Music database developer Jaxsta (ASX: JXT) has unveiled a potentially lucrative five-year commercial agreement with B2B music licencing marketplace Songtradr, which has also agreed to invest A$1.42 million.
For Songtradr, the deal serves as a means of obtaining exposure to an effective tool that is growing in popularity within the global neighbouring rights market, which is estimated to be worth US$2.6 billion per year.
The exclusive deal with an option for a further five years, is set to provide a bespoke tech-enabled revenue identification and collection service for Jaxsta Pro users – customers that use the service to identify missing performer income from audio transmissions and sound recordings.
Jaxsta stated that the partnership will provide a new revenue stream that would boost cash reserves and expedite its product roadmap and wider cross-selling opportunities including a planned transition to paid Jaxsta Pro subscription and the launch of its Marketing Solutions service.
In a statement to the market, Jaxsta said the deal incorporated a $500,000 upfront licence fee, with the overarching deal leaving the company with a 20% share of total revenues received by Songtradr from Jaxsta users adopting the service.
Meanwhile, the $1.42 million cash injection, in the form of a convertible note, was described as a source of “additional working capital” to support commercialisation of Jaxsta’s platform and wider product suite.
For Songtradr, the rationale behind the deal was to obtain exposure to a strongly performing company, at an opportune time in the music industry.
Songtradr admitted the company was motivated by Jaxsta reaching its 60,000-user milestone earlier this year – a 146% average month-on-month growth in users since April.
In total, the partnership represents an initial upfront value of $1.92 million, according to Jaxsta.
Songtradr founder and chief executive officer Paul Wiltshire spoke highly of Jaxsta’s offering: “Jaxsta has solved a significant piece of the music industry data dilemma and has built a scalable technology solution that integrates neatly into our music rights ecosystem and licensing marketplace”.
Unlocking further potential
The deal is expected to not only unlock further revenue-generative opportunities, but also provides a humanitarian element aimed at assisting those disadvantaged by pandemic restrictions and the grassroots music industry.
“Many artists and musicians around the world have been impacted by [the] loss of earnings from live performance and this partnership allows us to significantly increase our capacity to collect unidentified and unclaimed revenue during these unprecedented times,” Mr Wiltshire said.
In fact, one of the key reasons for the timing of the agreement was the onset of COVID-19. Many musicians have been left unable to earn live performance income, thereby leading to problematic consequences affecting financial security and standard of living.
It is hoped the partnership will provide musicians with the ability to claim previously unidentified and/or unclaimed neighbouring rights revenue.
“This partnership with Songtradr highlights the significant opportunities that exist in solving the data-centric challenges faced by the music industry. The partnership allows Songtradr to provide an enhanced global product leveraging the use of official metadata only available through Jaxsta. This service provides an additional benefit that Jaxsta Pro members will be able to access as we continue to grow the capabilities of the platform,” said Jacqui Louez Schoorl, chief executive officer and co-founder of Jaxsta.
“It’s been an ambition of mine to work with Paul and his team at Songtradr since we first met at SxSW in Austin Texas in 2017. As fellow Australians, and founders of music tech companies, we share a global vision for a more connected and data enriched music industry,” said Ms Schoorl.