SFX Entertainment is dancing with David Bowie’s UltraStar Internet Services.
The live entertainment promoter, producer and venue operator has taken a minority stake in the glam rocker’s Internet company, which includes Bowie’s subscriber website, BowieNet, as well as the official websites for the New York Yankees and the Baltimore Orioles.
Financial details of the deal were not disclosed, although Bill Zysblat, Bowie’s business manager and co-founder of UltraStar, said the deal includes “a sizable amount of cash
— but not a lot by Internet standards — for which we’ve given a small amount of equity.”
The ability for UltraStar to tap into SFX’s resources, its relationships with artists, celebrities, concert tours, athletes, sporting and theatrical events, which will help drive more clients to UltraStar, is “far more important than cash,” said Zysblat.
Unlike many Internet companies, UltraStar is “already cash-positive,” he said. “Embarrassingly, we make money.”
With Bowie and Zysblat’s star-studded connections, UltraStar has no problem linking with artists, but it helps when SFX, putting together a $100 million tour for a star, suggests the artist build an affinity site –an online fan club — using UltraStar, said Zysblat.
“We were introduced to BowieNet and we saw an enormous business opportunity to replicate that with other entertainers, athletes, sports teams, anything with an affinity component,” said Pam Spevak, President, SFX Interactive. “The Internet is the perfect medium for bringing like-minded people together and for them to get close to the artists, athletes and teams they feel close to.”
UltraStar will be able to mine SFX’s consumer data base of 60 million people who attended SFX-related events. In 1998, SFX promoted or produced 24,000 shows.
While such i-companies would have an IPO in mind, UltraStar won’t go that way until it has to raise a considerable amount of money for expansion down the road, said Zysblat.
UltraStar didn’t turn to venture capital firms to launch its Internet company, either. Bowie, Zysblat, three other private investors, and now SFX, are the investors behind UltraStar.
BowieNet, which hasn’t had any promotion or advertising, has 15,000 members who pay at least $5.95 a month. About 20 percent of them go for the total ISP service at $14.95 a month.
The service will launch a marketing and promotion campaign next quarter and relaunch the site Jan. 31.
UltraStar expects to launch the subscription sites for the Yankees and Orioles on Feb. 15, when spring training starts, and seven to 10 new affinity sites first quarter.