Purple Flag: Music’s Failed Revolution premieres on Tuesday at 8.35pm on SBS with each episodes accessible to stream free on . The second and ultimate episode will air on Tuesday 22 October at 8.35pm on SBS.
It is 2008. Katy Perry has simply scored her first hit single with I Kissed a Lady, and a revolutionary new concept has entered the music business: hearken to music without spending a dime, legally.
Key phrase: legally. Websites comparable to Napster and LimeWire had popularised unlawful file-sharing amongst these not desirous to spend $30 on a CD.
Piracy was threatening to take down the world’s largest document labels.
Enter a plucky new startup: one which promised you could possibly hearken to your favorite artists without spending a dime, and that advertisers would foot the invoice.
An Australian tech startup on the Gold Coast was as soon as one in every of Spotify’s largest opponents. Supply: SBS / SBS Information Documentaries
No, this wasn’t the beginning of Spotify — however that of an Australian firm referred to as Guvera.
Nicknamed the “iTunes killer”, it beat Spotify to launch in Australia and the US, and was as soon as considered valued at a billion {dollars}.
So why have most of us by no means heard of Guvera?
The following Fb or Google?
From its humble beginnings in a Gold Coast workplace, Guvera’s aim was to vary the music business perpetually. It selected an opportune second.
The business’s huge wealth and debauchery, fuelled by document music gross sales within the 90s, was beginning to irritate the general public, Australian musician Ben Lee advised SBS Information Documentaries.
“It turns into a little bit of a ‘allow them to eat cake’ Mary Antoinette second the place … you need the aristocracy to topple,” he stated.
The startup’s identify was impressed by revolutionary Che Guevara, and its motto was “F*CK PIRATES”.
“Whenever you construct one thing like this, it is part of you … you dream, sleep, eat the whole lot that is right here,” co-founder Brad Christiansen stated.
Christiansen based Guvera alongside Claes Loberg: a visionary Swedish Australian with lengthy hair, cowboy boots and a rock star look.
Claes Loberg (recreation) got here up with the concept for Guvera in an airport whereas ready for his flight. Supply: SBS / SBS Information Documentaries
Their dream was to create a platform the place manufacturers would pay so that you can obtain all of the songs you needed, in change for having branding on the web site.
“The elevator pitch was: What when you because the pirate might get your music without spending a dime with out your artist struggling?” Guvera’s former chief expertise officer, Finbar O’Hanlon, defined.
The corporate signed licensing offers with the 4 largest document labels, in addition to model partnerships with Australian Open, Harley-Davidson and The Voice.
As Guvera’s first chief expertise officer, Finbar O’Hanlon’s job was to launch the startup’s tech platform. Supply: SBS
Guvera launched in 20 international locations and by 2015, it stated it was gaining over 100,000 new customers a day.
Poppy Reid, former editor-in-chief of youth media writer The Brag Media and a music journalist on the time, advised SBS Information Documentaries it was thrilling that an Australian firm appeared poised to turn into a dominant participant in music.
“Guvera positively appeared prefer it had potential as a result of it was launching in all of those worldwide markets,” she stated.
“It was seeming to be profitable the race in opposition to Spotify after which in opposition to Apple Music.”
Guvera was one in every of round 26 streaming companies working in Australia on the time, Poppy Reid advised SBS Information Documentaries presenter Marc Fennell. Supply: SBS
The weak mum and pop investor
However because the payments began piling up for the quickly increasing firm, Guvera turned to traders to lift funds.
Sugarcane farmer Keith Messer was sport. However when he advised his daughter, Tracey Messer, he’d invested half one million {dollars} in a music firm whose identify he couldn’t recall, she was alarmed.
On the time, Keith was in his late 70s. Tracey remembers pondering: ‘What the hell are you doing, dad?’
For Tracey Messer, alarm bells began ringing when her aged father stated he’d invested in an organization with a “humorous identify”. Supply: SBS
“At his age, why is he investing in one thing when he has all the time been conservative together with his funding? And this, to me, was excessive danger,” she stated.
