Business Matters: Music-Related Startups Raise $123 Million In First Quarter
Business Matters: Music-Related Startups Raise $123 Million In First Quarter

Music-Related Startups Raise $123 Million In First Quarter
-- The money started pouring back into digital music last quarter. Ten music and music-related startups raised $124.3 million in venture capital in the first quarter of 2011. Billboard tracked the funding events by date of first public announcement.

That was a good improvement over the previous six months: six venture capital deals were announced in the fourth quarter of 2010 and the two were announced in the third quarter of 2010.

Leading the way in the first quarter was the $77 million raised by Beyond Oblivion. The company has created a streaming music service that is attached to specific pieces of hardware. Here's how the company describes its service: "We have developed a magnetic and scalable music service that combines the stickiness of a social network with unlimited life-of-device use of the largest legal music library on Earth." Subscribers pay a one-time fee that lasts for the life of the device. Content owners receive a "micro-royalty per play on those devices, whether or not the songs-files were legally or illegally downloaded, ripped or shared."

Rdio raised $17 million to help build its music streaming service. In the first quarter the company released a much improved iPhone app that has far more features than the original. In particular, the addition of Rdio's social features was a big step forward. Those features were previously available only on the Web-based version or desktop app.

Sweden-based X5 Music Group raised about $9.3 million from Northzone Ventures. The company plans to use the funding to sign American artists and grow its current catalog, according to a report at TechCrunch EU.

Quite a few artist services companies raised money in the quarter. FanBridge raised $2 million from Founder Collective, 500 Startups and a host of other backers. RootMusic landed $2.3 million from Mohr Davidow Ventures and then another $800,000 and hired a new head of business development. SoundCloud raised $10 million from Union Square Ventures and Index Partners.

There were a handful of other deals without a known dollar value. Two of the big ones were acquisitions of Thumbplay's streaming (acquired by Clear Channel) and ringtone (acquired by SendMe) businesses. Google's acquisition of PushLife is not included -- it was announced on April 8, which falls in the second quarter.

So far, 2011's Great Digital Media Experiment Seems So-so
-- So how is 2011's great digital media experiment going? So-so, but it's still too early to tell for sure. According to Experian Hitwise, the New York Times' paywall has contributed to a 5% to 15% drop in daily visits at "The one exception was Saturday, April 9th, 2011 where there was a 7% increase," wrote the company's director of research, "likely due to visitors seeking news around the potential government shutdown and ongoing budget discussions."

In addition, daily page views were down 11% to 29% during that time. So either visitors are reading fewer articles (less browsing so they won't hit their 20 free pages per month limit) or the people turned off by the pay wall are actually the ones who account for most page views.

Now, a drop in traffic is to be expected. The more important question is how many paying customers has the Times signed up to offset the loss in advertising revenue associated with a drop in traffic. And that is a big unknown at this point.
(Experian Hitwise blog)

Cinram Lenders Extend Company's Credit Line Through 2013
-- Cinram's current lenders closed a refinancing and recapitalization plan that extends the company's credit line through 2013. "Cinram has, through this refinancing, significantly strengthened and solidified its financial position, providing a sound foundation for the growth of the business and creation of value for stakeholders," said John Bell, the company's CFO.

Cinram is a manufacturer of pre-recorded CDs, DVDs and cassettes. It counts Warner Music Group and 20th Century Fox Home Entertainment among its accounts. In 2010, Cinram posted a net profit of $18.4 million on revenue of $1.1 billion. Revenue was down from $1.4 billion but the slight net profit was an improvement from the $6 million loss in 2009.

In January the company extended its reach into digital media when it acquired Los Angeles-based 1K Studios, which provides creative digital services to the likes of Paramount Home Entertainment, Apple, HBO and Warner Bros. Home Entertainment. Among the music products it creates are iTunes LP digital albums.
(Home Media Magazine)