SONG publisher, C2W Music spending and limited income threatens to burn through all of its cash in a matter of months.
The intellectual property company spent 74 per cent of the US$1.47 million in capital it raised between May — when it held its initial public offering — and December.
And even though it started to generate income towards the end of 2012 -- US$105,000 in the last quarter — 90 per cent of the revenue came from sponsorship, rather than royalties, which was suppose to form the core of C2W's business.
Now, the company's board is seeking to find the cash to keep it running through the rest of the year.
"We had a board meeting a week ago to come up with alternative ideas to allow us to continue doing what we are doing to get enough cash for the next nine months," said Ivan Berry, C2W's chief executive officer. "These ideas will be expressed soon."
The board had projected that it would earn US$1.32 million from royalties in 2012, with the expectations that income would grow to US$6.4 million by 2016.
The company made just over US$6,000 for the year ended December 31, 2012.
Sponsorship income is gained from government agencies and other organsations who have paid for the camps.
"That's free money for us, and we own these intellectual property," said the company's CEO. "We are continoulsy applying, we can't tell the rate, but we have put out applications for income. This month alone, we got $7,500 in sponsorship income from US perfoming rights company, Broadcast Music Inc (BMI)."
BMI is to partner with C2W to conduct a songwriting camp, featuring Melanie Fiona, in April, in Bequia, an island in the Grenadines, according to Berry.
But songwriting camps have been a big drain on the company's accounts — it cost US$274,000 over the last seven months of 2012, while an additional US$217,000 was spent on advances to songwriters.
"A portion of song writing camps and development expenses that were previously recorded as expenses are now treated as non-current assets," Berry said. "We believe these costs will be reimbursed from the songwriters' future earnings.
The CEO, in an interview last December, said C2W would cut back on expenses, and the camps used to gather songwriters to pen lyrics would be funded by sponsors.
"Less songwriting camps mean less expenses," he said.
C2W has written songs for artistes who are signed to labels such as Columbia Records, Def Jam/ Universal, Motown, and Epic/Sony Records.
The company signed a three-year partnership with German-based publisher BMG Chrysalis. The international company currently has writer artistes, will.i.am and Bruno Mars.
That deal makes the Caribbean company a sub-publisher for BMG, its catalogues, songs and songwriters.
So far, the last few months have been spent importing thousands of songs from the publisher.
"We are currently matching the BMG Chrysalis songs with the songs that are earning royalties throughout the Caribbean," he said.
He expects that much more revenues will be generated by this year's second quarter.
What the partnership now means for BMG is, it will receive earnings from its exploited material through C2W. It will negotiate and close deals with any entity wanting to use any songs that belong to BMG. In turn, the company is protected and collected for, globally, within the BMG Chrysalis system.
C2W will collect 100 per cent of BMG's royalties from all potential revenue streams, for which it will be paid a 10 per cent fee.
A song, Bandaid, which was written by Jamaican-born, C2W songwriter, Rupert Gayle has been confirmed to be the next single off the second album of American boy band, Mindless Behaviour. The song will also be complemented by a music video.
This means radio performance royalties, televison performance royalties, and sync fees for C2W, Berry said. "A song sitting on an album earns revenue, however, a song as a single from a group like this triples in earnings if the single and the group is successful."