SFX Buys Readability Developer Arc90, Fame House and Tunezy To Give Its Electronic Dance Music Business A Digital Content Spin

Electronic dance music is big business today, and SFX Entertainment, a producer of live events and other electronic dance music content, is making a big consolidation move to cement its position within it. It is buying three startupsArc90 (maker of the Readability app), marketing agency Fame House and music commerce platform Tunezy — to beef up its offerings online. The terms of the deal have not been disclosed; we’ll update if we can find out.

The string of deals will sit alongside the company’s acquisition of music-download site Beatport, bought in February this year. Other recent acquisitions have included Australia’s Totem OneLove Group, bought for $75 million earlier this month.

The three companies and their teams are joining SFX’s Platform business, with Arc90 founder Richard Ziade coming on as the company’s new chief product officer, he said in a blog post today.

“Arc90, Fame House and Tunezy are leaders in each of their fields and bring extraordinary talent to SFX,” said Robert F.X. Sillerman, Chairman and CEO of SFX Entertainment, in a statement. “These deals are consistent with our commitment to bring [electronic music culture] fans around the world more of what they love, 365-days-a-year, and to be world-class in all our areas of focus.”

Arc90’s possibly most visible product was Readability, which was an early project that also involved Marco Arment of Instapaper. Readability lets people bookmark and read later stories from around the web. The service at one point had some heat from Apple, and later Arc90 extended the functionality to include a Flipboard-like element called Top Reads. Another Arc90 product was Kindling, a collaboration tool for businesses.

Arc90 has also worked with a number of clients to develop web and mobile apps behind the scenes, and that is how it was first introduced to SFX.

With services like Instapaper and Flipboard taking off with consumers, smaller players may have been feeling competitive pressure when it comes to making revenue, let alone profit. You can see how consolidating with a larger publisher might make sense. But Ziade says that both Kindling and Readability will continue to live as separate products, with an update for Readability coming soon.

As for Tunezy, the Canada-based startup had raised an undisclosed round with Interntainment Media. But as with the reading apps, you have to wonder about profitability prospects. With platforms like Spotify and iTunes increasingly cornering the respective streaming and download markets, can smaller music players to get a look in? Tunezy was built as a route for independent musicians to connect and sell music “experiences” to fans, and it says it has some 10 million fans connected to artists that use its platform, but it’s not clear how many of them were actually using the Tunezy platform to buy experiences. In a game of scale even this may have presented too uphill a struggle.

This is where SFX may be able to come in handy. EDM (or EMC as SFX calls it) has largely bucked the trend in music today of diminishing returns on music sales. With a very heavy focus on paying for live events that revolve around star DJs, it’s become a huge money spinner — something that a recent article in the New Yorker pointed out is grossing even more than gambling at the casinos that have gone all-in on their EDM offerings.

All the same, SFX has not seen universal love from the public markets, even if the club kids like it. In its IPO debut earlier this month, the company debuted at $13 per share but then dipped as low as $10.64. Currently, it’s trading even lower, at $9.77 per share, with a market cap of $819 million.

In that context, these acquisitions could be a way of the company making sure — and demonstrating to investors — that it has a bigger plan in mind for how it will monetize beyond live entertainment. These three acquisitions point squarely at digital content, and a shift to getting users to paying for goods and engaging online as much as they pay to be involved in the live club events.

“The DNA of Arc90 is to challenge convention and innovate,” said Arc90 CEO Rich Ziade.”We’re incredibly excited to contribute to the direction and stewardship of the digital experiences that will color so much of electronic music culture in the future. With SFX, we found a shared commitment to innovation and experimentation.” The Fame House acquisition completes the picture with more comprehensive digital marketing behind it all.

The acquisitions are expected to close in November 2013.

Image: flickr