Native Instruments file for insolvency...

[VladK]

Not all sales to private equity are disaster. Paulson owns Steinway since 2013, and made it financially successful while keeping it a valuable brand.

Yes, some of private equity investors buy just to squeeze as much profit as possible, and then to sell as parts.
However, the sale to Bridgeport and Bain would probably be different if succeeded. Bain bought Guitar Center in 2007, and while they failed to clear its huge debt and were forced to sell the majority stake, they are not a typical private equity predator, they usually have a long term outlook. And Guitar Center is still alive while its only competitor SamAsh (which is family owned) is almost gone.

But anyway, the insolvency decision means that most likely the sale to Bridgeport and Bain will not happen. Now the administrator will decide if the company can be sold as a whole, split, stay as is if external financing from an angel investor is secured, or completely liquidated with only some assets sold. This proceeds can take years BTW.

And there is a small chance that insolvency is just a tactical move to let Bridgeport and Bain cheaper than it was agreed, but if this is true than this smell corruption, I doubt this is the case.

[VladK]

duplicate post

[npdc]

Are they the first big victim of A.I. in this field?

I think there are hard times ahead for a lot of companies in the plugin/music production business. We've already seen a lot of acquisitions, mergers and consolidations, which will likely accelerate, combined with a lot of household names going out of business.

There are two main reasons why the market is shrinking:
1. AI generated "music" doesn't require expensive plugins and hardware, or any effort, talent or creativity for that matter. Even with a free subscription to one of those services, you can generate more "music" every month than you could ever hope to actually produce yourself. This has essentially killed off the bedroom producer/hobbyist market. Those people are just typing prompts into Suno now instead of impulse buying plugins and sample packs.

2. During the pandemic, people had a lot of spare time due to lockdowns, wfh etc. Now the pandemic is over, people are going back to work, and the economy is also slowing down leaving people with less time and money to spend on hobbies like music production.

True. Thankfully typing prompts gives zero satisfaction to the user, so people doing it are only lying themselves. Nothing beats making your own song with all its flaws. The brain can't be tricked. You build a personal connection with your own made song, you know it from inside out, something it will never happen with a text prompt.

[Gamma-UT]

And there is a small chance that insolvency is just a tactical move to let Bridgeport and Bain cheaper than it was agreed, but if this is true than this smell corruption, I doubt this is the case.

If you're referring to my comment, Francisco would never have agreed to something like that. I just meant that Bain probably didn't like the original price or the debt NI had and walked away, but there's a possibility they might come back if the administrator is unable to sell the company or its assets at close to that price. One thing that would most likely change with it going into administration is how much debt the new NI would have.

[starflakeprj]

I think the major reason behind Native Instruments’ decline is a misplaced product focus.

Instead of listening to long-standing user demand for meaningful updates to core products like Massive (the original), FM8, Reaktor, Kore, or investing in genuinely new and innovative software, the strategy seems to have leaned heavily in another direction. Sure, we finally got Absynth 6, but the overall reception has been quite lukewarm.

Kontakt has become the cash cow, with most new releases being simplified sound libraries built on the same underlying concept. Small variations, minimal differentiation, repeated over and over again.

That approach may generate short-term revenue, but it comes at the cost of innovation, customer enthusiasm, and long-term trust.

Innovation isn’t about releasing more products. It’s about building the ones users are actually asking for.

I'm quite surprised that this didn't happen to Reason Studios or inMusic Brands before Native Instruments, though. Waves Audio should probably be worried as well. The market is simply too saturated.

[Examigan]

I finally bought Kontakt and MassiveX just last year and then this happens.

Hopefully they survive somehow.

[ericj23]

Is there any evidence that the rest of Soundwide (izotope and PA) are anything to do with this. It is possible that Soundwide is happy with those companies and only put NI on the market? It got no buyers, so insolvency is there to get it off Soundwide's books.

[Lazarus451]

There are many reasons for the hard times of the music production software industry:

1.) Oversaturated markets. A lot of companies are making mostly the same or similar products.
2.) Limited market size. Almost everyone has a phone or computer, but grandmothers do not make beats.
3.) Rising costs. Almost everything is more expensive than 10-20 years ago.

[EvilDragon]

Is there any evidence that the rest of Soundwide (izotope and PA) are anything to do with this. It is possible that Soundwide is happy with those companies and only put NI on the market? It got no buyers, so insolvency is there to get it off Soundwide's books.

Soundwide doesn't exist. It was a rebranding experiment that failed (and an expensive experiment at that). NI equals all the umbrella companies that were subsumed.

[hey212]

The end of this NAMM video has a great interview with Dirk from a few days ago, which he closes with: “The one thing I learned from selling PA and Brainworx to a PE firm is, I’m never going to be a minority shareholder in anything. Those guys telling you what to do and what not to do, when they really don’t have a f**king clue, and I mean it.”

[billinder33]

Are they the first big victim of A.I. in this field?

There are two main reasons why the market is shrinking:
1. AI generated "music" doesn't require expensive plugins and hardware, or any effort, talent or creativity for that matter. Even with a free subscription to one of those services, you can generate more "music" every month than you could ever hope to actually produce yourself. This has essentially killed off the bedroom producer/hobbyist market. Those people are just typing prompts into Suno now instead of impulse buying plugins and sample packs.

IMO Splice and the Splice-like variants have done way more damage to Kontakt than any prompt-based generative AI like Suno. So many Kontakt instruments have been chasing the loop-based producer, but Splice is just a way better solution for those workflows.

[starflakeprj]

YouTube videos on the subject are starting to appear:

God I hate YouTubers and their “omg” and “chin in my hand looking quizzled” looks

I agree, this is quite disturbing and annoying! I simply refuse to watch videos with those thumbnails.

Not to mention videos, and also articles, claiming 99% of the users don't know that, or 97% of all people haven't done this.

[Gamma-UT]

The end of this NAMM video has a great interview with Dirk from a few days ago, which he closes with: “The one thing I learned from selling PA and Brainworx to a PE firm is, I’m never going to be a minority shareholder in anything. Those guys telling you what to do and what not to do, when they really don’t have a f**king clue, and I mean it.”

I remember thinking when Dirk said he invested a chunk of his money from PA buyout in the Soundwide deal: oh sh*t, that won't end well.

[Dalle]

Sad. But deserved for their years of terrible decisions.

[hey212]

The end of this NAMM video has a great interview with Dirk from a few days ago, which he closes with: “The one thing I learned from selling PA and Brainworx to a PE firm is, I’m never going to be a minority shareholder in anything. Those guys telling you what to do and what not to do, when they really don’t have a f**king clue, and I mean it.”

I remember thinking when Dirk said he invested a chunk of his money from PA buyout in the Soundwide deal: oh sh*t, that won't end well.

Haha, yup! Although I can completely understand wanting to maintain a stake in something you built from scratch. But ya, it must suck then having to watch a bunch of clowns that think they know better run both into the ground.