Vinyl Group, Australia’s only publicly listed music company, has taken a bold step into the world of digital and physical collectibles with its acquisition of Serenade, a London-based platform known for its blockchain-enabled collectibles. The equity-based deal, valued at up to US$1.6 million, will strengthen Vinyl’s presence in the UK and European markets while expanding its reach into the fast-evolving space of digital collectibles.
Launched last year, Vinyl has been aiming to recreate the nostalgic feel of crate-digging for records in a digital format. CEO Josh Simons highlighted that the acquisition of Serenade aligns perfectly with the company’s long-term vision of connecting fans with creators in new ways. With the addition of Serenade’s platform, Vinyl will be able to offer a wider variety of music-related products, experiences, and collectibles.
The deal involved an initial payment of $553,000 in shares, with the remaining US$1 million contingent on performance-related revenue and earnings targets. To meet those targets, the combined entity will need to generate US$2.76 million in revenue and US$345,000 in earnings before interest and taxes within the next 12 months. Vinyl’s stock responded positively to the news, rising more than 8% on the ASX and hitting a three-week high.
Serenade has built its reputation by offering both physical and digital collectibles for a wide range of artists, including well-known names like Liam and Noel Gallagher, Muse, and Sum 41. The platform also enjoys partnerships with major labels, including Warner Music Group and Beggars Group, giving Vinyl a foothold in some of the most prominent corners of the music industry.
One of Serenade’s most innovative products is its NFC-enabled digital “Smart Formats,” which have shown significant sales growth since their launch earlier this year. These Smart Formats are physical collectibles embedded with Near Field Communication (NFC) technology, allowing users to access exclusive digital content like music, artwork, or videos simply by interacting with the physical item through an NFC-enabled device such as a smartphone. Serenade’s system operates on the Polygon blockchain, a layer-2 solution for Ethereum that ensures fast and secure transactions.
This acquisition not only brings cutting-edge technology into Vinyl’s fold but also reinforces the company’s vision of creating stronger connections between artists and fans. With Serenade’s NFC technology, fans can now access exclusive digital experiences tied to physical items, enhancing the value and appeal of the collectibles. As the music industry continues to adapt to changing consumer habits and technology, Vinyl’s integration of Serenade’s blockchain-based approach could prove to be a strategic advantage.
Serenade CEO Max Shand will also be joining Vinyl Group as part of the deal, signing a full-time employment agreement. He will receive five million options, which will vest based on specific performance goals. Shand’s role is expected to be pivotal in driving the newly combined business forward, particularly in terms of reaching the ambitious revenue and earnings targets that are key to the acquisition’s success.
While Vinyl’s acquisition of Serenade is a significant move, it comes at a time when digital collectibles and blockchain-based technologies are rapidly gaining traction across various industries, including music. For years, artists have struggled to monetise their work in the age of streaming, where physical sales have plummeted, and royalty payments from streaming platforms remain relatively low. Digital collectibles provide a new avenue for artists to engage their fan base and generate additional revenue streams. With Serenade’s platform, Vinyl can offer artists the ability to sell both digital and physical items directly to their fans, enhancing the overall fan experience and providing more opportunities for artists to profit from their work.
The acquisition is not without its challenges, however. While Vinyl’s stock surged on the news, it remains to be seen whether the combined company can meet the performance goals that have been set out as part of the deal. The success of Serenade’s Smart Formats has been encouraging, but the broader market for digital collectibles is still relatively young and somewhat volatile. Fans’ enthusiasm for these types of products can fluctuate, and while early sales growth is promising, sustained demand will be critical.
Moreover, with more platforms and marketplaces for digital collectibles emerging, competition is likely to intensify. However, Vinyl’s focus on both digital and physical collectibles could set it apart from competitors that focus exclusively on one or the other. By offering a hybrid of physical items tied to digital experiences, Vinyl could tap into a unique niche in the collectibles market.
The synergy between Vinyl’s music-centric vision and Serenade’s blockchain expertise could position the company to navigate these challenges successfully. By combining Vinyl’s existing fanbase and platform with Serenade’s innovative technology and partnerships, the company is well-placed to continue growing in both traditional and emerging markets.
The acquisition also signals the increasing relevance of blockchain in the music industry. As NFTs and other blockchain-based assets become more mainstream, they are opening up new opportunities for artists to engage their fans and diversify their income. While many music companies are still exploring the possibilities of these technologies, Vinyl’s move shows a clear commitment to incorporating them into its core business model.
As the integration of Serenade progresses, it will be important for Vinyl to maintain the momentum that has been generated by the acquisition. Shand’s expertise in digital collectibles, combined with Vinyl’s existing platform, should help the company to expand its offerings and meet the performance targets that have been set. The next 12 months will be critical in determining whether the acquisition lives up to its potential.
