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Feb 16, 2023 • 50min

How Cash Money Records Pulled Off Hip-Hop’s Louisiana Purchase (with Zack O’Malley Greenburg)

Everybody’s got something to say about Cash Money Records and the brothers who co-founded the label —Bryan “Birdman” Williams and Ronald “Slim” Williams. To paint the full Cash Money full picture, good and bad, I brought on Zack O’Malley Greenberg who has interviewed the brothers at-length while working at Forbes.Cash Money has one of the deepest catalogs in the game with several classics. And unlike some other upstart hip-hop labels, Birdman and Slim maintained control as they rose up. Their 1998 distribution deal with Universal is hip-hop’s Louisiana Purchase.But we can’t ignore Cash Money’s lows either. There is a long, long list of artists who claim they were not compensated fairly by Birdman and Slim.Zack and I go through 30 years of Cash Money as a business, its competitive advantage, and what comes next now that Drake and Wayne are gone from the label. [1:44] Is Cash Money the greatest hip-hop record label of all time?[7:34] What people sleep on about Cash Money[11:01] Cash Money’s history of not paying artists [16:52] Did Cash Money succeed because of Birdman and Slim or despite them? [19:29] Biggest signing? [20:29] The 1998 Universal-Cash Money deal [25:31] Lil’ Wayne’s mixtape run[29:03] The benefit of partnering with Republic Records[31:49] Bidding wars for Lil Wayne, Drake, and Nicki Minaj[33:21] Connection with New Jack City [40:56] Cash Money catalog valuation ?[43:00] Lil Wayne’s beef with Birdman [45:48] Can Cash Money strike platinum again? [50:44] Birdman’s love for music [56:08] Hopes for a Cash Money reunion tour and biopic [58:24] Who “won” the most in Cash Money’s history?Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.coGuests: Zack O’Malley Greenburg, @zogblogEnjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapitalTrapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.Transcription[00:00:00] Zack: You know, some of the subsequent deals that they worked out with Universal, you know, maybe some of the deals where they were able to get universal to, to tackle some of the back office stuff. I mean, it's very unsexy, but you know, that's clearly an area where they needed to improve. So, let's say,to give some cash in terms of like higher distribution fee in order to have Universal, you know, cover some of this stuff. It's kinda like a boring, dark horse candidate, but you know, I mean, you could say that, that's probably useful in terms of buttoning things up.[00:00:37] Dan Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from the executives in music, media, entertainment, and more who are taking hip hop culture to the next level.[00:00:57] Dan: All right. Today's episode is all about the one, the only cash money records. I got the one and only Zack Greenberg here who has reported on this company many times before we ran to this company and the business moves they did in our Top 10 Revolutionary list last year. So Zack, welcome back. I'm excited for this one.[00:01:18] Zack: Always good to be here with you, Dan. [00:01:19] Dan: Yeah. So for the folks listening, we are gonna do this in a few ways. We got a bunch of categories here that we're gonna run through, just evaluating Cash Money as a business, some of the highs, some of the lows, and just where they stand overall. But I think it'll be great to kick it off with the question that we often hear from folks is Cash Money, the greatest hip hop record label of all time? What's your point? What's your take?[00:01:44] Zack: How, man, you know, I mean, I think it's sort of like, any of these greatest ever are you talking about, overall body of work or sort of like, you know, The label at its peak. But you know, I think you gotta take it in an overall body of work, you know, type of thing. You know, it's hard to top Def Jam, I think, you know, if you were gonna go with an overall body of work, hip hop, legacy. But, you know, I don't know other than that, I mean, it's hard to say that there's anybody who you'd put above cash money, I'd say. Especially something that is, you know, really artist founded in that same way. I mean, you could talk about Bad Boy, you could talk about Rockefeller. But I think that, you know, Cash Money has staying power. You know, through Drake and Nikki and Lil Wayne and so forth, you know, in a way that, you know, I would argue that a lot of these other labels haven't, and, you know, who else can say that they've had Drake for that long? And I guess he's not there anymore. But man, that was pretty recent development and it's been a pretty great run. So, you know, to go all the way from the early nineties, you know, through basically now being relevant, stacking up all that catalog, you know, it's certainly, if not number one, it's, you know, gotta be top three, if not top two.[00:03:00] Dan: Yeah. So my answer is Def Jam as well, and we'll get to Def Jam in a minute. But, the case for Cash Money is this, and I know a few people have said it. Irv Gotti recently said it. Russell Simmons himself said that Cash Money was the greatest hip hop company that has come through. But the case for cash money, you mentioned it earlier, the fact that they did it while owning the core asset and the music and still doing that moving forward says a lot. Not something that can be said about Def Jam, many of the others that would be even in the conversation. I think even with a newer label at Quality Control, they've still done it while owning it. Well, at least up to this point from some rumors that are happening. But I think that's one case for Def Jam. But then I think of the continued run of success from everything that happened in the nineties from I guess we could start with like juvenile drop in HA in 98 and then pretty much everything from Drake's last Cash Money album, which I believe was Scorpion. So if you're looking just at like that run from everything there, that is such a strong hit rate. And I think that's the thing too that I would give them over Def Jam is the hit rate of who were the artists we signed and what was their likelihood of success and they were just able to do it. Even with the imprints, I mean, I think major record labels. So wrong with so many imprints. I just never worked out and for them to have, whether it's Young Money or even the smaller moments with the best music or with Rich Gain, there was always something there. And even though there was some conflict, and we'll get to that, I think that's the Cash Money case. The Def Jam case though, I think this is where I think of course Def Jam did end up becoming a major record label, so it's a little bit nuanced there, but I do think you have that eighties run Beasties LL Public Enemy. You got the nineties run with all those artists too. Especially looking at what Red Band met the man DMX. I feel like they had New York on Locke and then two thousands, the Rockefeller partner. Murder Inc. The video games, I mean, it's, I know the last decade hasn't been there, but it would be tough to not put Def Jam up top, but I understand if some people would consider Def Jam a major as opposed to, you know, an independent. So, I get the nuance there. [00:05:10] Zack: right, right. And, and being, you know, fully owned by a major as opposed to Cash Money, which really has distribution agreement. You know, and you could look at, you know, I guess Def Jam was sold in chunks, but the total amount that sold for, you'd have to adjust for inflation and stuff. But I wonder how that would stack up against the current value of cash money today, which, you know, it's incredibly driven by the copyrights that they still control and, you know, definitely hundreds of millions of dollars. You know, if you look at, Lil Wayne kind of quietly sold his The Young Money, Cash Money Partnership for a hundred million bucks a couple years ago, that was before the catalog boom, got really crazy and then kind of died down again. So, you know that that's valuing what Birdman and Slim Own, you know, just on the Young Money, Cash Money side of the business, you know, at nine figures. So there's, you know, there's a lot more to the company than that, although that's, you know, that's kind of the gold line. But still, you gotta think that, you know, this is still, you know, sent a million dollar business and, you know, I'd be curious to see what a proper valuation, you know, what it would look like against the total value that Def Jam got, you know, in terms of dollars over the years. But, you know, when you think about who was hottest and what record label was hottest at any particular point, Yeah, I think probably the peak was there was that year that Def Jam was, you know, getting sold or the second half of it was getting sold. And, Lyor basically said to Jay and D M X, like, let's have two albums this year. And, you know, because the valuation is gonna be based on revenues, not earnings. And like, the more you can sell, the more we get. And so, you know, that moment at D M X at his peak, and you know, Jay, I think, I'd say at least at his commercial, you know, record Sales Peak, you know, as an individual artist, you know, that was about as hot as, as it could ever get for, for any record label, I think. [00:07:08] Dan: That's a good point. So I guess if we were to compare Def Jams 98 and 99, like that run to Yeah. Cash Money, and I know there's a few runs you could put in there, but from an overall commercial perspective, it would have to be 0 8, 0 9 20 10, I would probably assume, because you get. Carter three, and then you get, you know, Drake's debut, Nikki's debut. I feel like it would probably be somewhere in there. [00:07:34] Zack: Yeah, that's probably pretty close. I mean, that was a lot, you know, that was a lot of concentration within a couple year period as well. You know, and I think the other thing about Cash Money, that maybe people sleep on to some extent is, you know, just like the efficiency of the label, especially in the early days. And, you know, of course we can get into some of the issues with paying producers and so forth, but, you know, they really had a system and you know, it was going and finding artists that were bubbling up, you know, first in the New Orleans area. I mean, this is in the nineties, and, you know, and then kind of just plugging them into the machine. Right. You know, put them with stable producers in-house, get Manny Fresh on there and, you know, it was not like a, you know, high expense kinda situation. Like maybe you would've seen with Def Jam or, you know, some of the New York, LA labels, it was just like, you know, you know, probably low, low cost, high output. You know, like there's a high margin business, low overhead, you know, it's lean and mean. So I think from, in that regard, Cash Money, you know, it might have been, it might have been the best business, you know, out of any record label. Right. In terms of sort of like efficiency and profitability and stuff like that.[00:08:47] Dan: That's a great point because if you look at that vibe, I think that was the vibe for the South overall. We saw that with no Limit as well, just with in-house production sheep, that production does almost everything and the music videos aren't flashy and the fact that I think they stuck with what they do and what they work with well, and eventually I think collaborations came, but that was something that they were hesitant about as well. Just thinking about juvenile dropping 400 degrees, and I'm going back to that just because that's the first album that comes after that 1998 Universal deal, which we'll talk about soon, but, that album, I'm pretty sure the entire production value for those music videos probably costs less than one of the suits that Puffy and Mace wore in the music videos. or, yeah, Jay-Z's Sunshine Music video, which I know has been talked about for years on end, but that's what the vibe was. There were no Hype Williams music videos coming through Cash Money. Right. At least at that point. I know they came later when Wayne blew up further, but that's what they did. They stuck to what they did and it worked. It worked so well. [00:09:55] Zack: Warren Buffet would love Cash Money. [00:09:59] Dan: Oh yeah. He loves little cost.[00:09:59] Zack: Cash Value. Value, cash value investor. Right. Early cash money would be the Warren Buffet play.[00:10:06] Dan: Yeah, absolutely. Definitely. And the thing is too, you talked about it earlier, just some of this things leading up to the big deal that they had, but even back in those early days, even before the Universal deal, Birdman and Slim, the co-founders of Cash Money Records had a history of legal issues with artists and not paying artists on time. And I actually have a list here, and it's probably an incomplete list, but artists that have had some type of dispute or issue with Cash Money records when it comes to payments. So I have Lil Wayne, Pharrell, Clipse, David Banner, Bangladesh, the producer, at least five or six artists before 1998, Wendy Day, who's not an artist, but one of the attorneys and people that helped make this deal happen. Behi Turk and Shal and Jazz Prince, of course himself. Tiger, Manny Fresh, and I'm sure I'm missing people from that list. [00:11:01] Zack: Yeah, absolutely. I mean, it's a long and storied list of people to have disputes with and, you know, it really is something that goes, you know, hand in hand with success.You can't ignore that history. So, you know, I think it is important to remember some of the context. You know, these guys were coming out of a completely different world. You know, and they were hustlers. They were legit hustlers in New Orleans. And, you know, in doing some reporting, you know, I verified it. I mean, you know, they were the real deal. They moved things over. They went legit. They became record moguls and Bird Man's Case became a rapper himself. And, you know, they were not people who had dealt with, you know, sets of books, right? There was not really necessarily like bookkeeping apparatus in their form of business. So, you know, I think there was an adjustment period that, you know, let's say perhaps went on for too long in terms of, you know, getting things papered up and straightened out. But, you know, I wrote a big story on them in 2019 for Forbes, where I went down to Miami and spent some time with Birdman and Slim. I talked to their lawyers a lot. I talked to Wendy Day. Spend some time in the studio with them and you know, I mean, everybody of course has, if you ask people in the Cash Money camp, they're gonna have their side of the story. If you ask whoever they're having the dispute with, you know, they're gonna have their side of the story too. And you know, obviously when there's smoke, there's fire, there's a hell of a lot of smoke when it comes to not getting paid on time. But… [00:12:29] Dan: What would you say is the Cash Money side of the story, though? The Cash Money is this it?[00:12:33] Zack: They, you know, started out as people who had not had formal training in business, doing business with a lot of other people who had not had formal training in business, who were represented by people who had not had formal training in business. And so when you go back to some of these early documents, it was not properly papered over on either side. And so there's a lot of question over, you know, who owns what, you know, I don't know that anybody who was involved in some of those early deals really, you know, had a full grasp of sort of, you know, music copyright and publishing and, and master recordings and all that. I mean, you know, it's not like an intuitive business, you know, it's like, wait, what? There's two writes to every song. They've like, there's a publishing and a recorded music. It's separate. How does that work? So I think a lot of that was, you know, kind of like if you go back the nineties and early nineties, especially when they're getting started, you know, before the Universal deal there was just really like, you know, I would imagine a lot of handshake deals, a lot of just, you know, kind of like, let's see how, how it goes sort of stuff. A lot of, you know, here we're gonna give you a bag of cash and you do you give us this beat or you give us a verse or whatever. So, you know, it makes sense to me that it might not be papered up properly. But, you know, the fact that that's continued, you know, so far into the future, you know, that's another story. So, you know, what they did say was that, you know, after, and we can talk more about this Universal deal, but after the Universal deal started and then, you know, as it continued to evolve, you know, to where Universal got an even bigger cut of, you know, distribution fee or like an even bigger distribution fee than it had signed up for in the beginning. Universal took on more and more of sort of the back office function. And so, you know, some of the more recent stuff is, you know, a little bit more papered up properly. So that's the Cash Money side. But, you know, it's funny, I mean, when I did this story and I reached out to all these folks, you know, what I got was like a no comment, which says to me that, you know, things have been settled up and they kind of don't want to get into it anymore. Right. Or maybe there was an NDA involved. But yeah, a lot, a lot of smoke. A lot of smoke in that area, for sure. [00:14:42] Dan: Yeah, the NDAs are key. I remember there was one of the people that I had mentioned earlier that I was going to have on the podcast of Trapital, the interview timing didn't work out, but that was one of the first things they said. If you have any questions for us about Birdman and his relationship with this artist or anything like that. No, we're not answering it. And I was just like, all right, noted. Like, and I feel like that's kind of RANE with a lot of this, but I think they and Birdman and Slim specifically in an odd way. It wasn't even just to them alone. I feel like there was this ethos of, you could almost put Suge Knight into this same category as well, but these people that were cut throat with business folks that they were doing major deals with, whether it was Suge Knight with the folks at Interscope or Birdman with Universal, I'm like, Hey, I'm gonna take what's mine. And rightfully so. They kept ownership over what worked for them and they did that, but they kept that same energy with a lot of the people that like worked with them on the other side too. And that's the piece of it that while it was frustrating to see there are actually some other sides of this too, because even the fact that I think we can get into it in a little bit, but just some of the artists, they were able to sign how they went about that. As frustrating as it was about them not paying artists, like there not every aspect of the business was and is predatory. So that's one thing that you know started to come up more and more as once you get past the salacious parts of the details and stuff, you're like, okay, no and no different than why you went down there to report them. Right. There is nuance and there are a number of things to dive into. For sure, for sure. So shifting here, one of the other things that I've thought about, we talked a little bit about what set Cash Money apart. We talked a bunch about the backstory and the bad rep, but the next thing up here is about Cash Money itself and whether or not you think that it succeeded cause of Birdman and Slim or it succeeded despite them. So thinking about this hypothetical world, if it even is possible, other folks that would've had this label in their hands and what things would've looked like, what's your take there? If we're really isolating them as business leaders.[00:16:52] Zack: I absolutely think it succeeded because of them. I mean, did they get in their own way some of the time? Absolutely. But I think, you know, anybody who can run a business that goes from like the early nineties in an informal economy, you know, in like the Louisiana area to being this global thing, to this day that is still, you know, very much at the forefront of an industry. I mean, you know, like they gotta be doing something right. You know, 30 plus years on the staying relevant and, you know, from like the early days Hot Boys to like the late nineties and, you know, remember Big Timers and Oh yeah. Still flying, all that, you know, heyday as we were alluding to, and sort of like the late s apparently, you know, 2010s, you know, of Cash Money, Young Money with Nikki and Drake and Wayne. Even coming through to, you know, to you to say Scorp. I mean, that's a really long run of relevance and you know, have that, I mean, yeah, like I said, they gotta be doing something [00:17:53] Dan: Right. Yeah. I think it's because of them too. I will. Because as much as there are issues, and we've talked about a lot of them here, There's so much of this that would've succeeded with folks, other folks in charge, because there are a lot of record labels from the South that tried to do what Cash Money did as well. And a lot of them came and then most of them went. And the fact that we're having this conversation and not having it about them is part of it. And a lot of those record labels had talented people as well, but things just didn't carry over. They may have taken, you know, a bigger deal to get more money upfront, but then the hypothetical is, let's say it was in the hands of someone else that wouldn't have been able to push it forward, then it becomes part of the Island Def Jam conglomerate and then just kind of gets mixed and mixed. And then it becomes one of the many labels that you hear about where it's like, oh yeah, whatever happened to this one or that one. And I think it took what could have been easily, because there would've been enough meat on the bone if we just talked about Cash Money from the early nineties up until, let's say the mid two thousands. Right. And I think that's, inflection point that we can talk about in a little bit. Even that itself was a great run itself. And then you look at the second half of the career from like the mid two thousands on, that's a whole other historic record label. They have two of those under the same house. I think it's because of them and as much as it can be frustrating to hear and see and, you know, unlikely there's some critical things. But let's jump into that now though, because I think one of the questions we have here is the biggest signing that this record label has had. What do you think is the biggest signing for Cash Money?[00:19:29] Zack: Oh man. You know, I think probably easy answer is Drake, but you know, I would actually say Lil Wayne because if you don't have Wayne, I don't think the Drake thing happens, you know, and really Lil Wayne from such a young age going all the way back to the hot boys and, and you know, coming through. All those Carter albums, you know, like he's the backbone of this whole operation, you know, musically, sonically. And I think without him you don't get everything else that comes along. What do you think?[00:19:58] Dan: Yeah, it's Wayne too. That's who I have. I know that Drake is the highest commercial artist. If you were to look at all of the numbers and I think without him, the past decade would've looked very different. But we would still be having this conversation in some form. Likely if it wasn't for the past decade of Drake, it may be a bit more truncated. But we may not be having this conversation at all if it wasn't for Wayne. So I think it has to be Wayne there. What do you think is the best business move for Cash Money?[00:20:29] Zack: You know, I'm gonna go back to that first deal that they struck with Universal. I was in the early nineties at Wendy Day, who he mentioned earlier. It was sort of like a go be who helped, you know, really get them, you know, kind of set up properly with this deal. But you know, they negotiated it and they wouldn't take anything less than something that they felt was an incredible deal. And, I remember the story that Slim told me as they went in, they sat down some mid-level executive at Universal and low-balled them to straight up buy half the company. And so he and Birdman just got up to leave. Then Doug Morris walks in and he was the head of Universal at the time. Comes in with another colleague, Mel Lo winter and Slim members, you know, Doug saying, Hey, if I were you, I wouldn't sell my company. He comes in and offers him 30 million advance just for the privilege of doing business. And, what does Universal get a 7% distribution fee, which is not a lot. So kind of almost doesn't make sense from Universal's perspective unless you think about it in terms of market share. Market share is so important when you're the biggest record label because there are all these great things that happen when you have the most market share. There are all kinds of rights that are assigned based on market share. Like anytime there's, you know, a mislabeled song that gets played or gets spun,and this happens a lot, the metadata in music is a disaster. So if, you know, there are these huge pops of sort of like unresolved money and you know, what they eventually do is they get resolved down by market sharing. So if you're Universal, you know, you get the land share of that and there's a lot of other things, a lot of other places where calculations are done based on market share. You can also brag and say that you're the biggest stuff like that. So, you know, certainly it was worth it for Universal to come in and especially, you know, you think about at the time, You know, hip hop was still at a nascent stage and particularly hip hop in the South was like, not even really on the map for Universal to be able to come in and have this connection was really great for them. But, yeah, I mean, what a great deal. 30 million bucks. You don't have to give up anything. You just give, you know, just give a distribution fee and frankly, you would want your stuff to be distributed by this, you know, enormous record label anyway, so that you could expand and get bigger and better. So I think hands down, that's it. You know, that didn't stop, that there were rumors, you know, that they were even bootlegging their own music, like out the back or wherever, so that they didn't have to pay the 7%. But I, you know, I don't know. I mean, that's that talk about, you know, efficient business. But, you know, I think you go back to that deal that kind of laid the groundwork. Cause if they had given up half of their company way back then, I mean, you see what happened, Jay-Z he up, you know, a huge chunk of Rockefeller early on and. And I think was never really that incentivized, you know, to make that his main thing anymore because, you know, he'd given up such a big chunk early on.