The Price of EDM and The History SFX Entertai...

 

As those of you who frequent The Drop Media may very well already know, dance music has come a long way since its origins in the Underground. It went from being very rich in culture in each of its segments, whether it be the original UK Dubstep scene, the Dirty Dutch house scene, or the Tech house scene, to being labeled as one overarching Theme. EDM. While for people in business, this makes things a lot easier to market it and commercialize it into the Cash Cow that it now is, it in effect, waters down the origins and culture that each segment has slowly built up over the years. Thus, among fans of electronic music, EDM’s commercialization has gone from being a fear that fans and producers have  pushed to the back of their minds, to an undeniably relevant and threatening reality. That’s right: The thing people don’t really notice or understand is that once each segment of the industry such as, Beatport and the many individual promotion companies,  become property of a single corporation, the room for creativity, passion and originality as well as the future from whence electronic music was built upon, is now permanently jeopardized. The man who is responsible for it all has shown his face, and he goes by the name Robert Sillerman, IE “SFX entertainment.”

The First SFX Entertainment

      SFX seemingly appeared out of nowhere in 2012; strategically supporting it’s unnatural growth by going on a buying spree (that might as well be called a killing spree) of Electronic Dance Music’s biggest companies that comprise the industry today, as a whole. Now at first, these purchases seemed sporadic and random, in effect keeping Sillerman’s intent masked, but as we go into 2014, his intentions are becoming painfully clear. To fully understand SFX’s plan for future ownership of the entire industry, one must first understand its origins and history.

 

The Original SFX is sold for parts and Becomes Live Nation.

 

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December 1997: Robert Sillerman creates the original SFX Entertainment

In 1997, Robert Sillerman attempted for the first time to change the live music business by consolidating all regional promoters – large and small – under the parachute company, SFX.

August 2000: Sillerman Sells out SFX Entertainment to Clear Channel Communications

Clear channel buys the assets out from underneath Sillerman’s company SFX, and forms a new company, known today as Live Nation.

April 2010: Live Nation Announces Merger with Ticket Master

In 2010 alone, Live Nation was responsible for the management of over 127 venues and countless event promotion companies. But that wasn’t enough. Live Nation then announced a merger with the industry leader in Ticket allocation, Ticketmaster, giving Live Nation a near monopolistic control over the majority of live music performances.

 

The Resurrection of SFX Entertainment

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January 2012: Robert Sillerman discretely glues the pieces of the SFX Entertainment brand name back together

With the relentless growth of the Electronic Dance Music Industry every year, Sillerman could not keep his hands off yet another golden opportunity to impose his way upon live music. Thus, Sillerman sought out to register, once again, for the reinvention of SFX Entertainment.

July 2012: Sillerman announces publicly his intentions of taking over the EDM industry

 Sillerman casually lets the press know that he plans to invest $1 Billion in acquiring event promoters in the exponentially growing, yet segmented, EDM business. Although, don’t be afraid guys! Because he said he has no intention of centralizing the industry (like he did in the past, or quite frankly, now), but only seeks to connect it as a worldwide community, so he can sell rave gear in a Wall-Mart nearest to you….

 

 

The Buying (Killing) Spree 

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June 2012: SFX acquires Disco Donnie Presents

 Only months after its reincarnation, SFX purchases its first major event promotion company, Disco Donnie Presents. Founder Donnie Estopinal justified his decision to sell: “Right now, we’re doubling our gross income every year’ this will give us the opportunity to build an infrastructure to keep growing.”

August 2012: SFX acquires Day Glow

Upon purchasing DayGlow, SFX immediately rebranded DayGlow under the name Life in Color. DayGlow President Sebastian Solano also issued a statement to the press: “We believe that this partnership [with SFX] will give us the tools to continue to expand our brand worldwide and take our show to a whole new level.”

January 2013: SFX makes plans to acquire Opium Group and Miami Marketing Group

Although his deal with Opium Group fell through, Miami Marketing Group accepted theirs. With this deal, SFX gained control over three of Florida’s most renowned nightclubs: LIV, LIV Sun Life, and story.

February 2013: SFX acquires Beatport

For SFX, Beatport was a very strategic stepping stone in Sillerman’s plan to harness control and consolidate EDM under a single platform. The acquisition immediately led to redundancies (Downsizing) for many Beatport engineers as well as the closing of Beatport’s San Francisco’s office.

Upon the completion of the deal, SFX president Tim Crowhurst stated, “We’re making [Beatport] more of a product-focused company as opposed to an engineering company. We’re very focused on creating end-products that the community and all of our constituencies are going to love.”

