In the latest development in the continuing scandal surrounding Bristol-based distributor 3tone - run by Dean Roberts and Christoffer Borud - it has emerged that Spanish distributor SonoSuite has been reaching out to digital service providers on 3tone’s behalf asking how quickly delivery feeds could be re-established after the UK company lost its ability to deliver content last week.
Founded by Maarten van Wijck and José Luis Zagazeta Vinatea, SonoSuite is headquartered in Barcelona. The company’s website says that its “white-label solution has been designed to help music businesses from across the globe to run their digital distribution independently, without using third-parties or intermediaries”.
SonoSuite had previously facilitated 3tone’s operations from late 2020 to mid-2021 when - according to several people familiar with the matter - founder Dean Roberts had a “sudden falling out” with the company.
Sources familiar with the DSP ecosystem contacted CMU on Thursday afternoon to express alarm after they discovered that SonoSuite had approached a number of DSPs asking how quickly delivery feeds could be re-established for bad actor 3tone.
3tone has “very basic” technical infrastructure of its own, and has never been able to deliver music directly to Spotify, Apple Music, Amazon Music and other similar streaming services.
Instead it has always relied on distribution intermediaries or ‘back end distributors’. Its most recent back end distribution partner terminated its contract with 3tone last week, and as a result all tracks belonging to artists and labels who had used 3tone for distribution vanished from streaming services.
The response from 3tone was a garbled message pushed out to customers by email and social media to try to cover up the fact that the plug had been pulled on the company. Simultaneously it was desperately trying to find a back end provider to step in to allow it to perpetuate the facade that it is a legitimate music distributor.
The revelation that SonoSuite has been testing the waters for 3tone came as a shock to a number of CMU sources. When CMU approached SonoSuite to ask why it was apparently starting to work with a company with a reputation as bad as 3tone, it took some time to respond.
Eventually, a comms executive emailed a brief statement that said simply, “Thanks for reaching out and bringing this situation to our attention. While it’s correct that 3tone recently reached out to use our white-label distribution platform, they are not our clients”.
We pushed for further clarification and asked SonoSuite to clarify why it would contact DSPs on behalf of a company that is not a client. SonoSuite eventually said, “3tone was a client from late 2020 to mid-2021. We lost track of their activity until they reached back out recently. We kick off several processes at the same time, including KYC and reaching out to DSPs. 3tone did not pass the KYC. So, as we mentioned before, they are not our clients”.
For a distributor to contact DSPs with queries on behalf of a known bad actor who is not a customer and has not yet passed its own ‘know your customer’ processes was “unusual” and “somewhat hard to believe”, one source who spoke to CMU said. Either SonoSuite dropped the ball and kickstarted distributor outreach early, or it had actually begun onboarding 3tone only to pull back when it realised the potential consequences.
When we pushed again, asking directly for “a clear explanation of why SonoSuite would start reaching out to DSPs for a known bad actor who is not a client and hasn’t yet gone through KYC”, SonoSuite refused to answer, simply reiterating its previous statement and adding “to gain agility we do different processes in parallel”.
While it’s entirely possible that SonoSuite’s conversations with the DSPs were perhaps simply exploratory feelers prior to establishing a formal relationship with its possible new client, it’s also a little hard to believe that a service provider would start those sorts of approaches - informally or formally - for a bad actor with a reputation as poor as 3tone’s.
Another source who spoke to CMU - from the intermediary distribution space - said unambiguously that there was “no way” that the intermediary distributors that they were familiar with would begin that sort of outreach without having signed a customer.
One possibility is that no one at SonoSuite was aware of 3tone’s reputation, despite it having previously been a client, and despite a basic Google search making it clear how bad the company’s reputation now is - including earlier coverage from CMU and the BBC.
This raises significant questions about how reliable SonoSuite’s customer qualification processes are and what sort of first line due diligence processes SonoSuite has in place.
With the 3tone scandal shining a light on the ‘back end distributor’ business, it’s increasingly important for upstreaming distribution aggregators who provide services to smaller distributors to conduct proper and robust due diligence on customers. It seems one previous potential partner for 3tone failed to do this a couple of weeks back, an error now repeated again by SonoSuite.
SonoSuite did, at least, have a KYC process, which - according to the company itself - ultimately meant it declined to take on 3tone as a customer again. There is currently a lack of transparency in the distribution sector regarding the KYC processes that different businesses employ. More clarity on this would help provide some reassurances to artists and labels - many of whom assume that if a company has access to the DSPs it must have been checked and is legit.
With the pool of potential partners for 3tone growing increasingly narrow - and DSP sources saying that they will pay closer attention to any attempts by the company to deliver content via any third party - it looks like 3tone’s ability to continue operating is likely to hit a dead end soon.
However, artists and labels are still owed substantial amounts of money, staff remain unpaid with months of wages owing, and High Court bailiffs are trying to locate Dean Roberts to execute debt enforcement orders.
The question now is how many times do distributor scandals like this need to happen before the music industry gets its house in order - and how can intermediaries like SonoSuite be trusted if they’re prepared to shop an outfit as dodgy as 3tone round their DSP partners - all the while denying that they are a client.