US music-streaming firm Cür Media has been granted more time to make its first licensing payments to labels and publishers, after missing its first deadline on 31 January.
The company recently launched its Cür Music service in beta in the US, and had agreed to make $8m of upfront payments to some rightsholders for the rights to make their catalogues available to stream.
“Pursuant to certain of the Content Agreements, the Company was required to make initial payments of content fees to the applicable Content Providers, in the aggregate amount of $8.0 million, on January 31, 2016,” explained a financial filing by Cür Media. “The Company was not able to make these initial payments when due.”
For now, the labels and publishers are not pulling the plug on Cür Music. According to the company, its deals include “cure periods” of 10-30 days after which, if it has not made a required payment, its licensing partners can terminate the agreements.
“To date, the Company has not received any written notices of default. In addition, each of the applicable Content Providers has orally agreed to provide the Company with additional time to make the required initial payments,” explained Cür Media. “The extensions range from 90 to 120 days.”
That sets the new deadlines for Cür Media to make its upfront payments as between 30 April and 30 May, by our reckoning.
However, there was a more pressing deadline from one of those licensing partners. In a separate filing, Cür Media said that Sony Music had amended its agreement with the company.
“Pursuant to the Amendment, the first payment to SME is due on March 25, 2016. If content fees are not paid by the Company on a timely basis, SME may terminate the Sony Music Agreement,” explained Cür Media. At the time of writing, it is unclear whether that payment was made by 25 March.
Cür Music launched in beta in late January in the US as an app focusing on internet radio and playlists. It currently has two subscription tiers: $2.99 a month and $6.99 a month, with plans to launch a third $9.99-a-month fully on-demand tier later in the year.
The company has made no secret of the fact that it needs more cash. The company was profiled by the Wall Street Journal in early March, which paraphrased its CEO Tom Brophy as saying it “still needs to raise more money to launch the service”.
Brophy also said that Cür Media had granted a 5% stake in the company to the three major labels as part of its licensing agreements, as well as agreeing to the $8m in advances.
The piece claimed that one label executive had said “his company had agreed to license its music to Cür primarily because it didn’t want to turn down the advance money”.
Cür Media’s last financial results revealed that the company recorded a net loss of $5.6m in the first nine months of 2015, having spent $5.5m on research and development and $1.4m on general and administrative expenses in that period.
In February, Cür Media postponed its plans to list on the Nasdaq stock exchange, telling investors that it was “actively seeking sources of equity or debt financing, which may include a bridge financing and/or a public offering, in order to support its operations, as it currently does not have sufficient cash to meet its operating needs”.
The question now is whether potential investors will be wary of pumping funds in that will immediately be distributed out as advances – something that VC firms have often complained about as a problem in the digital music ecosystem, given the need for startups to also invest in product development and marketing.