MQA only lost 7.1 million pounds in 2017

[kumakuma]

MQA Limited's financial results for the fiscal year  ending December 31, 2017 are now available from Companies House.

 

https://beta.companieshouse.gov.uk/company/09123512/filing-history

 

The good news is that the company only lost 7.1 million pounds in 2017, better than the 8.6 million pound loss recorded in 2016.

 

The board states:

 

"Given the widespread acceptance by key opinion makers in the music industry and journalists, as well as the business model adopted by the first licensees, the board remains confident that MQA is well positioned to succeed."
 

[Brinkman Ship]

sometimes you wake up and the world brings you good news. thank you kumakuma.

 

that is 20 million US dollars over 24 months. on top of the 40 million Meridian bled out since 1977.

 

[rickca]

1 hour ago, kumakuma said:

the business model adopted by the first licensees

What business model are they talking about? 

[Brinkman Ship]

"Given the widespread acceptance by key opinion makers in the music industry and journalists..."

 

Who on earth could they be referring to? Given the widespread acceptance by certain magazine editors, who worked as a de facto PR firm..so much so, that MQA fired their US PR firm 2 years ago.

 

[daverich4]

1 hour ago, Brinkman Ship said:

"Given the widespread acceptance by key opinion makers in the music industry and journalists..."

 

Who on earth could they be referring to? Given the widespread acceptance by certain magazine editors, who worked as a de facto PR firm..so much so, that MQA fired their US PR firm 2 years ago.

 

 

Peter McGrath comes to mind. Huge fan with impeccable credentials and reputation and nothing to gain from promoting it. He regularly chooses MQA music files for his speaker demos and considering what Wilson speakers cost I suspect he wouldn’t if he thought they were detrimental to the sound. 

[Brinkman Ship]

1 minute ago, daverich4 said:

 

Peter McGrath comes to mind. Huge fan with impeccable credentials and reputation and nothing to gain from promoting it. He regularly chooses MQA music files for his speaker demos and considering what Wilson speakers cost I suspect he wouldn’t if he thought they were detrimental to the sound. 

his motives have been well documented...

[John_Atkinson]

1 hour ago, Brinkman Ship said:

MQA fired their US PR firm 2 years ago.

 

That is not correct. MQA's US PR rep is Sue Toscano, who handled the MQA account when she worked for Nicoll Communications, and has continued to represent the brand now she has her own company.

 

John Atkinson

Editor, Stereophile

 

[Brinkman Ship]

4 hours ago, John_Atkinson said:

 

That is not correct. MQA's US PR rep is Sue Toscano, who handled the MQA account when she worked for Nicoll Communications, and has continued to represent the brand now she has her own company.

 

John Atkinson

Editor, Stereophile

 

No I am correct. They had hired Nicol PR and I called that firm to get some information almost 2 years ago and they told me they MQA had pulled the account. They were fired. Sue Toscano is a former employee there. She does not even have a functioning website. I met her at a dealer event/show in NY and she did not have the slightest clue how to explain MQA. On MQA's web site is directs all press inquires to MQA Ltd.

 

You will be called out on all half truths and distortions you spread

[firedog]

15 hours ago, kumakuma said:

 

The board states:

 

"Given the widespread acceptance by key opinion makers in the music industry and journalists, as well as the business model adopted by the first licensees, the board remains confident that MQA is well positioned to succeed."
 

 

Well of course the insider cronies who sit on the board say they "remain confident". That's typical blah-blah from a firm that isn't succeeding. A more realistic evaluation would say that in spite of the acceptance by "key opinion makers", the format has not succeeding in penetrating the market and acquiring wide acceptance among consumers, especially audiophiles.

I wonder how long Bob Stuart's in laws are going to continue financing the losses?  I can't imagine they will keep it up for too long.
Is Meridian also still losing money? I wonder how deep their "emotional pockets" that tell them to keep financing BS are?

[firedog]

8 hours ago, Brinkman Ship said:

MQA had pulled the account

In everyday language: fired the firm and went with a new firm.
Doesn't matter that one of the principles is the same. 

[firedog]

16 hours ago, kumakuma said:

 

The good news is that the company only lost 7.1 million pounds in 2017, better than the 8.6 million pound loss recorded in 2016.

 

Yep. At that rate  they will turn a small profit in about 5 years. I sort of doubt the original business plan had them losing money for 9 years. Somehow I don't think the financing will hold out that long. 

