ChaosMusic acquires Microview, grows digital monopoly

ChaosMusic is in the final throes of acquiring data storage firm Microview for $500,000, in a move that will significantly expand the online music retailer's position in the content and peripheral market.

Chaos has been strategically covering its bases in the online music content and peripheral distribution space over the last 18 months, fostering relationships with physical fulfillment companies and the Global Entertainment Retail Alliance (GERA).

In addition to its data storage capabilities, Chaos is keen to utilise Microview's short run CD replication and DVD authoring skills.

The online music retailer and wholesaler, which is 10 per cent owned by Andrew Kelly's Strathfield Car Radios, has recently taken on licensing and distribution via a partnership with Singapore-based YCH Logistics.

"We're bringing the strength of the three organisations together," said Rob Appel, CEO of ChaosMusic. "Our margins improve because we're involved in more links in the process."

Appel said Chaos has fully integrated its software and back end into YCH's operations, particularly in Asia, allowing it to move items around at a very low cost. "The acquisition of Microview means we can move the online agenda along quicker and with YCH we can offer physical fulfillment anywhere in the world," he said.

The recent acquisition will take place as two cash installments, one to be paid immediately and the second, subject to Microview meeting their set performance targets. Chaos will also take a 25 per cent equity investment in the company at 20 cents per share.

While the deal is official, it is subject to shareholder approval. Appel said however, "it is basically a done deal" having secured approval from all the firms' board members. The physical transition is already near completion, with some Microview staff being installed in Chaos' Melbourne offices and Chaos' former Sydney office in Surry Hills shifting to Microview's residence in Chatswood.

Appel said the restructure did create some redundancies with at least one staff member, the Microview CIO, exiting the operation.