[00:23:29] Dan: Yeah, it's one of the best deals we've seen in music and one of the best deals we've seen in hip hop over the past 30 years without question. And the fact that they were able to get everything you mentioned, plus 2 million advance for three years. They kept ownership of the Masters too. And that's the thing that, as we talked about, Birdman and Slim are still collecting on that year after year. So it's up there. It's incredible. And I know that there were other labels that tried to do the same, but just couldn't. I think part of the reason is that this goes back to them focusing odd, what works for them. They had a unique sound. Universal saw this as their entryway to the south in an authentic way because back then, you know, the south was still vying for dominance. And I know that, you know, things were happening at LaFace, but this was different. The New Orleans sound was different from what was happening in Atlanta at the moment. And this gave you an entry path into that. So it was big time. [00:24:27] Zack: Yeah, yeah, yeah. And, I think, you know, also 30 million back then, I mean, probably more like 50, 60 million when you talk about inflation. But you know, I would, to our earlier point, you know, did Cash Money succeed? You know, or despite Slim and Birdman, you know, that's situation where, you know, obviously I wasn't there and there wasn't a video of it, but, you know, when you sit down with Slim and Birdman, like you can get the sense that it would be tough to negotiate with that.You know? I mean, Slim's sitting there, he's like 10 feet tall. He doesn't really talk very much, you know, and Birdman, he can get pretty loquacious, but like, uh, he, you know, when he wants to, you know, be kind of stone based, you know, I mean, he can, he can have a great poker face. So I think, you know, if you're some executive, you're going in and you're trying to get them to sell, and they have really no incentive to sell, and they're sitting. Just like, Nope, we're good. You know? I think that that leads you to offer them some crazy deal, like the one that Universal offered and so I really would chocolate up to some very good negotiating, on their part as well. [00:25:31] Dan: Yeah. You need to be able to negotiate to pull off hip hop's Louisiana purchase. Got to at least one half. Absolutely. At least one half of it. Yeah. So, yeah. The other thing that I did have was a dark horse move and a move that doesn't get talked about as much, and as much as that move does get focused on the one dark horse that I did have is the, well, I guess too, but let me focus on this one. I would say that the mixtape strategy that they had with Lil Wayne in the mid to late two thousands, even though cash money had ownership of the music, even though this, I think that worked so well. One of the questions that we have is just how well did this company record label transition from different stages of music, whether it was from the CD era, ringtones or ringtones, to streaming it, Cash Money knocked it out of the park. With each of their albums sold, especially when they did this deal at the height of the CD era, when the music industry was struggling in the mid two thousands and they were trying to get people to buy CDs. They were just like, Hey, let's give away the music for free. And Wayne was rapping over other beats. He was in his bag more than anyone, and from dedications to Drought, all of those, just so many classics in there that I think real Hip Hop fans and folks that were following Wayne were following even more so than the next album. So all of that speaks. Lil Wayne being able to sell over a million albums in the first week when the Carter three drops in 2008, which is still a very tough time for CD sales to even happen. So that whole run and just the thought to do that. And granted, I think some of this may have been a bit more on Lil Wayne's push himself, especially because at that point he had his own young money imprint. But all of this is happening and you know, Birdman and Slim had a problem with it. They could have said no. But I think the fact that they leaned into the change that was happening, you already saw what 50 Cent did with his mixtapes in the mid two thousands. You get drama, you get the other folks in the south to be able to help make this happen. And I think it worked out well for them.[00:27:34] Zack: Yeah, absolutely. That's a really good point too. So, you know, I mean, I guess when you have a label that has been that successful, that long, Yeah, there should be a couple different options for what the best move was. Yeah, I like that as a sleeper pick. [00:27:47] Dan: Yeah. And Lollipop is the best selling ringtone of all time too. over 5 million ringtones sold, and I mean, ringtones, were selling for like three bucks each to that point. So I mean 15 million just from folks wanting to, you know, have, you know, that little jingle on there, Motorola razors or whatever the hell people were using at that point. But, what was your dark horse? Oh [00:28:10] Zack: Oh man, that's a really good question. I don't know. I mean, I guess it was just so clearly the Universal deal to me. But, you know, and Drake wouldn't really be considered a dark horse candidate, I guess you could say. As time went on, you know, some of the subsequent deals that they worked out with Universal, you know, maybe some of the deals where they were able to get Universal to tackle some of the back office stuff. I mean, it's very unsexy, but you know, that's clearly an area where they needed to improve. So, let's say,to give us some cash in terms of like higher distribution fee in order to have Universal, you know, cover some of this stuff. It's kinda like a boring, dark horse candidate. But you know, I mean, you could say that that's probably useful in terms of buttoning things up and you know, there was a lot of smoke, like we said, but you know, nothing ever, like the house never burned down. So, you know, maybe, maybe those kinds of arrangements really kind of help prevent something like that from happening.[00:29:03] Dan: And I think that back office piece also just makes me think about the broader partnership and the expertise that they were able to lean on. And a question that I actually didn't explore, but now I'm thinking more about it, is how different do we think that the Universal partnership would've been, let's say Cash Money had partnered with another label under the Universal umbrella? Because obviously part of this is very close. There was Universal Republic at the time and they've been hand in hand working with Monte and Avery Lipman ever since, and they are two of the most highly regarded executives in the game that have now being, year after year after year, the label with the number one market share. And part of that is because of Cash Money itself, but it's also because of all the other stars, even outside of that label, they have been able to bring it to, as opposed to many of the other labels in the Universal Umbrella or the umbrella of Universal Music group labels that have not had that consistency. So I also think there's a dynamic there where, let's say there's another world where cash money was under capital or cash money was under some of these other labels that have struggled to stay relevant, what that would've looked like.[00:30:10] Zack: Yeah. I mean, I think if you, if you kind of need to go back to Def Jam, you know, some of the back and forth that Def Jam has had over the years. It gives you an idea of, or even as like a top label, the kind of trials and tribulations you might go under. But you know, when you're coming in, you know, going directly to Doug Morris, you know that that gives you a lot of leeway, a lot of leverage. You got that line straight to the top. And, you know, even with somebody like Jay, it took him, it wasn't until, you know, I don't know, when he was dealing directly with Doug Morris, when Doug, this is, I think around the time of Blueprint three, and Jay had that line. I gave Doug a grip. I lost the flip for five stacks. He could have the album. They bet 10 million on a coin flip and like, you know, one way or the other. So, you know, but Birdman we're doing that like, you know, 15 years earlier, having that kind of direct line. So, you know, again, I think going straight to serve them incredibly well.[00:31:09] Dan: Definitely. Yeah. Another, another piece too. So, two other, like sonically three other dark horse candidates, I'll bring 'em, but they're all under the same thing, was Bird Man's ability to win bid wars and win huge bidding wars, I think is an underrated piece of this record label. So I'll bring up three of them. First one, go back to 2004. So this is around the time thatCarter came out and Wayne was considering to leave Def Jam, and this was around the time that Jay-Z had just became president and Jay-Z pushed hard, make that happen and couldn't leave cash money for Def Jam. That was the thought, right?[00:31:43] Zack: Yeah. Yeah. Carter boys, and there were all these, you know, kind of …[00:31:49] Dan: Yeah, they're trying to push the whole Carter board thing and yeah, Birdman was like, all right, come through. I'll give you your own imprint and you are the president of that imprint and let's continue this thing. And that obviously sets up young money and then the next 15 years after that, right. So he does that. Yeah. And I think that's huge because then that sets the stage for the bidding war for Drake, because Drake drops so far gone beginning of 2009. And this is like, you know, everyone is trying to, it's like when Yaba sweepstakes we're seeing in the NBA right now everyone wants this person and everyone is going after them. I mean, truly Greenwall Lior, everyone was trying to get 'em. And it was that connection that Drake had with Cortez, Brian and Jay Prince Ja Prince and that whole crew that I think eventually helped keep him on the cash money roster there. So that was a huge one. And I think we saw something similar with Nicki Minaj as well. A couple months later. Everyone wanted her to beat me up. Scotty the mixtapes were hot and he and Wayne, Wayne was like, no, I want her to be the, the first lady of the label. That was the whole thing in the two thousands, right? Everyone wanted to have the first lady. You saw it in the nineties, right? But like everyone wanted to declare and elevate this person and rightfully so, but like that's who we had. And then we obviously saw the beginning and the middle part of that next decade. Just go on one of the all-time runs. So Bird Band's ability to win against the biggest people in the industry for record label that his men, you know, his brother own is really impressive for sure.[00:33:21] Zack: And you know, it served Lil Wayne well in the end because Young Money became something that he was able to sell for, you know, about a hundred million dollars for his stake later on too. So, you know, keeping that ownership as opposed to just chasing the biggest advance time and time again we see in hip hop. You know, it's so important. But, you know, I was thinking the other night, it is funny, like everyone has watched New Jack City, and it had been ages, ages, ages. And if they reminded me, I mean, how much of the whole Young Money, Cash Money situation is modeled after elements of that movie. I mean, even just like, The name Cash Money or C M B Y M C M B. The shirts, like the shirts, are incredibly similar that, you know, a lot of the lines, even the Carter, you know, the albums are named. I mean, the Carter was the building, you know, where Wesley Stein's character was like running this whole operation you know, that's kind of like another interesting element to the whole, you know, to the whole narrative. Like, you know, these guys coming out of Louisiana, you know, had their eyes up on this very New York kind of, you know, almost role model, for a business. And, you know, they had been hustlers. They were kind of modeling themselves after these, you know, fictional hustlers in New York and, you know, and then in a way out hustled sort of like the New York record label establishment. So I thought that was kind of an interesting, you know, little side bit of color to the whole story. And, like a bit of irony as well, you know, when you talk about, South versus, New York kind of situation too. [00:34:59] Dan: And I think that also speaks to some of that mentality too, because here you have Birdman that was getting inspiration from a black crime movie. And I think a lot of the ways of him doing business are very much central on, okay, I wanna support and uplift the black community, do what I can here and grid. And I think, you know, part of how he was able to do that has, you know, been quite controversial just with certain artists he's had on. Yeah. But still, I think that ethos stems back from ownership in trying to keep things in-house as much as you can. And it took them a lot to even partner with other artists from other parts of the countries and stuff like that, that I think you saw with Dino Brown and how he was in that movie and how he carried versus I think someone like Jay-Z who record label Rockefeller named after one of the great white business magnets that you had in this country. Right. And so many Jay-Z bars, whether it's Black Axl, Rose Black, Kirk Cobain called me this. I feel like, you know, people always get on Kanye for some of that. Like always trying to like be okay. I'm, you know, the black version of whatever X person. But I think Jay-Z, you know, also had a lot of that too. And then I think also looking at his business mentality, a lot of his success came from his huge and lucrative partnerships with established companies in this space. So the inspiration I think also became kind of telltale sign for the type of businesses these types of folks ended up creating too. [00:36:23] Zack: Yeah. And you know, I mean, you know, brown was a really ruthless character. And you know, I think there's like the money and the success that's glamorized. But you know, it's a gritty movie. I mean it seems like he is not a likable guy in the end. You know, without giving too much of the plot, I'm sure everybody's seen it, but like, I was like, wow. Yeah. I don't know if I'd be wanting to model myself after this dude. You know, he's pretty brutal. But, you know, even on the, you know, kind of the lighter side, there's a scene where he's like giving out turkeys at Thanksgiving. Yep. And you know, the Cash Money guys always give out turkeys in New Orleans at Thanksgiving and I wonder if they got that directly from the movie. You know, cuz so many of you know, from the Carter. You know, the c n b kind of, kind of like whole, you know, ethos there. I wonder how much of that they just pulled directly from the movie, so…[00:37:16] Dan: Oh, yeah. I could definitely see that mentality too. And speaking about it, you know, full circle. I could also see Birdman having a bit of that cancel that bitch mentality too, in short situations.[00:37:28] Zack: Right, right, right, right. Exactly. So, yeah, I mean, and they won't talk about that part of it, the interviews maybe, but you kind of get the sense of like that's where the negotiation and the cash element of the Cash Money comes in. Yeah. [00:37:42] Dan: The aita literally held people over the balcony of a building to get what he wanted. Right. Yeah. Yeah. A lot of that came through to fruition. But next category up here. So missed opportunity. Is there anything that you look at that you're like, man, obviously it's an overall successful company. Is there anything you look back on about what if they did this differently or what if they did that differently?[00:38:02] Zack: I think the number one thing I wonder is what if they had sold the whole thing, you know? A year and a half ago, could they have gotten just an insane multiple? I mean, you know, you're seeing like Springsteen staying and all these guys getting hundreds of millions of dollars for their catalogs. So, you know, I get it. And there's, you know, catalogs, hip hop catalogs are valued differently from rock catalogs. And also one of the benefits of rock catalogs is they're usually, you know, written and owned by, you know, all the rights are with the band. There's not like a million different producers coming in. It's not as complicated. So like, you know, they can sell the whole thing, you know, a hundred percent of the rights and you don't have to, you know, it's not like you're just buying like, you know, I don't know, 30% of this and 50% of that and whatever. It's, it's not this complex web, let's say there may not be as many things that haven't been papered over as there were with Cash Money, but man, you know, there were some pretty insane, numbers flying around and I really wonder if, you know, if they had, been applying some of, you know, 20 or 30 x multiple. To whatever they were pulling in, you know, which is, you know, they can just sit there and make, you know, tens of millions of dollars a year, just off of this catalog. I mean, so what would the market have been if they had went and sold the whole thing at the peak of the catalog? Boom. That's what I really wonder. [00:39:21] Dan: That's a good one. So I guess some high level back of the envelope math on that. So let's say that the peak of the catalog boom was like December, 2020 maybe, and then like, you know, into the spring of 2021 and we definitely saw some 30 x multiples there and at least the last public number I saw, and I think you had this in one of your latest articles as well, but that Cash Money's Masters generated around 30 million annually, or 20 to 30 million. Was that the number?[00:39:49] Zack: Yeah, I think it was at least 30. And you know, cuz Bird, like most of hey Birdman, you know, has been making like close to 20 million a year, for a while, give or take. And you know, most of that is just, you know, the catalog. So yeah, I mean that's just his cut. And then if you figure you double that for Slim, yeah, probably, you know, it was around 30, 35, something like that, so, you know. Yeah. I mean, are they gonna get a 30 x value even at the peak? I don't think so because just hip hop wasn't getting that kind of valuation. I don't really understand that because everybody's like, oh, rock and roll music gonna stand the test of time. It's like if you ask the average 20 year old who Bruce Springsteen is, they're not gonna know. I mean, so I would argue that hip hop is actually gonna be more valuable down the line. But just the valuation, you know, that's not what people have been paying for. So even at the peak, you know, I, I don't know that I saw any valuations anywhere near 30. I think Kanye was shopping his catalog at one point and wanted a 30 x multiple, but, you know, didn't get any bites. So I think it comes down to like, yeah, what kind of multiple could they actually have gotten? [00:40:56] Dan: Yeah, because even more recently, so yeah, we're recording this now. January, 2023, there was a report that just came out about Dr. Dre selling a collection of music assets that I believe are worth different multiples. But the number that I heard from that was, They generate around 10 million per year and that he wanted 250 and he's getting just over 200 million or somewhere between that. So that's around a 20 x multiple for a deal. That sounds like it was still coming underway in 2022. So if you were to put that multiple on, let's call it 35 million for maybe what Birdman and Slim have collectively, then that is you're talking $700 million. So that's a pretty sizable number, not a billion. But maybe if there are some concerns about, maybe there's a bit more of a split of who owns what. We didn't even talk about publishing right now, but there may be a split too, especially if everything was captured. and even thinking about quality control, for instance, and I think they got around 400 million, 300, got 400 million, but this was last year. So I would assume that 500 to 750 sounds, if I heard a number there, I would be like, sounds about right. If I heard a number lower than that or higher than that, I would probably be surprised one way or the other. [00:42:15] Zack: Yeah. Yeah, I mean I think that makes sense. And it's not just one artist, you know, obviously it's a whole bunch of artists and a bunch of pieces of different artists. But I think another thing, and this is maybe one of the reasons why the hip-hop valuations are lower, is like when you have all those producers, it might not be as easy to get, you know, to get clearances for using stuff in commercials and that sort of thing. Whereas if you buy a hundred percent of the rights, there's no question. Right. And so I'm not even sure if somebody owned 1% of, of something, whatever. Like I don't think they would have some, like, veto right. About the song being played in a commercial. But, you know, when you start to have so many different parties owning bigger stakes, a particular song, it can get a little convoluted and, you know, I do wonder if that's a big part of it as well.[00:43:00] Dan: Yeah, no, that's a good point. Yeah. Cuz I think sampling also is a huge piece of that as well. The missed opportunity for me, this is a bit more of a specific one from like a timeframe, not like a specific move, but Birdman and Little Wayne not settling and squashing the beef, the issues that they had in the mid 2010s. I think we lost out on Wayne. I know Wayne was in prison during part of this, but we lost out on his momentum. We lost out on a lot there because I feel like a lot happened from the Carter four coming out in 2011 to the Carter five coming out in 2018. I believe. There was so much back and forth. There was so much drama. You know, Drake was going on his all time run at that point. Nicki was doing the same. And the fact that the signature biggest artist is literally tweeting out, I want off this label, but it's not that easy. Or sending these messages out in the middle of Wayne and Drake having their tours and him still being on albums and trying to figure out how to drop things.I think it was obviously a great decade in run, but I think it could have been even greater if they were able to solve some of that stuff and figure it out. [00:44:11] Zack: Yeah, a hundred percent, you know, that that was like, it's a long time to be going between, proper albums, you know, so, and I think that was a really interesting time in the music business. And, I mean, the music business changed completely right from, from 2011 to 2018 from being, you know, oh, this new streaming thing is gonna be important to like, you know, it is the entire business basically. So, you know, and I think that an artist like Wayne, you know, as somebody whose music translates really well to, you know, to that medium. And, you know, as we know, hip hop is a monster on streaming and, you know, tends to do really well. So I would've been really curious to see if he had been able to continue that momentum, you know, just how much bigger he could have gotten in that period of time too.[00:44:57] Dan: Yeah, definitely. The next piece we add too, I think we talked a little bit about this just in terms of how did the label handle the transitions? And I think you just mentioned it there. They were able to do a lot of it well, especially the mixed day piece and the ring toes. And then I think a lot of it laid the work for streaming and Drake is streaming, did a lot of that, the Cash Money labels. So I think that worked. But this next question is interesting though, because it's been around three years, I think it's been at least three years since you did your deep story, the Forbes cover story on Cash Money, where you went down and interviewed them. And then I know it's been four years since I had written a piece around the time that Drake had completed Scorpion and we knew that it was going to be, or at least I thought the future may be bleak. And I think the question that you pose into the piece was, can they strike platinum again? It's been three years since now. What do you think? [00:45:48] Zack: You know, I don't know. I mean, the rules for platinum, like what constitutes platinum have changed so much that, you know, all it takes is, you get, you know, one hot signing and they do really well on streaming and suddenly you have a platinum whatever. And, you know, it's like, okay, I think that, you know, Drake is gone. Wayne is gone. When I went down there, they were really big on blue face and Jack Reese, you know, I don't know what either of them are turning out to be like, I mean anywhere near Drake, Nikki, Wayne, et cetera. Jack Reese is the king of R&B though, right? That was the whole thing too. So what I'm gonna go with, no, I don't think they will begin Drake Platinum. But I would caveat that by saying it doesn't matter because they can just sit back, and collect these checks. And that's gonna happen. That'll happen even if, you know Drake and Nikki and Wayne retire. I mean, their back catalog stuff is still gonna be a gold mine. And you know, when I was down there, what they said was that they're forever in business with Drake. But they wouldn't get more specific. And so what I took that to mean was, you know, at the time, you know, he was kind of an ex extra kidding himself. But even once he's gone, they're still sitting on these, you know, their share of the copyrights that will be, you know, Drake is a streaming king and they have a big piece of that. So, yeah. Do I think they'll strike platinum again? You know, probably not, but I don't really think it matters. I don't think so, what are they gonna do? Like what are they gonna do? They're gonna sit back and collect those checks. Yeah. [00:47:26] Dan: Yeah. I came to the same spot as well. I guess platinum in the purest sense of having a chart hit. Sure. There could be a legacy hit that gets, you know, some viral thing on TikTok and then that becomes a hit. Like, I don't know, I don't know if I like slow motion singles, like juvenile when platinum, but I feel like that's the type of song I could see go viral and some TikTok thing and then bring new, that's one of my cat favorite Cash Money songs. And I feel like I could see something like that happen. But I feel like you were kind of posing it more so in the moment of looking at these runs of like late two thousand, late nineties, early two thousands, that Cash Money is like a platinum moment or mid two thousands. Wayne's mixtape ran late two thousands, early 2010 or to mid 2010s. Young Money rises to the highest of heights. I don't think we'll see that moment again. And it's crazy cuz I think there’s times where maybe things could have happened. You had the rich gang moment where he looked like he was so close with Young Thug. And I feel like especially in 2014, people expected Thug to go on to that superstar level and still be very successful. But I think that the stock for Thug at that moment was a little higher than it may be actually reached. And I think some of Thug's proteges kind of reached the heights that we thought Thug would've reached at one point, just in terms of a commercial success perspective. But it just never quite happened. But again, they own this. It's not like they missed some opportunity. This is something that is literally generating tens of millions per year and that's not changing anytime soon.