[Miska]

I cannot do anything but just wonder where do they manage to spend 7 or 8 million pounds per year while only maintaining a very small codec. What on earth are they doing to spend that much...

 

[firedog]

35 minutes ago, Miska said:

I cannot do anything but just wonder where do they manage to spend 7 or 8 million pounds per year while only maintaining a very small codec. What on earth are they doing to spend that much...

 

Well, they do have some number of people working to process "masters" through the MQA process, and some people working with manufacturers to give the MQA stamp of approval to HW - which apparently can take up some time in many of the cases. Acc'd to the document, they are paying about 18 employees and some directors a total of about 2.5 million GBP a year. 
Their PR/ad firm probably costs them quite a lot, as they seem to be very active in PR and marketing. Sending reps to all those shows for their biased presentations also isn't cheap. 

 

Looking at the financial statement, their revenues are miniscule- less than 200K GBP in 2017. "Administrative costs"  (including salaries) account for almost all the losses. How much are BS and the CEO pulling in remuneration? 
 

The statement also says that the road to profitability is dependent on the adoption of MQA by one or more of the large streaming services, and the subsequent adoption by consumers of MQA enabled devices on which MQA is paid a royalty. 

 

I really doubt this model will work. Even if Spotify or one of the like adopt MQA, I still don't see most users being willing to pay extra for a "hi-res masters" stream AND buy their phone based on whether it is MQA certified. People just don't make those kind of buying decisions in our world. It could only work if Google or Apple adopt MQA and force the adoption onto phones. But somehow I don't see that happening at all.....

[#Yoda#]

1 hour ago, firedog said:

 I really doubt this model will work. Even if Spotify or one of the like adopt MQA, I still don't see most users being willing to pay extra for a "hi-res masters" stream AND buy their phone based on whether it is MQA certified. People just don't make those kind of buying decisions in our world. It could only work if Google or Apple adopt MQA and force the adoption onto phones. But somehow I don't see that happening at all.....

 

Even more as if it seems that new blockchain based technologies attempt to reinvent audio streaming with an artist friendly approach https://blog.rchain.coop/rsong-the-future-of-music/

[mansr]

1 hour ago, Miska said:

I cannot do anything but just wonder where do they manage to spend 7 or 8 million pounds per year while only maintaining a very small codec. What on earth are they doing to spend that much...

Bribing "journalists"?

[Miska]

1 hour ago, firedog said:

Well, they do have some number of people working to process "masters" through the MQA process

 

So that's "what the artist intended and heard in the studio"...

 

1 hour ago, firedog said:

some people working with manufacturers to give the MQA stamp of approval to HW - which apparently can take up some time in many of the cases

 

I would assume they charge hourly price for that kind of work, so it shouldn't end up in losses...

 

Quote

The statement also says that the road to profitability is dependent on the adoption of MQA by one or more of the large streaming services, and the subsequent adoption by consumers of MQA enabled devices on which MQA is paid a royalty.

 

Spotify is already using Xiph's Vorbis-codec which is free for them and to the device manufacturers. AFAIK, they also have fallback MP3 compatibility which is now also royalty free after all the patents have expired. And from Xiph codec set they always have the option to go for standard FLAC which is well supported throughout and doesn't cost anything.

 

Spotify and other streaming services are already struggling so much financially that they are not ready to invest in codec royalties. And device manufacturers are really not ready to introduce such codecs that increase both development effort and BOM - adding pressure on the device price.

 

1 hour ago, firedog said:

It could only work if Google or Apple adopt MQA and force the adoption onto phones. But somehow I don't see that happening at all...

 

I think that could only happen after buy-out. If Google does it, they would likely open source it, just like they did for VP-series of video codecs after buying On2. If Apple does it, then it will become Apple-only solution.

 

Both companies have all the resources and technical capabilities to do similar codecs on their own, if they see any need for it. So far Apple has been sticking mostly to ISO standard codecs and also driving the standardization (like the .mp4 container originally from QuickTime). Given how Apple Music works, they would most likely adopt MPEG-4 SLS instead, because they already use AAC and that would add a lossless layer on top of it while preserving backwards compatibility with older plain AAC solutions...

 

[firedog]

1 hour ago, Miska said:

Spotify and other streaming services are already struggling so much financially that they are not ready to invest in codec royalties. And device manufacturers are really not ready to introduce such codecs that increase both development effort and BOM - adding pressure on the device price.

