The online retailer says it’s unable to make payments while its parent company, SFX, completes a ‘going private’ process.
Beatport has written to labels telling them it won’t be paying owed royalties for the past quarter until its parent, SFX Entertainment, completes its ‘going private’ process.
In a letter to music rights-holders sent last night by Beatport told labels that SFX’s ‘going private’ procedure had “trapped certain earned label payments”.
Beatport, which recently struck an exclusive content partnership with Spotify, believes the process will be “coming to an end in the next few weeks, at which time all payments will be able to be made”.
The big problem for the small labels we’ve spoken to is one of cash flow: this blocked payment covers three months of income, from April-June, and was due to be paid last Thursday (July 30).
With Beatport accounting for 90% of digital income for some dance labels, such a delay in a primary revenue source risks badly damaging their stability.
The email sent to music-right owners reads:
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.
Some label owners, such as Morgan Geist, published the email on Facebook. “Couldn’t seem to find the word ‘Sorry’ in this email,” he wrote. Beatport recently appointed a new CEO, Greg Consiglio, the former president and COO of SFX.