Trapital

Dan Runcie

Trapital is where technology meets culture. Hear breakdowns on the most important trends in tech, media, and entertainment. Trapital founder Dan Runcie and various guests break down the moves that shape the rest of society. Learn more

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Jun 3, 2022 • 39min

How indify’s Co-Founder prettyboyshav Is Flipping The Economics Of The Record Business

The traditional record label model isn’t artist-friendly. That’s not a secret to anyone by now. Deals are notoriously long and feature a revenue split heavily tilted toward the label — not the artist. But an ambitious alternative has arisen in the last few years. Meet indify, a start-up co-founded by musician prettyboyshav and his two childhood best friends, Matthew Pavia and Connor Lawrence.indify is a platform that connects investors with up-and-coming artists. Investors can not only financially back artists, but also mentor them in matters like legal or marketing. But unlike a record deal, investments can be as short as a song-per-song basis. As prettyboyshav told me, it’s like “going on dates instead of marrying.” As an artist himself with millions of streams to his name, Prettyboyshav is specially equipped to carry out indify’s vision — to create a more equitable, prosperous music industry. indify was originally a music discovery tool when it launched in 2015. Using an algorithm, it identified emerging artists on the cusp of “blowing up” like Khalid, who the tool flagged way back in 2015. That technology still underpins its new business pivot as the “AngeList for the music industry.” To get a glimpse into indify’s innovative technology and mission, listen to my full interview with prettyboyshav. We covered a lot of topics, including the ones below: [3:39] indify’s Mission In The Music Industry [5:28] Why Artists Are Taken Advantage Of So Often[7:03] What Does indify Look For In Investors Wanting To Join The Platform? [10:16] The Potential For Culture-Setters To Financially Back An Emerging Artist[14:38] indify Vs. Record Labels [19:07] Is There A Glass Ceiling On Artists Who Don’t Sign With A Record Label? [23:35] Does indify Do Upfront Money Deals? [26:10] Principles That Guard indify’s Technology[29:27] indify Having Web 3.0 Values Despite Being Off-Chain [33:11] How prettyboyshav Juggles His Music Career And Being Start-Up FounderListen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.coGuests: prettyboyshav, @prettyboyshav Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital Trapital is home for the business of hip-hop. Gain the latest insights from hip-hop’s biggest players by reading Trapital’s free weekly memo. TRANSCRIPTIONprettyboyshav 00:00I truly, truly, deeply believe in it and feel it and empathize with the work that's being done because I believe in these values, which really comes down to community, right? And community ownership, community governance, I think these things are very powerful concepts. And I think these are very powerful ways for an artist to run their business.Dan Runcie 00:26Hey, 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. Today's guest is prettyboyshav. He's the co-founder and CEO of Indify, a platform that is helping people invest in the future of music. Indify connects merchant artists with the funding they need to build the biggest careers. On Indify, it brings together artists who want to grow and control their career on their terms. It also brings together investors who want to support and back these artists and have the know how to help bring them to the next level. It also brings together business partners who can help artists with marketing, legal, accounting, and many of the other things involved to help run the business. One of the things that Shav and I have always talked about and we agree on is that artists are founders. If you follow me anywhere, you've seen me talk about this, you see me reiterate this. And I think Shav himself is a great example of this. He very much approaches Indify this way, and he's also a recording artist himself, prettyboyshav has over 10 million streams. And we talked a lot about what it's been like for him, navigating both the CEO role and his role as an artist. But we also talk about what Indify has been up to and some of their progress they've ha. The company has had over a million dollars generated this past quarter and 2022 for the artists on its platform and over a billion streams for those artists collectively as well. We talk about the influence that some of the partners they've had as well, such as Alexis Ohanian, who was an early investor in Indify, some of the artists that he's been able to back, and ultimately what they're trying to build towards. We talked about how Indify is positioned relative to other alternative financing options in the music industry. We also talked about how it's positioned relative to record labels. And can an artist on one of these alternative financing platforms achieve the same success as the superstars that are on the major record labels? The folks that headline major music festivals, perform at the Super Bowl and things like that? This is a great conversation. And if you're interested in where the music industry is going, some other options, you'll love this one. Here's my chat with prettyboyshav. All right, we got the one and only prettyboyshav here with us today. He is the co-founder CEO of Indify, platform and a company that is helping artists embrace their independence. He is also an artist himself with over 10 million streams. Shav, welcome to the