Singapore-based BandLab Technologies – owned by Meng Ru Kuok, the son of palm-oil billionaire Kuok Khoon Hong – is an odd mix of contemporary and seemingly old school businesses.
On the one hand, there is the BandLab app that allows musicians to collaborate and share their creations, unrestrained by geography. On the other, there are its recent acquisitions – music publications Uncut and NME (New Musical Express), which started all the way back in 1952. They were purchased for a reported £8.5 million (approximately $11.2 million) in May 2019, at a 9x EBITDA from TI Media, according to media industry-focused site Flashes & Flames. BandLab Technologies declined to confirm these figures when asked by DealStreetAsia.
BandLab Technologies turned its attention to NME shortly after giving up on its ambitions of owning Rolling Stone. Meng Ru Kuok first acquired a 49 per cent stake in 2016 for a reported $40 million. Bandlab Technologies was eager to acquire a controlling stake, but it was sold by Rolling Stone owner Wenner Media to US-based conglomerate Penske Media Corporation (PMC) for upwards of $100 million in late 2017. After briefly considering launching a Rolling Stone International product, Bandlab Technologies relinquished its 49 per cent stake in that publication to PMC in January last year.
Many parts of the playbook that Meng Ru Kuok had outlined for Rolling Stone International – including an Asia-specific focus and editorial – are now part of the launch plan for NME in the region.
The company, at present, does not charge for its online media content or for the use of the BandLab app. It won’t be touching the money earned by artists on its recently launched BandLab albums, platform either. Instead, the business model at Bandlab Technologies is at present heavily weighted towards its retail business. The music chain Swee Lee was Meng Ru Kuok’s first acquisition in 2012. Another source of revenue is advertising on its media properties.
But Bandlab Technologies claims to be working to a larger vision – one where its disparate music-linked brands and services will power a unified ecosystem.
DealStreetAsia caught up with Meng Ru Kuok to find the connections that drive the diverse hardware, software and media interests of BandLab Technologies.
Excerpts from the interview:
BandLab Technologies has acquired music mastheads like NME and Uncut, besides owning other music publications like Guitar and Music Tech. What has been the strategy driving these acquisitions?
Our responsibility to our brands is to make them the very best that they can be, within their sector. But with regards to future plans, it’s about them being extendable and able to stand the test of time. And so, they have to be complementary rather than competitive, and really work for the ecosystem within BandLab Technologies.
What sort of a business model will keep these titles going?
A lot of people speak about moving from an ad-supported to a fan-supported model. While that’s a new business model for media, it’s something we are very used to in our other businesses. In Swee Lee, for instance, if you want a guitar, you have to buy it: there are no advertisers sponsoring them or giving them away free of charge.
However, we still believe in the ability for premium brands to tell stories. And for advertisers and key partners to see that voice as a powerful medium. We fully intend the site to remain free, but due to the attachment formed by the audience, we can approach advertisers who are looking for special partnerships. And bring our content to engage their brands and consumers in a different way.
For example, for The Guitar Magazine, we will be running Guitar.com Live in October; a virtual trade show for consumers. Think of it as CES for the guitar industry. This is very much an advertiser supported event, but part of the new mediums that our brands will have to participate in to create new opportunities in 2020.
What’s your largest source of revenue?
We see ourselves as a music company. Our largest source of revenue today, without question, is still physical commerce. Products that we sell, manufacture, develop and distribute – retail, followed by advertising which is a close second.
What are some of your goals with the launch of NME Asia?
Our responsibility when it comes to a great title like NME is to take its journalism, credibility, story and authority and expand it overseas.
There is an incredible music scene in Asia – 60 per cent of the world’s youth live here. There are great startups and companies coming out of Asia, looking to tell the stories of its pop culture and content. But on the other side, it is also very important for incumbents in the space – established brands like NME – to give it attention. They have a responsibility to cover it and not just be here via traditional media licensing.
You launched the print edition of NME in Australia through what has been the worst year for print in that country, with a number of titles shutting down. How has that worked out for BandLab Technologies?
We obviously considered whether it was something we wanted to do. But we went ahead because we felt it was right. Especially in terms of our model. Our magazine in Australia is very much fan supported. We were not dependent on newsstands but sell a limited short-run on a monthly basis direct to consumer, from the website.
