Inside the Troubled Past and Uncertain Future of CMJ, New York's Long-Running Indie Incubator
The recent history of CMJ, and its near future, is foggy.
In the past few weeks it’s become fairly clear, despite overtures to the contrary, that the CMJ Music Marathon, the indie-focused music festival and industry conference that has woven itself throughout lower Manhattan and Brooklyn each autumn for the past 35 years, will not be celebrating its 36th edition in the coming weeks. After its acquisition by Adam Klein, the former CEO of eMusic, in 2014, the executive laid out an ambitious and promising plan to renew the brand. The many assets that CMJ has at its disposal -- foremost the thousands of passionate and knowledgable volunteers and employees of college radio stations across the country -- made it a promising acquisition, and to hear its new leader lay out his plans to leverage these music die-hards was promising for a much-beloved brand.
But Klein and his latest company, Abaculi Media, don’t appear to be the saviors, at least for the immediate future, that the company requires, with a growing raft of legal issues of its own working against any effort to bring CMJ back from the brink: for all those who want to see it continue, CMJ may have too many problems to see the sunrise. Its relatively recent history in and out of court may be a death sentence, mired as it is in litigation between an ever-growing cast of former owners and financiers. And even though the core of the company arguably holds more potential than ever, its past lays out a complicated future.
In the early 2000s, over 20 years after Robert Haber founded the College Media Journal in 1978, and along with Green introduced its annual marquee event two years later, Haber and Green re-acquired CMJ from co-owner Rare Medium Group, making the company whole under the umbrella of a company called CMJ Network, Inc. By the end of the aughts, however, CMJ Network was undergoing financial problems, and in May 2009 announced a lifesaving merger with a long-familiar name to those in the New York music industry: John Scher and his Metropolitan Talent company. Metropolitan expected to acquire 80 percent of CMJ Network, Inc. at a valuation of $2.4 million -- “We're living together but not married yet," Scher told Billboard at the time -- and Haber and Green even moved CMJ's operations into Metropolitan's Manhattan offices. As that deal was finalized, Metropolitan loaned CMJ stay-alive money a total of 27 times between 2009 and 2010, according to court filings reviewed by Billboard, amounting to about $600,000.
This is the point where the modern CMJ, both on paper and in reality, began to fall apart. Despite the announcement and its cheery tone, Scher and Metropolitan's acquisition was never finalized; financiers brought in to cover the remaining $2.4 million of CMJ’s valuation backed out over a reported $1 million tax bill the company owed, according to a source familiar with the company's finances at the time.
With a handshake deal still in place, however, Scher and the Habers continued to look for alternative sources of money. But in April 2012, with financing still not forthcoming, Haber and Green instead sold that 80 percent stake of CMJ Network, Inc. to a group of investors led by longtime Aerosmith associate Keith Garde for $100,000 and the assumption of certain liabilities, a far cry from its worth just three years prior. Garde's group of investors reformulated CMJ Network, Inc. into CMJ Holdings Corp., installed entertainment executive Alexis d'Amecourt as CEO, with Haber and Green remaining in executive positions at the company under him on yearly contracts, and struck a deal with the IRS to settle its tax bill as well. The money owed Scher, however, was not included in the sale, court documents say, and the new owners claimed that outstanding debt was the responsibility of the now-redundant CMJ Network, not Holdings. They were, in effect, trying to dump that debt into limbo.
Garde did not respond to multiple requests for comment. When reached, Alexis d'Amecourt declined to comment.
So Scher, not surprisingly, sued -- everyone, from CMJ Network, Inc. to CMJ Holdings Corp. to Haber and Green -- in May of 2013. Scher was calling into question every twist and turn of the company dating back to its sale to Garde, who remains based in Boston and was an infrequent visitor to the CMJ office, says one source, and the investment group he led.
Garde and Co.
Even before Scher's lawsuit began making its way through the courts -- despite mediation talks as recently as June, as of today (Sept. 14) the suit is set to go to trial in January -- a source with detailed knowledge of CMJ's business says Garde was desperately trying to sell the company, with tire-kicking a regular occurrence at the dorm-like office to which CMJ had moved after the Metropolitan deal fell apart. Making matters more complicated for potential buyers was a March 17, 2014 ruling by the New York State Supreme Court that CMJ Holdings’ motion to dismiss Scher’s lawsuit would not be upheld, ruling that Holdings was still liable for Network’s debt to Scher, which had by then risen to approximately $1 million with interest and fees.