[00:48:54] Zack: Yeah, yeah. Absolutely. So, you know, it's funny, they have, I guess just to sort of like switch gears a tiny bit, but you know, last moment when they said when Birdman and some said they're forever in business with Drake. It wasn't in Miami, but I met with them for some follow-up questions in New York. and they have, like within Universal's building in Midtown, they have a Cash Money conference route. Like there are actually these, I mean I don't think it's diamond play, but the door handles are giant dollar signs, like the Cash Money logo. And, and it looks like they're diamonds in the dollar sign and whatever it is. But, you open up the thing and you go in and there's like all these plaques on the wall and it's just a conference room that's always there. And it's sort of like their designated conference room when they, when they cut the tat. And I remember, yeah, we sat down in that conference room and I really tried to press them on the Drake thing. And I mean, if you dig up the Forbes story, we did a video too. And there's this great kind of tense moment where I'm like really kind of pushing them about it and they're like, we're forever in this with Drake. And like, that's it. And it's clear that's all you're gonna get out of that. But, you know, so, in terms of striking platinum again, yeah, I mean, I could almost envision a scenario where Drake like does the Super Bowl and he plays some, you know, catalog hit that never went platinum. And just purely by the exposure of people hearing it be like, oh man, listen that again, it just suddenly goes platinum again. You know, or for the first time. But yeah, short of that, I know I'm gonna agree with you. I think probably not again, but that it doesn't matter anyway. [00:50:32] Dan: Yeah. So we have a couple questions left here. This one, and I think it's maybe similar to the fourth you're bringing up, but if you were in Birdman and Slim's shoes today, is there anything that you would be doing differently?[00:50:44] Zack: You know what, I think I go back to that question of like, would you sell the whole thing? Especially if the prospects are kind of dimming a bit and, you know, it's like, I don't know though. I mean, you know, it's like if you're getting up there in age, like would you sell you, you know, you got this great house that you bought, you know, you got this great penthouse apartment in New York that you bought. For like, you know, a hundred thousand dollars in, you know, 1982. And, you could probably get, you know, I don't know, 10 million bucks for it. And then you could just like rent and do whatever you want and you know, for the rest of your life. But like, you don't really need the money. Like, you're fine as it is, like you sell it. Like what would you even do with the money that you got? You really love living in that apartment. Maybe you just stay. And I think that's kind of the point. Like, just remember being in the studio with Birdman and he doesn't need to be doing this. Like, he doesn't need to be running around with Jack in Miami trying to make him the, the king of r&b or whatever. But he truly loves it. Like you, you can tell that he's passionate about it and. After the interview was over, and I wish I had this on tape, but we're just like a dozen of us sitting there in the room. And, Birdman, he goes, Zack, why do people think I'm scary? And I remember he said, he was like, really pointy moment. He's like, I'm respectful. You know, I'm not a clown. I don't turn tables over. I don't scream and yell. I'm respectful. Why are people so afraid of me? And I thought for a minute and I said, you know, as like, look man, like, to be honest, I think the base tattoos really are kind of like off putting some people who are not used to that sort of thing. And, he was like, yeah, I've been thinking of getting them removed. You know, I think it'd be better for business. So, you know, it's like there's still this element of, you know, even though he's made it and he's got everything he wants, there's still this part of him that came from a different world. That, you know, he's kind of like still stuck between two worlds, between the world that he came up in and the world that he can afford to live in. And, I think, you know, where he feels at his best is in the studio. So why would you sell that whole thing? Why would you, you know, I mean, why would you kind of give that up? And I think Slim likes it too. And you know, they have this really funny relationship and, you know, Birdman's in the studio and Slim does live the business. And that's kind of the breakdown of it. And I just remember, like after this interview, you know, after leaving the studio, I went and we were all supposed to have dinner together and I went off with Slim and we waited for like a half an hour in the parking lot for Birdman. And he just never showed up. And then we went to dinner and he just never showed up. And it's cuz he wanted to stay in.He just stayed in the studio all freaking night. Cuz that's what he really loves. So, yeah, I guess it's a long way of saying, what would I do if I were them? I mean, you know, probably like the financial advisor advice would be. Sell this big thing and then you're totally set for the rest of your life. But you know, if it's throwing off enough, more than enough money, tens of millions of dollars every year for you to live on, what's the point? You know, why not just do that and do what makes you happy?[00:53:59] Dan: I think that's a piece that often gets for guys and understands what some of this stuff is, that some people really just love the craft. It makes me think too about someone like Martin Scorsese or Steven Spielberg and these directors that are now in their seventies or eighties, they're not doing these movies to try to make more money. Well, granted, yes, I think they're bought into the financial success. They want fair terms. But this is what they enjoy doing. They've been doing it since they were kids and they wanna just find outlets to be able to do this in the best way possible. And I think the same could be said about Birdman of wanting to be in the studio and just wanting to have that energy. And if you sell that, then what do you do? I think especially for someone like him that's stuck to the thing that he does well. And you know, like he isn't out here like Jay-Z trying to be mogul in the sense of having different things. I mean, there's a mogul aspect in terms of media ownership, but not in the sense of like, yes, I own this, I do this, I do that as well. Sure. Maybe there's some smaller things that are in the, you know, new Orleans or, or the Louisiana area, but not in that same way. So I do think that speaks a lot to that. [00:55:06] Zack: Yeah. And I think they have dabbled in other stuff for sure. And you know, real estate, and I think there was some period of time where they had like some oil rigs or something like that.They had a vodka called G T V. They were trying to really build up Y M C M B as like, as a clothing line type of thing, rather than just merch. But, you know, none of that really kind of like ever went viral in the way that any of their artists did. So, you know, and maybe because it was that they just didn't have the passion for it that they have for music. Like that example of Birdman. So, you know, Jay clearly has the passion for the business. He clearly has the passion for, you know, doing the champagne thing or, you know, doing the VC thing. And you can tell cuz he's out there doing it. He’s doing it cuz he loves it, and he makes money. But, I think it's hard for something to do well if you aren't truly passionate. Because consumers can kind of see through that. And also, you're not gonna go the extra mile for something if you don't truly care about it either. Definitely. [00:56:08] Dan: Definitely. And mine is a little different. And this may be more so from a selfish perspective of what I would do, but that's part of the question, right? Yeah. As someone that is such a fan of the vibe and the culture that they were able to create, I want to be able to relive that in different ways. I wish that Birdman and the team could patch things up and there could be a true Cash Money reunion tour that goes across the country. I know there's been different things here or there, but the same way that Didat did the Big Bad Boy Arena tour in 2016. I wanna be able to see that. I'd love to be able to do that. And I also wanna see a music biopic and the same style and the same budget and energy of Straight Outta Compton. I would love to see that about the Cash Money story. And to be honest, I feel like, I know there's a lot of energy around these biopics, but like I may be biased because it's the genre I like since Street Outta Compton came out, I just haven't seen one that's, you know, as good as that. And sometimes it's a bit frustrating when I see movies like Bohemian Rhapsody or Elvis, which I think they're fine, but I don't think they're as good as Straight Outta Compton and they're getting all these awards and stuff. And it makes me think that okay, I don't know whether it'll get Gary Gray back again or someone that can, you know, tell this story in a great way. I would love to see that unfold, but I think you would also need buy-in from the artist because obviously the fact that the relationships are straight can make some of this tough. And the willingness to tell the story in an honest way and the fact that there's kind of two sides to everything. Is Birdman gonna be bought in if he and his brother are being shown as, you know, like predatory loan sharks, like screwed people over. Right. Are the artists gonna be happy if it's making it seem too favorable to Birdman? So I know there's some contentions with how the story is told, but it's still something I would love to see done in the right way. [00:57:56] Zack: Yeah. Not to mention, how would you clear all the music, you know, how would you handle that? Although maybe now it's a little bit more streamlined, but you know, again, you know, a lot of different cooks in the kitchen there, so you never know. But yeah, no, I'd love to see that too. Oh man. That people asked. [00:58:13] Dan: All right, so last question here. Who won? If there's one person, artist, executive from Cash Money, who would you say is the winner of everything that's happened over the past 30 plus years?[00:58:24] Zack: You know, I think there's a lot of winners, a lot of losers, A lot of you get kind of a little bit of both, but I'm gonna go with Slim, you know, I mean, Slim has been in the background, like Birdman has gotten some more of the glory, but he is also taken a lot more of the heat. I mean, he has taken basically all the heat, I think, and Slim has managed to just sit back, run this like incredible business and make just a boatload of money without taking some of the heat that his brother did. So, yeah, I'm gonna go with Slim. How about that? I wanna know, what do you think? I like that answer. [00:58:57] Dan: I'm glad you said that. Yeah, because I think it would be both, but Birdman is my answer. The bidding wars that he won over the years. The ruthlessness of just getting the deals done, staying true to what he knows. There's a lot that I disagree with, and there's a lot that I wish that he had done differently and a bunch of missed opportunities, but they did something that we have not seen done in hip hop before, and we may not see that again, just because of how things have changed and evolved over time. So it really is a credit to that happening. So yeah, I love the Slim take too, because the fact that he reaps the rewards without, you know, any of the backlash. Like I've never seen anyone tweet or get frustrated about like, oh yeah, you know, Slim's really screwing these artists over. Slim's really doing this. You know what I mean? It's always a photoable Birdman, you know, like, right. But yeah. Oh man. Such a fascinating label. Yeah. Before we close things out, any final thoughts on Cash Money records? [00:59:57] Zack: Well, you know, I wouldn't say also, About Slim. You know, there's this, somebody had a great quote. It was some writer and they, it was some famous writer, and they said, a writer's fame is the best fame because you are not famous enough to get bothered on the street, but you are famous enough to get a good table at a good restaurant. And, you know, in a way, I think that's, that's kind of what Slim was able to do. Like, he could get, you know, what, whatever he wants, he could have, but nobody's kind of bothering him about it. And I think that's how he wants it. And, you know, Birdman, whatever he wants, he could have sort of, but what he can't do is walk outside without, you know, everybody harassing him, you know? So, you know, I think that to some extent he's more interested in the spotlight. You get the good with the bad. But you know, I think that spotlight it's important, like being able to turn it off is a really great luxury to have to turn it on and off. And, you know, once it's on all the time, you'll never be able to turn it off. So I am going to Slim for that. Yeah, for sure.[01:01:02] Dan: And Slim also did get memes made out of him from telling Charlamagne off of the Breakfast Club, either or that too.[01:01:08] Zack: Yeah. Or the Birdman hand rub. [01:01:11] Dan: Is that the Birdman hand rub? Yeah, the No clap though. I mean, I need to put on that though, but man, what a moment. Yeah, yeah. All right. Toasted Cash Money. And this is a fun one. What a fascinating case study. And yeah, we're gonna tell the stories that don't get told elsewhere. So Zack, thank you for coming through and thanks again for this Young Money, Cash Money t-shirt for those folks watching the videos. You can see this is the one last time I was in New York, Zack came through, he was like, I got something for you. And yeah, I had to make it happen. [01:01:40] Zack: That's right. I should have worn mine today. But, it was in the laundry. You know. It was in the laundry. . [01:01:45] Dan: Oh, yeah, definitely. All right, man. Thank you.[01:01:48] Zack: Appreciate it. All right. Have a good one. Thanks again. Yep. [01:01:51] Dan: All right, cool.[01:01:53] Dan Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend and post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how Trapital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, go ahead, rate the podcast, give it a high rating, and leave a review. Tell people why you like the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

Jan 19, 2023 • 53min

Why Algorithms are Getting Smarter with Ari Herstand

I had a great chat about the future of streaming and more with Ari Herstand, who isan independent artist who also runs Ari’s Take, an education business to teach others artists about the industry. He just released the third edition of his book, How To Make It In the New Music Business.Ari joined me to discuss how artists are navigating new music releases. It's increasingly getting out of the artist’s hands in favor of the uncontrollable algorithms powering the likes of Spotify and TikTok. Ari says it’s like, “playing the lottery.” While algorithms are taking the human element out of music discovery, that human touch has found itself into new artist monetization tools like NFTs. It has inverted what Ari calls an artist’s “pyramid of investment” for an artist growing their fanbase.Ari and I covered a lot of ground on this episode. Here’s what you can expect to hear from us:[3:10] Waterfall release method infiltrating Spotify[8:15] Music discovery power shifting away from human, toward algorithms [11:40] DSP’s purposely pulling power away from playlist editors[19:21] TikTok isn’t for every artist[21:26] Evolving team structure of an indie artist [27:55] Role of music NFTs[31:44] How Sammy Arriaga sold $250k of NFTs to non-fans[40:02] The Pyramid of investment [49:10] Ari the musician vs. Ari the educator [50:05] Updated version of How To Make It In New Music Business bookListen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.coGuest: Ari Herstand, @ariherstandLearn more about Ari's book, How to Make It in the New Music Business here: https://book.aristake.comLearn more about Ari's Take here: https://aristake.com/This week’s sponsor is Laylo. Join artists like Kodak Black, Sam Smith, and others who notify their fans instantly when they drop merch, tickets, and more. Create your own drop page for free in seconds at laylo.comEnjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapitalTrapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.TRANSCRIPTION[00:00:00] ARI HERSTANDI'm not a good recording engineer and I'm not a producer. So that's another team member that I'm going to hire when I make a record. Like I'm not Finneas. I'm not going to make a record in my bedroom. Like I can't do that. And that's not what I want to do. Like honestly, that doesn't inspire me. What inspires me is to make music with other people.[00:00:26] DAN RUNCIE INTROHey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more who are taking hip-hop culture to the next level.[00:01:36] DAN RUNCIEToday's episode is a playbook for all the indie artists out there. I had a great conversation with Ari Herstand, who is a musician himself, and he's also the founder of Ari's Take, which is his education business that focuses on how artists can make it today, especially indie artists. How indie artists can make it today in the new music business. And that's actually the title of the third edition of this upcoming book. Ari and I talked a lot about some of the new and updated insights that he has in this edition of the book, specifically around streaming, and how artists are starting to favor and prefer focusing on algorithms and how that can get them more listeners and where playlists currently sit with artists prioritizing them. And we also talk about NFTs, TikTok, and Ari's concept in the book called the Pyramid of Investment. This is a great conversation for anyone that wants to better understand the music industry, especially for the growing segment of independent artists that are carving their lanes out for themselves. Here's the episode. Hope you enjoy it.[00:01:48] DAN RUNCIEAll right, today we are joined by Ari Herstand, who is the author of his new book that's coming out, how to make it in the new music business. He's an artist himself, and I was lucky enough to be a guest on his podcast a couple months back. So Ari, it's great to have you on. And congrats on the book coming up.[00:02:06] ARI HERSTANDYeah, thanks, Dan. Thank you. Thank you. Very exciting. The third edition and get ramped up for that. But it's great to be here with you today. Thanks for having me.[00:02:17] DAN RUNCIEYeah, definitely. And I know for you, one of the big topics of the book is just how artists continue to evolve with how they're releasing music, how they're paying attention to what's going on with streaming right now. I feel like you have a good vantage point for this because you're doing so much of this yourself with your own releases. What are some of the big changes? Because I know that everything post-pandemic has been a little different, and now we're heading into this new phase right now with the new year. What's the big thing for you that you're seeing with the evolution?[00:09:07] ARI HERSTANDRight. So every artist needs to ask themselves what their intentions are with their release. And so, you know, the beautiful thing about the new music business and the scary and daunting thing about the new music business is there really isn't a right or a wrong way to do anything. There is the right and wrong way for you. And that could be the wrong way for me. So everyone, you know, it's based on your intentions and what your goals are for the release. If we just go, you know, more in the mainstream realm or let's just say your intention is to be successful on Spotify. Because that's a metric that most artists these days are kind of using to gauge the success of their release. And they want to have the best chance of, you know, grabbing that Spotify, being being blessed by the Spotify God, I guess. So to do that, there is a very specific release strategy that has been studied and now tested and now used by everyone from Lizzo and Krungman to Maggie Rogers to Robert Glassberg. And that's the waterfall release method. And Indie artists, you know, that are just releasing their first few singles are using this as well. I mean, this is the waterfall release method. And I'll break this down a little bit on what this means. This has started to get used a few years ago, but it really picked up last year in 2022. And now 2023 is I think going to be the year of the waterfall. But basically what it is is that, you know, you release singles leading up to the album. That has been happening for years now. However, here's what gets a little bit more where where it gets a nuance on how those singles are released. It's you don't just release a single song anymore as a single. You release your first single one song. That's just the one song released one second now your second single is that the new song is track number one. And the previous single that you released is track number two. So it's technically your second single, but it's kind of like a two song album. If you really go that way, if you're tuning it up, if you're an artist is to the artist asking this all the time. Well, how do I do this in my district? back end or whatever, like doing it's a two song album. And the way that the streams maintain for the previous single and that you don't lose your playlist inclusion, all that stuff is you use the same highest or C number. And so it's if you use the same highest or C number that used when you released that track, a month prior, it will be identical stream counts. And then a month later, you release your third single, but that's now a three track album. You know track number one is the new single track number two is the single you release a month ago and track number three is the is the single you release two months ago. And as long again, use the same highest or C numbers, it'll be included in the same playlist. They will be identical tracks, wherever they're included on people's algorithm, personal playlists, all that stuff. You can do this. People are doing five or six singles that way. And then the album and this release method, you know, this could take eight months, essentially, if you want to do one single every four to six weeks, and then the album. How you can kind of look at it, is you're building the album. And so it doesn't have to go on order, you can pick whatever order you want based on your singles. And then the final album is the album order, no correlation doesn't have to be the single order, you can pick whatever order you want each time. The track art can be different each time. I've seen it, people do different single art for each release. I've seen people just use the album cover for every release. So you know, at the end, you might have like six singles released that each have a few different songs on them. And then the full album, some people pull those previous singles down. So if they want to get a clean discography going up there, you just have a final album at the end of the day. And the previous singles with like the two song album, a three-song album, the four-song album before they pull those down. But you're not going to lose any playlists, you're not going to lose any stream counts because you're using same iris to scene numbers each time. So that is a release method, and the reason people are doing it this way is for the Spotify algorithm because Spotify likes to have regular releases. And if you send somebody say, hey, here's my new song and you send them the link, they're going to listen to that song. Now, if there's nothing, no other songs following that song to listen to, after your song finishes, Spotify is going to recommend them something to listen to or they're going to jump off and listen to something else. Now, if you give them the songs to listen to that after your previous releases, they'll stick around and keep listening to it. So the reason people are doing this is for the Spotify algorithm, but also to keep their fans engaged. So like say, here's your single number four and they listen to it and like, oh, cool. What now? I'm going to go back to listening to my favorite artist. Unless you have singles three, two, and one also there. And like, oh, I'll just keep listening to the other songs on this essential playlist. You think of it, whatever you want, a four-song album, a four-song single, a playlist of your new singles. However, you want to think of it, the user is just thinking, oh, I'm clicking on this link or new music Friday, or I'm in my release radar. I see this new single come out by this new artist I like. And then Spotify is going to start to recommend those songs through the algorithm. And the best thing about continuing to release the and the waterfall method is like those previous singles stay included in release radar. So this is like what has been figured out by labels and managers and artists over the last few years. And based on what Spotify wants to see and basically what they're being rewarded for with the algorithm from Spotify. And you know, I think a few years ago, everybody was chasing the playlist editors and like, oh my gosh, if I can just get included in the rap caviar, then like I'm set forever. Whatever the playlist inclusion, the editorial playlists are not as powerful right now as the algorithmic playlists are. That is a big change. Is like three, four years ago, people were like, oh, it's all about the official editorial. Now you want to trigger that algorithm because that is now personalizing every single user's playlist based on what Spotify thinks that user likes to hear. And you want to get your songs included in that. And people are just letting Spotify feed them now based on the algorithm versus seeking out playlist[00:09:27] DAN RUNCIEAnd why do you think that that shift happened from the playlist prioritization to the algorithm? Was it something internal with Spotify or is it just a natural decline in the power of playlist?{00:11:40] ARI HERSTANDYeah, I mean, the main thing is is let's think about what Spotify's intentions and goals are. Their goals are to keep users on their platform as long as possible. And they've discovered that if you feed users songs that they want to hear and have a higher success rate of them continuing to listen and stay on Spotify, then they're going to follow that. Then Spotify is going to do more of that. So they've been AB in this for years. They're like, OK, do people stick on our platform on Spotify longer by listening to our editorial playlists that human beings employed by Spotify are creating? Or do they stick on our platform longer by the algorithmic playlists that are internal robots are curating for them, the algorithm is curating for them. And what they found is that people are sticking around longer with the algorithmic playlists. So they're now doing more of that and realizing that this is what it is engaging users to stay on Spotify longer, because that's what users prefer. The algorithm has gotten a lot better at learning people's tastes, music tastes, than any singular playlist editor. And the other thing is, when we're talking about indie artists, is that why indie artists need to refocus their efforts into more of the algorithmic lane versus the editor lane, is that playlist editors, I mean, it's like playing the lottery to try to get an official Spotify editorial playlist. For one, with 100,000 songs being uploaded every day, you have a very, very hard chance of getting selected being one of those songs that is going to get included on. The very select few Spotify editorial playlist spots. But the algorithm, there's billions, literally billions of playlists that theoretically that they can put you on, or the algorithm will insert you into various people's radios or discover weekly or whatever. You have a much better chance of getting there. And then if users respond, well, do your song there. I mean, you pop up on someone's discover weekly, and they click save. I like this song. I want to hear more of it, and they don't skip it. That sends signals back to the Spotify algorithm, like, oh, this song is performing well. Let's try it in more algorithmic labels. Let's try it in more radio. Let's try it in more of these. And then theoretically, you'll just get included more and more, and then it'll just kind of snowball onto itself.