Curious to search out out extra, Tracey attended a 2014 Guvera funding seminar together with her father in Queensland.
It was a lush affair, very similar to each occasion Guvera placed on.
The 2010 New York Metropolis pre-launch get together for Guvera’s music platform featured US rocker Alice Cooper and rapper Mos Def, a Cuban cigar-rolling desk and a 13-metre ice sculpture spelling out Revolution.
The extravagant pre-launch get together for Guvera, attended by A-listers within the music enterprise, featured an enormous ice sculpture. Supply: Getty / Donald Bowers
Tracey left the Queensland seminar feeling uncertain concerning the spokesperson’s claims that investing in Guvera would make everybody wealthy.
“They don’t seem to be something totally different to what’s already arrange. Spotify was already arrange — how was Guvera higher?” she stated. By then, Spotify had over 20 million customers worldwide.
The day after the seminar, Tracey met with representatives from the non-public fairness agency, AMMA, which was elevating cash from traders on behalf of Guvera.
“I stated to them, ‘Look, Dad and I mentioned it … he is not going to be investing any more cash,'” she stated.
Tracey thought that was the extent of her father’s involvement with Guvera — till she later walked into the native financial institution and made an opportunity discovery.
“One of many tellers stated: ‘Oh, aren’t I glad to see you?’ She felt like one thing actually incorrect was happening … and she or he could not do something about it,” Tracey recalled.
The financial institution teller later advised a courtroom she’d seen Keith Messer coming in on two events with a businessman, who the courtroom believed to be an AMMA salesman.
The teller testified that Keith was guided to interrupt time period deposits and switch massive sums to Guvera.
Keith Messer was recognized to locals of Hervey Bay, Queensland as The Watermelon Man. Supply: SBS
Over two years, Keith invested a complete of $8.5 million into Guvera. Courtroom paperwork confirmed that transactions had been made even after Tracey’s speak with AMMA, and the majority of them had been completed whereas Keith was affected by superior Alzheimer’s illness.
Tracey doubts her father even had the capability to make a financial institution transaction together with his Alzheimer’s.
“I imagine a 100 per cent that these folks have been totally conscious that my dad had no concept of what he was doing,” she stated.
Tracey sued AMMA and gained, with the Federal Courtroom branding the agency’s actions as “exploitative”, “manipulative” and “unconscionable”.
Tracey continues to be upset over how her aged and weak father was handled.
“There’s just one good factor out of Alzheimer’s with dad, and that he has no recollection of this,” she stated.
“This is able to’ve destroyed him.”
$180 million vanished into skinny air
Keith Messer wasn’t the one one to pour his financial savings into Guvera.
In 2016, the corporate revealed it had raised $180 million from 3,000 traders.
A lot of the fairness had been raised by AMMA, whose government chairman was Darren Herft — who additionally occurred to be chief government of Guvera on the time.
“The man who’s working the music enterprise can also be working fundraising,” investigative journalist Liam Walsh advised SBS Information Documentaries.
Such a apply is authorized, however Walsh describes the scenario as a “crimson flag”.
Guvera by no means achieved its dream of dominating the music business.
Guvera folded after the corporate did not float on the Australian inventory market. Supply: SBS / SBS Information Documentaries
The corporate ultimately collapsed in 2017 after a proposed itemizing on the Australian Securities Alternate was blocked. The $180 million disappeared after the corporate folded.
In 2020, the Australian Securities and Investments Fee (ASIC) banned Herft from working firms for 2 years.
There’s been little greater than radio silence on Guvera since then.
That’s, till August this 12 months, when Herft popped up in a video announcement to share some “thrilling information”.
“I will be rejoining the board of Guvera, an organization that I’ve clearly had an extended historical past with,” he stated, because the digicam panned throughout 4 screens emblazoned with the Guvera brand.
“Actually wanting ahead to serving to to rebuild our firm.”