The cracks were beginning to show. The magazine CMJ New Music Monthly, which had been in operation since 1993, stopped publishing in mid-2009; the once-essential CMJ New Music Report, the flagship Haber started in 1978 and re-named in 1982, went digital-only shortly thereafter and seemed to have been folded into the “charts” section on CMJ.com by mid-2012. The following year, the entire operation had been reduced to fewer than 10 full-time employees, supported by unpaid interns and seasonal freelancers each Marathon season, many of whom had trouble getting paid on time, or at all, according to multiple former employees contacted by Billboard.
Those who worked there were kept in the dark about the financial troubles that the company was enduring while moves were being made behind the scenes. "They kept everything quiet,” says a former employee. “All we ever heard was, 'Here's another promising new investor who is going to save us and move us to new offices.’”
At the same time, the internet's ubiquity had cut into college radio’s vitality as a source for breaking new artists, and the evolution of SXSW in Austin from a similarly-minded indie conference and artist showcase into a global behemoth had begun to suffocate the market that CMJ had once ruled.
CMJ was quickly losing its cultural footprint and reputation within the music industry and, combined with its financial issues, was in desperate need of a buyer. One of those was a British journalist-turned-entrepreneur, Paul Campbell, who had founded his own successful company, Amazing Media, which focuses on independent music. "We had been looking for a way to expand to the U.S.," Campbell tells Billboard. "To grow our brand to its full potential, it needed to become bigger in the States, so thus CMJ. In the end we didn't do a deal, and the main reason was that I didn't want to spend the rest of my life in court."
Campbell and Amazing Media passed on the acquisition. But during the company’s survey of CMJ’s assets and viability, Campbell had retained an executive named Adam Klein, who was fresh off the sale of eMusic to an e-books startup, to look into CMJ (among other companies) on his behalf. Klein, in the course of his investigation, developed his own interest in the company. "Adam was doing a consultancy for us when he left eMusic -- I don't think he'd ever heard of CMJ, we introduced him to it,” Campbell says. “Shortly after he stopped working for us, it emerged he was buying it." Klein tells Billboard it was CMJ who approached him for the purchase.
Enter Abaculi and Adam Klein
On June 6, 2014, Klein finalized the purchase of CMJ Holdings Corp. from Garde’s investment group, which had bought out the Habers’ 20 percent stake prior to the deal. Klein, under the auspices of his new company Abaculi Media, took the reins.
The takeover initially meant two things: CMJ Holdings Corp. would be re-branded as Abast Holdings Corp.; and the Habers’ contracts were summarily terminated, ending their relationship with the company they helped found and foster 36 years before and since. A source, well-placed in the pre-Klein CMJ, described news of Klein's purchase as "heartbreaking”; another characterized Haber and Green’s termination as the two having been “kicked out.”
Abaculi Media, founded by Klein in late 2013, was created, according to a description presumably approved by Klein, to leverage "WiFi tech and data analytics to create new value through new consumer experiences and the economics for live event business." (Abaculi's own site is less forthcoming.)
Scher's pursuit of his money quickly caught up to Klein, Abaculi and CMJ's new corporate home. In an August 2015 decision, a New York State judge allowed Scher to add both Abaculi Media and Abast Holdings Corp. to his original lawsuit. As its new owner, the court ruled that Abaculi may end up being held responsible for some of that debt, including certain assets that had been designated as collateral against Scher’s loan.
Adding to the headaches for Klein, Abaculi and Abast, the latter two were sued in May 2015 by Haber and Green, who alleged breach of contract dating back to CMJ Holdings’ original takeover of CMJ Network. Haber and Green also say their contracts were terminated without cause or warning on June 6, 2014 -- the date of the sale to Klein and Abaculi -- and that the new owners refused to pay termination fees that had been agreed upon. They are seeking $500,000 in damages, legal expenses and costs. Haber declined to comment on CMJ’s operations since the sale, and did not return an additional request for comment on the lawsuit. His lawyer declined to comment on the ongoing litigation.