[00:12:46] DAN RUNCIEYeah, I think the algorithm getting better, that what you mentioned, is likely one of the big drivers of this, because if I think back to the days of, let's say, like the mid 2010s, the algorithm still felt a bit similar to those old Pandora algorithms where after the seventh song, you start hearing the same thing over and over. And if you're comparing that to, let's say, what Tuma Basa was doing at Rap Caviar at the time that, of course, yeah, I think Tuma is going to be the better curator of what you have. But if you're shifting things to now, where these algorithms just get better and better and better, then, and I think as well, over time, a lot of the playlist also had that alert. There was a bit of the, oh, this is the new radio. This is this, but then, yeah, when the playlist is better and better, even as a Spotify user over time, you can see that, okay, they do have a better sense for where things are. So naturally, it did shift the behavior. And I think you kind of saw this more broadly with, you know, outside of music as well, with movies or TV shows and other things. I think the algorithms do get better over time.[00:16:02] ARI HERSTANDOh, absolutely. Yes, we're seeing that, you know, absolutely across the board with Netflix and Hulu and Prime and all that stuff. But, I mean, you bring up a good point about, you know, the human and the human playlist editors and what, you know, the power has shifted away from these playlist editors in part because Spotify is pulling the power from that. Because, you know, they're not giving the playlist editors free reign. It's kind of like if we can compare it to, you know, radio stations back on the day that the DJs had the power and they could play whatever they wanted. And that was like, you know, when the 70s and the 80s and maybe even a little bit into the 90s, you know, the DJs could play whatever they wanted. And they were all powerful because that's how people discovered music. Then Clear Channel took over and bought up all the radio stations and was like, oh, guess what? These are the only songs that you're allowed to play now. Here's the list. And then every week Clear Channel would update that list and send the list to all the DJs and say, you can choose, but you have to play these songs. So then the DJs became less powerful because that power was removed away from them by the overlords, which was the owners of the station, which was Clear Channel. The same thing has started to happen on Spotify. The editors used to be the all powerful DJs. They used to be all powerful playlist editors. Now they're overlords, they're owners, Spotify has come to them and be like, well, guess what? Your playlist is not keeping people on this, on Spotify and on the playlist long enough anymore. So you're only allowed to do three new songs a week. And in those three songs don't really perform well, then you're either gonna lose your job or you're not going to have the liberty to choose the song anymore. And of those three songs, they actually have to be from this list, which is the song that have already been pre-tested on the algorithmic side. So it's kind of like we see the same thing as it's like, instead of clear channel dictating the list based on their private marketing rooms and studies with surveys of listeners like they used to do when they would test songs with radio with market groups, now Spotify's testing songs with the algorithm and then they send those songs to the editors and be like, okay, these songs are proven. So when Tua was selecting the song for Rap Caviar, he was at the start of it. But as it got later on and on and what's happening with today's topics with Rap Caviar and all of them, he's just not one person anymore that's shooting. I mean, when Troy Carter was at Spotify and kind of in charge of all this, he said this and this was mind you four or five years ago, this was happening to them. It's like with those big, big playlists, he's like, it's no one person that is deciding this. These songs are tested and then we decide that it was going to go into those big playlists. But now that's happening on every playlist top to bottom.[00:16:25] DAN RUNCIERight. And circling back to what you had said at the beginning that this, of course, is shifting artists to that focus on how they're releasing music, the waterfall strategy, but tweaking that specifically for what they're doing with singles leading up to the album. But I also have to assume that to a certain extent, some of this does become table stakes in that everyone, as you mentioned, is doing it that knows what they're doing right, whether it's you or it's Lizzo or others. So once that's kind of the lay of the land, are there additional things that, you know, artists that you're at least suggesting that artists should or shouldn't be doing or at that point does become more and more dependent on things that are independent of the release, whether it's the artists fandom, the quality of the music and so on.[00:19:21] ARI HERSTANDAbsolutely. And this goes back to the intentions. And so, you know, it's no secret that in 2020, 2021, if even a bit last year in 2022, the Tiktok was, you know, a massive driver of streams. And so it's like, for some artists, that was where they found success. But, you know, and this is where we get into what are your intentions and who is your fan base? If you're making kind of straight ahead rock and roll, that's going to appeal to like 35 year old plus or you're making like throwback traditional R&B, that's similarly going to appeal to a 35 - 40 year old audience and up. Your marketing methods should not be Tiktok. So like if somebody's like, oh, you got to do a Tiktok, well, like, no, you don't have to do it. You know, you have to understand who your audience is, if your audience is on Tiktok, then maybe. And if your music that you make could be tiktokified, it's like, you know, it's like it's funny, you know, and all that and with Lizzo's song About Damn Time. You know, the thing that went viral on Tiktok was like the seven seconds of the first line of the second verse. It's like the most random shit that catches on Tiktok that you just like don't even know and oftentimes it's just like, you just never know what's going to catch or not. And it's like, so yes, Tiktok that can be a strategy. Absolutely. And it's like buying lottery tickets. So like the more you post, the more, you know, tickets that you're buying the higher profitability you have of something catching and then people using that bit, of course, there's deeper strategies that you can implore if you really want to study this. If you're like Tiktok is the method and the way that I want to go, totally like you can, you can work influencer marketing. That means, you know, get hundreds of influencers with varying audience sizes, micro influencers, macro, whatever kind of budget you have, pay them a little bit of money to use your song or your snippet of your song, your 15 seconds of your song in their video. Have everybody do it in the same week. And hopefully that gives you a chance that inspires more people to use that same 15 seconds in their videos. Sometimes it works. Sometimes it doesn't. It's kind of like back in the day, you know, when labels would work a radio campaign and spend $300,000 on promoting a single at radio. Sometimes it worked. Sometimes you lost $300,000. And that's what we're seeing right now with influencer marketing campaigns because Tiktok is so fickle and random that you don't know if it's going to work. And if you spend $100,000 on an influencer market, so that is one way.[00:19:38] DAN RUNCIEYeah, I think the Lizzo point is key with that because I know that she spent and her team spent a lot of time focused on trying to make that whole album special pop on Tiktok. So to your point, the fact that they probably thought it would have been the bad bitch of clock live but then ends up being a completely different line that ends up going completely viral because don't know how exactly it's gonna go but the fact that the team put in work means that something was able to pop there.[00:21:26] ARI HERSTANDThe beauty of TikTok is that you can test and test and test and test and test for free, especially like indie artists are doing this all the time. So like yes, Lizzo has millions of dollars behind her and a full team of people that can do this. I'm seeing this with indie artists doing this all the time where they're just testing on their own, you know, they'll post a few videos a day or a week or whatever with different snippets of their line, of their songs rather, and seeing which ones respond best. And then like, oh, okay, it's this part of the song. Like, you know, if they were Lizzo, they were like, oh, it's the first line of the second verse responded better than the other previous 15 snippets that I posted over the last three weeks. So let me do 10 more videos of just that first line of the second verse and see if it was a fluke or if this is actually about a pattern that I'm on to something and they're like, oh, that is what's connecting. And like, oh my gosh, 20 people just posted videos using that the first line of the second verse and they're like, all right, let's keep doing that. And then you kind of, you know, this is how you discover what work is just trial and error, whether you have a label of, you know, 20 social media experts doing this and a million dollars behind it to like, throw gasoline on the fire by hiring influencers to do this. Or if you yourself and your best friend in your bedroom figuring this out, it's the same strategy.[00:21:46] DAN RUNCIEYeah, that makes sense. And especially with the fact that Indie artists can tweak it, it is free to essentially tweak on TikTok. But I'm curious to hear your opinion on just how the Indie artists specifically can have the ideal team structure. Cause like we said, on one end, you have Lizzo's million dollars behind you on the other end, you have, yeah, it's you and maybe your friend can help you do this. But somewhere in the middle is that successful Indie artists that doesn't have the, you know, major record label resources, but it's still tweaking things. So even if we think a bit more broader than social media, what does that team look like? Like maybe even for yourself, like what does that team structure look like to make sure you have all the pieces in place to run a successful Indie business?[00:27:12] ARI HERSTANDTotally. I mean, it's a great question. And I talk about this in the book. I've updated the new team. I call it the new team. Because there's been the traditional team that's been around for decades. And that's what everybody understands. Like your art manager, your personal manager, your record label, your booking agent, your publicist, your attorney, you know, a publisher like this. That's the traditional team that, you know, you'll read about in the other music business both written by lawyers that were written 30 years ago. Most in the industry on that level, they haven't really updated that team. But when it really comes down to what we're looking about in the new music business with Indie artists, especially before you get those big players on your team, you still have to run your own business yourself. And sometimes we've seen a lot of NDRs that don't ever want a record label. And that's totally fine. So, you don't need that scene, remember necessarily. But what you do need is to be putting out regular content that's representative of who you are as an artist. And so what does that require? Well, it requires video content. Okay, you need someone on your team that can make really good video content. If that's you, cool. But sometimes it's not the artist. And so having someone on the team that's good at video, videographer, whatever, an editor, that is a key number of the new team that is extremely necessary. Say with a photographer, you know, it's really important to kind of have regular, new high quality photos or any kind of photos, whether it's your, you know, candid photos when you're around, when you're on tour, photos from the stage, from behind you with the audience there showing what you're about, promo photos, press photos. So like a photographer. It doesn't need to be a full time member on the team, but I think doing regular photoshoots and having people that are regularly pumping out photos. Again, it doesn't need to be as formal as like a record label or a team member like that. It's like, oh, you're my best friend. You have a new iPhone and you're really good at taking photos. Let's like take a lot of photos all the time and continue to post them. And that counts too, you know, and same with like a designer, like a graphic designer, you know, there's so many used cases where graphic design is gonna be necessary, whether it's designing your album cover or it's merch items or it's show posters or, you know, any other cases where you need something design. Again, it doesn't need to be a full time member of the team. It could be someone you enlist over Upwork that you hire to do that or it could be a friend of yours. That wants to help out. And then there's this role that I call the digital specialist. And, you know, managers and labels of column, it's like, are they calling digital? They're a digital person and it's like, oh, you know, we're going to send it over to digital. Basically, what that is, is like they specialize in social media advertising. This is something that is is really crucial when it comes to the release strategy that we're talking about previously. Virtually every single record label, it be label up to the majors down to individual artists that are releasing music on their own on that have a little bit of a budget are now running social media ads. It takes a lot of time to learn all this and it's a specialty for sure whether you're running ads on, you know, via the meta ads manager with Instagram and Facebook or Tiktok ads manager, YouTube, Google ads, all that stuff. That's what a digital specialist can do and then they kind of monitor everything and then they gather all the assets and then they help kind of guide the strategy. And so all this being said is like these are team members that are important to every indie artists career right now. They don't need to be individual people that handle these roles. I've seen indie artists that do all these roles themselves and they're their own team right now and that's cool. If they can figure that out for me personally like I know that I'm not a good recording engineer and I'm not a producer. So that's another team member that I'm going to hire when I make a record like I'm not Finneas. I'm not going to make a record in my bedroom. Like I can't do that. That's not what I want to do. Like honestly that doesn't inspire me. What inspires me is to make music with other people. So like I'm the type of artist that I'll get into a studio with eight other musicians and we'll track something live, you know, and like that's what I like doing them inspires me. But I need a producer. I need an engineer. I need a mixing engineer. I need a mastering engineer. These are all team members that I might enlist for that one recording. You know, but other people like Finneas was Billie Eilish's first team member. And he was her recording engineer and producer and like she had that built-in team where they could be pumping out music to Soundcloud regularly early on. Whereas like a lot of artists don't have that but some do. It's like again, what are your intentions? What inspires you? What kind of music do you want to make? But there are certain roles that can be filled by either your brother in down the hall, in the bedroom or by someone halfway around the world and Upwork. But these are the roles that can be filled and the jobs that need to get done.[00:27:55] DAN RUNCIEThat makes sense. I know another thing for these teams is someone that is always keeping their eye on the new big thing or the new small thing to be able to test out just being able to figure out what's there. And the past couple of years, Web 3 and NFT specifically have guy and even more traction and I think maybe in the most recent year got a little bit less traction to just a more overall transaction level. But as we're heading into 2023 now, how do you look at NFTs as part of your strategy and how do you look at Web 3 more broadly for what artists are doing and any examples that you may have of like yes, this person that is an indie artist that wasn't just a mature artist like did it and they've done it really well.[00:31:44] ARI HERSTANDAbsolutely. I don't see Web 3 slowing down anytime soon. I still see that this is as a digital society is heading. It's evolving for sure. Bitcoin isn't kind of what is all encompassing anymore like it was five - six years ago. It's not even just the mouth crypto currencies and it's not even just about NFTs like NFTs. The reason that it's lost a lot of its initial luster and sheen is because when it first kind of caught on, you know, early 2021 or so. It was like that was the sexy new thing that nobody quite understood but once you got it you're like well, this is crazy at the digital collectible.Cool I collected playing cards when I was growing up, I get it, sweet, that's what this is the digital collectible one of one okay cool I understand it so that was like. And people are trying to find used cases like you know we initially heard about Kings of Leon was like one of the first that did like an NFT album and they tied you know physical experiences to their NFTs like you get front row tickets that you were one of the NFT holders for life and you could redeem the NFT for proper tickets. So that was like the first way by say now we're seeing is more used cases and people that are creating them independently so like I had on the podcast on my podcast the name is Business Podcast. Sammy Arriaga, he's a Latin country artist and he's a really great, really cool crossover artist. He is a country musician but it's kind of with Latin infused country music it's really cool. He had a deal with Sony, he was signed to Sony as an artist and any of the publishing deal for a while they you got dropped up. It wasn't up to the major label success standards that they were hoping for. I got dropped. Then he actually had a little bit of success on TikTok in like 2020 and then he pivoted to NFT's in 2022 actually, I believe. And just cut to the headline, he made over $250,000 on his NFT of his album or actually of his song. Just one song to be honest. And how he did it, what was really interesting, it wasn't because of his fan base because the vast majority of music fans right now still have not come around to NFTs. They're not really in the metaverse. They're not in the crypto web 3 community yet. But the web 3 community is still very, very strong. It is thriving and kicking. If you can tap into that, then you can actually have a lot of success there right now, currently today. Now in five years, I do believe that most music fans, there will be used cases and every artist will have something to do with NFTs and Web 3 and micro and bastine which I'll get to in a second. But what Sammy did was he went to that Web 3 community and where do they primarily? Just at the time and still really is on Twitter and specifically Twitter spaces. What he did is he went into these Twitter spaces rooms. These are like the audio, Twitter spaces, the audio, new version of clubhouse and any space that was talking about NFTs and Web 3, he'd pop in, he'd listen for a little bit and then he'd raise his hand and I asked to come up and speak. They'd invite him to speak and he's like, hey, guys, you've been talking about NFTs for the last hour. I play you a song that I wrote, actually about an NFTs and it's called Metagirl and it's a META Metaverse Metagirl and they're like, oh, okay. So essentially, then he played the song. He's like, you can actually get that song right now as an NFT, the links in my, you know, pin the link right here and they were like pin the link in the Twitter space and that's how we did it. And he made $250,000 just from doing essentially by busking on Twitter spaces.[00:32:18] DAN RUNCIEHow many Twitter spaces did he do to make that happen? [00:35:05] ARI HERSTANDIt was a lot, you know, because some of the 100 people, some of the 1000 people, but you did it for a while and like, that's a way, you know, that's not a scalable method necessarily that I'm encouraging people to like go busking on Twitter spaces and make an NFT. But he was able to do that and by finding that community, now, you know, Baratay is another indie artist. She was one of the first to kind of start experimenting on NFT platforms and selling NFTs. What she also did early on that we're now starting to see more widely adopted was she not only would release NFTs tied to her songs, but she would tie royalties to the NFTs, meaning you don't just buy an NFT as a digital collectible that you're hoping to resell and make a little money on. You're actually buying a percentage of ownership of the song or like a royalties as I should say of the song. So like she had one time, you know, auctioned off, I guess, you know, and it was through a blockchain platform. I believe she used royal at the time, which is NAS's platform. She like gave away 40% or sold 40% of one of her songs to people. So you could buy whatever percentage you wanted and it was valued at a certain level. And then you can buy that. Now, those platforms are starting to pop up like I'm on the advisory board of label coin and they're a new platform that, you know, started by a booking agent, Mark Miller, who I've known for years. And he approached me and he's like, Hey, here's what we're doing. And it's essentially it is the same concept. Using blockchain technology, but essentially being able to sell a percentage of royalties for your song. So you could theoretically like say, I'm going to sell 50% of the royalties of my song. And it's like, I'm going to sell it to a thousand people. So you could buy like, you know, a half a percent or a quarter of a percent or a small percentage. It's like buying stocks, essentially. It's like, you know, like the Robin Hood from music. So we're starting to see that and the blockchain technology that the whole infrastructure is built on because it's just more streamlined that way. And so like, we're moving to in the future when these platforms likely, book, coin and royal and the others like really start to break into mainstream is the fans are going to think, Oh, I have to learn cryptocurrency and I have to get a wallet and, you know, buy some of Ether, you know, from the Ethereum and buy some ether and like. You know, that is the heavy lift that why it prevented so many people from getting the NFTs. Like I want to learn how to do this and pay gas fees and blah, but like all the shit that it takes hours and hours and hours and hours just for one person to buy like one NFTs. It's like we're getting a little away from that and it's gonna be like a fan is like, oh, I'm gonna get 10% of royalties of Ari's new song and it's done in 10 seconds. And like they don't even know[00:36:33] DAN RUNCIEYeah, it needs to be as easy as like buying something called the Amazon, right? Like it needs to be instant. And I think that I agree there. I think that was probably one of the biggest gaps for a while. There was all these things. And some of it I think is natural with any new technology. There is an adoption curve. It's always gonna track the enthusiast which at least in this recent era congregated mostly on Web 3 corners of Twitter and we're discussing things. So I think it's really smart, you know, for artists to, you know, jump in on Twitter spaces the way that they did. It was really interesting to hear that in a lot of ways yeah, they weren't even reaching, they're like die hard fans. They were just reaching people that were interested. But that said, I think so much of this rings true with something else that's a concept in your book, the purement of investment. And I think I look at this a lot of ways, almost like a inverted sales fund if you will, address in terms of building awareness, the decision intended and actually getting people to act on it and knowing that you can obviously generate revenue at each level of those streams. But NFTs, especially if they're used the way that they could is something that does sit at the tip of that pyramid. It's not gonna be everyone, but it is something to monetize the die hard fans that you have. But even there you could adjust where it sits based on what you price it, how many drops you have and so many other things.