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Guvera continues PR offensive, CEO moves to reassure shareholders

By | Published on Wednesday 6 July 2016


Guvera’s PR offensive continues, and for its latest YouTube videos the company has found members of staff better able to explain what the company actually offers. Though it’s an update to shareholders from CEO Darren Herft that proves most interesting.

As previously reported, as parts of the company were placed into administration, after Guvera was blocked from raising new investment by IPO, the streaming firm attempted to counteract negative reporting in the press with a series of videos from execs.

In his video, founder Claes Loberg said: “We’re a model that actually allows advertisers to exist in a world where people just click past everything, and we’re a model trying to monetise the 95% of people in the world that get free content … I mean, we do stream music, sure. But just the way that Ikea sells hotdogs. They’re not a hotdog company, and we’re not just a streaming company”.

Chairman Phil Quartararo added in a second video: “Music fans are fans. They’re not consumers only. They’re fans. Which means they’re fanatics. They’re fanatical. They’re driven by passion. We’re not selling widgets. We’re not selling diapers. We’re not on a shelf somewhere at Wal-mart. We are selling something that people care about”.

With very little clarified in those two videos, Guvera then rolled out Product Director Robb Snell and Head Of Brand Partnerships Richard Unwin, both of whom seem to have a clearer idea of what they’re doing.

“Guvera’s a brand-funded music entertainment platform”, says Snell succinctly. “Guvera has two key stakeholders, those being the listeners and the brands. Unlike most platforms that have just listeners as the key stakeholder, Guvera is designed to have brands integrated seamlessly into the platform”.

“[Brands] need to re-engage with their audience on a daily basis”, he continues. “The problem is, over the last couple of years brands have ventured into the app space, and they’ve created their own apps, or they’ve always created their own websites. It’s just that those apps and those websites don’t typically stick with the audience, and they don’t drive regular traffic. So they need to be on a platform that does drive daily engagement with the audience, and Guvera does that”.

Concluding his video, Unwin adds: “To me, what Guvera actually allows you to do, and allows a brand to do, is wrap their whole message around something cool that everyone loves, which is music”.

So that was pretty simple, and no one felt the need to start banging on about hotdogs.

All of this, of course, is aimed at promoting confidence in Guvera among investors as accountants at Deloitte assess the future of the business and prepare for tomorrow’s creditors’ meeting for the two subsidiaries in administration.

CEO Herft also recorded a video update, seen by CMU, which was somewhat longer than the others, and which was not made public but instead sent specifically to shareholders to assure them that everything was fine and the future of the company is bright. It also serves as a gauge of how many times one man can say thank you to his shareholders in a the space of 20 minutes. The answer is ten, if you’re interested.

In the video, he again asserts that Guvera has a more sustainable business model than other streaming services, because it has an additional revenue stream from brands who wish to piggy back on its platform. This revenue is separate from the standard advertising income that all free streaming platforms generate, he says, and which is used to pay rightsholders.

“The latter component … is where we pay fees to the music labels, and there from the music labels to the music artists”, he says. “That has been questioned in other music streaming services as to their ability to build sustainable long term revenue, due to the high costs of being involved in the music industry. From an early day, Guvera saw this as a strategic advantage to be able to provide music the way that people want access to music, but to do so in a way through brands that allows Guvera to have a more sustainable financial business model for the future by being able to split our revenues between the brand channel component strategy reporting aspect, and the more traditional digital advertising aspect”.

And that may well be true, but those other streaming services aren’t the ones who’ve currently got the administrators in. In terms of the company’s current finances, he said that dramatic restructuring in the last two weeks had brought the company’s monthly overheads down from more than AUS$5 million to AUS$1.5 million, with the aim of making future cuts in the near future.

“It has meant we’ve had to cut back on certain markets and territories”, he says. “Which means we’ll be refining our strategy [regarding] the execution and deployment of the Guvera music platform into certain key territories, with a particular focus on emerging markets, in the next six months”.

In addition to home country Australia, key focuses for the company now are Indonesia, India, UAE, The Philippines and Vietnam, while services in Singapore, India, the USA, Mexico, Russia and other countries will seemingly be cut back. Guvera, of course, does not operate in the UK, thanks to a failed attempt to launch via the acquisition of Blinkbox Music.

Herft also stressed that Guvera’s parent company, Guvera Ltd, has not been placed in administration. This is important to shareholders, because that is the company in which they actually hold shares. The companies in administration are the company through which the streaming service operates in Australia, Guvera Australia, and the company through which staff are employed, Guv Services.

Herft does not address claims that Guvera Australia is the company that actually holds licences with record labels and publishers, for that market at least. Although he did note that payments of wages for staff are currently up to date. “We think it’s very important that people who have worked for our company are rewarded and respected for what they’ve done”, he says. “And both from a payments perspective and from an entitlements perspective, that is an area that we take very seriously, and we are from our perspective as a board ensuring that our team are looked after”.

On the subject of paying people, he adds: “The board of Guvera Ltd has undertaken to endeavour to share with the administrators the amount of capital that the company can contribute to look after creditors. It is our intention to look after our creditors as best we can, but we will need to work with our advisors Deloitte, that are now managing the administration, to determine the exact path forward in that area”.

Referencing the creditors the company’s IPO prospectus said would be paid back had it floated, he notes that “the parent company, Guvera Ltd, is not exposed directly to these creditors”.

He also says that the company is due a research and development grant of around AUS$6 million, which the company expects to receive “in late August or early September”. “These funds, together with funds that are coming through from our existing shareholders, will ensure that the Guvera short to medium term requirements can be met from a financial perspective”, he says.

“Our main strategic objective is to ensure that Guvera provides the best platform in the world for brands”, he concludes. “The focus of the company going forward will essentially focus on key emerging markets, as we spoke about earlier. This includes Indonesia, India, the UAE, markets that are growing very quickly for Guvera right now. We see these as key marketplaces, marketplaces that we’d like to dominate with our unique, better and different business model, a complete focus on working with brands in those regions, and giving consumers access to music through those brands, on the Guvera platform”.

So that’s all very positive and upbeat about the future, though the real indication of the company’s health will possibly come at tomorrow’s creditors’ meeting, where the company’s new plans are expected to be fully outlined.

As previously reported, administrator Neil Cussen of Deloitte Australia told the Sydney Morning Herald last week: “Over the course of the next week we will be working with management to see if we can get a proposal that we can talk to the creditor group about in relation to a deed of company arrangement. I don’t have any direct concerns today, but we have been spending [our time] in the subsidiary companies [so] we haven’t had time to turn our thoughts to Guvera Limited at this stage”.