July 25, 2013 (Los Angeles, CA) ─ Siemer & Associates LLC, a leading merchant bank serving the Digital Media, Software and Technology industries, has published its Summer 2013 Digital Music Industry Report providing an overview of trends taking place in the digital music segment of the music industry. S&A expects the utility of vertical integration to drive music M&A activity going forward. Investors will increasingly put money into rights holder verification services, which help publishers track their music usage so they can collect fees, as well as online advertising vehicles that allow increased monetization of digital music.
The pace of global music revenue declines has continued to slow, a trend that is expected to continue. Global digital revenue has grown at a 28% CAGR, with cloud music services being the fastest growing sub-vertical with 40% growth in 2012. Despite streaming music’s strong growth, margins are continuing to contract due to increased competition, a trend that should continue with Apple’s entry into the sector. The wealth of legal and affordable options for consumers has made a significant dent in music piracy, down 26% year-over-year.
The past year saw four major acquisitions in the cloud music services sector, all by very different acquirers, which shows the high interest in music services from what traditionally have been non-content companies. The leading cloud storage platform, Dropbox, bought audiogalaxy; a leading device manufacturer, Beats Electronics, bought MOG; a leading retail distribution company, TESCO, bought we7; and the leading mobile device manufacturer, Samsung, bought mspot. All these acquirers, presumably, are looking to leverage the consumer demand for music services to sell related products. We expect the number of acquisitions to accelerate in the coming years, both horizontally and vertically.
“The music industry is finally arriving at solutions for monetary losses suffered during the digital music revolution,” said David Siemer, Managing Director of Siemer & Associates. “M&A will feature heavily in the strategies of recording industry giants as they begin to pivot in 2013 and beyond.”
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About Siemer & Associates LLC
Siemer & Associates LLC is a global boutique merchant bank dedicated to offering candid insight and guidance to Digital Media, Software and Internet companies throughout their business life cycles. Comprised of industry veterans who have worked both inside and out of technology enterprises, S&A has successfully completed more than 50 transactions that aggregated over $3 billion in sell-side mandates and surpassed $1.5 billion in equity capital. Headquartered in Los Angeles with offices in Singapore and Hong Kong, S&A offers exceptional corporate capital raising, financial advisory services and M&A, specializing in complex cross-border transactions.
About Siemer Ventures
Siemer Ventures, an early stage technology investment fund, is committed to expanding the international technology ecosystem by investing in tech companies positioned for rapid growth that are run by remarkable entrepreneurs with deep domain expertise. These companies typically target large, fragmented and high-growth markets with unique and differentiated products and services. One of the most active investment funds in Southern California, Siemer Ventures has more than 60 current portfolio companies and makes an average of 25 new investments each year in Digital Media and SaaS startups.
About WaveMaker Labs
WaveMaker Labs is an incubator fund based in Singapore and sponsored by Siemer Ventures. WaveMaker Labs seeks to make 12-18 investments per year into the Singaporean tech ecosystem. With this, WaveMaker aims to catalyze the formation of value-creating technology businesses right at the heart of Southeast Asia’s 600 million consumers and the 2 billion more in nearby India and China.