It seems MQA isn't charging a fee to the streaming services for the codec per se, nor are the labels. Just the standard fee for a file. 
 It appears it is being "given away" in the music file distribution without extra charge so as to establish the format and setup a situation where consumers buy the MQA playback HW, which does involve royalties to MQA

[Miska]

35 minutes ago, firedog said:

It seems MQA isn't charging a fee to the streaming services for the codec per se, nor are the labels. Just the standard fee for a file. 
 It appears it is being "given away" in the music file distribution without extra charge so as to establish the format and setup a situation where consumers buy the MQA playback HW, which does involve royalties to MQA

 

At least highresaudio.com is 2 EUR more per album for MQA version, compared to regular hires. And what I know they do charge labels for MQA conversion service. Plus in their original pricing, if you want your own converter it costs 20k. So they charge both ends of the chain for royalties.

 

I don't know what other services are selling MQA downloads and how they charge those compared to non-MQA hires.

[firedog]

7 minutes ago, Miska said:

 

At least highresaudio.com is 2 EUR more per album for MQA version, compared to regular hires. And what I know they do charge labels for MQA conversion service. Plus in their original pricing, if you want your own converter it costs 20k. So they charge both ends of the chain for royalties.

 

I don't know what other services are selling MQA downloads and how they charge those compared to non-MQA hires.

I was referring to streaming, not download sales. I don't think Tidal is being charged an extra fee for streaming an MQA version of a file. There is no reason the two types of product have to be priced in the same way. 

That would match the stated goal of being widely adopted by streaming services and then using the royalties generated by users buying MQA enabled devices in order to stream to them. That's what MQA themselves described as what they are attempting to do to create revenue streams.

[PeterSt]

Disclaimer : All of the below is not meant to be stipulating or meant to be suggestive otherwise, unless I explicitly say so. It is also just how I read such a public financial statement and since I am no professional on this, it is just how I interpret matters.

 

 

18 hours ago, kumakuma said:

The good news is that the company only lost 7.1 million pounds in 2017, better than the 8.6 million pound loss recorded in 2016.

 

Excuse me, but why do I read that the loss in 2016 was 3.7 million pounds ?

All I did was grabbing the 2016 similar report instead of believing the 2017 report which reflects the 2016 loss as well, but indeed as 8.6 million pounds.

 

It is a bit hard to see where the tweaks are, but it has to be about the administrative expenses. These are  is 3.8 million in the 2016 report which is reported in the 2017 report (as previous year) as 8.7 million. Difference is 4.9M which is the same difference as the reported losses in the 2017 report vs what's in the 2016 report (8.6M vs 3.7M).

 

The 2016 and 2017 reports just don't connect.

 

Continuing ...

 

If I see it correctly, the Total Equity dropped with 4.5M anyway (from 7.4M to 2.8M).

 

After reading an hour into it, the crux is at the bottom of page 26 (2017 report). This is about shares which have been issued in 2016 and with which services were paid (as it looks, services supplied by The Group (which will be MQA Inc.)). Thus, MQA ltd owns shares and instead of paying for services with money, they hand over shares. They had a value of 4.9 million pounds. This increased the administrative costs like in "hiring personnel" (this latter is my own interpretation).

This "transaction in retrospect" can be found on page 12 with the notice that this is thus not in the 2016 report at all (how strange) - "Shares issued during the year".

Now knowing this, we can see a similar transaction on page 11 for 2017, where 2.5M on shares were issued which thus should contribute to the administrative costs of 2017.

Both exchanges of shares for virtual invoices and money (again my interpretation) we find back on page 15, paragraph 2.3. It literally says that this money, contributing to the loss, does not imply outgoing cash flow. This, while - if I saw it correctly - the shares have been created on the spot (for 0.001 pound per piece, page 26 paragraph 18) and will imply a tax withhold for the upcoming 5 years if the law is the same as the country I'm in (withhold : my language of telling that now 4.9M + 2.5M can be deducted from Profit in the upcoming (5) years, so no taxes need to be paid over a due profit of 4.9M + 2.5M). 

That paragraph also tells about this not being a "recurring event" ...

 

Noteworthy is the mention at the bottom of page 22 that 18.7M of deferred taxes is in order, which is a debt that I personally don't see decrease by looking at the current turnover or outstanding debtors (like 901K debtors for MQA ltd and 1M creditors for MQA ltd). How the turnover of 149K (page 8) relates to mentioned 901K of debtors ... but can be, because turnover is from 2017 while debtors can be from ancient history.

