Akazoo

» see akazoo.com as it lived, on the wayback machine

~ the obit ~

Akazoo was built inside InternetQ, an Athens company founded in 2000 by Panagiotis Dimitropoulos that made its money selling mobile content through phone carriers. The music product was developed from 2007 and launched in 2008, aimed at markets where nobody had a card to pay with: you were billed through your operator instead, which was a genuinely good idea in places where a bank account was not the default. There were deals with Sony in Malaysia and Samsung in Greece in 2013, and by the end of the decade the catalog was advertised at forty million songs.

Whether it worked anywhere is the whole question, and the archived front page answers part of it. The last copy of akazoo.com saved by a crawler in the United States shows the apology it served to visitors from countries it had not licensed, which read: we would really like to be here, for now though our service is not available in your country, please check back, you never know. The language menu ran to thirteen options, from Filipino to Russian, and Turkish was not one of them. A company telling investors it had 38.2 million registered users was a blank page in most of the world.

The end came through the stock market rather than through the product. InternetQ had been listed in London on AIM from 10 December 2010 at a £31 million valuation and was taken private in early 2016 with fraud allegations already circulating. Akazoo then went public in the United States on 11 September 2019 by merging into Modern Media Acquisition Corp, a blank-check vehicle run by former Cumulus Media chief Lew Dickey. The deal raised $55 million and put the company on Nasdaq under the ticker SONG.

~ the rap sheet ~

~ the short report ~

On 19 April 2020, Quintessential Capital Management published a report saying the company was deceiving its investors. The stock collapsed and the chief executive was fired. The board hired investigators, and what came back confirmed the short seller. Nasdaq moved to delist the shares and the warrants on 1 June 2020. The SEC filed an emergency action and froze what was left of the assets that September.

The complaint is worth reading for the size of the gap. Akazoo had told investors it had more than 38.2 million registered users, 4.6 million of them paying, and over $120 million in annual revenue. It had, according to the SEC, no paying users and at most negligible revenue. This was not a company that had overstated a growth curve, it was a company whose customer base was an accounting entry.

~ the geofence ~

The interesting part of the deception is that the product existed. You could load akazoo.com, search the catalog, walk through album pages for Cantonese pop and Danish radio plays and fifty different opera compilations, and the pages rendered. What you could not do, from most addresses on earth, was subscribe. The service was licensed for a handful of markets and told everybody else to check back later.

That combination is what made it durable for eleven years. A streaming service with a real catalog and no real customers looks exactly like a streaming service with customers if you only ever see the front end, and the metric that separated the two lived in a spreadsheet in Athens. The album pages kept being crawled by search engines until the last week of January 2021, at which point the server stopped answering and the site never came back.

~ what the settlement was for ~

In April 2021 Akazoo agreed to a judgment permanently barring it from further violations, and on 27 October 2021 the SEC announced the number: $38.8 million, disgorged for the benefit of the defrauded investors. Separate shareholder litigation over the SPAC had already partly settled for $35 million that April, and in March 2022 the company's auditor was sued for $40 million. The domain now loads a GoDaddy parking page, which is the least eventful thing that has ever happened to it.

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