ProMusicLeague Records is offering equity at a $1.2 million post-money valuation. This is much lower than most average crowdfunding valuations across industries. The company generated $122,854 in revenue in 2021. Therefore, a $1.2 million valuation implies an 8.1x revenue multiple. This is a bit higher than the average revenue-to-valuation (or price-to-sales) multiple for the public entertainment industry, which is around 5.9x. However, 8.1x is generally below average for a crowdfunding company. Therefore, ProMusicLeague is raising at an attractive price for investors.

Music recording is a lucrative, though relatively niche, market. There are already a number of established competitors, and three major companies dominate the market: Universal Music Group, Sony Music, and Warner Music Group. After many years of revenue decline, streaming is helping the music industry boost revenue once again. In 2020, the US recorded music industry was worth $8 billion. The global music industry is expected to grow at a decent compound annual growth rate of 8.5% between 2021 and 2026.

However, that market size doesn’t have a direct impact on ProMusicLeague Records’ addressable market. Because the company is only generating revenue from one-time fees paid by artists (not from ongoing music royalties), ProMusicLeague’s upside is limited to the potential artists who could pay for its services. 

It’s difficult to determine a number of aspiring musicians who might be willing to pay for a record-label-as-a-service package like ProMusicLeague’s. The number of musicians on Spotify is one clue. There are currently 8 million active artists on Spotify worldwide. However, just 57,000 artists attract 90% of streams on the platform. The vast majority of artists don’t even rack up 50 listens per month. That vast majority of artists thus seems to be ProMusicLeague’s perfect target customer. But it also seems likely that many  aspiring musicians are either not wealthy enough or committed enough to their music to justify paying a $5,000 fee to ProMusicLeague. ProMusicLeague is also focused on the US alone, which drastically limits its customer base. All in all, it seems reasonable to assume that only a small portion of artists could reasonably sign up for ProMusicLeague, so the company’s revenue ceiling appears relatively low. 

ProMusicLeague Records was founded by CEO Jordan Crudo, a former minor league hockey player turned entrepreneur. Crudo holds a bachelor’s degree in philosophy and pre-medicine from the University of Central Florida. After graduating, he played minor league hockey for a few years before turning to entrepreneurship. Crudo also currently runs ProGearStars, a sports memorabilia company. As such, he is not fully dedicated to ProMusicLeague. 

Crudo reports selling half of his businesses to Asha De Andrea (“Asha Gaskill” on LinkedIn) in exchange for capital and half of her equine rescue business. De Andrea is now the president of ProMusicLeague. She doesn’t appear to have any professional experience other than running her equine business, working as a health coach for five years, and being involved in Crudo’s other companies. De Andrea holds a degree in business administration and management from Colorado State University. 

The ProMusicLeague team has zero music industry experience and very little other professional experience. There is little indication that either Crudo or De Andrea have what it takes to grow ProMusicLeague and guide it to a successful exit. Neither executive is dedicated, as they jointly run more than one other business in addition to ProMusicLeague. Therefore, this team seems like a red flag. 

The record label market is currently dominated by big names that make money from royalties, including Universal Music Group, Sony Music, and Warner Music Group. Meanwhile, ProMusicLeague Records is attempting to reinvent the concept of record labels by offering all of the benefits of a label for one flat fee – no royalties included. This is indeed a differentiator and could be attractive to artists. However, it’s simply unclear how this business model can possibly be sustainable over time. ProMusicLeague promises to provide attentive and personalized service for each and every artist. But the company can’t possibly provide its extensive list of offerings to hundreds of artists at a time – at least not without hiring a huge number of staff to service those accounts. Doing so will be difficult to finance from $5,000 flat fees. While this differentiation is appealing in theory, it doesn’t seem like ProMusicLeague has figured out how to achieve it in practice. Furthermore, the company has no patents and no defensibility, so a competitor could potentially offer a similar deal. All in all, ProMusicLeague’s main differentiating factor may do the company more harm than good in the long run. 

ProMusicLeague Records doesn’t offer a great deal of performance data, but the company’s revenue increased from $23,059 in 2020 to $122,854 in 2021. Furthermore, operating costs are far less than revenue, so the company has been profitable for the past two years. In 2020, ProMusicLeague made a profit of $17,664, which grew to $110,772 in 2021. Since profitability is uncommon among crowdfunding companies, this is a good sign for ProMusicLeague.