pod.prettyboyshav 03:15What's up, Dan? Good to be here, man. I've been wanting to come on here for a while.Dan Runcie 03:19Yeah. And I mean, you know that I've been following everything that you've all been doing. And it's been very interesting to see how you've navigated the industry and how you leverage the technology built to continue to do good things. So for those that are less familiar, what is Indify and what is it that you all are trying to help solve in the music industry?prettyboyshav 03:39Well, Indify is a marketplace that's helping artists raise funding on equitable terms from strategic partners. You could think of it as almost like AngelList for music. I think our premise is that the major labels and a lot of the old system and the traditional system, the music industry, kind of represent what you know, private equity did years ago on the venture side. And I think fortunately, we have things like YC and AngelList. Actually, one of these tweets is the Kanye tweet from around fall 2020, where he kind of talked about a lot of things that we've been talking about, but we think it's time that a lot of those standardized, founder-friendly, and digitize terms come to help artists who we believe are also founders raise funding equitably. Yeah. So it's been exciting. I think this is an evolution from our earlier platform, which was really just a discovery tool for the music industry and became an industry-standard tool across a ton of record labels and ended up identifying a ton of artists, early one that we're very known for is Khalid.Dan Runcie 04:34Nice, and I got to mention, because you mentioned the Kanye tweets behind you. Is one of those the one that's talked about the Y Combinator for the music industry?prettyboyshav 04:43Yes, that's exactly what it is, you know, “When I spoke to Katie Jacobs who's on the board of the Vivendi. We decided to create a YC for the music industry so artists have the power and transparency to be in control of our future. No more shady contracts, no more lifelong deals.” And this one is Alexis tweeting Blonde, because I showed Alexis Ohanian, who's our investor. I was like, man, you got to get deeper into Blonde and Frank Ocean because this thing is amazing.Dan Runcie 05:05Yeah, it's an amazing album. And I think, thinking more broadly about what you all are building, I think that venture for music is the pitch I've heard from you. I've heard references well with where you're seeing with this, but I feel like you're taking a bit of a more unique take on it than maybe just the YC model. So what does that look like? What do you see things playing out for you?prettyboyshav 05:28Well, I think what YC did, right, in building the safe and standardized docs, and more documentation and transparency has allowed founders to see, okay, what is par for the course? What are founder-friendly terms? You know, if you don't use a safe note, for a raise, or standardized docs, you're kind of, you know, totally left field, a ton of artists, I would say, you know, just anecdotally, like, one out of three artists we meet, a very high percentage have actually signed some sort of predatory, shady contract before they even get off the ground. And the lack of standardization at that early stage if you compare it to Venture Seed, Series A, Pre-seed, has made it so a lot of artists get taken advantage of at inception. And I think that's something that's very core to Indify to prevent that from happening to build the tools and education system so that artists can have an ecosystem or have kind of technology, such that they're protected.Dan Runcie 06:20And I think a lot of that you mentioned the partners they work with and the people they meet, because that, of course, is how people ended up in either good contracts or bad contracts. That's a lot of what's there right? And I think you've spoken before about this distinction between smart money versus dumb money, which I know has also been very common in investing and in tech as well. And I think the same can be said in music. And I know that you all do your job on both sides, both the artist side and the investor side to determine who can be entered into the program. So yeah, let's start with the investor side. What are the things that you look for when someone wants to join your platform because they want to invest in an artist?prettyboyshav 07:03Yeah, I think, you know, building on kind of some of the points you were making earlier to Dan, like, what is protection for artists? What is being artists first? This is something that at Indify we studied for six years, and these are nuanced questions, and I've studied it myself as an artist, right? You know, there's a ton of funding solutions that are out there, some fan investing, some loan investing, but you know, if it is a finance bro buying your song, or if it is, you know, a loan against your own streams, a lot of the times this can put the artists in a worse position than if they were to take no money at all, because now they're in the hole, X amount of dollars. And if all those dollars are not spent, wisely are spent in a way that they're amplifying, ultimately, your platform as an artist or your income as an artist. Now, you're not increasing your income, and you're in the hole 10, 20, 50k. And that's something that I think, you know, is important to make a distinction about because artists are founders. And we're not necessarily seeing founders prioritize capital, but prioritize the best partners when they're raising funds for their companies. I think the same is true for the smart business