Red Flag: Music’s Failed Revolution premieres on Tuesday at 8.35pm on SBS with both episodes available to stream free on . The second and final episode will air on Tuesday 22 October at 8.35pm on SBS.
It’s 2008. Katy Perry has just scored her first hit single with I Kissed a Girl, and a revolutionary new idea has entered the music industry: listen to music for free, legally.
Key word: legally. Sites such as Napster and LimeWire had popularised illegal file-sharing among those no longer wanting to spend $30 on a CD.
Piracy was threatening to take down the world’s biggest record labels.
Enter a plucky new startup: one that promised you could listen to your favourite artists for free, and that advertisers would foot the bill.
An Australian tech startup on the Gold Coast was once one of Spotify’s biggest competitors. Source: SBS / SBS News Documentaries
No, this wasn’t the birth of Spotify — but that of an Australian company called Guvera.
Nicknamed the “iTunes killer”, it beat Spotify to launch in Australia and the US, and was once thought to be valued at a billion dollars.
So why have most of us never heard of Guvera?
The next Facebook or Google?
From its humble beginnings in a Gold Coast office, Guvera’s goal was to change the music industry forever. It chose an opportune moment.
The industry’s massive wealth and debauchery, fuelled by record music sales in the 90s, was starting to irritate the public, Australian musician Ben Lee told SBS News Documentaries.
“It becomes a bit of a ‘let them eat cake’ Mary Antoinette moment where … you want the aristocracy to topple,” he said.
The startup’s name was inspired by revolutionary Che Guevara, and its motto was “F*CK PIRATES”.
“When you build something like this, it’s a part of you … you dream, sleep, eat everything that’s here,” co-founder Brad Christiansen said.
Christiansen founded Guvera alongside Claes Loberg: a visionary Swedish Australian with long hair, cowboy boots and a rock star look.
Claes Loberg (recreation) came up with the idea for Guvera in an airport while waiting for his flight. Source: SBS / SBS News Documentaries
Their dream was to create a platform where brands would pay for you to download all the songs you wanted, in exchange for having branding on the website.
“The elevator pitch was: What if you as the pirate could get your music for free without your artist suffering?” Guvera’s former chief technology officer, Finbar O’Hanlon, explained.
The company signed licensing deals with the four biggest record labels, as well as brand partnerships with Australian Open, Harley-Davidson and The Voice.
As Guvera’s first chief technology officer, Finbar O’Hanlon’s job was to launch the startup’s tech platform. Source: SBS
Guvera launched in 20 countries and by 2015, it said it was gaining over 100,000 new users a day.
Poppy Reid, former editor-in-chief of youth media publisher The Brag Media and a music journalist at the time, told SBS News Documentaries it was exciting that an Australian company seemed poised to become a dominant player in music.
“Guvera definitely seemed like it had potential because it was launching in all of these international markets,” she said.
“It was seeming to be winning the race against Spotify and then against Apple Music.”
Guvera was one of around 26 streaming services operating in Australia at the time, Poppy Reid told SBS News Documentaries presenter Marc Fennell. Source: SBS
The vulnerable mum and dad investor
But as the bills started piling up for the rapidly expanding company, Guvera turned to investors to raise funds.
Sugarcane farmer Keith Messer was game. But when he told his daughter, Tracey Messer, he’d invested half a million dollars in a music company whose name he couldn’t recall, she was alarmed.
At the time, Keith was in his late 70s. Tracey remembers thinking: ‘What the hell are you doing, dad?’
For Tracey Messer, alarm bells started ringing when her elderly father said he’d invested in a company with a “funny name”. Source: SBS
“At his age, why is he investing in something when he has always been conservative with his investment? And this, to me, was high risk,” she said.
Curious to find out more, Tracey attended a 2014 Guvera investment seminar with her father in Queensland.
It was a lush affair, much like every event Guvera put on.
The 2010 New York City pre-launch party for Guvera’s music platform featured US rocker Alice Cooper and rapper Mos Def, a Cuban cigar-rolling table and a 13-metre ice sculpture spelling out Revolution.
The extravagant pre-launch party for Guvera, attended by A-listers in the music business, featured a giant ice sculpture. Source: Getty / Donald Bowers
Tracey left the Queensland seminar feeling doubtful about the spokesperson’s claims that investing in Guvera would make everyone rich.
“They’re not anything different to what’s already set up. Spotify was already set up — how was Guvera better?” she said. By then, Spotify had over 20 million users worldwide.
The day after the seminar, Tracey met with representatives from the private equity firm, AMMA, which was raising money from investors on behalf of Guvera.
“I said to them, ‘Look, Dad and I discussed it … he’s not going to be investing any more money,'” she said.
Tracey thought that was the extent of her father’s involvement with Guvera — until she later walked into the local bank and made a chance discovery.
“One of the tellers said: ‘Oh, aren’t I glad to see you?’ She felt like something really wrong was going on … and she couldn’t do anything about it,” Tracey recalled.
The bank teller later told a court she’d seen Keith Messer coming in on two occasions with a businessman, who the court believed to be an AMMA salesman.
The teller testified that Keith was guided to break term deposits and transfer large sums to Guvera.
Keith Messer was known to locals of Hervey Bay, Queensland as The Watermelon Man. Source: SBS
Over two years, Keith invested a total of $8.5 million into Guvera. Court documents showed that transactions had been made even after Tracey’s talk with AMMA, and the bulk of them had been done while Keith was suffering from advanced Alzheimer’s disease.
Tracey doubts her father even had the capacity to make a bank transaction with his Alzheimer’s.
“I believe a 100 per cent that these people were fully aware that my dad had no idea of what he was doing,” she said.
Tracey sued AMMA and won, with the Federal Court branding the firm’s actions as “exploitative”, “manipulative” and “unconscionable”.
Tracey is still upset over how her elderly and vulnerable father was treated.
“There’s only one good thing out of Alzheimer’s with dad, and that he has no recollection of this,” she said.
“This would’ve destroyed him.”
$180 million vanished into thin air
Keith Messer wasn’t the only one to pour his savings into Guvera.
In 2016, the company revealed it had raised $180 million from 3,000 investors.
Most of the equity had been raised by AMMA, whose executive chairman was Darren Herft — who also happened to be chief executive of Guvera at the time.
“The guy who’s running the music business is also running fundraising,” investigative journalist Liam Walsh told SBS News Documentaries.
Such a practice is legal, but Walsh describes the situation as a “red flag”.
Guvera never achieved its dream of dominating the music industry.
Guvera folded after the company failed to float on the Australian stock market. Source: SBS / SBS News Documentaries
The company eventually collapsed in 2017 after a proposed listing on the Australian Securities Exchange was blocked. The $180 million disappeared after the company folded.
In 2020, the Australian Securities and Investments Commission (ASIC) banned Herft from running companies for two years.
There’s been little more than radio silence on Guvera since then.
That is, until August this year, when Herft popped up in a video announcement to share some “exciting news”.
“I’ll be rejoining the board of Guvera, a company that I’ve obviously had a long history with,” he said, as the camera panned across four screens emblazoned with the Guvera logo.
“Really looking forward to helping to rebuild our company.”
