Magex awarded £50m to strengthen US presence
Magex, the NatWest bank’s off-shoot designed to assist the purchase of digital content over the Internet, has received $80m (&£50m) in financing.
The money has come from companies already closely involved with Magex Universal Music, which owns Decca, Polygram, Philips and Motown; and Intertrust, a technology company specialising in digital copyright. Other new shareholders include Goldman Sachs and Capital Z. NatWest retains a “substantial” minority stake.
Magex claims the investment is the biggest one-off funding in Europe. Fashion e-tailer Boo.com secured a reputed $120m (&£75m) last year, but not all in one go.
“The new funds will not be used to raise Magex’s low consumer profile, says the company’s head of business development, Andrew Farrow. “I’m not naive enough to think that consumers will want to buy something because of the Magex name,” he admits. “We’re an infrastructure company and I wouldn’t pretend that this is an attractive consumer product.”
Instead, the money will go towards research and development, and expansion into the US, its main market, says Farrow.
Magex offers a service designed to get around the problems of music and digital content piracy. Farrow claims not to have any direct competition, although there are many companies moving into the area of digital downloading.
Conceived over two years ago, Magex is only now preparing itself for market.
A music website is set to use the service, but Farrow declined to reveal its identity as Marketing Week went to press.
Despite all the publicity surrounding digital music downloads, Farrow believes non-music downloads, such as books and business to business documents, will soon become a bigger market. “We’re already starting to see some shifts in this direction,” says Farrow. “I believe this market will be twice as big as the music market.”
NatWest’s other main Internet subsidiary, CyBuy, is also targeting the US market ahead of the UK. CyBuy uses e-commerce technology to allow so-called “buy-in-the-banner” Internet advertising, which let users buy products direct from the ad. It is still owned by NatWest.
