Jaxsta bounces off the mat with new global music database deal
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Shares in music database company Jaxsta (ASX:JXT) are up +200 per cent this morning after it received backing from a US song licensing partner.
The five-year deal with Songtradr will see the two companies create an integrated platform, which will provide Jaxsta users with a channel to identify “missing performer income from sound recordings” (also known as Neighbouring Rights).
Along with the payment of a $500,000 up-front licensing fee, Songtradr will also invest in Jaxsta via the issuance of a $1.42m convertible note.
The liquidity injection saw JXT shares lead the market this morning. The stock doubled at the opening bell before surging by almost 400 per cent into midday trade.
Jaxsta, which joined the ASX via a backdoor-listing in December 2018, was established with the aim of providing a global database so anyone involved in creating a song — from songwriters to musicians and engineers — receives credit for their role in the production process.
The company has struggled for traction in 2020 after hitting a high of 35c in October last year:
In terms of closing the deal, Jaxsta said Songtradr was attracted to the partnership following a strong period of post-COVID user growth on the Jaxsta platform.
Jaxsta said it now has over 60,000 registered users, representing monthly growth of 146 per cent since April.
Songtradr will leverage the database of musicians/artists on the Jaxsta platform to assist in its core operation — assisting with “the identification of uncollected royalties resulting from the performance of certain sound recordings on broadcast and digital/online media”.
Jaxsta founder and CEO Jacqui Louez Schoorl said that combination represents obvious synergies for the two sides, as part of Jaxsta’s broader goal to provide more accurate credits to music creators and rights owners.
With live performance revenue severely curtailed due to COVID-19, Schoor said the deal “highlights the significant opportunities that exist in solving the data-centric challenges faced by the music industry”.
“The partnership allows Songtradr to provide an enhanced global product leveraging the use of official metadata only available through Jaxsta,” Schoorl said.
The $1.42m note from Songtradr — which will be used for general working capital — can be converted to equity at any time at a conversion price of 3.5c per share.
The three-year funding facility has a coupon rate of 7.5 per cent which will be accrued and paid at the end of the term, of capitalised in the event of an equity conversion.