We invested a lot on the cover, the paper stock, changed the format of the magazine to make it something that really encapsulated the best stories that we had from the month prior. Rather than being something to just flip through, you have to sit down and commit time to read it. We are really happy with how it performed and the feedback has been terrific.
What happened with Rolling Stone and is there anything from that experience that you’d like to share?
I am afraid I’m unable to comment on that. It is a terrific brand. There are wonderful people who work for that brand and wonderful new owners. We were fortunate to work with PMC for a couple of months before they took the whole stake at the start of 2019.
What sort of role do you see yourself playing at BandLab Technologies? Are you, for instance, actively involved with editorial?
A lot of my time is spent across the media businesses but also specifically on one of the fastest-growing parts of our portfolio which is BandLab. My key responsibilities are to ensure that everyone understands the ultimate vision that we’re driving towards. And to have the facilities and resources that they need, but also to ensure that we are integrating and benefiting from working in the ecosystem within BandLab Technologies. With regard to the quality of the editorial, my writing will never be good enough. Let the experts do their job.
A lot of your purchases – Uncut and guitar brands Heritage and Harmony – are closely associated with rock music, which according to a number of musicians, industry observers and Nielsen SoundScan is on the decline. Are you over-invested in a genre that is not firing on all cylinders?
There is no question that firstly more music is being consumed around the world than ever before and that hip hop and rap are the dominant genres.
However, when it comes to rap, beat making and hip-hop, that is where the BandLab app comes in. We invest in it far more than we do on the traditional side. We are driving a team of 40 developers here in Singapore, creating a product that is used all around the world. The US is our primary market. There are over 8 million songs being made a month, mostly hip-hop.
The big difference is that the primary instrument with which one makes that music is the mobile phone or laptop. The key product, in a way, is the software itself. And so, we are very focused on that side, in the same way that we also focus on monetisation of musical instruments – a $25-billion and growing industry. One that is still skewed towards traditional instruments like guitars. All is not lost for guitars: we believe it is still a key instrument and the number of guitars sold globally is proving that.
How did you conceive of BandLab?
The easiest way to understand BandLab for someone who is uninitiated is a Facebook for music with GarageBand and SoundCloud built-in. We’re entering the age of mass music creation which is extremely exciting. But music creation is inherently complicated.
The inspiration was something that I developed with my co-founder (Steve Skillings) who I met when I was running Swee Lee. The idea was the creation in the cloud, with next-generation solutions, marrying in the fact that today, music needs to be a social and community experience. Before BandLab there wasn’t really a product that brought everything together – both tools and community. We are very lucky to be able to set up in Singapore. Today, we have close to 22 million registered users and are on track to hit 50 million in 2022, assuming steady growth, without anything going viral.
Do you charge the people who use the platform?
At this point, it is entirely free. We want to make sure the product is right. A huge part of BandLab’s vision is breaking down barriers for creativity in making music, and we’re seeing massive uptake. Not just in the US, but all around the world – the Philippines, India and South America are doing extremely well.
You recently launched BandLab Albums – a store format for people to purchase music from artists on the platform. Do you see it developing into a rival for Bandcamp which as of now attracts a lot of independent music?
As the world moves from analogue to digital, distribution is not really the issue anymore. It’s more about differentiation. That is why the community and social features are so important at BandLab. Our first phase was to help people make music and the next one will be supporting our users as the platform matures and the audience grows. We have a tip jar feature where users can get money from their fans for making music. We let them keep 100 per cent of revenue versus other platforms that take quite a significant cut.
Are your future investments also going to be purely in the music space?
Focus is very important – it was one of the most important lessons that I was given. We see music as a sector with tremendous opportunities. You can never finish finding them and working on them in a sustainable manner.
We have some diversification because of similar interests. Gaming, film and TV are not necessarily within the music space but they are very much aligned with NME consumer. At Swee Lee, we sell instruments and vinyl records in our stores. But we also sell clothing and lifestyle products and have a cafe which appeals to people who are not just there for the music. It is all about a consumer with an interest or people who see themselves as adjacent to that interest.