Wall Street letdown for EDM giant as UK market strengthens

The American EDM firm, SFX Entertainment, whose recent acquisitions have included Beatport and the US division of the world’s largest dance event promoter, has had a disappointing start on the stock exchange, while figures show that the UK dance market is on the rise.

Shares in the company, which is yet to make a profit, opened at $13 but stooped to $10.64, falling 18 per cent in early trading this week, giving it a price tag of $857m. SFX initially made $260 million from its offering of 20 million shares priced at $13, however, soon after its Wall Street debut, investors displayed much more interest in cloud computing companies than the US music industry’s fastest-growing genre.

Meanwhile, in the UK, post-festival season figures analysed by research groups has confirmed a continuing trend in the rise of commercially successful dance music events on the British Isles. The value of the UK’s live music industry in general has remained steady for the past few years, despite the recession, but the dance music sector is beginning to take the lion’s share, with cross genre festivals giving more provision for electronic acts, while the number of dedicated dance festivals grows year-on-year. It’s expected that this will account for much of the industry’s anticipated growth as the economy stabilises.

The disparity between the markets in the US and UK might draw comparisons between America’s emergent EDM scene and the rise of dance music in Britain from the late 80s to the early 90s, when raves around the M25 attracted many thousands of revellers, and albums such as The KLF’s The White Room sold more than a million copies, yet dance music was ignored by most major investors until the turn of the new millennium. It was widely considered commercially unviable, largely due to the The Public Order act which outlawed raves and the media’s demonisation of house music following early drug-related deaths associated with the scene.

The industry in the US could be facing similar teething problems after a spate of deaths attributed to drugs sold at dance events, which have sparked a public backlash against EDM, with some extremists campaigning for all electronic music to be banned. The crucial difference though is that SFX boss, New York media mogul Robert F.X. Sillerman, has been a one-man investment powerhouse behind the US scene, freely accepting multimillion dollar losses through acquisitions, having pledged to spend $1bn on EDM.

The UK dance music scene had no such backing two decades ago and, it seems, despite the slow start on Wall Street, the US market is set to mature within a much shorter space of time.