March 2013: SFX purchases a 75% stake in Dutch promoter ID&T

         ID&T is a great company and is internationally recognized for their groundbreaking festivals and massive EDM events, including Tomorrowland, Sensation and Mysteryland. Once SFX secured a controlling interest in the ID&T, SFX announced the first TomorrowWorld in Georgia as well as the first Mysterland debut in the US in Bethel Woods, the original site of Woodstock ’69.

June 2013: Live Nation and SFX go head to head again for a stake in Insomniac Events

         SFX initially offered $100 million for Insomniac, but Live nation won the match and gained a 50% stake in the company.  

October 2013: SFX acquires Totem Onelove Group and the remaining 25% of ID&T for a total of 100% ownership

         Sillerman announced the buyout of Australian Event company, Totem Onelove Group, was “an important step as [SFX expands] into the Southeast Asian market.” It also gave SFX control of the massive touring festival Stereosonic.

 

 

The Stock Market Offering

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June 2013: SFX files for an Initial Public Offering (IPO)

After a reported net loss of over $28 million, SFX decided to go public and raise another $175 million in stock and bonds. The company let its shareholders and investors know that the exponential growth of the EDM industry would return their initial investment in no time.

October 2013: Shares of SFX are offered on the NASDAQ

         Not surprisingly, Afrojack joined Sillerman to announce and ring in the opening bell for SFX’s IPO, under the ticker SFXE. The IPO originally opened at $13 a share and raised $260 million, but ended the day at $11.89. As of today, the IPO is valued at around $10.25 a share.

November 2013: SFX Acquires Made Events and I-Motion

Although there were deaths in at the Electric Zoo festival last September, SFX purchased Made Events and confidently announced plans to expand the brand internationally. To cover his ass, he also outlined plans to improve the medical attention inside his festivals and events. I-Motion grants SFX a strategic entry into Europe with festivals and events.

December 2013: SFX enters into a global marketing partnership with Anheuser-Busch, and in effect, gains a 75% stake in Paylogic Ticketing Solutions.

         For SFX, the $25 million dollar partnership with Anheuser-Bush Inbev, the popular multinational brewing company powering Budweiser, represents a first step toward offering advertisers a “platform to reach the expanding EDM market.” Or rather, it represents a way to take advantage of the nearly endless beer marketing budget in exchange for cheesy EDM beer commercials during the Super Bowl… great.

In an interview, Sillerman explained the logic behind the acquiring Paylogic Ticketing: “Our principle interest was in acquiring a company that could absolutely handle massive surges, as we experienced, for instance at TomorrowWorld.”

January 2014: SFX signs a partnership with Clear Channel Communications 

Although there is a clear cut history, present and future competitive relationship between Clear Channel and SFX, especially in the EDM industry, they hope to at least make a profit together through joint collaboration. Yay! Their new relationship will result in a national DJ talent contest (probably a tv show next), a Beatport Top 20 Countdown on pop radio, and a live event series. (Probably along the lines of, “now that’s what I call selling-out Volume 548593234.”).

The worst part is that SFX will gain a lot of publicity from the exposure that Clear Channel’s nationwide radio stations will provide for the all-mighty EDM, and Clear Channel will inevitably and relentlessly reach EDM fans.

February 2014: (I saved the best for last) SFX enters into lawsuits and legal Battles.

         In early February, three music managers sued Robert Sillerman for allegedly cutting them out of SFX. The former colleagues – Paolo Moreno, Gabriel Moreno, and Lawrence Vavra – claimed they gave Sillerman the idea for an EDM conglomerate (idiots). Then, after they suggested the first few acquisitions, they were “frozen out” of SFX.

Only a few weeks later, SFX went to court yet again. Only this time, they got tangled up in a complicated lawsuit between the promoters of Electric Forest, AEG live, and the festival’s long-standing venue, Double JJ resort. The venue has accrued a lot of debt over the years and SFX offered to buy the land. However, the purchases could and would jeopardize AEG live’s lease and the future of Electric Forest.

Of course, an SFX press representative denied that “SFX is doing anything to halt Electric Forest,” but many are still skeptical and’ rightly so. As Insomniac spokesperson Jennifer Forkish said, “What SFX is attempting to pull off is really very transparent – they are trying to take the property out from an established festival competitor in order to punish those that won’t play by their rules.” Or rather, if you say no to SFX, they will run you into the ground with a smile.

 

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So I ask you all at the Drop Media, Is this the end of an era?

 

- Apollo out.