 

 

[NOMBEDES]

What happens when (if) the UK leaves the EU?   

 

Maybe the Russians are our friends?  The Russians saw that MQA was a terrible idea, so they went full troll and. through the usual methods, convinced the British public that getting out of the EU was a great idea.  Now MQA will be confined to the UK and those nations foolish enough to buy into the royal MQA scam.

 

 

[kumakuma]

4 hours ago, PeterSt said:

Excuse me, but why do I read that the loss in 2016 was 3.7 million pounds ?

All I did was grabbing the 2016 similar report instead of believing the 2017 report which reflects the 2016 loss as well, but indeed as 8.6 million pounds.

 

It is a bit hard to see where the tweaks are, but it has to be about the administrative expenses. These are  is 3.8 million in the 2016 report which is reported in the 2017 report (as previous year) as 8.7 million. Difference is 4.9M which is the same difference as the reported losses in the 2017 report vs what's in the 2016 report (8.6M vs 3.7M).

 

The 2016 and 2017 reports just don't connect.

 

 

If you look on page 8 of the 2017 report, you can see the notation "As Restated" above the 2016 column. In other words, ignore what was previously reported for 2016.

[Rt66indierock]

6 hours ago, PeterSt said:

Disclaimer : All of the below is not meant to be stipulating or meant to be suggestive otherwise, unless I explicitly say so. It is also just how I read such a public financial statement and since I am no professional on this, it is just how I interpret matters.

 

 

 

Excuse me, but why do I read that the loss in 2016 was 3.7 million pounds ?

All I did was grabbing the 2016 similar report instead of believing the 2017 report which reflects the 2016 loss as well, but indeed as 8.6 million pounds.

 

It is a bit hard to see where the tweaks are, but it has to be about the administrative expenses. These are  is 3.8 million in the 2016 report which is reported in the 2017 report (as previous year) as 8.7 million. Difference is 4.9M which is the same difference as the reported losses in the 2017 report vs what's in the 2016 report (8.6M vs 3.7M).

 

The 2016 and 2017 reports just don't connect.

 

Continuing ...

 

If I see it correctly, the Total Equity dropped with 4.5M anyway (from 7.4M to 2.8M).

 

After reading an hour into it, the crux is at the bottom of page 26 (2017 report). This is about shares which have been issued in 2016 and with which services were paid (as it looks, services supplied by The Group (which will be MQA Inc.)). Thus, MQA ltd owns shares and instead of paying for services with money, they hand over shares. They had a value of 4.9 million pounds. This increased the administrative costs like in "hiring personnel" (this latter is my own interpretation).

This "transaction in retrospect" can be found on page 12 with the notice that this is thus not in the 2016 report at all (how strange) - "Shares issued during the year".

Now knowing this, we can see a similar transaction on page 11 for 2017, where 2.5M on shares were issued which thus should contribute to the administrative costs of 2017.

Both exchanges of shares for virtual invoices and money (again my interpretation) we find back on page 15, paragraph 2.3. It literally says that this money, contributing to the loss, does not imply outgoing cash flow. This, while - if I saw it correctly - the shares have been created on the spot (for 0.001 pound per piece, page 26 paragraph 18) and will imply a tax withhold for the upcoming 5 years if the law is the same as the country I'm in (withhold : my language of telling that now 4.9M + 2.5M can be deducted from Profit in the upcoming (5) years, so no taxes need to be paid over a due profit of 4.9M + 2.5M). 

That paragraph also tells about this not being a "recurring event" ...

 

Noteworthy is the mention at the bottom of page 22 that 18.7M of deferred taxes is in order, which is a debt that I personally don't see decrease by looking at the current turnover or outstanding debtors (like 901K debtors for MQA ltd and 1M creditors for MQA ltd). How the turnover of 149K (page ? relates to mentioned 901K of debtors ... but can be, because turnover is from 2017 while debtors can be from ancient history.

 

 

 

Petrr the 2016 statements were restated.

[PeterSt]

13 minutes ago, Rt66indierock said:

Petrr the 2016 statements were restated.

 

What would be the reason to perform it like that ?

(think bad if you like)

[Rt66indierock]

38 minutes ago, PeterSt said:

 

What would be the reason to perform it like that ?

(think bad if you like)

 

The normal reason to restate is the correction of an error. In the reporting of the labels equity investments it appeared they were given equity in MQA Ltd. This was not the case and the services they provided MQA needed to be reflected in the financial statements.