Welcome back to Baby Breakerdom! This time, our ongoing quest to uncover budding Rule Breakers finds us connecting with our inner rock star and plugging into energy derivatives trading.
Bands movin' on up
First up this week is Sonicbids, which seeks to create an organized market for independent musicians.
VentureWire calls the site "online networking for up-and-coming bands," but I think it's much more than that. Sonicbids' signature offering is what the company calls an electronic press kit, or EPK.
As Sonicbids pitches it, the EPK completely eliminates the drudgery of custom-creating a few hundred CDs to be mailed to anyone who's willing to listen. That may be going too far. Nevertheless, as I write today, I'm listening to the sample EPK for Syd, a contemporary rock band with a soulful sound. Great stuff.
And there's more to the EPK than sound samples. There's a bio, video, photos, and press clips. There's also detailed information for promoters, including set lists and equipment needs. Promoters are also given tools to screen for artists who best fit their chosen genre.
See how that's different from MySpace? Connectivity rocks, but business rolls. Sonicbids mixes both in what seems to be a powerful package that could prove disruptive to labels Warner Music (NYSE: WMG ) , Sony (NYSE: SNE ) , and Universal.
It could also be big business. Sonicbids says it has 100,000 members worldwide. Assuming 75% of this group are artists, and that they're paying $50 annually for their EPK subscription, the company could be taking in as much as $3.8 million a year.
But that may be just the beginning. Cyprus-born founder Panos Panay describes his company's story at the site:
I ... remember getting buried under press kits from musicians that wanted to get booked by me but never had time to listen to their tapes and CDs. All along I kept thinking that there had to be a better way for musicians and promoters to connect with each other besides bulky and expensive mail-in press kits.
Venture investors agree. They've pledged $4.5 million to Sonicbids in its first-ever round of private equity financing, reports VentureWire. I suspect that we'll see more as the site attracts a bigger following. Add this one to your IPO watch list, Fool.
Profits in the Pink Sheets
As investors, we'll often tell you to avoid Pink Sheets or over-the-counter stocks. But when it comes to commodities, most trading is still done over the counter. New platforms are being created to add liquidity and efficiency to the process.
Consider InterContinental Exchange (NYSE: ICE ) . It's grown like a weed under a fountain; revenue and net income have more than doubled over the trailing 12 months. A recent victory over competitor Nymex (NYSE: NMX ) also resolved some intellectual-property issues in its favor. (ICE first entered the public markets in November 2005.)
Don't be too surprised. According to an early 2005 feature article in Futures Industry magazine, ICE was reporting a tripling in clearing transactions for oil, natural gas, and other derivatives over 2003 levels. FI went on to predict still further growth, noting at the time that "the frontiers of OTC energy clearing are still fairly limited."
It's against that backdrop that I'd like to introduce our next Baby Breaker, YellowJacket Energy, which claims to have created a peer-to-peer platform for weather and energy derivatives trading.
Without seeing a demonstration, it's hard to tell how revolutionary YellowJacket's approach really is, but the company says it has more than 130 clients around the globe and that 80% of today's weather derivatives are quoted on its platform. (Weather derivatives are contracts designed to hedge against business risks arising from adverse weather conditions. Agribusinesses will use derivatives to account for the risk extreme weather presents to their crops.)
Maybe it's my overactive imagination at work, but those sorts of numbers have me wondering whether YellowJacket isn't trying to become to derivatives what Archipelago was to current Rule Breakers pick NYSE Group (NYSE: NYX ) .
And I'm not the only one. Greenhill SAVP, an early-stage venture fund, committed $1.25 million earlier this month and joined the venture fund for New York City (really) and Contour Venture Partners in backing YellowJacket. My guess is all three will be handsomely rewarded.
For more Rule Breaking Foolishness:
- Check in with our last litter of infants.
- Some growth stocks are unloved.
- Go ahead and cash in on the growth stock rally.
- Check on the latest list of top growth stocks.
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Tim Beyers is a regular contributor to Fool.com and the Rule Breakers team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy is a rebel on Wall Street.