Music subscription service Slacker Radio once wanted to compete head to head with the likes of Spotify. On Friday, the company announced that it had been sold for $50 million to LiveXLive, a company specializing in music festival live streams. Financials published as part of that acquisition don’t paint a pretty picture — and show how hard it can be to succeed in a business increasingly dominated by big players with deep pockets.
Slacker generated a total of $36.7 million in revenue in 2016, according to a LiveXLive SEC filing. During the first six months of this year, Slacker’s revenue was just $13.4 million, down 36.4% from $21.1 million during the same time last year, due to Slacker losing two key distribution partners for its paid service.
The service currently has 1.5 million monthly active users and 400,000 subscribers to its paid and ad-supported tiers, according to the filing. The company accumulated a total deficit of close to $148 million by the end of 2016, and reported a net loss of $3.8 million for the first six months of this year.
Founded in 2003, Slacker changed its strategy multiple times over the years, bouncing back and forth between focus on free radio and a paid on-demand service. At one point, Slacker also aimed to enlist YouTubers and other online celebrities as curators.
But the real money-maker for Slacker had long been to strike deals with mobile phone operators to bundle Slacker, and deals with other companies to power their services. Slacker had been the backbone of Samsung’s Milk Music, which the consumer electronics giant closed in 2016. Without mentioning Samsung by name, Slacker’s financials show contractual payments totaling around $10 million in 2015 and 2016 — payments that “concluded in 2016,” as the filing states.
All of this goes to say that Slacker’s finances were looking pretty bad for 2017 and beyond, making it hard for the company to survive on its own.
LiveXLive now agreed to buy Slacker for $44 million in cash and $6 million in stock, but it’s worth noting that LiveXLive doesn’t actually have that much cash on hand. The company only reported $225,000 in revenue for its fiscal year ending March 31, and losses of $14.2 million. It is now looking to finance the Slacker acquisition through a public re-listing, which aims to raise as much as $100 million, and notes that the acquisition may not close if the listing doesn’t go as planned.
A LiveXLive spokesperson told Variety that the company didn’t have any immediate plans to change Slacker’s brand, or let go of any of its staff.
The company now wants to make Slacker key to its efforts to build an entertainment company with multiple revenue streams across music, video, and social. It’s a tall order — but then again, so is competing as a standalone entity against the giants of the music-streaming world.