ProMusicLeague has made partnerships with studios like KMGLife, a loan company called Green Machine, and rappers Snoop Dogg and Redman. The company reports steady growth in the number of artists enrolled in its program, but the numbers don’t quite add up. The company reports a current roster of 125 artists and 10 companies. (It’s not clear how companies fit into the record label equation.) According to ProMusicLeague’s stated fees of $5,000 for artists and $50,000 for companies, that roster should theoretically have made ProMusicLeague $1.1 million. However, the company reports just $42,488 in revenue so far for 2022. It’s not clear how ProMusicLeague’s roster of artists is connected to financial performance, since the company does not take royalties. 

Overall, ProMusicLeague appears to demonstrate strong financials and decent traction. But there are still some numbers that don’t add up. As such, there are still unanswered questions investors should carefully consider before making an investment in this company.

ProMusicLeague Records is a high-risk investment opportunity. The company has obtained 125 artists and 10 companies as clients. But in order to truly be successful, the company must gain name recognition. ProMusicLeague also has little funding history, which makes its ability to raise future capital uncertain. 

However, most of the risk comes in the form of several different red flags. The founding team is not fully dedicated and is very inexperienced. ProMusicLeague’s stated client traction doesn’t align with its revenue, which should be much higher from all the flat fees. The company’s business model doesn’t seem scalable. And above all, ProMusicLeague offers very little information to explain or justify any of these concerning signals. Therefore, investors are taking on a significant risk of the unknown if they invest in this company. 

ProMusicLeague Records’ business model doesn’t really make sense. It’s not clear how the company can possibly provide an extensive list of record label benefits for the low price of $5,000. Any one of its 20-plus service offerings would easily be worth far more than that in the market. Professional website design, for instance, can cost somewhere in the range of $15,000 to $75,000. Plus, ProMusicLeague isn’t actually incentivized to provide high-quality service for its artists, given that the one-time fee is the only revenue that ProMusicLeague will gain from the client. Without an ongoing royalty incentive, ProMusicLeague has no reason to spend large sums of money to provide services to each client. Even if this all made sense, ProMusicLeague is inherently unscalable. Each new artist signed will increase the amount of services that ProMusicLeague must provide, without any technology solution or other system to provide these services more efficiently over time. 

Beyond that basic issue, there are several other red flags surrounding ProMusicLeague. First of all, its founder Jordan Crudo states that he was a professional hockey player and invested his “millions in earnings” into ProMusicLeague. That seems highly unlikely. Crudo played minor league hockey for less than four years, and minor league hockey players typically only make about $52,522 a year on average in the US. Crudo doesn’t appear to have any significant wealth or fame from his hockey career that would serve as competitive advantages for ProMusicLeague. Beyond that concerning inconsistency, ProMusicLeague has poor branding, revenue statements that don’t match client numbers, and other signals that the company is poorly managed. Overall, this doesn’t seem like a high-quality investment opportunity. 

In theory, ProMusicLeague Records is pioneering a democratized model for the music industry. Making the resources of a professional record label more accessible is good for artists, fans, and the overall state of artistic expression. 

In addition, ProMusicLeague’s revenue increased from $23,059 in 2020 to $122,854 in 2021. It has been profitable over the last two years, with that profit growing from $17,664 in 2020 to $110,772 in 2021. It’s not clear how this is possible, given the intensive capital requirements of providing full-service record label assistance to 125 artists, but somehow ProMusicLeague has managed to do it thus far. Furthermore, ProMusicLeague is raising at an attractively low valuation. If the company can maintain growth and profitability, investors could possibly enjoy an upside.

Papillon Pavilion Records, doing business as ProMusicLeague Records, is a very early-stage music label services business that earns money through a flat fee instead of royalties. The company has had growing revenue, and it has been increasingly profitable between 2020 and 2021. Its valuation is also quite attractive for investors.

Overall, though, ProMusicLeague just doesn’t seem destined to scale. The executives are inexperienced, and neither is fully dedicated to ProMusicLeague. The company also seems to have limited market potential. Strangely, although ProMusicLeague has 125 artists and 10 companies as clients, its revenue numbers don’t seem to reflect that. Its business model doesn’t make much sense, as ProMusicLeague can’t possibly provide quality service to hundreds of artists at one time based on its flat fee model (at least not without hiring a significant staff, which would need to keep growing with each new artist signed). While ProMusicLeague has an admirable goal to democratize professional music resources for aspiring artists, this approach doesn’t seem to benefit the company or its intended customers. Therefore, ProMusicLeague Records has been rated an Underweight Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written on June 3, 2022.