[00:40:02] ARI HERSTANDAbsolutely, yes, the pyramid of investment on this concept that I have in the book, I'll just kind of break it down a little bit so people understand. It's like, you think about it, you know, this is financial investment. I also have a pyramid of engagement, which I'll get into a second, but what just investment at the bottom of that pyramid, we have the people that don't really spend any money on you directly, they might stream your song, they might stream your music, you might make a little bit of money from what their actions that they're taking like the stream of your music, but they're not like spending money on you directly. So that's the bottom of the pyramid and that's where the vast majority of the music of fans, audience, listenership lives just across the industry. But as we go up the pyramid, you know, then there's like, those that might attend your live stream and like tip you over that or they might just like tip you here and there and you know, in the digital realm, sure, it's a live stream, it's on Twitch, or whatever, or like, you know, they can tip you in real life or something, they're going to your shows and they'll tip you. So it's like the tippers essentially, then you go up a little bit higher, that people are actually buying tickets to your shows. Now they are actually directing money directly to you and they're coming to your concerts, they're your ticket buyers, your concert goers, then you look a level higher, they're the merch buyers. They're the ones that buy merch at those shows or buy merch online, but you know, your store or from your Spotify profile or whenever they're buying merch directly from you, they're like, I'm a real fan, I want to buy merch. Then we go higher and then we're into that category of fan clubs, crowdfunding campaigns, you know, investment, NFT, three point, you know, with that whole realm of like, I'm like such a big fan that if they're on Patreon, I'm going to be their patron. If they're running a Kickstarter, I'm going to back their Kickstarter. If they're selling a percentage of their royalties of the new song, I want to buy that. And then at the very tippy tippy top of that, it's kind of a little bit of out too, but it's like those that are buying the VIP packages. So it's kind of like a combination of it all. It's like that, am I going to, you know, go to the show and I spend the $250, you know, do a 10 sound check and get the merch package and do that whole thing. So it's like that's all at the top. And so you think about this as the pyramid of investment, you're going to have fans at every level of that and you want to make sure that you cater to all of them and that you don't exclude some. So it's like, you know, I think people can kind of have understood this concept when, like, I first got this like six, seven years ago when Patreon kind started to hit after Kickstarter. And I saw some of my friends that were running Patreon campaigns and Kickstarter campaigns, I know simultaneously. And to me, that seemed counterintuitive. I was like, wait a minute, your fans are only going to do one or the other. It's like, they're going to either back your crowd and bring you an album or they're going to be your patrons, right? No, I was wrong. What it was, was really like Kickstarter was below on that pyramid. There were more people that are willing to drop a hundred bucks this one time, this one year to back your Kickstarter, but then there's fewer people a little bit higher up on that pyramid that are going to pay you $10 a month on Patreon or Substack or whatever it's going to be, Band Camp, any subscriber service that are a level higher that will be your subscribers and then it just kind of keeps going up from there.[00:40:28] DAN RUNCIEYeah, I think that makes sense. And the thing that I've often thought about the model too is that of course the revenue that you get per fan does increase as you go further up that period. But if you were to multiply that by the number of fans in each of those tiers, do you think that the tiers do start to equal out roughly or what does that look like for you?[00:41:39] ARI HERSTANDThat's a really great question. I don't really need data to back that up, but that's a really great experiment and something that should be studied, I think like an artist that kind of, yeah, I'm going to work on putting those numbers together. That's a great idea. It's kind of like along the lines of the Thousand True Fans Concept, where this concept is, you know, they say that if you can get a thousand people to pay you $100 a year every year for the rest of your life, rest of your career, now you have a career and that's all you really need is a thousand people to pay you $100. However, if you break that down a little bit differently on the government of investment, you don't need the thousand people to pay you $100. You could get a hundred people to pay you $400, you could get 200 people to pay you $200. You could get, you know, 400 people to pay $50, you could get 700 people to pay you $20 a year, you know, and you could really break that down a little bit differently. And so it's like, how are you going to get to that $100,000 a year mark if that's your goal or a million dollars a year, if that's your goal. And it all these fans are going to fall somewhere. All this money is going to fall somewhere on that pyramid of investment.[00:43:12] DAN RUNCIEYeah. I think about it this way too, maybe from like an example perspective. Let's look at someone at the top. Look at someone like Beyonce. I could see her. I would need to do the math. But let's just say ballpark speaking, she gets $30 million a year revenue from her music, right? Purely from streaming. I could also see her getting $30 million a year from, let's say she does a few concerts that year or a few special one offs. She could also get $30 million a year from doing two private shows of performing at a wedding or something like that or performing at an Uber private event. So each of those things can equal that amount. But yeah, I think that way to break down the thousand true fans, I think is important too. Because I think when that theory came out, Kevin Kelly's, I think it's back in 2018, but it made a bunch of sense. But I think for most people putting things out, yeah, even that requires a bit of segmentation there. So it's fascinating. And I'm sure so much of this is fascinating for you as well. Because I feel like you kind of have two examples of this with the businesses that you're running. You have Ari Herstand, the artist and you have your own, pure, mid of investment. You also have your visit of this podcast, the courses and the book as well. And for you, I'm sure I know you have a team that helps with each of these things, but do you look at it any differently between the two, you know, yourself as an educator that is sharing this information combined with yourself as the musician?[00:49:10] ARI HERSTANDYeah, I mean, absolutely. Like, I think, you know, why people have responded to the artist take business and my book and the artist take account of me and the music, the podcast and all the stuff that like, I do on the music business education front is because I am a musician. I have that musician's empathy. I've, you know, lived it and living it and it's like, I understand how hard everything is. It's like, you know, I'm not just saying it to say it like NN because I read it somewhere. Like, I'm living it. I'm interviewing people that are living it. You know, I put on two different hats like I look at myself almost now as like part journalists and like kind of, you know, in the lane that you're in where by interviewing more people, we learn more and that's great. Like, I know my perspective and everyone's perspective can be limited to their own experiences. So I try to widen my experiences by widening my information base by talking to more people. So the whole point of the podcast honestly was just to talk to more people, smarter people than me that are doing bigger things and more successfully than I was doing. So I could learn from them and then share that information. Like I've always interviewed people from like artist take and writing for other publications and I then made the podcast basically public. With my own music career, you know, the intentions have shifted. But when I started Ari's take as a blog 10 years ago, I made 100% of my money from my music. I was like a full-time artist, touring artist releasing music, all that stuff like touring most of my year, going on plenty of national tours. The intentions have shifted when I realized where I can be most useful and necessary. So like I don't tour anymore. You know, I'll do one-offs here in there. Like when I'm with my new funk project, Rasmentisdrake, it's like I do in a kind of an immersive funk experience. And I want to keep that in one place like we did in L.A. in like last summer, we did, you know, a 16-show run in L.A.. That's like my creative outlet. Like I do in the intentions of that, I want to top the Spotify charts and like go on tour. So like why I keep going back to like what are the intentions for every artist is like they're different. So my intention for that was like I wanted to sell out all those 16 shows and like that was my own function for the off thing. Or I wanted to at least, you know, get people a good experience and have a good time doing these things. Like I released a solo album last year under my own name. And the intention of that was honestly not I want to go on tour or I want to, you know, and get millions of streams. It was just like I went through a break out and I needed to write these songs and release them for my own mental health and just like honestly just for my own well-being and like get these songs out there. And people connected with them. And that was wonderful. And like I heard from tons of people that really resonated with the songs. Like that was something that you know gave me some perspective to is like, my focus right now is not making a living just for my soul of singer songwriter project like it used to be. That being said, there's a place for everything. And so, you know, I covered this concept of like the multi-hyphenate. Everyone's a multi-hyphenate. Everyone from Beyonce down to me and any other indie artist that is working at a day job or whatever, everyone's a multi-hyphenate. Like, your job title can start with musician and then it can be, you know, what else? Like, some people are musician, lift drivers. Some people are, you know, musician, entrepreneur, CEOs like, you know, Dre as Beaks, headphones is like, oh, he's an entrepreneur and a business person. And so it's like, I don't think the artists need to feel like shameful or insecure about their other hyphenates, their other job titles. You know, at the end of the day, you want to do what inspires you. And so for me, you know, my idea of success is making a living, supporting the kind of lifestyle that I'd like to live doing what I love and offering value and meanings to people. And so I've kind of structured my own life in a way where I go to where I feel like I'm needed and then where I can bring value to people. And that I've found, you know, most useful in kind of the artist take blame and the music business lane of everything I'm doing. But at the same time, like, I'm an artist. Like, I'm never not going to be an artist. Like, that's just like who I am. That's like what my soul is. And so it's like, I can't ever stop doing that. Like if I don't want to force myself to ring out as much money from that, there's no shame in that. Like that's, you know, sure, you know, I always say it was all the time to be, it was like, if you're happy making music from home and putting it online and you're making like 50 grand a year by doing that. And that's like what you figured out how to do. You've got some same theory, you're on some ads, you got some streaming, whatever. And like you're doing that and you're happy. Wonderful. Could you make a hundred, 200, 300,000 dollars more if you like one on tour or up your merch operation or like, you know, started a Patreon or launch an NFT or something like that? Maybe. But do you have to? But no, of course not. Like do what makes you happy. Like if that's going to make you unhappy because you're chasing more money and like why? Like you don't need to do that. Like do what makes you happy. And that's the big thing. And so it's like, you know, I'm constantly figuring that out for myself and I encourage other artists that figure it out for themselves.[00:49:30] DAN RUNCIEYeah. And I think that's a good way to put it, right? There's so much action now. You know, there's so many opportunities in everywhere. It isn't multi-high fit. It is really up to you how many hyphens you have behind that name and how heavily you want to push all of them. And I think the other one for you is author. And of course you have this book coming out in a couple of weeks. So yeah, before we let you go, let me just do one more close to let people know the updates with the book and when to expect.[00:50:05] ARI HERSTANDYeah. So It is out January 17th, 2023. You can get it wherever you find books with its Amazon or Barnes and Noble or your local bookstore. And I don't know when this is airing or gonna go live, but if you're in L.A. on January 17th, join me at Barnes and Noble up at Grove and we're doing a book signing and a live podcast recording there. But yeah, I've added a hundred new pages to it. I've updated stuff in every section. I've rewritten chapters, but scratch, of course. A lot of stuff we talked about today is in the book like NFTs and Web 3 and TikTok and live streaming. A lot of stuff that didn't exist three years ago. So I've completely rewritten the majority of the book. So you know, if you have the first or second edition of the book, I encourage you to check out this third edition. It's very, very different and updated.[00:50:46] DAN RUNCIEGood stuff, man. Excited for you. Thanks for coming on. This is great. {00:50:50] ARI HERSTANDThank you. {00:50:54] DAN RUNCIE OUTROIf you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat, post it in your Slack groups, wherever you and your people talk, spread the word. That's how Trapital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, go ahead, rate the podcast, give it a high rating and give a review. Tell people why you like the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

Jan 12, 2023 • 52min

How Diddy is Underestimated as a Businessman

Jan 5, 2023 • 53min

NYU Keynote: Music, Streaming, and Second-Order Effects

I had the pleasure of being the keynote speaker at New York University’s Annual Alumni Event for its music business department. Big thanks to Larry Miller, a professor and director of the program, for inviting me. It was a free-flowing conversation focused on how technology is reshaping the music industry from top-to-bottom. We’re well into the streaming era now, but some of the second-order effects are barely starting to ripple — particularly the oversaturation of content. It’s easier and cheaper than ever to release music, which explains how tens of thousands of new songs are uploaded to Spotify on a daily basis.On one hand, this has ushered in a golden era of independent artists making a career without the backing of a label. On the other hand, value is increasingly accruing to the superstar artists. Most of these superstars were “grandfathered” into this new era as they were already household names before streaming took off. Reaching that same superstar status is harder and harder for new artists due to the industry’s oversaturation. Larry and I dove deeper into the issue during our conversation. Students also hit me with Q&A about burning topics such as ChatGPT, botted streaming numbers, and much more. Here’s what you can expect to hear on this episode: [2:02] Introduction from Larry Miller [5:09] Superstar artists like Taylor Swift and Drake shining brighter than ever[10:22] Too many hits, not enough superstars[17:23] How Curren$y “niched down” to break through[24:18] Tradeoffs of going independent or the major label route[26:47] Industry takeaways from Spotify and YouTube’s billions playlists[30:32] YouTube’s competitive advantage over Spotify[34:09] Evolving Trapital’s own business model[39:43] Music’s bot problem in streaming and ticketing[42:07] Is the music superstar dead?[44:19] Picking a platform(s) as a new artist[46:24] How oversaturated music landscape impacts listeners[49:03] Is New York drill music the next wave?[50:48] Pros and cons of AI musicTrapital’s first-ever Cultural Report for 2022: https://trapital.co/culture-report/Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.co Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.TRANSCRIPTION[00:00:00] Dan Runcie: Both Spotify and YouTube generated a tremendous amount of revenue for the music industry. I believe Spotify had last shared that they generated 7 billion for the industry. YouTube generates six or seven, I think it's 6 billion. The last thing that I had seen them put in. So that is a sign. Okay, great. You know, you tie that back into the numbers you shared before. You can do a little bit of backwards math to see how much of that is responsible for the overall industry with where it is now. So you see that, and then you also know that like anything else, the most popular songs drive most of that revenue. So you can kind of get a good idea to be like, okay, what are the songs that are driving? The music industry right now. [00:00:46] Dan Runcie: Hey, welcome to the podcast. I'm your host and the founder of Dan Ruey. This podcast is your place to gain insights from the executives in music, media, entertainment, and more who are taking hip hop culture to the next level. [00:01:04] (Intro) Dan Runcie: This episode is a fun one. We're sharing the audio from a talk that I recently gave at NYU. I was the keynote speaker at an event there for several hundred alumni and students. For the music business program, it starts off with a 10 minute talk by me where I'm giving an overview on the lay of the land with where things lay right now with streaming and music and social media, and how artists are doing their best to navigate all of the noise that's happening right now. And then it pivots into a conversation. Which is a fireside chat with me and Larry Miller, who's the head of the music program at N Y U, and we talk even more about what certain artists are doing, right? We talked about Currensy, who I recently had on the podcast a couple months ago. We also talk a little bit about me and Trapital and building this and where I see things going in the future. Really fun conversation. I really enjoyed doing this event and I hope you enjoyed this. Here it goes. [00:02:02] Larry Miller: Dan Runcie is the founder of Trapital. Trapital has become an amazing media platform and the quality and amount of content, really insightful content that Dan cranks out as remarkable. It's just remarkable. What it's about is the people who are taking hip hop and culture to the next level. That includes the artists who are becoming moguls, leaders who are reaching new heights and fans inspired by hip hop's growing influence. Dan, when he'd school, and I suppose even, you know, business school. This media company Trapital, because he wanted to see a change. The hip hop execs that he looked up to were becoming really successful business leaders, but he felt that they rarely got the coverage that they deserved. And he wanted to do something about it. So he launched Trapital in March of 2018, and the business has grown ever since. Tens of thousands of influential people read Trapital's weekly memos and listen to the Trapital Podcast every week to stay ahead of the latest trends. Trapital's been featured pretty much everywhere. Places like The New York Times and the Wall Street Journal, and the BBC and N P R, C N B C and lots of other places are turning to Dan for insights on the business of hip hop. Dan's recent coverage has focused on lots of things. He's focused on the surprising differences between Spotify's and YouTube's. Billion stream playlists. Just looking at the ones that have done a billion on each platform. There are actually some pretty interesting differences between those two platforms. He's done significant work on how a venture capital fund from a 16 Z, Andreas and Horowitz invest money that is raised exclusively from black leaders in entertainment, sports, and business. He's done a report on the so-called decline in the influence of hip hop culture. He's done work on the future of ticketing. He's done a lot on DIY careers in hip hop, and done some really insightful reporting around Joe Kelli's amazing new book, Rap Capital, the Rise and Reign of Atlanta's hip hop culture, which if you haven't read it, get it. Dan got his MBA from a school in the Midwest, I think it's called Michigan, and he lives in San Francisco with his wife, and small child, daughter. Please give a warm NYU music biz welcome to Dan Runcie.[00:05:09] Dan Runcie: Larry, thank you to the entire faculty, alumni for having me. It's an honor to be here. And I guess to start things off, because she's been brought up a few times, Taylor Swift has been a topic I know a lot of you thought about. So just outta curiosity, how many of you tried to buy Taylor Swift tickets this week? Okay, a few hands. Keep those hands up if you actually got Taylor Swift tickets this week. Okay? All right. Well, people will have to follow up with you all after to figure out exactly how you did that, but I think that's an interesting place to start with so much of what's happening right now in the music industry, because Ticketmaster, as most of you know, the whole entire app and the site crash because of the high demand. Ticketmaster put out this blog post and they said that they had five times the amount of hits compared to the Super Bowl, compared to other high days worth of events for this concert alone for Taylor Swift, and she's someone that's been on tour before. She's someone that has done plenty of things in music, but to see this kind of demand is pretty surprising. But she also broke a bunch of records with the album that she just put out a couple weeks ago, Midnights, and it's made me think about something we've talked a lot about recently, in Trapital. Something we've done a lot of research on. Right now there is so much music coming. I see, I think a few of you probably saw that music business Worldwide article, Spotify releases it. A hundred thousand songs a day get uploaded to that service. Most of those songs don't get listened to, to be clear, but a hundred thousand songs a day is still something else. And then as Larry had mentioned as well, Live Nation and a lot of these other event promoters and ticketing companies are having their biggest quarters and biggest years. And artists like Taylor are probably going to be having record years. And on the flip side, you also look at someone like Drake. Him and 21 Savage recently just put out their album, Her Loss. I think Drake gave one week's notice on this album, fourth highest streaming week that an album has ever had, which is pretty impressive. I know that Drake's a superstar, but still, even his past albums before this had plenty of buildup before where if you think about what he did with Scorpion or even the long buildup for an album like Certified Lover Boy. But the fact that Drake can announce on short notice is pretty surprising because if you think about where things are in music, you have more artists than ever that wanna tour. You have more artists than ever that are releasing music, but it's the superstar artists that are still the ones that people are gravitating more towards and they're the ones that are still getting most of the profits. But on the other side of the spectrum, things are getting a little bit tougher because Larry mentioned it a little bit earlier, but a lot of artists are struggling to make toward profitable, especially post pandemic the way that things are right now. Inflation costs are rising. It's costing so much more from freight costs to be able to travel with an entire production set from city to city, hotel airfare. So certain artists are selling out their tours or selling out their concert tickets, but they still aren't able to generate profit unless they increase the ticket prices. But even if you do that to a certain extent, the customers are going to push back. I'm sure a lot of people have seen all the complaints that people have had about how high the prices are, all these hidden fees. So there's a little bit of a squeeze there. And I think what we're seeing now is something that we've seen happen in the media, something that we've seen happen in music, but the fact that the barriers to entry have made music more easy to access, and now that we're in a post pandemic world, more people wanna be outside than ever. It's a lot of the artists at the top that are doing extremely well. But on the other side of the spectrum, while you do have some folks struggling, there are artists who are doing extremely well on the independent side of things. These are artists oftentimes that are owning their masters. These are artists that own their publishing rights as well. And because they've been able to keep a low cost and they've been able to essentially build from the ground up and continue to do it almost the way that a CEO in the music industry will be building up their business. They've been able to build pretty successful businesses too, in many ways. Leveraging the power of the internet because whether it's through SoundCloud or using YouTube or any of these other platforms, they can use their content or they can use their content to be able to drive awareness to their music. And then with that, they can then build up their audience and ultimately, Do that more successfully than they might have otherwise if they were to join one of the major record labels. So it's in this interesting piece because a lot of those artists feel like they have to make a decision, and Larry and I are gonna talk a little bit about one of them in a bit, but it's making artists, and I think many people in the music industry kind of pause because of the amount of content that's coming out, because of the amount of music that's coming out, it's a little bit harder to be able to pierce through. How many of you remember about a month ago, there was a billboard article that came out that said too many hits, not enough superstars, there was named something around that. Does that ring a bell? Okay. I've seen a few folks nod their heads there, and there were a few quotes in that article that stuck out to me because you had a lot of folks that are A & R or other executives in the industry that would say, we're doing all the things that they're telling us to do. We’re doing all the TikTok campaigns, we're doing the same press runs, we are creating the content, we're putting it out there. But even if we do all those things, We still can't guarantee that an artist that we think is going to be successful can get there, and that's because at the end of the day, the record labels and the artists themselves don't have control over the TikTok algorithms. They don't have control over the Instagram feeds to be able to tell what specifically is going to rise to the top and how you can break through another piece from that same article that stuck out to me. How many are you familiar with Steve? Okay. Pretty familiar. And it stuck out because there was a recent concert that he did and he was singing his song at the concert. The audience, the voices, got quiet once it got past that TikTok moment of the song. And if you're an artist, you're putting everything into your album. Of course you know that your fans are probably gonna sing harder to the hit songs under the singles. But because through the TikTok piece. I mean, it's just a reminder of how things are coming and where things are going. Even the concept of a one hit wonder I think has changed quite a bit because back when a lot of us probably were growing up, even if an artist was a one hit wonder, you still probably knew something about that artist. I mean, we can go back years ago, but even someone like Lou Bega who had that song, Mambo Number Five, or even someone like Trinidad James who had all gold everything, you still remember the videos, if you saw them walking down the street, you could probably recognize them. Or I've still been to, you know, a few events where I've seen some of these folks at. But now a one hit wonder could have just a song that you may hear a bit often, but you're recognizing it from some meme that someone else did on their TikTok video or someone else did. So you're engaging a bit