Editor’s Note: The following piece was written by John Cameron, and was originally posted on We Got This Covered. We believe it offers an unprecedented insight into the decline of SFX and what the future might hold for both SFX and Beatport. Read the first page below and it in its entirety here.
Entertainment conglomerate SFX Entertainment filed for Chapter 11 bankruptcy on Monday – and while anyone with a finger on the palpitating pulse of electronic music knew it was coming, the announcement made for as resonant a sound of the EDM bubble bursting as any.
Electronic music exploded into a full-fledged cultural phenomenon over the past several years, and it took no time for entertainment moguls to notice. Of all of them, though, none moved to capitalize on the rapidly growing industry more quickly than Robert F.X. Sillerman. The entertainment entrepreneur founded SFX Entertainment in June of 2012 and pledged to invest $1 billion in EDM before buying up companies like Disco Donnie Presents, ID&T and Beatport over the course of what Billboard dubbed “The EDM Arms Race.”
Despite his enthusiasm, it wasn’t long before Sillerman’s so-called empire began to deteriorate. SFX’s stock steadily declined in value over the years following the corporation’s 2013 IPO, and took its sharpest dive last year. Due to numerous lawsuits, the cancellation of one festival, and breakdowns which would endanger the attendees of another, in 2015 the value of SFX’s stock dove from a little over $4 per share (roughly a third of its IPO value) down to 11 cents per share, effectively driving the multinational corporation to bankruptcy.
At this stage in the SFX saga, there can’t be an insider alive who disputes the blinding incompetence of Robert F.X. Sillerman.
If that sounds like an exaggeration, remember that the man in question is 67 years old, made his big introduction to dance music by declaring that he cared to know nothing about it – and then played dress up to look like a Bond villain in his Billboard shoot.
Eccentricities like these only account for a short snippet of his illustrious highlight reel of patently poor judgements. Unfortunately, where at first they took the form of laughable faux pas, they would magnify in scope until you could argue that – considering the impact on investor confidence that his running SFX into the ground surely had – if the EDM bubble does finally burst, Sillerman would be more at fault than any single other individual.
The incompetence at SFX’s highest tier of leadership is the very reason the company conducts business with such secrecy. Once you peel back the layers of bureaucracy far enough to observe Sillerman and his constituency closely, though, the unapologetic ignorance with which day-to-day decisions are made gives you a good idea of how a $9 billion company managed to fall $300 million in debt in less than four years.
As innumerable controversies continue to tarnish the company’s already soiled reputation on near daily basis, its emphasis on confidentiality has become even more rigid. Especially in light of SFX’s bankruptcy filing, those employed by its numerous companies are required to keep especially tight lipped.
However, a handful of sources familiar with SFX’s dealings approached We Got This Covered to discuss the corporation – specifically, the details of its egregious mismanagement of online music marketplace Beatport. Among other things, their testimonies provide a rare window through which the unsavory business ethics of Sillerman and his contemporaries can be broken down, and the behavior patterns evident in the company’s misdeeds paint a startling picture….