owners that are artists. And I think they should be respected as such, many of them are making six, seven figures a year that work with Indify. And part of the reason that that is, is they're not only I think, CEOs in their own right, and building their business on platforms like TikTok, Instagram, social media, shipping every day, right? Like we talked about shipping with founders, these artists are shipping every day. They're putting their stories out there, they're connecting with people. But they're also very, very smart to find business partners that know how to digital market their music, that know how to manage their operations, and they're hiring these partners and partnering with investors. And so what we look for, you know, there's generally two kinds of cohorts, I would say, one is spark music professionals that have had experienced breaking artists before. And we have certain kinds of thresholds for that, one of the thresholds we talked about is, has this partner work with an artist that has reached over 30,000 streams a day or not, even previous time? Or also, you know, influencers themselves. I think that's something that we're really excited about. It's a bit more on the early stage. But, for example, Alexis Ohanian invested in the artist Leah Kate, I think around, you know, when he least identified her on the platform, and he, that was all him. He went on the platform and he found her. She was even lower on the rank. She was at around 3000 streams per day. He's helped her grow using his platform and his base to now over a million streams a day. And we think that's an incredible example of a partnership. And we think those combinations together, a syndicate of sorts of these strategic professionals with strategic influencers that can gift an audience to younger artists, is the new way of music industry.Dan Runcie 09:51I'm sure there must be some nuance there, right because of course, someone like Alexis who is a fan, he understands that clearly, he has a lot of influence to be able to make things happen. But I'm sure you may also get interest for people in tech, let's say they were early at a startup, startup exited, they have some extra money. They may know nothing about the music industry, but they just want to get in. How are those conversations?prettyboyshav 10:16Well, I think, Alexis, and I'll tell the story, like, Alexis tweeted, I wish I could invest in Lizzo enterprises. And I tweeted back, invest in the next one on Indify, and somebody showed him the tweet, somehow, I caught him for five minutes at the US Open actually, and told him music investing safe, he said, you're a crazy person. Investing in music can't be safe, I tried it. And he, actually, you know, put his money where his mouth is, and he backed an artist. But I think with that was the spirit of somebody who wanted to help that artist and grow, with that was the spirit of somebody who wanted to spend time with Leah, who was a founder and help her develop both as an artist and as a businesswoman, an independent businesswoman who's building an incredible seven-figure per year revenue business. And so I think that that development, and I think more so with him, the ability to empower her as an entrepreneur. And that story, getting out there, I think, was what made for something really exciting with Leah. But I think what's really interesting is now bigger artists actually coming into the fold. We actually a huge artist, I'm not at liberty to say yet, in Q1, backed an artist, one of my favorite artists of all time, and this I think is going to happen more and more. What happens if LeBron starts backing artists on Indify, right? What happens if, you know, actors and actresses? What happens if Lisa, right, starts backing artists on Indify? I mean, these are artists that can bring real taste, culture, and audiences to those next generation of emerging artists. And I think when you're posed with signing your rights away to a major label or partnering with someone like that, I think it's a really exciting proposition for the future.Dan Runcie 11:48Yeah, this reminds me of an idea that I think it was Jack Butcher, if someone like that had mentioned on a podcast about looking at someone like a Canelo Alvarez or even Deontay Wilder, you have these prizefighters, boxers, and if they invest in artists, that artist is the one that walks out with them when they're doing their walk-up music, that is a huge platform, so able to introduce someone like that. I think that is so powerful.prettyboyshav 12:14I saw that clip and shout out Jack Butcher and Visualize Value, and everything he's doing. He has an amazing podcast too, he's a friend. And I think that's such an amazing concept, right? Like, I think as a society, we're yearning for cross-cultural moments, you know what I mean? You see it so much with even the Paul's fighting in boxing. And you know, Paul-Mayweather, what a crazy event that was, or Conor McGregor-Mayweather and I think, more and more, I think you're gonna see culture crossover, right. And I like that fun there. But like, you know, music is in our DNA. And people talk about sometimes they asked me, like, you know, what's the market in music? What's the market of streaming? What's the opportunity? And I'm like, well, there's 7 billion of us in the world. We all like music, right? So I think everybody is on the table to be a part of the story. And I think that's why it's so powerful. I think we've wanted solutions for music for such a long time. But I think for us, you know, it's been these strategic partners, and