more with the viral hit itself than the actual person that's making the music. So it's making things a lot tougher for a lot of artists who I think are the majority of them, wanna be successful, wanna be known and wanna get a few looks. But that middle ground of just wanting to be able to feel like you have that moderate place, you're kind of in the middle of the industry. It's getting a little bit harder to continue to have that being viable because now as I mentioned, you're starting to see a bit of this path where you have the superstars who are just getting more and more recognition as there's more and more options than ever. Or the independent artists who, even though the economics work in their favor, even though they may be able to do even better financially than some artists who may get more exposure than them, they may not be getting looked at the same, as some of their peers are. So it's a very interesting place for the industry. I think with that, it presents a ton of opportunity, but I also think that for certain artists, especially hip hop artists, there's a little bit of a mindset shift in terms of how am I releasing music? What is it that I wanna release? Because I think for a while it seemed like there was a blueprint that generally most people do. You put your music out, maybe you have a following on social media, you share that. You share a little bit of your personality. Hopefully a good manager can come to you if you find one or vice versa. If you do well, you're able to break through. Then maybe a major record label can find you. There was a bit of a general path, but now you're starting to see more and more of that split, and it's making artists in a lot of ways, think a bit sooner about what that decision is when you're still figuring out where it is and where you honestly wanna be. Do you wanna try to become the next Taylor Swift or the next Drake, or do you wanna try to do this a bit more yourself and have a bit more control over what you do? Because the thing is, even things like that, like becoming the next Drake or becoming the next Taylor Swift, have plenty of nuance part of other things that people have been talking about is how much harder it is for a newer artist to be able to hit the same levels. The fact that, you know, we're still referencing whether it's your Adele's or Beyonce's or Taylor Swifts, or Drake's, a lot of these artists have been famous years before TikTok was ever a thing. They still had a lot of that monocultural benefit of when they blew up, they were the thing, and they were able to benefit from that and have a lot of exposure. So now any of the platforms they had, it's all gravy. Now it's all added. They can use that to their advantage, but you are now trying to rise up and do that same thing, it's harder. Even someone like Olivia Rodrigo. Any fans of Olivia Rodrigo? So she is someone who I think Driver's License in a lot of ways for some people felt like the song blew up overnight and it did extremely successful, as did her album. But she was a Disney kid. She had been famous for years before leading up to that. So even that isn't quite at that same level. So it's a very interesting time in the industry. It's been a really great time to working the work we're doing at Trapital specifically to understand what this means. We're talking to a lot of different artists. We're talking to a lot of their managers, and really just making sure that we can share the best stories that we can about what's working, what's not, and highlighting those things. Cuz I think at the end of the day, you wanna find a way for artists to be successful. You wanna find a way for the people that are trying to build companies in the space to be successful, but it's very important to with the way things are trending right now, and a lot of people are saying, oh, it's oversaturated. Oh, we hope that we can eventually get back to a place that is less saturated. I don't think that's happening. The cat's out of the box at this point. If anything, there's gonna be more and more exposure more and more platforms. You look at how quickly TikTok grew to be a platform that has 1 billion monthly active users at this rate. There could be another platform that hasn't even grown yet that by 2026 could be that big. That's just how big things are from a connectivity perspective. So you never know what things could look like, but I think for where things are heading in the music industry there, it's a really fascinating time and even there's a lot of the established superstars that have done extremely well. There's still a ton of potential opportunity. I'll pause there cuz I know that Larry and I can talk a little bit more about that. But it is such a unique time and I think it's probably a good time for us to continue having the conversation because one of the people I do wanna talk to you about is Currency, who is an artist there. So we can do that in a moment, but yeah.[00:17:23] Larry Miller: A New Orleans hip hop artist who's got a lot going, you guys know Currensy. Woo woo. So what's the deal and what made this especially noteworthy for you?[00:17:36] Dan Runcie: So Currensy is someone who I had interviewed about a month ago and it was a pleasure to have him on as a guest on a podcast. I talked to him and his long-time business manager and partner Musa, and Currensy is someone who has been through each aspect of the music industry and I think in capsules a lot of what we've been talking about here. He first got exposure about 20 years ago. He was signed to Masterpiece No Limit label, and of course there's the whole New Orleans connection there. He ended up leaving New No Limit, and then he eventually signed on with Cash, Money and Young Money specifically under Lil Wayne. The thing is though, he actually ended up leaving cash money right around the 2007-2008 timeframe, which was a bit unique because that was the time that Drake and Nicki Minaj ended up joining them as well. And that label went on a pretty high trajectory after that. So some of the young money fans may often be like, oh, what could have happened? Right. But I actually think it was probably the best thing for Currensy because he realized that he was speaking to a slightly different audience, and specifically he knew that there were certain things that he was gonna be able to share with them that would resonate. That probably may not make sense trying to be on the next Lil Wayne mixtape or trying to be on the next Young Money collection or whatever it is. So he's been able to continue his career since, but he has a bit more of an interesting model where you see artists like him, NBA Young Boys, another one, but these artists are releasing albums every other month or releasing mixtapes every other month on streaming. And it's one of these things whenever people talk about that, it often becomes a bit of this question, where is this quality that's being put out? Or is this just quantity? And I think it's a very real thing. I mean, as someone that grew up enjoying a lot of music, even the artists that are successful now, from a personal fan perspective, you know? Yeah. It means something that, yes, you know, Beyonce drops Renaissance. We haven't heard her do a solo album since 2016, and she did one this summer. Okay. I'm listening. Same thing with Adele when she had hers, but I think that for Currensy, I'm not in, I may not be in that fan base demographic specifically, but the people that are following him on a regular basis love him. So he is focused on his true fans, he's found them. And by being able to do that, ultimately these people are gonna wanna hear from you on a more regular basis. Even if it isn't your best stuff, it's what they're gonna want to hear and it speaks to the flexibility that is offered now with streaming because before, just with how much it cost to release an album, yeah, it made perfect sense why you would wait and wanna save your best stuff for it. But if an artist wants to have the model where they wanna release frequency frequently and drop as often as they can, they can do that. And the platforms give them the flexibility. And someone like Currensy, the way he put it to me was, you know, there's certain artists that are gonna get 80 million streams a day. They're more popular than I am, but they don't drop as often as I do. And I'm gonna get my 80 million streams as well, even if I'm putting out much more music than they are. And for a lot of artists, they're still recording the same amount of music. They're just shit picking the best ones to pick for the album versus someone like Currensy's like, no, let me share most of it and share it with the fans. So it's very interesting to hear that. And then specifically since then, he's been able to take a lot of that money. He is solely focused, for the most part on tours. Really doesn't do too many festivals because he doesn't feel like that is where his true fans are. So leaning even more so into the true fan piece, been able to build up and create a few different nightclubs and places like that in New Orleans. He has an apparel company, Jet Life, so it's been a really interesting model for someone to leverage the tools that are available. And even though he may not speak to me or you specifically, he has his people. That to me shows the power of artists being able to focus on their niche and being able to build from there.[00:21:38] Larry Miller: How broad do you think this, you know, phenomenon is? I mean, you made a point a couple of minutes ago that it's only gonna get bigger. There's only going to be more of this. And I think that the inference for the incumbents for, you know, the majors in particular is that they need to, you know, continue to, you know, innovate and unbundle the thing that they do and be really good and, and competitive at it. You know, the leverage seems to be moving overwhelmingly toward the side of the individual music creator. You seeing more of that?[00:22:16] Dan Runcie: I think there's nuance there, and it's something I've thought a lot about because on one hand you do see the overall revenue share numbers, where the share of at least recorded music revenue from independent artists is continuing to grow, and I believe now it's over 30% and has continued to grow year over year, the past couple of years. On the other side of it though, if you're looking at the top artists on the Spotify charts or the top artists on any of these other charts, it's still mostly signed artists that are there. Those signed artists may not necessarily, let's see, be as many new names. Like it's gonna be harder for someone to dominate the entire list the way that Taylor or Drake do when they release an album. But most of the ones that are still there are still the signed folks. So I do feel like a lot of at least for the folks on the record label specifically and the people that are working there or the people that are working at publishing companies, they still are working with the majority of the most popular artists. I know there was a quote recently from Steven Cooper from Warner Music Group and he said, our record label is less dependent on superstars than it has been in the past. And I think there's a lot of truth to that just because you can see who's being signed to wear, you can see how many stars they've been able to develop ever since. And even though there may be less big names that they may have had. There's still a higher likelihood that a big name is gonna come from them than it would be from, you know, an independent group, from an independent artist. I would say, especially at the top level. Mm-hmm. I would say. Yeah.[00:23:51] Larry Miller: Right. And so for an individual artist, they may need to go through a, you know, calculation that evolves over a period of time about whether they have the ambition. and the drive to become Drake or Taylor Swift, or if they can make, you know, just as much or maybe more on a probability adjusted basis doing it for themselves. [00:24:18] Dan Runcie: Yeah, I do think that. If you're an artist and you wanna shoot for the stars, I think that even though there's a ton more platforms and there's many other tools out there that are making it easier for you to own your masters and own the rights to everything that you have, even the artists that have ended their deals, they're much more likely to resign with the major record labels or resign with the publishing companies, but having you know better terms than they did before. You've seen that with the weekend, and you've seen that with a few of the artists, specifically, a lot of the ones signed to Republic Records, they've, you know, de-risk themselves essentially as assets so they're able to get better terms. And they may have gotten on that first deal many years ago, but I do think that that means a few things, right? That means that those artists themselves that are already established, they're more likely to wanna stay there. But I do think for the newer artists, there's still plenty of opportunity because there are still a number of companies that wanna be able to partner with them and help them build. Right. You were just referencing Downtown and one of their key tenants of their mission is, let's help you become a superstar where you can continue to own the assets that you have. And there's a tremendous team there that has a tremendous amount of backing and tools to be able to make that happen. So I think things like that are really, really interesting. I think we'll have to continue to see how it plays out to see if we can see someone that can continue to go that route without ever having to given it up. Cuz I think right now you've seen a lot of folks were traded in at least, you know, some ownership for their rights early on. But then once they got enough leverage, they were able to get them back, which I think is powerful and in their own right. But have we seen it the other way where they started off owning everything and they've continued to own throughout their career? I think naturally there's any type of trade off you have to do when you have a business partnership. So part of that comes with the territory. But with so much flexibility and so many more options, it's gonna be interesting to watch. And that's one thing I'm interested in.[00:26:23] Larry Miller: You just mentioned the charts a minute ago, and I know that you just did a pretty deep dive on a comparison, of the billion stream or billion view charts that YouTube and Spotify separately came out with, that revealed some sort of interesting, you know, nuanced insights about what is similar but different about those platforms. What did you find? [00:26:47] Dan Runcie: Yeah, and I guess first for a little bit of context there, one of the drivers for this analysis was because, both Spotify and YouTube generated a tremendous amount of revenue for the music industry. I believe Spotify had last shared that they generated 7 billion for the industry. YouTube generates six or seven, I think it's 6 billion. The last thing that I had seen them put in, so, that is a sign. Okay, great. You know, you tie that back into the numbers you shared before. You can do a little bit of backwards math to see how much of that is responsible for the overall industry with where it is now. So you see that, and then you also know that like anything else, the most popular songs drive most of that revenue. So you can kind of get a good idea to be like, okay, what are the songs that are driving The music industry right now, and if you're looking at those two platforms specifically, a lot of similarities because I think some songs are hits regardless of the platform, but a lot of differences too. I think there are a few things that stuck out. Spotify specifically is a bit more leaned, at least as of right now. It's a bit more skewed towards English speaking music. I think that's just given where it's got a lot of exposure. In the earlier years, Spotify, a Swedish company, had a lot of exposure specifically in Western Europe, and then we're seeing it now with a bit more of a saturated market now in North America, but YouTube has been much more international. As a, you know, result. And in many ways, as a compliment, it was a free service and a lot of times it was able to reach and help and make sure that people could upload and reach people all across the world. And I think with that, we've seen a lot more artists from Latin America that have been able to excel quite far on spot on YouTube's list specifically. And we may not see them as high on Spotify's list. So that's something that was definitely a bit unique. With Spotify specifically, it aligns a bit more towards radio hits in general because you think about music itself, it is a very flexible type of thing that people wanna consume. You can listen to something on Spotify while you're at a friend's party. You can listen to it while you're, you know, on, on yourself, demand. You're hearing music on the radio, the grocery store. There's so many ways where the same song can resonate in a way that watching the music video, it's a little. Right, like it's a much more active thing. You're gonna probably wanna sit here and have this more visual engagement and experience with it. So with that, it highlights a few things. One, YouTube is probably gonna be a bit more aligned to what someone may actively choose to wanna listen to. So there's some insights there. But YouTube's also a bit specific because. The platform is a bit more driven by memes and things like that, that probably just don't get as much notoriety or become as relevant as they would be on Spotify. Like for instance, are you all familiar with the song?, Nelly and Kelly Rowland, Dilemma. So there's this iconic scene in that music video where Kelly is texting someone and she's using Microsoft Excel to text the person . And it's bizarre because it's something that probably didn't get that much, you know, attention at the time it came out. But now that people can rewind and look at stuff, it's fascinating. So things like that, you know, just don't translate the same way.[00:30:15] Larry Miller: What about the community building and just the community-esque interaction that has been natively part of YouTube for really quite a long time now that is still kind of blacking at Spotify? Is that a factor?[00:30:32] Dan Runcie: I think so. And I'm glad you brought that up because I think YouTube's power in a lot of ways is, you can look at the comment section of a lot of these songs, and it's almost like a trip down memory lane, especially for some of these songs that you may not have visited in a little bit of time. And artists can see the name of their fan, they can interact with them, they can find a way to be able to try to build a bit of a community there. You can't necessarily do that on the same platform on Spotify. I think in a lot of ways, Spotify and maybe some of the other digital streaming providers from a strategic perspective didn't necessarily give artists the option to be able to see who their fans were, because I think in some ways that data has so much value, right? Spotify may share it as a flex every now and then through Spotify wrapped and things like that, where you can be like, oh, I'm in the 0.4% of Travis Scott fans. You know, I guess I listen to, you know, whatever song too often. But besides that, you don't really have that. But think about the power that an artist could have if they could do that themselves on YouTube. Even though you don't get that data, you can still see some familiar people. You can, you know, find some way to connect or go off platform if you can. And that creates the ability to build a niche. And I think in some ways it helps you have the algorithm just work in your favor, right? Like I think YouTube just being based in general off of, you know, it's the second biggest search engine, so you're leveraging everything from Google's power to be able to help power that. It just helps you as an artist be able to connect directly.So someone I mentioned earlier, NBA young boy. The way that he's used YouTube has been pretty fascinating because he releases his music first on that platform and he's someone that's releasing music every time. And the way that he's been so focused on it, it's almost similar to someone like, do you all know who Mr. Beast is? The YouTuber? Yeah. I heard a few laughs there, but it's almost a bit of a similar mentality to that where he understands that this is his audience. He sees what's working in the algorithm may continue to serve them, and because of the success from YouTube, he's been able to translate that to other platforms. So I do think that that's a platform, and I think there's a few of them, but artists being able to find a platform that allows them to connect with fans, and especially if fans in their niche or in their base happen to be there. It can be really powerfu.[00:33:04] Larry Miller: I want to remind you that we're gonna have a couple of minutes for questions from you and you know, please figure out what you'd like to ask Dan. And I'm not sure exactly where we're gonna have a mic set up, but I know it's gonna be somewhere. It's walking around the back of the room right now. But first I have another question. When we were talking earlier, we had talked a little bit about the shift in capital business model and that where you had started out as a subscription based business and now that it is, you know, entirely sponsorship driven and that one of the things that that has afforded you is the ability to help build deal flow as the result of the subject matter and the segment of the business that you're in as an angel investor. And I wonder if you can say more about that, about what your experience has been and what your aspirations are. [00:34:09] Dan Runcie: Yeah. No, thanks for asking that for me. Going back a little bit. When I initially started Trapital, the thought was to have this as a paid subscription service model where I would have a free piece that went out every week, and then if you wanted to have additional pieces written, and it would be specifically for the people that were most interested, and it would be $10 a month or a hundred dollars a year, and I did that a little under a year and things were working and I mean, things were growing. I took a step back because I felt like what was most effective for me and what was most effective for the type of things I'm doing was I wanted as many people as possible to be able to be able to either read or listen to the stuff that we're sharing because I felt like this wasn't like I was writing about tech or finance where there were plenty of people that had been writing about this, but there was something that, you know, you were gonna get like a trade secret or some insights from me that you wouldn't necessarily get elsewhere like you had shared in the intro in the beginning. I largely wanted to start this to be able to elevate and hopefully change the discussion so that when people talk about whether it's the business leaders and the strategic moves that are happening, your names like your Rihannas and your Jay-Z's can be mentioned in, you know, in the same breaths as your Jack Dorsey's or your Jack Welch's or other people like that. There are successful people in this industry that are doing this, and being able to highlight that was effective. So the more that I could broaden who could have access to it and who could read it, the more that that would be possible. And I felt that there was opportunity from a sponsorship perspective, from other companies in this space, or even tangentially outside of the space that wanted to align with this type of content and the type of people that were reading it, that I knew that not only could it match the revenue that was coming in from the subscription, it could likely be even larger. And with that, the more people it reaches, the more that it helps everything else grow. And one of the things that it's afforded me is the ability to not just be able to, you know, write and share insights about the strategy of what's happening, not just from the artist level, but from the companies that are in the space and technology, where a lot of them started to reach out to me and wanted to get my advice on, hey, this is what we're building. What do you think of X, Y, and Z? But what that specifically offered then was leading to the next conversation where, hey, we're gonna be raising. And we would love to have you on as an investor specifically because we think you have the insights and we think that you could be a value add to what we're building. And you know, after I think, you know, a few of those conversations, that's where I say, you know, this is something that can be taken more seriously because the insights are here and the spaces here are obvious. And I think that it became more and more clear that I could use this as an opportunity to, you know, back and support a lot of the companies in the space, specifically the ones that were aligned with the way that I had seen clearly what was working and what wasn't. So it's afforded me the opportunity to make angel investments in several of these companies and something that I'll continue to do through the work that I do here. And I think having a podcast, having a newsletter has been a great way to do that. And ultimately just continuing to, not just me, but other folks on the team with their help as well, to make sure that the content and the insights that we're sharing is as helpful as possible. Cuz at the end of the day, this is research that we wanna be able to make it reach as many people as possible that are interested. And then with that, knowing that it's not just the content and the insights that are helpful, but actually being able to provide, you know, financial backing and support to the companies in this space that can help, you know, make it, you know, as strong as it can be, not just for them, but for the other companies. I mean, it's a space that has had so much innovation and I think one of the things that's been a bit frustrating to see at particular points is that a lot of the newer companies in this space have had a PR, and had a pattern of asking for forgiveness instead of permission from the music industry. Yeah. To be able to use the rights of a lot of the songs, to be able to have a lot of the partnerships that they should have in place. And it doesn't have to be that way. I think there are great people out there that are building companies the right way. They're having the conversations early on and being able to help be part of that movement has been really fascinating and inspiring to see as well.[00:38:44] Larry Miller: Great. Thanks for sharing that, Dan. Let's go to your questions. I know that some of you have questions for Dan. If you do have one, there's an open mic in the middle of the floor and we'll give you a moment. Step right up. There is a questioner.