A leaked e-mail has revealed that PledgeMusic has laid off its staff and won’t ever pay back artists.
So, how did it come to this?
For nearly a year, failed British crowdfunding platform PledgeMusic has promised to pay back the hundreds of thousands it owes artists.
Due to serious financial issues, as well as poor management, the company had withheld payments to musicians and bands.
With embattled co-founder Benji Rogers back at the helm, the company first released the following statement, promising to pay back artists last summer.
“It’s our expectation that payments will be brought current within the next 90 days.”
PledgeMusic owes at least $100,000 to electro-industrial band ohGR. Another group, Fastball, still hasn’t received $21,000. Queensrÿche, a heavy-metal group which first became popular in the 1980s, is now owed more than $70,000.
As previously reported, the 90 days have come and gone.
No payments.
Then, earlier this year, the company once again released the following empty promise.
“It is our expectation that payments will be brought current within the next 90 days.”
In an attempt to save face, Rogers said the company has explored possible ‘partnerships and acquisitions.’ It hasn’t provided proof about any possible talks, however.
Again, the 90 days came and went. Still no payments.
During this time, some interesting developments took place.
First, hinting at possible legal action, the British Musicians’ Union urged users to avoid PledgeMusic at all costs.
“We would suggest that, if you’re thinking of launching a crowdfunding campaign, you should approach one of the other established crowdfunding platforms until such time [after] this situation has been resolved.”
Then, the US Securities & Exchange Commission (SEC) issued formal stock charges against PledgeMusic majority shareholder Joshua Sason. As the Founder and CEO of Magna Group, Sason allegedly orchestrated approximately $25 million in securities fraud involving penny stocks with fraudulent debt. Sason and Magna dumped the stocks on unsuspecting investors.
Not exactly the kind of news meant to inspire faith in PledgeMusic.
Soon after, the failed crowdfunding platform confirmed that it would no longer accept contributions to active and pre-sale campaigns.
Refusing to comment on the whereabouts of the cash, the crowdfunding platform said it simply remains bound to “commercial sensitivities.” It won’t reveal any details about possible acquisitions, hinting that the company likely made the news up.
Thankfully for one PledgeMusic-owned company, Paste Media Group stepped in last week to purchase – and save – NoiseTrade.com.
Now, a leaked e-mail has revealed how bad things truly are for Rogers’ company, and for artists who depended on the platform.
“Please, please, please buy PledgeMusic! But, don’t worry. You don’t have to pay back artists.”
Earlier this morning, Digital Music News received an interesting e-mail from an anonymous source.
FRP Advisory LLP, a UK business advisory firm, has been named the proposed administrator of PledgeMusic.com Limited and its subsidiaries (dubbed ‘The Group’).
With a pre-liquidation fire sale set to take place, FRP Assistant Manager Robbie Wirdnam has now sought “expressions of interest in the business and assets of the Group’ – i.e., PledgeMusic.
“By way of introduction, I’m part of the corporate finance team at FRP and assisting my colleagues in the restructuring team, as the proposed administrators of PledgeMusic, in the marketing of the Group’s business and assets. As you have previously looked at the opportunity on a solvent basis, I’m circling back to determine whether you have an interest in the business and assets for sale, ahead of an administration process.”
Wirdnam explains that the British crowdfunding platform faced two ‘pressures’ which ultimately lead to its demise – working capital pressures and a lack of ongoing funding.
Stating that the website remains ‘live,’ and with the company now maintaining a community base of over 2 million “superfans” as well as 45,000 artists, a suitor can now outright purchase PledgeMusic.
“With the right support and backing, the platform and e-commerce services are available to be switched back on, including the pre-sale, marketing, and distribution digital media, merchandise, memorabilia, and exclusive experiences.”
Wirdnam added that the suitor could buy the crowdfunding ‘platform’ and its assets of The Group “free from any liabilities.” Assets include all technical aspects of PledgeMusic – the application, framework, infrastructure, and DevOps (including code and continuous integration) – the company’s trademarks, and domain names.
He explains PledgeMusic currently operates on month-to-month agreements with most technical vendors. Thus, no long-term contracts or agreements exist.
In addition, Rogers has dismissed nearly all staff members, as “no employees [remain] on the Group’s payroll.” An unspecified number of unpaid employees have remained at the company “to help with the proposed process.”
In other words, as our source explained,
“Artists are not going to get paid: no staff, no cash. I can’t imagine any buyer would come in and put in their own cash to pay artists the old balances owed by Pledge.”
Wirdnam and FRP have also offered potential buyers a ‘dataroom’ featuring financial, technical, and operational information about PledgeMusic. However, suitors will first have to sign a Non-Disclosure Agreement.
He adds,
“Expressions of interest are being sought for the business and assets of the Group by 16:00 p.m. (London time) on Thursday 9 May 2019.”
You can view the full e-mail below.
