Website Review: Audimated.com

'Love Music. Make Money.’ That’s the slogan behind Audimated.com, a social platform that provides independent musicians and their fans the tools to share, discover, and monetize music. The Audimated model is simple enough – artists create products, fans promote those products and then fans earn commissions on sales. (You can view their marketing video at the end of this post.) The online community and marketplace is a free service. Artists can create profiles on the site so fans can discover their music and help spread the word to others. Artists can share their music and sell albums, singles, ringtones, concert tickets, or just about anything else they can think of that someone would shell out money for. The artist sets the price for everything they offer – and can even offer downloads of their music for free. Fans can create profiles as well and set up a personal “store” promoting their favorite artists. If other users buy an artist’s tunes, concert tickets, or memorabilia from a fan’s store, the artist and the fan can get paid. Artists get to choose whether or not they want to offer commission to the fans that promote their content though, and can set the commission rate to whatever they please. However the commission levels are set up in tiers – and commission is paid up to 5 tiers. It might sound confusing but here’s an example straight from the Audimated website. Let’s assume an artist has set a commission percentage of 10%. If fan 5 were referred by fan 4 who was referred by fan 3 who was referred by fan 2 who was referred by fan 1 then fan 4, 3, 2, and 1 would earn 10%, 5%, 2.5% and 1.25% respectively. In total the artist would pay out a total commission amount of 18.75%. Audimated themselves take a 10% cut of all sales on the site. I thought I’d run the numbers to see how much of a monetary advantage Audimated provides to artists. Assuming you sell a $0.99 single – Audimated takes $0.099 (which I assume they’d round up to $0.10), leaving you with roughly $0.89. If the single was sold to a tier 5 fan, you now have to pay roughly 18.75% in commission, which off of $0.99 single is equivalent to roughly $0.19 cents. That means the artist takes home roughly $0.70 – on a free account! Sounds like a good deal, especially considering that iTunes does not accept music from independent artists unless they go through a distributor, such as TuneCore. However all distributers will charge you a fee, while Audimated is completely free.
That pretty much covers the logistics of the operation – now for the website itself – it’s actually quite simple to navigate your way around. Audimated cuts out all that flashy design that clutters the page and keeps it simple. Sign-up was a breeze, taking me all of 2 minutes to accomplish and in addition to the main service they also offer an Audimated radio where you can hear tracks from artists who are registered as well as a blog that highlights featured artists, and articles that are can help any artist navigate their way in the music industry. My only complaint? Once you get to the blog, you have to look around for a link that’ll take you back to Audimated website. Audimated is still in the Beta version, having launched last summer, so we’ll just have to wait to see what the future holds for them as a company.

Here's the marketing video that also appears on the Audimated home page.

Save Independent Music: Audimated Tour from Audimated on Vimeo.

It's Official: Citigroup Takes Control of EMI

After months of speculation about whether EMI could stay afloat on it’s own, would be sold off, or would be seized by Citigroup (Citi), we now have a definite answer.

Citi, which provided £2.6 billion of debt for the 2007 buyout by Guy Hands’ Terra Firma, wrote off most of EMI’s loans after the investment vehicle set up by Terra Firma defaulted. In a debt-for-equity swap, Citi wrote off 65% of EMI’s debt in exchange for full ownership of the company. Citi completed a recapitalization EMI – reducing debt by 63% from £3.4 billion to £1.2 billion, and providing more than £300 million of cash now available to EMI. The new capital structure provides EMI with a strong balance sheet and the ability to invest in and grow its business. Before the restructure EMI was operationally profitable and able to pay the interest on its loan, but struggled to make a dent in the principle. Citi reported that although it retains ownership of the company, it would not interfere with EMI’s operations, which generated $2.64 billion in revenue in its last fiscal year, and posted a $534.9 million profit before interest, taxes, depreciation and amortization.

So what does it mean for EMI? Currently Roger Faxon, EMI’s chief executive, has a bright outlook recently saying, “The recapitalization of EMI by Citi is an extremely positive step for the company. It has given us one of the most robust balance sheets in the industry with a modest level of debt and substantial liquidity.” EMI further released a statement that said it would “continue delivering on its strategy to maximize value for the artists and songwriters it is dedicated to servicing.” EMI might be continuing operations as usual for the foreseeable future but for how long? The latest acquisition by Citi tees up EMI to be sold again as the US. Bank will more than likely not want to hold the music company for the long term.

The question now is what does the future hold for EMI? It most certainly will be sold off again but it remains to be seen to whom. At this moment all signs point to Warner Music Group. Yet EMI’s remaining debt is large enough that it would still complicate a potential merger with Warner Music Group (WMG), who carries $2.4 billion in debt, including interest payments. The challenge of servicing such a massive debt burden would be further complicated by the question of which debt would be considered senior. Not to mention that Warner Music Group is publicly owned and would have to answer to stockholders. It is possible that WMG could sell its Warner/Chappell publishing catalog and put the proceeds toward a purchase of EMI, either as a whole or for one of it’s arms. A deal involving two of the world’s four largest record companies could face regulatory hurdles, much like those that Universal Music Publishing faced when they acquired BMG publishing. WMG does have it’s mind on some sort of restructure, the company has employed investment bank Goldman Sachs to explore the option of either a sale of Warner or a purchase of EMI.

But if WMG doesn't buy EMI as a whole, it is unlikely that any other media company or private equity firm would do so, inevitably splitting up the fourth largest record company in the world.


References:

EMI Announces Successful Capital Restructuring, and Change of Ownership
Citigroup Acquires EMI, The Fourth-Biggest Label Group in the Music Industry
Who Will Buy EMI From Citi?
Now That Citigroup Has Taken Over EMI, What's Next?
Citigroup Grabs Debt-Plagued EMI
Citigroup Grabs Control of EMI