[00:39:00] Audience 1: Hey, how are you doing? I just have a quick question. I'm really curious on how you feel about just botting in the industry in general, because I feel like when you were talking about the YouTube charts compared to Spotify, there could be some discrepancies in the data just because it's a lot easier to bot on YouTube versus Spotify you can get flagged. So I'm just kind of curious to know what your thoughts are around those charts. You know how accurate the data is and also what you think about that in general. Because I feel like, especially in hip hop too, it's really prevalent and it's definitely a lot about getting the numbers and stuff like that. And a lot of my clients have, you know, similar thoughts about that. So I'm just curious to know what your thoughts are on the morality of that. Is it worth it? Is it not? All those things. So yeah. Thank you.[00:39:43] Dan Runcie: Yep. Great question. I think I'll take it in two parts cuz I think there's issues with bots on streaming sites that are issues with bots on the ticketing side too. As you know, a lot of people have probably experienced it, but on the streaming side of it, it's something that I've looked at and thought it's frustrating and it's wrong because a lot of people are just gaming the system because I think that the technology has improved where a lot of things like streaming farms and things like that have been able to, it's become a little bit easier to be able to figure out like what to ignore, what not to include from a data perspective, where I think a lot of that's been ignored. But I think a few people, I don't know if anyone saw, but there was this video going around about how I don't know if it's true a hundred percent or not, but like Travis Scott's team, like gaming the system to be able to, you know what I'm referring to? Like, to be able to help boost the sales for Astro World. And it's one of these things where, okay, you could, if I'm taking a step back, directionally speaking, do I still think that he would've been as popular as he is without that happening? I still do. I mean, I think that there were so many things treading in that direction, but did that help? I'm sure it did. You know, so I still do think that it is something that is directionally, it can still give you a pretty clear idea over what's accurate and what's not. I think it's really hard to pierce through the top and be there consistently if it's purely driven by bots. But I do think that more likely than those things come to the surface in some way. Whether it's an artist that is streaming or they have tons of social media followers, but then when it becomes time to try to sell a concert ticket, The tickets can't sell, and then that artist then has to downgrade a venue or they have to cancel the show because of things like that. These things always find a way to come to head. So I do think that in some cases, some type of retribution does often happen for artists specifically with streaming, just to get other questions in. I won't go into the ticketing piece of it. I think we all know how, you know, you know, horrible that that can be, but yeah.[00:41:52] Larry Miller: Do we have another question? Oh, good. Hi. Welcome back.[00:41:57] Audience 2: Who decided this way of asking questions? This is really weird. Hi Dan. Is the superstar dead? And if so, is that necessarily a bad thing? [00:42:07] Dan Runcie: Good question. I don't think superstars are dead, but I do think the definition of what we describe them as has shifted and it continues to shift over time. Right, because. Let's say we go back to the sixties or even, let's take a step back. Even if you go back to the nineties and say, okay, our superstar's dead. No one is as big as Beatlemania was before people would say, you're right. No one's as big as Beatlemania, but Whitney Houston and Mariah Carey are still very popular as our Boys 2 Men are whoever else. And I think that's kind of shifted now to someone being like, okay, well our superstar's dead. Can someone be as big as Beyonce? They may not necessarily be as big as Beyonce in that same type of way, but I mean, Billie Eilish had a pretty good year. I think even though I think she came out in the late 2010s, she still had her, you know, big moment 2019. I think we're also seeing, I think if anything, the biggest superstar potential now, just given the way that things have expanded, is on the international side too. You look at what Bad Bunny’s doing. I mean, that is a superstar at every definition. The fact that a non-US album or a non-English speaking album has been on the top of the billboard list for almost the entire year is incredible and the billboard is really just capturing what's happening in the US. So imagine if that was a worldwide list. So, yeah, so I think it shifts in that way where I think, you know, 20 years from now, people will be saying, oh, is so-and-so, you know, or a superstar's dead because no one will be as Bad Bunny be as big as Bad Bunny. So I think it continues to evolve.[00:43:48] Larry Miller: Great. Hi, Max.[00:43:50] Audience 3: Hi. How's it going everybody? First off, I just want to say, I can't believe you started this speaking about Currensy. I'm a huge fan of his and he has a lot of unique ways of releasing music. And so my question is, if you're a burgeoning new artist who's trying to get as many listens as possible, would you suggest trying to move forward in platforms that are really big right now? Or finding platforms that are emerging, trying to develop a fan base there where there's less competition?[00:44:19] Dan Runcie: I think it's a mix, but I think, and maybe instead of the last piece of it in terms of finding platforms that are emerging, I think it's more so finding a platform that may seem less quote unquote sexy. But is that gonna be more so where your fans are where your folks like to be. Like for instance, I think a platform like Audio Mac has been doing pretty well over the past couple of years, and they may not get the same level of headlines that Spotify is, but if you are an artist that has a strong following in West Africa or in other parts of Africa, and you know that Audio Mac is one of the leading streaming platforms there. And then that's gonna work out tremendously in your advantage. And I don't know if I necessarily consider them like newer emerging, but I think it works out there. But on the other side of it too, still having exposure o on your Spotifys and your YouTubes and your Apple musics is still good as well because you want to, you don't know when that moment may be that you, for lack of a better word, like breakthrough and have that hit. And when you do, you wanna be able to still have something in those other places. Even if you had your home base on, you know, one of the platforms that may not get as much exposure but for the people you're trying to reach may be the best thing.[00:45:38] Larry Miller: What do you got?[00:45:40] Audience 4: Hey. So, in a conversation of superstars, you know, you talked about the notion, the billboard, headline, you know, too many hits starting up superstars. The platformization of music where it is right now. Maybe it's a little bit harder for superstars to kind of come up and cut through the noise, but the potential, like you mentioned, to be a superstar is never any bigger in that sort of way. You mentioned the implications on, you know, from like the label side of things, from the other side of things a bit. In your opinion, what are the implications from a music consumption standpoint? You know, the average listener, people that listen to music in terms of the implications for music discovery, how music is in people's lifestyles and the way that it is now with platforms and just the superstar conversation as a whole?[00:46:24] Dan Runcie: Yeah, I thought about this a few ways because I think that one of the things that we're missing a bit because of the way things are now, is that someone can have a song that is topping the charts, but it's not the way that it was maybe like 10, 20 years ago where, oh, if the song is the number one song in the country, oh, like I heard it on the way to the grocery store and then I heard it on the radio and then my friend was probably playing it when I went over their house in the afternoon. No, it's more likely to be that the super fans of this song have been like, you know, streaming the hell out of it and they just have been going nonstop and I may not even know who that person is. So a bit of that water aspect isn't necessarily there as much from a fan perspective. I think the other piece of it is the algorithm of the streaming services double down on this more because at least when I log into Spotify or if I log into one of the streaming services, I'm more likely to see the songs that I've been listening to before. I'm more likely to get some type of daily mix that is based on what I've been listening to before. It's harder for me to be able to see. If I actually wanna see, okay, what are the new top hits? Like I have to search for that to some extent and go out of the algorithmic feed. That's already been tailored to me. So I think it makes it harder for me to go search for those things. And in some ways, the platforms kind of design it that way because they're like, okay, if they know that I am Rihanna fan. They're more likely to want to share with me more Rihanna songs I haven't listened to than assuming that I'm gonna like whoever may be the rising artist right now. So I think it makes it tougher from that perspective. And I think a bit of that shared community isn't, isn't there as much. So I think from a fan perspective, I've kind of had a bit of a double-edged sword because while I think part of what attracted me to so much music and memories is being able to have those shared experiences with people as opposed to now it's like, you may have like these super fandom experiences, but it's with these people that may not necessarily be in your direct area, but you're all connecting online in this way that you may not have.[00:48:33] Larry Miller: Okay, good. I think we have time for, well, let's ask this question and see how we're doing for time. Go ahead.[00:48:39] Dan Runcie: Maybe you could do like a rapid round, we could get through.[00:48:41] Audience 5: Just really quick then, what are your thoughts on like NYC Drill? I know artists like Dio Sama are huge. Just on the data side like TikTok and YouTube, so what are your thoughts on it? Sort of, cuz I'm a little skeptical on it going really mass. Like, cuz we're really super focused on NYC. Just how big can Drill really get? [00:49:03] Dan Runcie: Well, I think we've seen, you know, the growth and exposure in the Midwest specifically. I think so you've definitely seen it there. I think you've seen artists kind of having their own moment, whether it's someone like Ice Spice, who I think has blown up pretty recently. But I also think that moments of it hurt, right? I think it really would've been cool to see someone like Pop Smoke be able to have the moment and the rise that I think he was going to have. But even that, I think it's kind of interesting the way you phrased the question, because I think even for something like Drill music, there's probably certain people that, like the concept of Drill music, don't like to reach them in the same way. But if you're in it, you probably already think that it's overexposed to some extent, which I think kind of speaks to this like broader dynamic that we're in, where if you're in something, it can feel like if you're in that niche and you're focus, and I know it may sound awkward to call Drill music niche in that way, but if you're in that group, then yeah, it can seem like, oh wow, this thing has been going on for a while, and now it feels like it's everywhere. But if you don't really tap into Drill like that, someone could be like, oh, what's this thing? So I think that's something I keep in mind with it as well. Like there's still so much more exposure out there. So I don't necessarily have those concerns for Drill music. If anything, I think we'll probably see other regions, especially in the US, continue to adopt it more the way that we've seen New York and the Midwest, specifically Chicago.[00:50:26] Larry Miller: Let's go to what I think is gonna be a final question. Go ahead.[00:50:30] Audience 6: Okay. I just had a question about your thoughts and involvement in like A.I involvement in the music industry. You know, just like in terms of the recording side. perhaps may potentially be in the Live side of the music industry as well. I don't know if there's any applications for that? But just your thoughts on that.[00:50:48] Dan Runcie: I'll keep this quick. It's funny, I was talking to someone about this earlier today. A.I and anything based on like GPT Three in general is fascinating because I do think it can be addictive for artists, but I feel like I can already see the headaches that are there with so many things, right? Because if it's based off existing content, and of course those content owners are rightfully gonna have certain issues about who's basing these A.I lyrics or songs off of things. I do think, though, that for certain artists it can be fascinating. I don't think it'll get to the point where someone could have like a song that they actually wanna release at a top level that is created by A.I. At least not now. The technology isn't there, but could it help with an artist that is having writer's block about a particular thing? I think it was interesting. There's a conversation. Bruce Springsteen was on an Interview and he was saying how like for him with A.I. he's looking at it as something where, you know, he's like, I've had months where I just didn't write cuz I essentially had writer's block. I just couldn't think of something to be able to put out there. But could A.I. just help jog my memory and even as someone that I am not a songwriter or a musician, but as a writer, I've been seeing these tools and the things they can do, and just being able to plus, you know, sign and then them being able to generate some thoughts, or at least a potential outline of, okay, what could this topic look like? It does at least help jog the memory in the way that reading an article or something like that can be such a fascinating space. I know we're over time, but yeah. Fascinating space. [00:52:31] Larry Miller: Thank you. We're gonna have to leave this here for now, but you can hang out for a while and chat with everybody as we run through the rest of our program and maybe even a little bit afterward. And so let's thank Dan for a really thoughtful discussion.[00:52:50] Dan Runcie: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how capital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, go ahead. Rate the podcast, give it a high rating, and leave a review. Tell people why you like the podcast. That helps more people. Discover the show. Thank you in advance. Talk to you next week.

Dec 15, 2022 • 38min

Trapital Mailbag: A.I. in Music, Future of NFTs, Hip-Hop Globalization, and More!

I’m digging into the mailbag for today’s episode. For the first time in over a year, I asked Trapital listeners and readers to send me their most burning questions about the music industry. I’ve pulled out nine questions from the bunch to cover on the show. We’re covering everything from NFTs to artificial-intelligence-assisted music creation to investing in music catalogs going forward and a whole lot more. I’m hitting you with my honest thoughts on each. Here’s a look at the topics:[0:54] State of music NFTs [4:40] Customer problems as a music startup[8:35] Lack of new music superstars [12:07] Future of AI-assisted music creation [17:00] Tradeoff for artists wanting ownership [22:11] Hasbro selling eOne[26:16] Music catalog investing in 2023[29:41] Globalization of hip-hop [33:21] Emerging artists as startup founders Trapital’s first-ever Cultural Report for 2022: https://trapital.co/culture-report/Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.co Sponsors: MoonPay is the leader in web3 infrastructure. They have partnered with Timbaland, Snoop Dogg, and many more. To learn more, visit moonpay.com/trapital Check out The Drop, REVOLT's weekly newsletter to stay ahead of the latest news in hip-hop and Black culture. To learn more, visit revolt.tv Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.TRANSCRIPTION[00:00:00] Dan Runcie: If you're an owner of I.P., often times that I.P. may be the most valuable thing that you have. But does it always make sense for you to then be the ones that produce it? Of course, there's unique examples of this, right? I think Disney is a company that clearly does both, but Disney is such a unicorn in what it does in so many ways, and we've all seen that flywheel of what they've done, and that flywheel is so relevant because it's hard to see another company that could really do that to that level. But it's more likely than not that if you are an I.P. owner or it's probably in your best financial interest to partner with a company that you can leverage their production because they are skilled at being a production company to do that thing.[00:00:46] Dan Runcie: Hey, welcome to the podcast. I'm your host and the founder of Dan Runcie. This podcast is your place to gain insights from the executives in music, media, entertainment, and more who are taking hip hop culture to the next level. [00:01:04] (Intro) Dan Runcie: From you, the listeners who make Trapital, exactly what it is. So this is a mailbag question where you all sent in your best questions. Some of you emailed them, some of you posted them on socials, but I looked at the questions and picked the best ones, and this is a mailbag episode. It's been a while since we did one of these, so it felt good to do one. I actually wanna do these more often just because I think the questions were really great and we're able to address a bunch of topics that we'll get into A.I, the future of music, globalization, ownership, and all the topics that we love to break down on capital and a few ones. So let's jump in.[00:01:41] (Pre Roll Ad Moonpay) [00:02:11] Dan Runcie: All right. Today we have our one and only Mailbag episode from Trapital. It's been a while since we did one of these. I feel, maybe at some point earlier this year we did a mailbag, so it was finally good to dig back in, hear from folks and be able to answer the questions that a lot of you have been thinking. This podcast has grown quite a bit this past year and was in the 1% for the most shared podcast according to Spotify wrap, so that was pretty good. Some applause for that. And I wanted to bring in some of the questions from some of the avid listeners and readers we have. So I posted in social media, posted in the newsletter, and this is a roundup of the best ones. Covered a bunch of topics. We're gonna talk about the future of A.I and music, the state of NFTs, globalization, ownership, and a whole lot more. So let's dive into the first question we have here. So, Ken Penn wants to know what is the current state of music NFTs and our major labels as interested in them as they were? So first for some clear context, a lot of people have been asking questions about this because the general trends of N F T discussions from last year to this year is not quite what you would expect. A lot of people saw that Bloomberg report that came out earlier in 2022, I think they said, N F T transactions were down 97% from the peak that they were at in 2021. And if you type in the word NFTs in Google Trends, you'll probably see a slope that looks quite downward. That is very true, and that's clearly where that is. But I think there's a big difference between that, which I think 97% of that was the hype and a lot of the crap that you likely would only see at the height of the pandemic when money was flowing like crazy. Think about the time when like Pet rocks were being sold and Logan Paul was buying his NFTs or trying to sell his NFTs for whatever. If that was the top of the market, then I think we're seeing things level off a bit more now because you are still seeing partnerships from the major labels and from a lot of artists. I look at Warner Music Group. Warner's been active, more active than any other major label, I think, when it comes to active investments and being forward-looking and being public about those investments. And it was just six, seven weeks ago that they had formed a partnership with Open Sea, which is one of the largest platforms out there to be able to trade in as a marketplace to be able to buy and sell NFTs. So you also have other deals that we've seen. Universal Music Group recently hired two SVPs that are focused on web three with a pretty strong focus on NFTs themselves. And more broadly, you have companies like Public Pressure that just raised $6 million to continue to build in this space. I have said this a few times in this podcast, but I think that Web three and NFT specifically, you had to get through the.com era. You had to get through that heads.com phase of people just starting shit because it sounded like it was something that was gonna resonate, but after a lot of that didn't work out. You obviously had the.com bubble burst. That era still gave us Google, it still gave us Amazon and all these other companies that have still continued to be successful and be some of the biggest companies in the world today. And I think there was a very strong chance that we will still have that with this current wave. It may look slightly different in music, but I still think that we're gonna see, and we have seen more of the true opportunities, whether it's on the artist side of artists that are selling actual NFTs that their fans would find valuable and that others will wanna buy into as well. And I think you'll see this on the major label side with more investment going into acts that can actually reap the rewards from it. One of the biggest deals of 2022 when it comes to N F T sales was Snoop. and what he was able to do, just capturing that momentum. After the Super Bowl. We wrote, or I covered a lot of this in the culture report that Trapital put out will include a link to it in the show notes if you haven't checked it out yet, but still a lot of upside on NFTs. I do not see it quite as much as the bubble that I think was clearly there in 2021. A lot of that quarantine rapid growth needed to calm back down a bit, and I think NFTs are one of the areas that were hit a lot harder than others, but I still think that there's plenty of upside for people that actually wanna build and don't just wanna do grifter, whatever the hell else people were trying to buy itself time. Another question here is from David from Santa Monica, and this was actually a reply to a newsletter that I recently put out where I was talking about some of the cost challenges that music startups and music tech companies will face as in regards to working with customers and customer service and working and dealing with unprofitable customers and wanting to move further up. Mark's question was whether or not I had any data on the customer service costs that these companies have. And I wanna answer that question in a slightly different way. It's less about customer service in the same way that you know, you or I may go call Comcast or may call Xfinity when we're having an issue with our cable or our internet, but it's more so you are a client or customer that is trying to use this particular service, whether it's free or you're relying on it to grow your own business, and you are now having some challenges, you're having some type of question. The thing is a lot of the companies, especially a lot of the distribution platforms, started off being available to everyone, but I think they realized how expensive it is to serve the clients and to serve the customers who are not driving the most business possible. It's no different than a lot of people see when they're working with client services. Overall, your $2 million clients in a lot of ways can be so much more enjoyable to deal with and work with than your $2,000 clients or $2,000 clients will chat a nickel and a dime. They have a bunch of questions about this, that, and the third, but your clients that have a bit more money, they normally come in a bit more clear and confident with what they're looking for, and it can lead to better business in the long run. And I think to a lot of extent, the same is true with a lot of the artists that you end up serving or a lot of the customers that a lot of these platforms end up serving because a lot of their time gets spent with customers that just don't justify the ROI of how much it costs to have that person on staff continue to work and continue to coach and work directly with someone who's just not generating enough revenue to be able to justify the spend. And if you think about how a lot of the companies focus on these things, especially if you're being built out like a tech customer success. This is a role where whether even at the high individual contributor, or the middle level manager role, you're talking, you know, $150, $200,000 plus for someone that can do that roll on annual basis. I mean, I'm thinking of myself, it was six years ago at this point, I was offered a customer success role from a startup that has, you know, now been acquired. I believe the offer was right around that $150, or maybe it was a little bit more than that K range. And that's how much you're paying to have one person that is dedicated to not just you, but to other clients.But if you were to fractionize my time, let's say that, you know, I was someone that was making $160k a year and I had 12 to 16 clients per year that I was serving, you have to justify, okay, is it worth $10k of the company's time to be able to continue to serve this person if that's what I'm spending my timeline, and we all know that it's less likely that it's gonna be an even split. So that's where these things I think, can often come into play, which is why I think you've seen a lot of the distribution services and a lot of the others start to be more selective over time. And they start to have cut-offs in terms of who they're willing to serve and who they're not willing to serve. And that's one of the reasons why I think we see that shift where, especially in music distribution, it ends up leaning itself towards just having a low cost option, like Distrokid or a tunecore where it essentially doesn't cost much at all to upload the services, but it's a bit more do it yourself or you get something that is a bit more boutique. But by being able to join the boutique offering, it's much more selective as a result. So the next question here is from Arthur from Twitter. He didn't specifically say his name, but it was a good question here. He asked, who gets more blame for the lack of consistent superstar X, labels or customers? The answer is neither. The answer is technology. If you're trying to blame anyone, I personally don't call it blame. I more so call it the driving factor, but this is more about technology. Technology was the driving force that lowered the barriers to entry for artists to be able to create more music than they've ever created, and to be able to release it the way that they've done it. And because they're releasing music the way that they've done it, it then becomes harder and much more noisier for new artists to be able to enter the scene and be able to hit the same heights that they did. And because of the increased number of options that are