Equity deal with Universal Music Canada strengthens Iceberg marketing ability

Iceberg Media has signed an equity agreement with Universal Music Canada that will see the Toronto-based company more closely integrate its research and marketing activities with the music industry heavyweight. The deal is the second major coup this month for Iceberg. On Aug. 15, BCE Inc-owned Sympatico-Lycos launched a new online music service featuring four channels provided by Iceberg. In its agreement with Universal, the recording giant will take a minority equity stake in Iceberg worth about $1.5 million. In return, Iceberg receives the right to cross promote Universal’s artists. It will also have access to a new marketing fund which the company will only say is in the "generous" six figures. Iceberg, which programs original music for its own online stations and on a custom basis for third parties, will use the marketing fund to promote channels it builds for Universal. President and CEO Ted Boyd told CNM it will also be used for a number of as-yet-unannounced initiatives. Besides cash, however, Boyd says the deal cements a "deep and meaningful" relationship between the two entertainment partners. "It goes beyond playing the song. I think we’ll be more closely integrating our marketing stream than we have been. It’s certainly access to artists, access to new media initiatives that they’re going to undertake. It goes beyond simply being a cordial broadcaster who is playing Universal music," he says. "It will really be a partnership for research opportunities in the online space and a whole host of other opportunities that go beyond playing an artist’s track." The deal marks the first licensing deal Universal has struck with a Canadian company to license its music for online streaming here. It’s also the first investment by the music industry giant since making a commitment in January to support the Canadian new media industry. That support stems from a public benefits package tabled with the federal government as part of Vivendi’s takeover of Universal. The deal with Universal, and access to the marketing fund, will also improve Iceberg’s cash flow position at a time when other online music companies are struggling to pay the bills. Boyd says the company is keeping its burn rate to about $400,000 per month, low enough to stretch its cash reserves until at least October 2002. He also stressed that the equity deal won’t interfere with Iceberg’s ability to partner with the other labels. "We certainly see this as the beginning of developing a series of relationships with all the other labels, and expect those discussions to conclude in due course," he explains. "It’s hard to say, ultimately, what shape each one will take, but, certainly this is a good starting point." He also notes that other online radio operators will likely be in discussion with Universal since they, too, will need a licence to broadcast that company’s artists. For the moment, the lack of a decision on Tariff 22 has created a grey area for copyright fees (CNM, April 20/00), but Iceberg has begun escrowing fees until the Copyright Board of Canada sets a tariff. In another deal announced earlier this month, Sympatico-Lycos licensed Iceberg’s four channels and re-packaged them under the Sympatico Radio brand for a new web site launched Aug. 15. Boyd says its dealings with the company will likely be expanded to include further customized portal building in the future. Tough financial times have cost Iceberg one property, its Preservatory.com initiative launched last December (CNM, Dec. 14/00). The site, which contained 150 hours of classic CBC programming, was dropped in May when Iceberg couldn’t find a way to generate revenue from it. In the second quarter of this year ending June 30, Iceberg reported a net loss for the first six months of the year of $2.44 million, for a net loss per share of $0.11. Revenue was reported at $225,000 for the first six months.

Equity deal with Universal Music Canada strengthens Iceberg marketing ability

News | 08/23/2001 4:00 am EDT

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