pairing them with, you know, and our ability to identify artists, I think is the best out there in all honesty, pairing them with artists with traction, that's when one plus one equals 100. I mean, in the last year or so we've helped artists reach over a billion streams independently. And this is rea on the ground effort, and real on the ground connections, that is making a difference in these lives, not in terms of just a one-time cash-out. But many of these artists are now making six, and some seven figures per year over, you know, what could be the rest of their careers. And that's the beauty of when you do break through on streaming, what it can do for you can create sustainability as an artist, I think it's something that we're very proud of, in our cohort of artists helping them get to.Dan Runcie 13:48So let's talk a little bit more about the benefits and what artists do you get. Because I think a lot of people, they hear options like Indify, they're thinking about it as an alternative to maybe going with their traditional record label and doing that type of deal. And on the surface. Of course, if an artist is working with Indify, I believe the terms is up to 50% and rotating ownership for their masters is what they offer. I know there are some record label deals that do offer that. But if you could talk a little bit more about the distinction there. And if there are certain things that you think that you offer as a replacement, and then are there certain things where you still think that an artist would need to still find elsewhere, they should find elsewhere, and may be a bit of the itemization of where Indify's value add is relative to what the artists would get on a record label.prettyboyshav 14:38Well, I think talking more just technically to start, if you look at the traditional record industry contract and what standard and this is for people out there who don't know, generally they're like, aghast when I explain this, but a typical record deal is, this is the deal that a lot of these greats have signed A typically a record deal Is 85%-15% in favor of the major label, a five-album deal. And over the course of a lifetime of copyright plus like seven years. It's like the traditional kind of deal. So that means an entire artist’s career, that they're sort of signing away at 17, 16, 20 years old, but are involved in for the next 10 to 15 years of their career. And I think that time period also matters. Also, for the capital advance, you get, right, like you see these artists get all these nice things upfront, I think that upfront cost is massive. It's massive, because you're not only, in a typical loan, you pay, you know, your 100% of your rights would pay back that loan, right? In this case, your 15% has to pay back that initial advance, let's say it's 100k, 200k, 500k, meaning you're in the whole millions, right of dollars, before you see 15 cents on the dollar. And that's after there is and these are some of the things that I find the most predatory, a 25% distribution fee, which costs $20 on this circuit, or, you know, accounting that is just less than clean and clear, I'll say. And so I think on the converse side, I think a lot of these infrastructural issues are initially what we're trying to fix, you know, beyond just I think the terms, but if we put it plain and simple on terms, I mean, a lot of artists on our platforms start with raising for one song, right? With a partner that they talked to, and they might have interest from a ton of partners, messages from the ton of partners on the platform, speak with them. And if they liked that partner, generally these deals are for one song, only three to five years. And after the initial investment is paid back, I think we see a lot of 70-30 kind of splits in favor of the artists. So it's quite literally flipping the economics and making the commitment significantly less. And I think honestly, one of the other things that I've heard, you know, people talk about one of the greatest forms of control is slowness. I think, you know, these contracts, they take sometimes six weeks to six months to a year to fully kind of work through. On Indify we're seeing, you know, you can raise one song, try a partner, try another partner for another song, if you liked them, do an EP. And you can do that investment. You know, using this platform. Again, all of the actual legal terms are in our outsourced to our like TOS and our super artist-friendly, we have our sort of indie note that like backs that, but you're then just deciding for simple terms, once those are decided it can take 45 minutes to raise, and you can capitalize on that moment that's happening on TikTok, or on Instagram immediately with some of the best marketers and managers in the business that are doing a lot of, a lot of the heavy lifting behind the scenes, and are a lot of times the people who the label pay at a premium. And so I think that's for us why we feel Indify is really a better option. Because, you know, rather than diving in and getting married to a partner at the youngest possible age, you're in fact, just, you know, going on dates, I guess, with different partners and seeing, alright, who's the best fit for me, who's somebody that connect with? Who's the right value add investor for my project?Dan Runcie 18:01I do think that last example, makes a ton of sense of that, essentially, because so much of it, especially with these five-album deals, you are signing away so much early on when, if you think about yourself as an asset, you've been de-risked, hopefully much earlier in the process