We're seeing more and more unnamed sources speak out against SFX and the questionable handling of the companies that they acquire, and TechCrunch got their hands on some terrifying news this weekend about this behemoth. Beatport was acquired by SFX earlier this year, and ended the fourth quarter by firing the engineering staff that created and maintained this platform right before the holidays.
Though this move included severance packages, the timing is more than a bit disheartening. But for anyone that's been paying any attention, it shouldn't have been unexpected. We quietly watched as the stock price for SFX dropped immediately as it became public, which indicated that the offering was priced too high. It has been reported that Beatport had two consecutive years of losses in the millions. We've sent shots at Beatport for their lack of knowledge about the music that they're selling, and certainly shrug at their charts. And as SFX has spent nearly a billion dollars on acquisitions without posting a single profit, the only thing we can do is wait to see how their business model unfolds.
All of this news is on the heels of a quote from a keynote speech given at Sydney's Electronic Music Conference. We shook our heads in disbelief as Beatport CEO Matthew Adell shrugged at DJs playing pre-recorded sets. The quote from InTheMix is frightening: "I actually don’t care what happens before the speaker. As a fan I only care what comes out of the speaker.” As we're taking a stance against ghost production and paid manipulation of the market, seeing suits shrug off industry standards (like DJs actually being able to DJ) is a major red flag. And as these industry leaders represent our art in some capacity, we can't help but be worried about EDM's future.
Beatport is a 10-year-old service that has its fair share of issues, including its high price point (Beatport charges music fans roughly 50% more than iTunes does for downloads, and distributors 20% more for placement), and the inability to download records that you've paid for more than once. Independent producers and small labels have seen their profits on this platform drop significantly in the past few years, and we're seeing more musicians simply giving their records out for free in an effort to retain fans.
We saw Addell address these problems and field tons of additional questions on Reddit a little over a month ago, and that AMA was more than interesting. He confirmed his knowledge of the $4000 package called "Amplify" that offers campaigns to give labels and artists additional exposure and marketing. To say that taking money to market content on a platform you own is pay-to-play and an ethical nightmare is an understatement, but he addressed the question and owned it. He also stated that "EDM is in my mind a genre trend, but Electronic Dance Music is not."
What we can say is that Addell is a DJ that got his start working in record stores and running house labels out of Chicago, and that he has a background working for MusicNow and Napster before landing at Beatport. The service that Beatport provides definitely holds value. He has a tough job in turning this ship around, and the removal of a large chunk of Beatport staff has to be a blow to the moral of the company. We're crossing our fingers that SFX isn't doing damage to the companies that they're acquiring, and hoping for the best as they move forward to attempt to represent our culture.