Beatport “Bloodbath” As Dance Music Startup Lays Off Engineers
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DjWoody |
Beatport Shatters SF Office & Lays Off 20 Denver Employees
http://techcrunch.com/2013/12/08/beatport-layoffs/
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I posted this here because obviously this is a store many of the TA producers use and could possibly be affected by the upcoming changes. |
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clay |
short version? streaming is taking over. |
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DJ RANN |
Thanks for posting Woody. It really does not surprise me as I thought some kind of axe would fall after SFX bought them out. They are money guys and as attractive as these propositions are when you're buying them, these companies need to see a cold hard return on that hedge fund borrowed money.
The figures are interesting though and ot my knowledge it's the first time real numbers have been mentioned publicly.
How the did they manage to lose $1m in $12.1m revenue for an ONLINE business. Tells me that their infrastructure is completely out of whack. It means they are taking in close to $50m a year and somehow rent, servers and salaries (which is 90% of their operating costs) are amounting to more than that?
Those engineers must have been driving to work in Aston martins, because they could afford to pay 400 people $100,000 a year and still have $10m left over for office space and server fees. Does not make sense at all when the whole company was probably 200 employees. |
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DJ RANN |
quote: | Originally posted by clay
short version? streaming is taking over. |
That's true but only for consumers. Dj's aren't streaming for ytrack to play are they? |
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DjWoody |
quote: | Originally posted by DJ RANN Does not make sense at all when the whole company was probably 200 employees. |
Worse.... Techcrunch claims Beatport was only 88 strong. |
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Storyteller |
Was thinking about posting this here myself the yesterday...
SFX is starting their own EDM empire and is creepy. Buying Beatport (music sales), ID&T (events), Paylogic (tickets) and others it owns a large share of all segments in the dance music industry. In short; I don't like them.
The layoff is sad for the people involved, but I think its for the best. Lay-offs in innovative sectors such as digital music consumption usually mean the end of innovation thus the end of the company itself. Standing still is going backwards. The question now is, who will fill the void that will appear in the next few years? |
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tehlord |
quote: | Originally posted by DJ RANN
That's true but only for consumers. Dj's aren't streaming for ytrack to play are they? |
In other news, streaming isn't profitable, Spotify has never made a profit etc etc.
The problem with selling yourself so cheaply is that it's very difficult to raise charges 2-3 years down the line.
Saying that, if Spotify doubled their monthly subscription costs it'd still be a bargain. |
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itsamemario |
quote: | Originally posted by DJ RANN
Thanks for posting Woody. It really does not surprise me as I thought some kind of axe would fall after SFX bought them out. They are money guys and as attractive as these propositions are when you're buying them, these companies need to see a cold hard return on that hedge fund borrowed money.
The figures are interesting though and ot my knowledge it's the first time real numbers have been mentioned publicly.
How the did they manage to lose $1m in $12.1m revenue for an ONLINE business. Tells me that their infrastructure is completely out of whack. It means they are taking in close to $50m a year and somehow rent, servers and salaries (which is 90% of their operating costs) are amounting to more than that?
Those engineers must have been driving to work in Aston martins, because they could afford to pay 400 people $100,000 a year and still have $10m left over for office space and server fees. Does not make sense at all when the whole company was probably 200 employees. |
the development costs of their new platforms (play etc) could very easily amount to a million, and i dont think theyve seen much return there yet. |
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itsamemario |
quote: | Originally posted by tehlord
In other news, streaming isn't profitable, Spotify has never made a profit etc etc.
The problem with selling yourself so cheaply is that it's very difficult to raise charges 2-3 years down the line.
Saying that, if Spotify doubled their monthly subscription costs it'd still be a bargain. |
monthly subscription is gonna be the downfall of streaming services.
uber short tailored commercials is the way to go to ensure income for both artist and streaming service. but im talking 5 seconds. more than that is gonna feel like an intrusion. u can see it's (finally!) starting to trend on youtube even. the only way to MAKE people watch a commercial is to make it so short u dont have time to reach for the remote. Song fades out, "BUY COKE YO", Next song begins. None of that "hi im jonathan and im gonna bore the out of your skull for what feels like close to an eternity". Make my words, as Ricky says, this is the future of online music revenues. |
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Looney4Clooney |
i think that when everything became progressive, the need for people to classiy the music seem pointless hence no need for employees. chuckle
subcription won't work until you get wireless in the metro. Cell phone plans are cheap enough that teens can listen to it all day and cover the data. Still a few years imo. The change is inevitable. YThere is no point storing something you always have access to. |
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theqlogic87 |
Beatport has been like a stinging bee to the dance scene, completely destroyed the progressive house name, and only promoting the top names in the game. Stupid. I hope Beatport dies a slow and fugly death. |
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DJ RANN |
I'm agreeing with nearly everything people are posting;
Long ads should be a thing of the past and they have to be relative in length to the media - i.e. a 30 second ad is acceptable when you're streaming a 90 minute film, but it's never going to fly on a 5 min EDM track.
Out of principle, I click off that media if I see it has an ad over 10 secs, and I can guarantee that the ADD generation has even less patience.
But even is BP's Play cost them a million, that's just 2% of their annual revenue. They must have been bleeding money our of every orifice to take $50m, only having 80 employees, be an online only service (not brick and morter overheads etc) and STILL manage to lose money. I mean , even if you paid every employee $200,000, that's still not 30% of your annual revenue.
The thing is though, and what most people don't have a clue about, is that so many of these apparently "thriving" or popular online sites are ginormous loss making ventures.
What their ownership is hoping for is a silly money buyout (exactly what happened to beatport) as they know they're not making a penny and never will.
I know of one very online group buying promotional site (does well over $150m in revenue a year) and has had over $200m in investment in the past five years and has only lost money and never turned a profit.
Why do these companies (beatport included) do this? because these are exit strategy businesses. They are not designed to make money in the traditional sense of selling goods or services at a greater amount that their expenditure.
All they are interested in is making a brand that has value as some speculated intellectual property vehicle, all so some huge investment company will buy off them for millions.
As with beatport, they were bought, then they actually get a proper look at the company (not just an esoteric projected worth based off potential market share etc) and the bloodbath is the result.
Data has now outstripped voice calls or texting, and I even know some people don't care for voice plans, just as much data as they can get.
Look at what T-mobile and AT&T are doing here in the USA; offering you unlimited calls, text & text - but here's the kicker - the data is capped. You have to pay more to get higher limits. All of T-mobiles current plans are capped at 500mb, and you have to pay more to get more. They've already recognized that data is now where the money is at.
The problem with selling yourself cheaply at the start is that when you need to jack it up later, some other startup is then offering the same of not more for less.
Beatport did shoot themselves in the foot though with the classification thing. It used to be pretty damn easy to find what you want by genre - now I have to know the name of the artist or label to even get close, and frankly they've done a really sloppy job of recommending similar music to you. What it lacks is the function of when you used to go in to a record store and ask the guy working there for stuff and actually get some pointed, and on point, recommendations.
They also made it way too easy to get a release out there. I know we've all talked about the fact vinyl, due to the medium and steps involved was in effect a type of filter that stopped awful or badly produced music from seeing the light of day, but Beatport made the situation even worse - any muppet with fruityloops can get a progressive release now lol. |
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