if you end up being successful, but there's no opportunity to necessarily realize that until a bit later on in the process, and I know one thing that I do hear from people and I'd love to hear your thoughts on it is that with some of these alternative financing options, the terms are great, everything is effective from that perspective. However, people still have this question about, okay, well, what is the max that we could see an artist succeed? Can we see someone be this superstar that's performing at the Super Bowl or reaching these Billy Eilish or Olivia Rodrigo or Ariana Grande level of artists if they're not with one of the major record labels? You could still earn a living off of those, but can an artist reach that path? So it'd be great to hear your thoughts on that, and especially how you think that relates with Indify. prettyboyshav 19:07I'd really love that question. It's something that I think about a lot. It's something that I'm excited to experiment with myself. I think eventually, you know, something that I'm interested in is documenting, transcribing, and publishing my process of going through Indify with an artist with 10 million streams. I'm not quite, I think fairly qualified. So I'm actually posting my TikToks trying to get there. But I think as an artist, you get excited about seeing what, and as obviously as a founder, what the brink of this platform is. We've seen for transparency's sake a $400,000 deal happened on Indify. We've also seen deals for 10 to 50k, right, where the investor, you know, pre-release, invest in the song. Week one with some initial pre-release traction, and then I can talk about the Seaside demo example. That song was invested in on Sunday, it came out on Monday. By Wednesday, it was doing well, Nick Mueller and Golden Kids Group, he flagged it to Spotify. And he made sure the digital marketing was being spent wisely. So that week two, it's now doing 100,000 streams per day 200,000 streams per day, week three, week four, he's calling TikTok, calling Snapchat, calling Apple, calling all the right partners such that it reaches pop rising by week two, or three, and by week five, and hit Today's Top hits as an independent song. And this happened within the course of a month. I mean, you know, songs like that, without going into too much detail. When you do have that viral capacity, you could see a 30 or 50x, on your 10k investment. And we're seeing investors experienced that, you're seeing these artists, again, earn six to seven figures, from creating moments like that. And beyond that, you know, just working with these partners, when it doesn't happen at that level, you're seeing, I think 80 or 90% of these deals on the platform are profitable. So quite literally, you have what is a low ceiling, or a low risk, high ceiling asset class, which I think is incredibly unique, especially because we're de-risking those things by only allowing the artists to come on and see strategic partners and only allowing the partners to come on and see artists with traction and be able to invest in them right on the platform and then be able to earn out directly through kind of this whole ecosystem and technology that we've built. And I think what we've seen in the last year, even the last quarter Jx.Zero, I think he reached 700 or 800,000 streams a day. Leah is now doing a million streams per day. Pink Sweat$, who was the first artist to raise way back when this was even off platform. Leah was the first one on platform with Alexis. Off platform, Pink did a funding partnership, a funding deal to start his career. I mean, he's had a platinum record. He's in the top 500 of the world, and he's at Coachella. And that's the only artists that's had a few years to develop. I think the next superstars are already happening on Indify, I think that's a given. I just think that just like startups, these are going to take time. But if you look at the last year, and even if you look at the last quarter, I think we had three or four songs hit the global viral chart last quarter, and these artists are on their way to be great. And I think just to add one more thing, if you look at Kanye West's top songs on Spotify, his jeen-yuhs just came out, College Dropout was spotlighted in that, like crazy. I mean, what an amazing doc. But if you look at his Spotify, his number one song is Praise God, right? If his number one, why is his number one some Praise God? I mean, Moon. I love that song. Arguably a better song in my view, praise God is a great song. Off of Donda, there's a million tracks that are doing well but that's the only song off Donda that's number one. No, the jeen-yuhs doc didn't move anything to number one in terms of The College Dropout and the songs that were spotlighted. So why is it that Praise God is the number one song on Kanye's catalog. Kanye West are the biggest artists the world, because on TikTok it reached 1.5 million videos. The investors on Indify are the best at marketing on TikTok and social media. And it's my belief that not only should the next generation of emerging artists raise funding on Indify, but it's my belief that the current generation of superstars will start to in the next few years.Dan Runcie 22:58It's a compelling pitch. And I think normally at this stage, you of course, are able to incentivize artists with the amount that they could earn by essentially starting around and using their songs as around or using an album is around, right? Is there any upfront pitch or financing though that would happen? So let's say there is a major artist that's