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Fat Beats, Inc.

Discover the history and impact of Fat Beats, Inc., a retail basement store opened in 1994. Owned by Joseph Abajian, it has become a premier international independent distribution company specializing in vinyl. Find out how it has influenced the hip-hop industry and the challenges it faces in the age of digital capitalism.

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Fat Beats, Inc.

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  1. Fat Beats, Inc.

  2. What is it?

  3. History • Retail basement store open in 1994 • Owned by Joseph Abajian (DJ, B-Boy, and producer DJ Jab) • Fat Beats, Inc. • Headquarters in Brooklyn • “The Last Stop for Hip Hop” • Niche DJ market

  4. Vertical Integration • Production: Fat Beats Records • Distribution: Fat Beats Distribution • “premier international independent distribution company specializing in vinyl” • Retail: Fat Beats and Fatbeats.com • “destined to corner the market in on-line hip hop sales”

  5. So, Fat Beats Can??? • Produce content • Distribute its content to retailers • Sells its content at its retail locations • Promote its artists through in-store signings/performances • Creates…??? • Synergy!!! Of its commodities by selling albums, CDs, tee shirts, DVDs • Who does this sound like???

  6. Production • “much attention from major labels eyeing Fat Beats as an A&R source in hopes of landing the next big artist”

  7. Distro • Opened in 1996 • worldwide clientele for wholesale and mail-order selections of various independent releases • Clients= “crucial mom & pop retailer or dj store” • “Independent record stores are vital to keeping this music we all love alive”

  8. Distro Cont’d • “Decidedly not a one stop”…? • “distributing and marketing” artists • $4M in distro sales in 2003

  9. Labels Distributed

  10. Retail • Formerly • Amsterdam • Atlanta • NYC • Los Angeles • Web

  11. Competition • Production • Distribution • Retail • “destined to corner the market in on-line hip hop sales”

  12. The Alliance • Newly formed alliances with companies such as Loud, Tommy Boy, Interscope, Caroline, and Koch • October 30, 2007 KOCH Entertainment Dist. signed an exclusive physical and digital distribution deal

  13. KOCH Entertainment Dist. • Most $$$ “arm” • $175M in revenues (33%=digital sales) • 25,000 titles/280 labels • Ship, market, process music: • “gives us a higher degree of control” M.K. • May 2007, $6.5: • 2.7% market share • 3.3% • 2.6%

  14. Publicly Traded on London AIM market • 1.3M public shares, 67.31% of stock is private • March 2007, Marwyn LLP buys Ent. One for $160M • Through Marwyn’s capital, Ent. One made many international film/music distro purchases

  15. January 22, 2009 • E1 Music= • KOCH Records • E1 Entertainment= • KOCH Ent. Dist. • E1 Music Publishing= • KOCH Music Pub • E1 Entertainment U.S. • KOCH Vision • E1 Music Publishing= • KOCH Music Publishing • No mention of Ent. One

  16. London-based hedge fund • Specializes in…? • buyout • consolidation strategies • Incorporated in…? Cayman Islands • $2B in acquisitions in 3 years • 79% is privately held

  17. Diversification??? • hazardous waste plants • alcohol and drug abuse laboratories • global laboratories • online betting services • construction training • environmental safety consulting • snack foods industry

  18. Some Questions/Analysis… • 1) Since the majority of KOCH Records’s sales are hip-hop or rap music, what does this mean for companies like Fat Beats? • 2) What does KOCH Entertainment really mean by independent? • 3) What does “independent” really even mean anymore?

  19. Cont’d • 4) Is there truly any competition in the recording industry? Especially in terms of distribution? • 5) Can independent music/underground hip-hop and hedge funds coexist? • 6) What does this relationship w/ hedges and off-shore trading mean in terms of the artists’ messages? • 7) If “indies” supposedly subvert the dominant system (music and in general), are they, in fact, just reinforcing that system/status quo?

  20. If 80% of the music sold in America comes from the “Big Four” and 10% from the independents (ADA, RED, KOCH/E1) what “choices” do we have? • Does this really even matter in the age of digital capitalism/music???

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