Music Row veteran pushing Highnote venture raise
Nashville music-industry veteran Scott Welch and his co-founders are on the road these days, working to raise $1.5 million in A-round funding for Highnote, an Internet venture based here.
Welch told VNC yesterday that Highnote has termsheets under review with Nashville-area investors, and is continuing to present the company's story elsewhere. Highnote was presented to Toronto-area investors in October, with presentations in New York and Los Angeles under discussion.
Highnote streams music and videos and is designed to generate ad revenue via click-through links that are embedded in popular music and video.
Welch's client-artists have included Alanis Morissette, LeAnn Rimes, Mark Wills, Allison Kaplan, Paula Abdul and others. Welch said his earlier entrepreneurial gambits have included the late MP3.com and, more important, StubHub Inc., a ticketing venture that sold 18 months ago to eBay for more than $300 million. His Music Square firm does business as Scott Welch Management Inc.
Welch said his projections show Highnote generating nearly $1 billion in revenue by Year 5, largely by focusing the marketing of Highnote to those whom he says spend $8 billion annually to promote performing artists worldwide.
Welch said the venture could probably get buy with less than $1.5 million from angels, partly because he thinks he and his partners have only "about $5,000" actual cash sunk into the company, in addition to sweat equity and out-of-pocket expenses.
Welch said he was motivated to join the Highnote venture largely because, "as a manager, I got tired of the [mainstream industry's] gate-keepers, and I saw a lot of great bands and heard a lot of great music that could never get heard," a problem he attributed to the economics of big labels and management approaches that "squash" innovation.
Welch said Highnote links will be particularly valuable in connecting consumers with new and emerging artists, and said that in the long term "niches" — Celtic is a possible winner — will be Highnote's bread and butter. Artists, label execs and others would bid for links to content featuring key artists or genres of music, and would pay Highnote when site visitors clicked-through to the advertisers' lesser-known artists and properties.
Welch said Highnote's analytics technology will learn from visitor behavior and queue-up content and ads in which the visitor is most likely interested, borrowing from the techniques of such companies as Amazon.com and Google AdSense.