like, Oh, hey, I see what you all are doing, I'm down. But if you could give me some upfront money, not necessarily an advance or some type of upfront money, what would that look like? Is that something that you've all explored? Or has that come up at all?prettyboyshav 23:35You know, it's so funny. One, bigger artists are approaching us. I think that's actually, to my surprise, I didn't think we'd be at that stage yet. It's a dream. It really is a dream, what we get to do every day, a chance to serve some of these artists gives me chills, because these are artists that are heroes. And to know that we built the infrastructure better than the old. In fact, the pitch is much easier to them than the new artist because they've been through the system. They know what it looks like from the inside. Generally...Dan Runcie 24:01So you don’t have to say the artist but could you give us like a tier, like what level is one of the ones that have reached out?prettyboyshav 24:07I would say an important megastar. I won't say like, I think that's the right, I'll give that to you. That's what I'll give.Dan Runcie 24:14Okay, okay. Someone that would have headlined Coachella? prettyboyshav 24:18Yes, absolutely.Dan Runcie 24:19Okay. Okay. prettyboyshav 24:20I think you'll see artists that would headline Coachella, and that people would be most excited about on the bill, especially in Brooklyn, where I'm at, where there is a care for culture and art, and these things that we've been excited about. I think those are the artists who were excited to serve, man. You know, like it'd be a dream to work with and help Frank Ocean raise for his next project. I mean, he's the guy that started this model years ago, and I think these artists deserve credit, not just as artists, but as entrepreneurs. But yeah, to your question on Indify, you'd be shocked. Artists are on there negotiating down the amount of initial sort of capital they'll get, because they only want the right amount, not the most amount, because they don't want to earn on their advance. They want to earn on their equity, they want to earn on the business. And that's to me, the generation of founders as artists or founders that we're looking to empower. And I think I'm excited to help the superstars, you know, earn off of their streams too as they should, because their pies are going to look a lot bigger.Dan Runcie 25:17Yeah, I think the interesting test I've always looked at was when Taylor Swift had finished her record label deal that she was on the open market/ She was exploring options, and everyone wondered, what is she going to do. She obviously wants to own her masters moving forward. And she ended up doing a licensing deal with Republic Records, which she has been now and she's released, I believe, three albums now, under that deal. I think that, what you're saying is that if we could get to the point where now the market is at a different place than it was in 2018, with options like yours, that now have the option or opportunity for a megastar, who is out of their deal. They've been de-risked they already are a star, what could it look like for them to be like, okay, now that I'm done with this deal, now, I want to go to Indify?prettyboyshav 26:10Yeah, I think you're gonna see a lot of that happening. I'm very confident in that. And I think those are conversations that are happening faster than we expected, I think what, you know, going back to the Taylor Swift moment, and you actually did an amazing breakdown of what was going on with her. And just for anyone who's listening, like, I know, you're already on Trapital, because you're listening to the podcast. But I do believe, Dan, what you're doing is some of the most accurate breakdowns in the market. I mean that. It's a joy to listen to these podcasts. It's a dream to be on here. And it's so cool to read your newsletter, you know, every time it comes out. I think, going back to the Taylor one, because I remember you breaking it down. And obviously, we're nerds about this stuff. So we should talk about it. But you know, on Indify, there's three main principles that guard the technology on the platform. One, artists own the rights forever. You know, artist kids deserve to have their music, we think that's the fundamental, maybe even a human right, not just a right that we believe they should have. And that's something that, you know, an ownership deal will never happen and in the fight, and I would hold Web 3.0 platforms to that same standard, because I think a lot of them are doing ownership deals. And I think that's going backwards. I think a lot of the music industry is moving forward from that. So it's something that I believe just very strongly as an artist, we need to move forward from. Two, artists deals are always 50% or better after the initial investment is returned on Indify. The platform is like locked in, like error out if you start to put in terms that break that. And third, artists always keep creative control. And that's the way these docs are formatted. I mean, for an artists like Taylor Swift, who's brought a lot more value to these companies, and, you know, arguably bigger than some of these institutions ourselves. She deserves to be the CEO of her own life and our own art. And she deserves to make every decision the way she wants to, she deserves to pass that on to her kids. The fact that artists like that can't do that, and then what she has to now go through to make that music, you know, listen to equitably out there is insane, it's out of control, and it shouldn't exist. And I think, you know, we