“FRP Advisory LLP (“FRP”) are the proposed administrators of PledgeMusic.com Limited and its subsidiaries (together referred to as “PledgeMusic” or the “Group”) and are seeking expressions of interest in the business and assets of the Group.
By way of introduction, I am part of the corporate finance team at FRP and assisting my colleagues in the restructuring team, as the proposed administrators of PledgeMusic, in the marketing of the Group’s business and assets. As you have previously looked at the opportunity on a solvent basis, I am circling back to determine whether you have an interest in the business and assets for sale, ahead of an administration process.
Due to working capital pressures faced by the Group and a lack of ongoing funding, Management of PledgeMusic made the decision earlier in the year to suspend all new projects and campaigns on the platform. The website is still live and the Group maintains a community base of over 2,000,000 registered ‘super-fans’ and 45,000 artists. With the right support and backing, the platform and e-commerce services are available to be switched back on, including the pre-sale, marketing, and distribution digital media, merchandise, memorabilia and exclusive experiences.
The opportunity in its current form is to acquire the business and assets of the Group free from any liabilities. The assets include;
- All technical aspects of the PledgeMusic platform
o Application
o Framework
o Infrastructure
o DevOps (including code and continuous integration)
- Trademarks
- Domain names
The Group is operating on month-to-month agreements with most technical vendors and there are no long-term contracts or agreements in place. There are also no employees remaining on the Group’s payroll, aside from a small number of former employees that have been retained to help with the proposed process.
A dataroom is available comprising financial, technical and operational information for the Group should you wish to explore this opportunity further, with access granted subject to the signing of a Non-Disclosure Agreement. Expressions of interest are being sought for the business and assets of the Group by 16:00 p.m. (London time) on Thursday 9 May 2019.
It should be noted that all communication on this opportunity should be conducted through FRP. Should you require further information or assistance, please do not hesitate to get in touch with myself.
I look forward to hearing from you.
Regards,
Robbie
Robbie Wirdnam
Assistant Manager, Corporate Finance”
Featured image by huiam (CC by 2.0).
When will musicians learn that tech douches are their enemy?
This is nothing to do with tech. This is good old corruption. Plain and simple
There’s quite a history and numerous examples of tech companies not respecting creators. On another note, I’m curious if any of the musicians on pledgemusic attempted to come to the aid of bands that got shafted? I haven’t heard a single example of one band sticking up for another that wasn’t getting paid. If there had been a combined effort and some solidarity, things may have turned out better.
That’s ridiculous. They’re musicians not the corruption police. Yeah it’s the musicians fault for a company using their misappropriating their funds to operate. You sound like a moron
When did I say it was the musician’s fault? I was just curious if any of the various musicians banded together to get support against Pledge. The idea that there’s strength in numbers ain’t anything new and I only saw musicians complaining of getting screwed after it affected them personally.
Blames tech companies when tech companies are created and maintained by a human being. Are all tech companies disrespecting content creators? You make a blanketed statement that has no specifics that actually factor into the data.
Next you accuse the musicians for not coming into the aid of other musicians being screwed by this specific company? Were you not around for the days of Napster, when the musicians came together to fight for their rights?
So 1 company has bad management and robs its clients… and you feel that other musicians are to be looked down upon for not helping each other out? This company robbed musicians of 5 figures and in some cases 6 figure digits. You really think all musicians should just shell out cash to make up for the theft that this company caused?
You have a biased viewpoint that is jaded. Have a heart.
Record companies were never the enemy with their funny accounting. Neither were radio stations, which required payola. Nor were producers, who demanded writer credit. As for the taxman, if being able to keep 5% should appear too small, be thankful they don’t take it all.
Does anyone seriously believe any of the 2 million registered superfans are going to trust their money to this company, even if there was someone out there crazy enough to buy it ?
It’s now simply another toxic asset.
The 2m superfans, (not sure how they determine that) is the only data asset worth anything.
I believe under British company law that a company has to appoint an administrator if the company is no longer solvent. The administrator is under obligation to liquidate the assets and pay creditors (which may include artists if there’s enough money) for the best price possible. So this looks like standard practice. I believe ‘Rogers’ is an unpaid advisor from reading other articles so I doubt he’s “back at the helm”. Lazy “journalism” at its best here – saying that Pledgemusic is a horror story.
It is a horror story. Unpaid artists, lies upon lies, nobody running the show, no employees. Artist money used to find operations. Top shareholder facing fraud. What else would you call this mr anonymous?
DMN sucks billy goat in the area of real journalism for the last 4 years. However Pledge is still a shit show.
“However Pledge is still a shit show” – You took the words right outta my mouth 🙂
unbelievable that all these artists, including my young daughter, and all their friends and families that donated to support their music, are being screwed. Fraud charges should be made.
My band is owed over £10k and despite successfully gaining a county court judgement against them, it looks like we will never see our money. Pledge UK knew what was going to happen but took us along and flanneled us all the way. I hope fraud charges are brought but that probably won’t pay us artists. Fuckers.