Outside of purchasing CMJ and its attendant headaches, Klein and Abaculi stayed busy in at least one other way, producing the broadcast of 2014's Veracruz Games. That deal, however -- the only business transaction other than Abaculi's acquisition of CMJ of which Billboard was able to find evidence -- resulted in a lawsuit brought by the Boston-based Remote Facilities Consulting Service which was hired, for $510,000, to provide broadcasting equipment and the personnel to operate it from Veracruz. In its suit, Remote Facilities says Klein paid, in a series of relatively small transactions, $170,000 of that $510,000; including work above and beyond the initial contract, Abaculi was said to owe the company $416,088.17. The defendants in the case were Klein, his two properties (one on Central Park West, the other in Chatham, Mass.), Abaculi and CMJ. It also named every current business that Klein was allegedly receiving payment from (a legal option in Massachusetts called "trustee process"), including $100,000 per year from Sizmek Corp., on whose board Klein sits, and which recently merged with San Francisco-based investment firm Vector Capital, and Klein's own Media Leader LLC, the purpose of which Klein explained in a presentation from 2010. (No projects or ventures from Media Leader were found).
While a settlement was agreed upon between Remote Facilities and Abaculi this past June, payments were never made by Abaculi and resulted in a judgment on Aug. 28 against the company for $425,000. If it is unable to pay that amount, Remote Facilities could seek compensation in the form of a chunk of the already-strapped CMJ.
Earlier this year, rumors began to circulate that CMJ's Music Marathon would not, for the first time in 35 years, be taking place in 2016. But in June, when contacted by Billboard, Klein insisted that this year's Marathon was still very much on the table. "When I acquired CMJ, it needed to go through quite a radical turnaround," he said at the time. "We'd been rethinking, investing, growing, rethinking how to protect its core value and grow that value. We've been putting our pieces in place." When contacted again, a statement that Klein provided to Billboard last week was also somewhat guarded, and also made no mention of the Marathon. "A little patience and a whole lot less wild and unsubstantiated speculation is what we need right now. CMJ will continue as an innovative force and a strong presence going forward. We’ll share more about our 2016 and 2017 program soon."
That program will very likely not include the Marathon, as multiple sources previously involved in the event confirmed to Billboard that CMJ had not contacted them about this year's edition -- with one saying outright that there was too much debt for the Marathon to overcome this year.
Despite all this, when contacted again this week about the Marathon's fate, Klein continued to insist it was on the table for this year. Asked how an event as large and wide-ranging as the Marathon, with hundreds of artists and dozens of panels typically part of its schedule each year, would be feasible by year's end, Klein would only say the company is “completing the logistics” and “developing a strategy” that he would discuss when ready. Regarding the lawsuits pending against Abaculi, Klein either denied involvement or declined to comment.
And while Klein continues to put a cheerful, if exasperated, spin on CMJ’s coming fortunes, its longtime core business -- college radio and the charts it has compiled for almost 40 years -- has gone silent, with one blog reporting that several college stations haven’t been contacted by the company in months, and that now fewer than 200 radio stations regularly report to the company, down from well over 500 just a few years ago. The charts on CMJ's website, its life blood since 1978, have not been updated since Feb. 5; its site as a whole has not been updated since June, and its Marathon landing page still advertises its 2015 edition.
A cynical view could paint CMJ’s fate as self-inflicted; years of accumulating debt combined with poor management and serious cash flow issues brought on by an increasing number of lawsuits that have brought down a company that for decades played a huge role in bringing countless underground artists into the spotlight. But plenty will mourn the decline of an institution dedicated to shining a light on artists who just needed a break, and supporting the college radio infrastructure that has given so many industry professionals their first taste of the business.
Haber and Green, for their part, have moved on: today they are set to launch the inaugural Mondo.NYC music-tech-industry conference and festival, taking place at CMJ’s longtime home at NYU and covering much of the same ground that CMJ’s Music Marathon had in the past. When asked this week about the comparisons between the two events, Haber was determined to keep things positive. “I can only tell you that we're real proud of our accomplishments at CMJ while we were there,” he tells Billboard. “We have had nothing whatsoever to do with the company over the last couple of years, we have no idea what their plans are or what their strategy is… Whether [CMJ] happens or not, I have no opinion.”
Whether Mondo can fill the CMJ-sized gap in New York City’s fall music agenda will be determined in the coming years. But if CMJ truly is done for good, it will represent the death of a staple of the industry, and one that many had a personal connection with.
“It’s such a bummer,” says one former employee of CMJ’s current situation. “I always thought of CMJ as the scrappy but fucked-up little engine that could.”