American media conglomerate SFX Entertainment acquires Beatport for $50m

Robert F X Sillerman, yesterday

Robert F X Sillerman, yesterday

As widely predicted earlier this year, SFX Entertainment has purchased online music retailer Beatport. The New York Times reports that Beatport will be added to a portfolio SFX Entertainment’s spectacularly named owner Robert F X Sillerman plans to expand with $1bn of acquisitions over the next year.

Sillerman said: “Beatport gives us direct contact with the DJs and lets us see what’s popular and what’s not. Most important, it gives us a massive platform for everything related to EDM.”

The deal reportedly values the Denver-based online retailer at just over $50m, a figure which seems remarkably low in comparison to, say, Spotify’s $3bn valuation (especially given the fact that Beatport reportedly makes a profit, which Spotify can only dream of).

In an interview with Billboard last month, Beatport CEO Matt Adell ducked questions about whether a deal was in progress, but boasted that Beatport was the world’s number one online dance music retailer “by far”. Adell also warned that iTunes and other online retailers were operating “a disaster model” and that the days of people making money from selling recorded music were “never, ever, ever going to come back”.

SFX Entertainment – which is a separate organisation to SFX, the media group Sillerman founded in the 1990s and sold to media giants Clear Channel in 2000 – also owns a portfolio of companies including Life In Color (“the word’s largest paint party”), Miami nightclub owners Opium Group and event planners HUKA Entertainment, and is rumoured to be interested in buying Insomniac Events, the company behind festivals including Electric Daisy and Beyond Wonderland.

At this stage it’s virtually impossible to predict the impact Beatport’s sale will have on customers, artists and labels. The only obvious concern is that, along with the company, SFX Entertainment has also purchased the personal details and shopping history of every Beatport customer. From a market research perspective, Sillerman’s comment about being able to “see what’s popular and not” is particularly telling – if you have a Beatport account, don’t be surprised if you get hit with highly targeted marketing campaigns for music and events in the near future.

The reaction so far from the dance music community has been mixed at best. In typically forthright fashion, Kris Wadsworth remarked on Facebook: “Just a heads up, in case you don’t realize what this is. In America, we call this a ‘monopoly’. Also synonymous with ‘bullshit’.”

27th February, 2013

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