Exclusive: Guvera Raises $20M For Stealthy Brand-Supported Music And Video Service

Australia-based Guvera is slowly making its way onto the radar of digital music and technology blogs, and something tells me we’ll hear a lot more about this private, registration-only music site over the next few of months.

I heard the name being dropped a couple of times in 2009, but every time I visited the website I couldn’t get past the registration stage and thus quickly forgot about it afterwards.  

Its screaming manifesto also threw me off: declaring in large, shiny capital letters that it is going to save the music and content industry by solving all the problems in the advertising industry is quite a lofty goal, especially without anything to show for it yet.

Late last year, things started moving for Guvera, with the company announcing that it had signed licensing deals with Universal Music Group, the Independent Online Distribution Alliance (IODA), EMI and other labels, with additional reports talking about millions of dollars being invested in the startup. So I set up a chat with Guvera CEO Claes Loberg, who quickly acknowledged that they secured about $10 million dollars in financing in 2009 . . .  and that they’re about to collect $20 million more (all from AMMA Private Investment, an Australian consortium of private angel investors).

This is what Guvera does, in a nutshell: it gives advertisers a way to set up custom branded entertainment and promotion channels where consumers can come to enjoy content for free (music now, soon movies and TV shows), without any kind of restriction.  Current clients include companies like McDonalds, Johnson & Johnson, and Harley Davidson.  The content gets selected by the brands (or the agencies representing them) based on “personality”; there’s an assessment tool companies can use to determine which artists or specific songs fit their brands and target audiences best.

Clients gain access to a dashboard that allows them to set up channels, and run campaigns based on demographics, location, and more. Advertisers set a fee they are willing to pay per person per download or stream on their Guvera channels above a set minimum (e.g. $3 for every male between 25 and 35 years old and living in New York City).  The revenue generated from the advertisers is shared between Guvera and the music rights owners. The trick, Loberg says, is that the consumer is never supposed to get the feeling that advertising is being shoved down his or her throat in exchange for free content.

For now, content means music from partners only, but Guvera is talking to more labels (including Sony and Warner Music) and is also in advanced negotations with movie studios and television networks. Founded in 2008, the company has been gradually allowing a couple of thousand beta testers into the system every month, albeit at a very slow pace. The company expects to open up to more beta testers, including in the United States, before March this year. After that, it expects to attract and retain users virally, by getting big brands to lure customers to their proper Guvera channels and by offering a loyalty program that rewards heavy users.

Asked who are Guvera’s closest competitors, Loberg tells me that they’re shooting for the people who are now downloading content for free on networks like Bittorrent or Limewire, and those who are tired of having to watch promo videos or see annoying display ads in order to be able to enjoy music and other content free of charge.  Guvera is taking more of a feel-good engagement approach where brands house music and video on their channels and attract targeted consumers in that way.

In short: Guvera’s trying a different take on advertising-supported music and has attracted tens of millions in dollars in funding to prove it can turn its concept into a viable business.  The Web is littered with online music companies who have tried before and failed.  Can brands buy mindshare and consumer loyalty by giving away free music and video content?  

Guvera and its investors will soon find out.