Delivery Agent Signs First Record Industry Deal. Expects $50M+ Year

June 25, 2007

San Francisco-based Delivery Agent recently closed an $18.5M Series C round. They also signed an exclusive deal with Interscope Geffen for the exclusive rights to run the online sales for the Pussycat Dolls. This is Delivery Agent’s first music deal. Its prior deals were to run e-Commerce for TV properties like Desperate House Wives.

• A PriceWatershouseCoopers report predicts a -0.4% compounded annual growth rate
through the next five years. The report refers to the “typical” music business of recorded
music, not the music publishing or other segments that are part of the entire picture. With
music groups getting involved in other revenue streams, those figures will need to be adjusted
in the coming years. (Billboard.biz)

• Rolling Stone continues its series on the new music industry, this time laying out five
possible outcomes in the future of the business: ad-supported music, legal P2P, endless access
points (only generalities were given), different revenue streams and consumers as retailers.
Yeah, I know, I’ve heard it all before, too., but in the era of the 200-word article this is about
as “think piece” as Rolling Stone gets. (Rolling Stone)

• Sonos digital home music systems are now available in more than 440 Best Buy stores. The
national chain will offer in-store, interactive Sonos displays in all stores offering Sonos
products. (The Independent)

• Universal Music Group has joined up with Delivery Agent Inc. to launch a custom online shop
for Interscope recording artist Pussycat Dolls. Consumers will be find and purchase clothing
products seen on the Pussycat Dolls. The stores will also sell exclusive, branded merch. Check
out the “shopisodes,” a cross between VH1’s “Pop Up Video” and the Home Shopping Network.
(Press release)

• Jupiter analyst David Card on Paul McCartney in an iPod commercial: “Boomers need to be
more comfortable buying digital music, too, you know…almost 60% of paying downloaders in
our survey base were under 35.” (David Card’s Jupiter Blog)

• Representative Henry Waxman has reportedly grown concerned over the possibility of
sensitive personal and government information being inadvertently shared on P2P networks
and has sent letters to Limewire and StreamCast Networks executives to inquire what steps
they have taken to prevent such sharing. (Hollywood Reporter)

The Pussycat Dolls may not wear much, but the scanty clothes they do don are now available to fans.

Through their record label, Interscope Geffen A&M Records, the pop starlets have signed an exclusive deal allowing San Francisco’s Delivery Agent to build the band a branded online store. The deal is Delivery Agent’s first foray into music, and dozens of bands from several different labels could have their own online stores managed by Delivery Agent by summer’s end.

The new partnership comes a month after Delivery Agent closed on an $18.5 million series C funding round. The three participants, Bessemer Venture Partners, Cardinal Ventures and Worldview Technology Partners, all funded Delivery Agent’s two previous rounds, which raised $16.5 million.

Music’s not such a stretch for Delivery Agent, which operates branded web sites for all the major networks and many studios, as well as its own web site, SeenOn.com, where people can buy clothing and other items they see on TV shows.

“Think about the landscape, the way they’ve been generating revenue to date: album sales, ticket sales, some ancillary merchandise,” said CEO Mike Fitzsimmons. “This is a way to monetize the assets they already have. … We’re opening a new form of revenue.”

Record labels need new ways to cash in on the artists they produce if they are to survive. Record sales declined 20 percent in the first quarter of this year, according to Nielsen SoundScan, and digital downloads like those on iTunes did not cover that shortfall.

Interscope Geffen A&M Records is not the only label to announce new business partnerships to cash in on its artists’ brands. Nor are the Pussycat Dolls the only ones to seek untraditional ways to monetize their appeal.

Last week, Chris Lighty, CEO of Violator Records and manager of rapper-brands like 50 Cent, formed Brand Asset Group, a New York consultancy that will help labels like Warner Music Group share revenue from musicians’ lucrative endorsements.

“Without the record companies’ initial investment, the awareness wouldn’t be there for an artist to have brand extensions,” Lighty said of why a band would include a record label. “The old model is outdated and broken.”

In this digital age, record companies recognize they are entertainment companies rather than record peddlers, said Mike Muse, CEO and co-founder of Muse Recordings, an independent label.

“Technology and advances in media allow consumers to want more; they want to engage with artists and be part of the brand and purchase items that artists are promoting. It’s becoming all-encompassing,” Muse said. “Labels are coming to terms with that and recognize it’s more than just the music. … Labels are making sure they don’t get cut out and don’t leave money on the table.”

Lighty’s new group helps labels do that; so does Delivery Agent.

Delivery Agent builds, hosts and manages e-commerce sites for entertainment and media properties. In television, that means providing a platform for a “Desperate Housewives” fan to buy the clothes worn by Teri Hatcher. For the Pussycat Dolls, the technology goes further. Fans who watch one of seven Pussycat Dolls videos on the band’s site or on SeenOn.com can move their cursor over a performer, click on her earrings and be immediately routed to a site to buy that exact item.

Fitzsimmons is unfazed by industry reports about slowing growth of online retailers. “We have a long way to go before this business falls prey to a 10 percent annual growth rate,” he said.

Delivery Agent has grown more than 100 percent in each of the past four years. It is profitable, and this year is expecting revenue above $50 million. It employs 85 and is still hiring.

Pussycat Dolls Links With Delivery Agent For E-Commerce

By Michael Paoletta, N.Y.

June 18, 2007

Delivery Agent has become the exclusive developer of custom e-commerce initiatives for A&M/IGA act Pussycat Dolls, effectively immediately. This deal has the potential to extend to other Interscope Geffen A&M artists like U2, Gwen Stefani and the Black Eyed Peas.  With the Pussycat Dolls, Delivery Agent will introduce and develop new areas for revenue growth, which will benefit all parties involved, from artists to labels to brands.

The partnership launches with the creation of a custom online shop for the Pussycat Dolls, which is accessible via their official Web site and Delivery Agent’s SeenON! branded site for the group. Visitors to the sites are able to purchase products featured in Pussycat Dolls’ videos.

A provider of shopping-enabled programming for TV shows, movies, sports and publishing, Delivery
Agent believes this new business venture will enable IGA to develop a more compelling Online
presence for fashion-conscious groups like the Pussycat Dolls.