Aug 05, 2015
Beatport Stops Payment To Labels While SFX Scrambles To Go Private

UPDATE: Symphonic Distribution has reported that Beatport will send outstanding Q2 payments to labels next week. Beatport and SFX Chairman & CEO Robert Sillerman have both made statements which can be seen below:

It was confirmed today that Beatport’s label supplier payments, which have been delayed temporarily via a hold at SFX Entertainment, will be processed next week.

We deeply regret any hardships this delay has placed on members of the creative community – especially independent labels and artists, who are the lifeblood of electronic music culture and who have been long standing partners and suppliers to Beatport since 2004. We are truly sorry this has happened, and that we allowed payment distribution to get caught up in unrelated matters.

While the majority of payments were delayed, some payments were made before the hold went into effect, and those included payments to major labels and some labels participating in the new Beatport streaming service. This was not preferential treatment in any way, but we understand how the optics may illustrate just the opposite.

Beatport is nothing without creative partners. We remain indelibly committed to serving the electronic music community and providing tools and resources for DJs, producers, and labels around the world to reach their fans and develop their careers. Anything that gets in the way of that mission must be dealt with swiftly so we can all get back to focusing on our core goals. To that end we appreciate the assistance of AFEM during the process this week and we look forward to continuing the growth of Beatport in support of the electronic music community.

I [Sillerman] regret that unrelated elements made Beatport delay some payments for the first and only time in its more than 10 year history. The way we handled this was inexcusable and should never have happened. The thousands of creators who have made Beatport what it is today deserved better, and I am deeply embarrassed, both personally and professionally, by what has happened.

Record labels expecting sales revenue from Beatport will have to wait until its parent company, SFX, lifts the freeze on their funds, which are currently “trapped” in their “go-private” deal.

Beatport sent out a letter to labels Aug. 4 which states that the 10-plus-year dance music marketplace will not be paying record labels outstanding earnings from the second quarter until SFX chairman and CEO Robert Sillerman’s $774 million buyup of the company’s outstanding shares is completed. Copies of the letter have since been shared by artists and labels:

Since inception over 10 years ago Beatport has paid almost $200,000,000 to its label partners. Beatport’s parent company, SFX, is currently involved in a ‘going private’ process that has trapped certain earned label payments. This process will be coming to an end in the next few weeks, at which time all payments will be able to be made. Beatport prides itself on being the broadest and original friend of the makers of electronic music and will clear this one time obstacle very shortly.

In the meantime, feel free to contact your label manager with any questions. Thank you for your patience and continued support.

– The Beatport Team

As the letter states, they expect the “go-private” deal to wrap shortly, as Sillerman has but a matter of weeks to complete the process. At that point, all outstanding, “one time obstacle” label debts will be paid in full.

This news comes at a poor time for Beatport, whose recent partnership with Spotify and heated competition with Apple Music and iTunes on the respective streaming and purchase fronts offer no room for lapses in confidence from artists, labels, or otherwise.

The announcement came just days after a judge ruled to move forward with the $100 million lawsuit originated in 2014 by multiple former SFX partners who claim they were pushed out of the company after supplying key strategic advice. The hearing is set for Oct. 6, during which the plaintiffs will seek $100 million in damages. SFX pulled in $354 million in revenue in 2014.

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