1. Fat Beats, Inc.

2. What is it?

3. History Retail basement store open in 1994 Owned by Joseph Abajian (DJ, B-Boy, and producer DJ Jab) Fat Beats, Inc. Headquarters in Brooklyn “The Last Stop for Hip Hop” Niche DJ market

4. Vertical Integration Production: Fat Beats Records Distribution: Fat Beats Distribution –“premier international independent distribution company specializing in vinyl” Retail: Fat Beats and Fatbeats.com –“destined to corner the market in on-line hip hop sales”

5. So, Fat Beats Can??? Produce content Distribute its content to retailers Sells its content at its retail locations Promote its artists through in-store signings/performances Creates…??? –Synergy!!! Of its commodities by selling albums, CDs, tee shirts, DVDs Who does this sound like???

7. Production “much attention from major labels eyeing Fat Beats as an A&R source in hopes of landing the next big artist”

8. Distro Opened in 1996 worldwide clientele for wholesale and mail- order selections of various independent releases Clients= “crucial mom & pop retailer or dj store” “Independent record stores are vital to keeping this music we all love alive”

9. Distro Cont’d “Decidedly not a one stop”…? “distributing and marketing” artists $4M in distro sales in 2003

10. Labels Distributed

11. Retail Formerly –Amsterdam –Atlanta –NYC –Los Angeles Web

12. Competition Production Distribution Retail –“destined to corner the market in on-line hip hop sales”

13. The Alliance Newly formed alliances with companies such as Loud, Tommy Boy, Interscope, Caroline, and Koch October 30, 2007 KOCH Entertainment Dist. signed an exclusive physical and digital distribution deal

14. KOCH Entertainment Dist. Most $$$ “arm” $175M in revenues (33%=digital sales) 25,000 titles/280 labels Ship, market, process music: –“gives us a higher degree of control” M.K. May 2007, $6.5: 2.7% market share –3.3% –2.6%

15. Publicly Traded on London AIM market –1.3M public shares, 67.31% of stock is private March 2007, Marwyn LLP buys Ent. One for $160M Through Marwyn’s capital, Ent. One made many international film/music distro purchases

16. January 22, 2009 E1 Music= –KOCH Records E1 Entertainment= –KOCH Ent. Dist. E1 Music Publishing= –KOCH Music Pub E1 Entertainment U.S. –KOCH Vision E1 Music Publishing= –KOCH Music Publishing No mention of Ent. One

17. London-based hedge fund Specializes in…? –buyout –consolidation strategies Incorporated in…? Cayman Islands $2B in acquisitions in 3 years 79% is privately held

18. Diversification??? hazardous waste plants alcohol and drug abuse laboratories global laboratories online betting services construction training environmental safety consulting snack foods industry

19. Some Questions/Analysis… 1) Since the majority of KOCH Records’s sales are hip-hop or rap music, what does this mean for companies like Fat Beats? 2) What does KOCH Entertainment really mean by independent? 3) What does “independent” really even mean anymore?

20. Cont’d 4) Is there truly any competition in the recording industry? Especially in terms of distribution? 5) Can independent music/underground hip-hop and hedge funds coexist? 6) What does this relationship w/ hedges and off-shore trading mean in terms of the artists’ messages? 7) If “indies” supposedly subvert the dominant system (music and in general), are they, in fact, just reinforcing that system/status quo?

21. If 80% of the music sold in America comes from the “Big Four” and 10% from the independents (ADA, RED, KOCH/E1) what “choices” do we have? Does this really even matter in the age of digital capitalism/music???