there, it makes it even easier for powers that be to continue to invest more in what they already see proven. Whether that is your superstar artist or ones who have already proven themselves that seem like they'd be most likely to be the next next bets, whether that's your Taylor Swift or your Adele, or your Beyonce on the proven side or on the artist coming up, whether it's someone like, Olivia Rodrigo, or like Blast, or Billie Eilish or someone like that. So these things that are, I think, a big factor just based on where things are and barriers continuing to be lower and lower. And there's been countless reports on just how difficult it is and how record labels are starting to feel like it's having a harder time to break new stars in the way that they once did. It's harder to have new superstars reach the levels that they did. I think you see this in some of the analysis that's been done on charts and stuff like that too. It's a lot of the same names that have been household names for over a decade that are continuing to stay there and it's harder for the new artists to really come through. So I guess if there's anyone to blame for that, we can blame the founders and the product managers from the companies that enabled the barriers actually to happen in the first place. I know a lot of people disagree. I do think it's a good thing that people have more options than ever just in terms of the artist's perspective, but just because I think that it brought a lot of flexibility. But with that, there's always trade-offs like any new technology brings. There's good with that. There's bad that comes with that. I do think that the pros and the cons outweigh them. I do think that the pros do outweigh the cons with that, but still very aware of the downsides of the current timing. This next question is from Joe Edwards and he asked, what is the ultimate potential of GPT-3? This is a hot topic right now, I think for a lot of folks, and it's a question that I think everyone from record labels to attorneys, to emerging artists are trying to figure out, but here's my perspective. I think that GPT-3 is a great tool that will be able to give songwriters an extra tool that they can have by their side. I think we recently heard Bruce Springsteen on a podcast talk about how he could use A.I., whether it's something like something that can help jog his memory or jog his thoughts, specifically if he's having a better writer's block and how difficult that can be for a songwriter. You just wanna be able to have a few things that can aid your process of bringing thoughts together. The pen that comes from that would ever truly replicate something that Bruce Springsteen would wanna put out himself. But just give it how advanced these tools get and how better and better they get. It's likely gonna provide someinspiration that can be helpful. That said, I think it would be more helpful to help existing artists, and I'm a bit less bullish right now on new artists coming up. I think we all saw what happened with Capitol Records and FN Meka and that whole mess, while I don't think that that's all A.I. driven, part of that's driven by the people that were running it. I do think that that is an inherent challenge that some people may be a bit weary of, at least for now. But one place that I do think A.I. and GPT-3 specifically could be unique for is for giving certain artists or certain people the ability to access a sound catalog or an ability to access a group of songs that they can use to then scour to figure out what they can then glean from that to be able to create the new songs that are able to create lyrics that they could use in the future. The reason I highlight this is because I'm sure if you're trying to use a song that is based on a song that is owned by a major record label, the record labels and their lawyers will come after you, and it is something that I know that is already top of mind for. But there's a lot of music out there, a lot of music that people would want to hear that isn't owned or controlled by the major record labels. And I think in the same way that you saw platforms like Epidemic Sound or Splice and others be able to create, whether it's monthly subscriptions or other types of opportunities to buy access to a right to use any of the songs in the catalog. I think you could see something very similar to that happening with A.I. and GPT-3 specifically, because yes, if GPT-3 tries to scour all of the songs available, that is a legal nightmare. But if you're an artist and you wanna be able to pay $10.99 a month or whatever it is, to be able to access this tool where you could type. Any prompt that could help spur your thought, that could be a very great use of $10.99, especially if that gives you the ability to make the next album from your bedroom that could be nominated and win a bunch of Grammys or sell, or, you know, do a bunch of commercial success or just have enough success for you to be a standalone successful musician in your own right. Because I do think a lot of those things are likely to appeal more so to independent artists. I also think that we'll see some potential with GPT-3 with an artist that breaks out on TikTok in general, I almost feel like it's inevitable that there's gonna be some artist in 2023 that has some song that goes viral on TikTok, and people are gonna be like, oh, where did the idea for the song come come from? And the artist is gonna say, oh, I just typed in a prompt. Write me a song about X, Y, Z. And here's what came up. Because we already started to see little hints of how artists would use name generation or using tools to come up with things, right? You've all heard the story about how Lil Nas X used insights from Reddit and insights from Twitter to create Old Town Road and how he essentially engineered that song to reach a type of success that it did grant. A lot of that was outside of his influence, just given things going viral after the whole country music controversy. But a lot of the things leading up to that point were influenced by him. And I think even on a more simpler side, artists like Childish Gambino and Post Malone, I'm pretty sure that both of them got their names from some random computer generators. So there's been things like that that we've seen and I think we'll continue to see more of that. And I think even the answer to this question is gonna continue to evolve. So you could ask me this question in a year. I think I could probably have this as an end of the year podcast question for some time now. And their law used to be something new to glean. The next question here is from Mercedes G. She wants to know why don't artists prioritize ownership even though artists have been pushing ownership for decades? So this question is a bit nuanced because I do think that there are a lot of artists out there that do push ownership, and they are clear that they wanna be able to own their masters and own their publishing and understand the value. I think the challenge comes though, when it becomes a trade off and that trade off is likely offering the artist something that they couldn't have otherwise had because owning your masters and owning all those things sounds great and it sounds great if we assume that the artist could have reached the same heights that they could without giving up something in exchange.The thing is, when an artist is starting to pop and they are already experiencing what some of the challenges are, being able to really hit that next level and whether that is something that they want to do because of some of the things I answered with earlier questions. With more and more music coming out, it's harder for everyone to break out. It's especially harder for artists that are already signed to two record labels to break through. That means it's gonna be even hard for an artist that doesn't have the major label resources behind them to break out as well, which could make them even more likely to wanna then sign with the major record label, especially if they are cutting you a check. I'll look at a few examples of younger artists as well. Look at an artist like Lil Dirk or even NBA Young Boy, I'm pretty sure little Dirk. Posted that he had gotten a 40 million deal recently this year. And I think Dirk is someone that has been popular. I mean, it's several years ago at this point that he was on double XLS freshman list, but even as an independent artist, it could have taken him quite a bit of time to ever hit that amount of money, especially if he's trying to cash it in on the moment that he has. So it's one thing to push ownership and it's another thing to still be able to say, you know what, no, I'm good. I don't want that check. Let me continue to do what I'm doing. When someone offers you an eight figure check that's right in front of you. And I think there's a bit of that human element that can sometimes get a bit lost cuz it's easy for the people in the pita gallery playing Monday morning quarterback to go say, oh, why would you do that deal? Or us to focus on some of the survivorship stories of Master P turning down a million dollar record label deal. Different people that may have offered it to him. Because for every success story like Master P, there are other people that turned those same type of deals down but it didn't take off the way it did for P and then they go back to the record label and being like, oh, hey, could I still get that deal? And the record label's like, no, like the moment passed and the only reason you're coming to me is because you don't feel like you have the momentum that you had before. So there's a few factors here that I think are important to consider, and there is that human element that I think just changes. It's one thing to be a Twitter pundit and put your thoughts out there, but it's another thing to really still say no when a company that you know, they're rolling out the red carpet for you their show, they're presenting the seven, eight figure check, whatever it is, and then you still saying, no, I'm good. And then I think you even see us at the highest levels as well. You look at the deals that you know, someone like Drake or the weekend, you're more so hitting now into the nine figure deals and these artists are more likely to be able to continue to have ownership, but they're still licensing their masters or licensing their music out to the major company. So there's still some trade off there. It's very rare that you ever are really seeing superstar artists that still are hitting those superstar artists levels that is like, you know what? I'm good. Let me just go release everything independently. Cause I think at the end of the day, if you are a priority on these labels, and if you are still getting the best that you can get, you're more likely to figure out, okay, what trade-off is commensurate at what level? And that doesn't mean there wasn't a better way that could be done optimally. My explanation here is more of an explanation of the entire landscape of less of an advocacy for one position or another. But I do think in general, just given how much harder it is for record labels to be able to truly, I think, focus and invest on that artist development piece because they're expecting artists to come to them when they've already hit zero to 60. I think it really puts the onus on the artist to be like, okay, are you happy at 60? Because if you're happy at 60, you may not need the record label, and maybe you think you could get to 70 or 80 yourself, but it may take some time. But if you're trying to get to a hundred, it's gonna be really hard for you to do that independently. So a lot of it requires some questioning on where you wanna go, how far you wanna go, and why that may or may not be as important to you. [00:22:52] (Mid Ad): Today's episode of The Trapital Podcast was brought to you by Revolt. Revolt is on a mission to curate and share the best of the best in hip hop culture and social justice. You may remember a couple months back I had the CEO of Revolt, Detavio Samuels on the podcast scene. He talked all about the mission and where things are going, and I think this is one leading company that is elevating what's happening in black culture. It was launched by Sean Diddy Combs back in 2013, and the multi-platform Network offers breaking news videos, artist interviews, exclusive performances, and original programming. They have content for everyone, like Asset over liabilities and original podcast with the host of Earn Your Leisure that gives you a behind the scenes look into the business investments of artists like Soulja Boy and Rick Ross. They also have the Drop Revolts weekly newsletter and curation of the latest in hip hop and black news, and they have the black print where sits down with innovators and change makers laying the ground up for the next generation for the culture. You can learn more and sign up for Revolt's newsletter, the drop@revolt.tv.[00:24:00] Dan Runcie: All right, this next question here is about a specific deal that's going on, but it's gonna be a good one to answer. JB from Atlanta asked, now that Hasbro has sold E-One's TV and film division, could quality control be a potential buyer? So a few things to unpack here. Earlier in November, Hasbro announced that it will be selling its TV and filled divisions of the comp company. Note that this news, three years after Hasbro had initially acquired all of Entertainment One, which included its music division. And then I think it's been about a year now. My time may be off, but it's been about a year plus now that it had rolled off its music division, which then became Monarch, which is run by Chris Taylor and that team. You may remember them because they were the team that was involved with the selling and the acquisition of Death Row records and then that deal with Snoop Dog. But Hasbro overall has kind of been in this, oops, maybe we should have done this deal when they went and bought E-One. And I think the big takeaway away for Hasbro has been that if we want to leverage the IP that we have, and as many of you know, Hasbro toy companies, so it has the IP there, but it also has some brands that were in that production, like Peppa Pig and things like that. They can still own the IP, but they don't have to own the in-house production to be able to then leverage that IP and make it happen, and then when you own those divisions, it just can be so costly to try to do that. So they got a lot of pressure from Wall Street and other analysts to sell that division and focus on what they do. If you're an owner of an IP, Oftentimes that IP may be the most valuable thing that you then have, but does it always make sense for you to then be the ones that produce it? Of course, there's unique examples of this, right? I think Disney is a company that clearly does both, but Disney is such a unicorn in what it does in so many ways, and we've all seen that flywheel what they've done, and that flywheel is so relevant because it's hard to see another company that could really do that to that level. But it's more likely than not that if you are an IP owner or it's probably in your best financial interest to partner with a company that you can leverage through their production because they are skilled at being a production company to do that thing. So that was a lot of the reason why that sale happened in the first place. Now let's talk about the QC part of this. I would be very surprised if Quality Control was to go on and buy a TV and film division because I also look at Quality Control as an IP. I mean just given the ownership structure, they may joint own some of that with Motown, give the joint venture there. But they are IP owners that can then use that to leverage, whether it's the brand or the story of your little baby Migos and even the rise of coach K and P and and things like that. And while QC does do investments, like I know they're involved with SoundCloud and they have a few other things going. I would be very surprised if they went on to acquire a type of, you know, studio themselves. I know that QC does have a film division, but my impression of that has always been more so, yeah, let's stay quiet, let's have that something that we could have that small and manageable in-house, but if they still have a big release, I think they would probably wanna go to shop that and market the same way that any other big time producer would want if they wanted to push something further. No different than, I think you kind of saw with the Little baby documentary that eventually went on, Amazon was released on Amazon Prime a couple of months ago. So I would be surprised there, if anything, I mean, I think QC is one of these record labels that may be looking for an outside investor itself, but I'm not quite sure what the Motown relationship, just given the joint venture ownership there and how that may look, whether or not who the actual company is that owns, whether it's the brand or the artist or anything like that.Moving forward from that. All right. Couple more questions here. So is music investing specifically, like in catalogs, is music investing still a good idea in 2023? And my answer is yes, but not in some of those 2021 pandemic era evaluations. And that's because I think what I liked about the catalog boom is that it brought awareness to something that I think a retail investors in the niche knew, but a lot of others weren't focusing on, is that there's a lot of value to be had with owning some of these catalogs because there's certain artists that I think do have the potential to just feel similar to a evergreen stock or something like that continues. Provide consistent revenue that isn't correlated with the economy time and time again. But I think there's a few things that happened that people may have missed. One, there is a decay curve with all of those assets. And even as much as people wanna tell you that the Beach Boys or Michael Jackson or the Beatles are timeless, everything has a decay curve. I mean, you could even go back, you know, decades, even. Frank Sinatra or Elvis. I know that you know that the movie that came out recently, but even folks like that, the discussions that are happening now about those people aren't anywhere near the type of discussions that you may have heard, at least when I was growing up, and that just shows you how much has changed in several decades since then. So, and I think the music listening would've probably aligned with that as well. So there's that, and I just think that the valuations that were being paid for a lot of these things probably just wouldn't happen again. One, because interest rates are nowhere near as low as they were, but I think even regardless of interest rates, there was a lot of overpaying for those assets just given the excitement. So smart on a lot of the artists for cashing out when they did and getting a lot of those returns because at least from what we've seen from a lot of the reports, You've seen some of these financial time stories talking about Hypnosis. And Hypnosis has at least from what the returns have been from their catalog has not been able to generate returns that a lot of the investors feel satisfied with and feel are in line with what they had, which is why I think you started to see more challenges there. There was almost an entire year period where the company didn't make an investment, and I think you've seen a lot of things ring true for others. There are still catalog sales happening. It just may not happen at the particular dollar amount that people wanted. For instance, there was Pink Floyd deal that was being talked about for a while. It's still being talked about. I believe they wanted $500 million, but based on some of the recent findings that had come out, the offers that they started to get were much smaller than they would've liked. So people are still interested in buying Pink Floyd. It may not be for the amount of money that the rights holders wanna sell it for, but there's still interest there, and I think that rings true all the way up and down the board. Listen, it wasn't even just music investing. The quarantine era of the pandemic led to a lot of sales for things happening that just probably wouldn't happen in the same way today. All right. Another question here is how does the globalization of hip hop Influence its business and cultural impact? And this question came from chat GPT. Someone had submitted this question and then it came back as, oh, what do you think is a good question to ask about the business of music or the business of hip hop? So this is a fun one. I know I've written about it a few times, but for the sake of brevity, I'll tackle it in two ways. First, A lot of the Western hip hop artists were able to reach a much bigger audience as a result of globalization, and I think it made it easier for some of them to launch global brands as a result. I look at folks like Rihanna and folks like Jay-Z. Look at some of the deals they've done with, whether it's ACE of Spades for Jay-Z, or the Fenty partnerships with Rihanna. These partnerships are tied in with European companies and there has to be some relevance for how big you are seen in Europe and other areas for those things to really have an impact. And I think you saw that compound as well. When you look at someone like Rihanna and Fenty Beauty, being able to enter Africa and just given the ethos of that brand being able to be inclusive and have shades for all skin tones, it makes perfect sense to be able to do it in Africa, which you just think about the beauty industry. This is an entire continent of people, especially women. Different complexion and skin tones that were largely overlooked by the many other major brands. So being able to have that influence there directly ties into an artist like Rihanna, you know, years, decades earlier, being able to tour in these places and being able to have her name out there, being able to be seen in that way. So I think it affects it from that perspective. And of course, Jay-Z, Rihanna are more so people at the top of that chain that are billionaires, but I think it really made a large impact on everyone else on the other side, I think it's made a huge impact on international artists too, because we've seen in so many other places that hip hop has truly been that connective tissue. It's really been that gateway that can help. Raise and elevate the voice of the unheard or elevate the voice of the people that may not have either gotten a chance to get their word out there or can really speak to some of the challenges that are happening. And that's the way that hip hop started. You look at Public Enemy, they saw themselves as the black CNN. They were trying to voice what's really happening. You listen to songs like Grandmaster Flash, The Message. This is what's going on in the streets of New York right now. And I think that if you listen to a lot of hip hop from other areas and you hear things translated, you're hearing a lot of that. And even someone like Bad Bunny, how he speaks about some of the challenges and the oppression that's happening in Latin America, or even things that are happening in Puerto Rico specifically, or even how we spoke out about disaster relief and even L G B T Q issues. It's not a coincidence that this is a hip hop artist that is doing this in their own language and that's happening. So I think we've just continued to see more and more influence and we'll continue to see how hip hop continues to be such a big driver. And it's not just Latin America. You're seeing it in France and you're seeing it elsewhere. And as globalization of music more broadly has made it more possible for artists in local languages to truly rise up. I think you're gonna see more and more of that coming from hip hop in a lot of those local language areas. All right. And the last question we have here is from Quai Bangs who asks, do I notice similarities in emerging artists that follow the start-up path to start-ups themselves? And I definitely do see a lot of those. And I like the question because I've been hearing so much from founders in the space and start-ups in other companies about two things. Truly identifying and seeing artists as founders, not just as the creative talent behind what they're doing, but they are the ones that are the founding person of this company that if successful as it can be, it'll be a company built around them to then help focus and really benefit and speak to their strengths and address their weaknesses as well. No different than a start-up would be who is that? Who are your co-founders that you're gonna find that may not be on the talent side, but can help with the business? Or if you wanna do it all yourself, who are the people that can be around you to at least help support in that way? And I think that you've seen some of those things happen, from time and time again. You look at the start of Dreamville, I very much do. Ibrahim Hamad and Jay Cole as two people that are in line with being able to do that and continuing to push forward, which I think has been pretty strong, seeing how they've been able to do that over the past decade. Plus, you look at any of these record labels and I think you're more likely than not going to see some type of tandem there. We talked about Quality Control. I think you see a lot of that too, and I think no different than a start-up may try to get equity for what they're doing. I think you're seeing certain artists start to explore this as well, whether they're trying to explore on chain, we're trying to sell tokens or they're trying to get a more formal structure in place. I recently had the investor, Cooper Turley, Cooper Tupa on the podcast, and he was talking about this as well, and how he's investing in companies that are looking at this investing artist specifically so that he can take an equity stake out of the artists themselves and be a bit, you know, less dilutive than a record label that may wanna take 80% of the cut moving forward in exchange for in advance. So there's plenty of trade-offs there. I think it's an interesting thing to continue to explore, but I think that it is a sign of what that path to the future looks like. Cuz I think that artists, our founders, at the end of the day, how they go about that, you know, is one thing or another. And who wears that CEO hat. Whether it's someone that artist proactively puts in place or it's someone. It ends up being at the record label that they signed to, or it's their manager. There's so many ways that these hats can be worn, so you'll be interested to see how it plays out. But wow, that was fun.That was a quick bunch of rapid fire questions there, but this was really great. I hope you enjoyed it and I hope you enjoyed the podcast this year as well. Definitely continue to share it with anyone that you think would be in. And let me know if you have any other questions. We can keep this in mind. I wanna do these more regularly in general. So, yeah, if you're listening and you enjoyed this episode, send us a quick note, whether it's, you know, on social media or email. And then we'll keep them rolling so that the next time we do a mail bag podcast, we can keep it rolling.

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