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.
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.
“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 DevOps (including code and continuous integration)
- 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.
Assistant Manager, Corporate Finance”
Featured image by huiam (CC by 2.0).