need tools that we need new solutions, to rewrite how this is going to work for the next generation of Taylor Swifts. I think, Indify, you know, I hope that we can have a conversation with her about doing stuff with her future projects to make sure that, again, she can build her business equitably, own her business, but still get those strategic partners and marketers needed to take the next level.Dan Runcie 28:30You mentioned Web 3.0 earlier, and some of the solutions there and what you hope those solutions will offer to artists. And I think a lot of people have talked and thought about the Web 3.0 opportunities in music and positioned it as a use case to do or in many ways, what Indify is doing and you are proving with your platform that this can happen. It is happening off-chain, and it doesn't necessarily need to be done through 3.0 or through NFTs or things like that. Some of these things you may be exploring in the future. But where do you stand right now in that aspect, because I do feel like a lot of the other companies that are positioning themselves to try to solve a similar problem have positioned themselves as the Web 3.0 solution for this. But you've been a bit more focused on saying, hey, this can exist, it doesn't necessarily need to happen that way. prettyboyshav 29:27I mean, look, I think you really broke it down best, as you do in the A16Z piece you wrote, the music tech community is going to need to, at large, both Web 2.0, and Web 3.0, and Web 2.5, and everything in between is going to need to tackle different problems for artists for us to build an ecosystem that's competitive with these goliaths of the old, you know, and I think us working together and us holding each other accountable having these conversations and I love how I think Web 3.0 has pushed Indify to be more open and more inclusive. I have a lot of friends in the community who've, you know, shown me incredible values and the incredible depths of what this movement is about. And I truly, truly deeply believe in it, and feel it, and empathize with the work that's being done. Because I believe in these values, which is really comes down to community, right, and community ownership, community governance, I think these things are very powerful concepts. And I think these are very powerful ways for an artist to run their business. I, you know, I have so much love for what sound and what catalog and what some of these companies are doing. I think there are amazing founders behind those companies. I think they're building amazing tools for artists to earn different and new revenue streams on their music. And I think all of us need to really come together and work together to build this infrastructure for new artists. I think one of the things that I'm yearning for, one of the things I haven't yet I think fully see in the space that I'm excited about, is something that maybe more reflects an artist DAO of sorts. And again, I'm still in the first inning of this, all of this understanding all of this as most people are, but something I'm going to experiment with. Again, like the way I've always operated with prettyboyshav and you know, the artist career and being the founder of Indify as co founder with Connor and Matt who I've built this with, you know, my best friend since day one is, like, I experiment and we experiment, me, Connor and Matt experiment and kind of create these different like processes with the prettyboyshav. We hack at my Spotify For Artists, we do all this crazy stuff, to learn, right, and to experiment and to figure things out. And then a lot of that, a lot of that failure becomes what is knowledge and R&D into I think the Indify roadmap. I think that's an amazing way to stay grounded and stay into focus. For me, one of the things I'm going to do is and I published my goals at the beginning of this year, I not only want to raise on Indify and published and transcribe that, that for the public to see. But I also want to, as an artist, do some Web 3.0 experiments. And I'm basically launching this physical and digital trading card experience that is going to be like my mecca for my pretty community. And so it's going to come, you know, if you get it, you can basically like, see a roadmap for the prettyboyshav art, you can come get your nails painted with me, you can listen to some exclusive music. And I think those community events, that superfan access, I think is something I'm really excited to just play with on the Web 3.0 side and to see happen in the space.Dan Runcie 32:21It's great to hear, because I think you can see both sides of this, you understand what needs to be done and not just using yourself as not even more, not even a use case. But essentially you understand what needs to be built, what you would want for yourself as an artist and how you navigate all of that, as well. And while we have the time, we'd love to chat a little bit more about you and what you've been doing with your artists career on that front. First off, how you manage the time between the two, because I'm sure it's both hats to wear. And I'm sure it's a lot from that perspective, but how have you navigated doing both of those things? And I know that you've also said in past interviews, you want to be known more for music moving forward. So how does that continue to or how does that evolution continue to progress based on where you see things going?prettyboyshav 33:11Yeah, well, I think, I appreciate it, that question. You know, me, myself, Connor and Matt, we've always understood that there's this fluidity, I think, between myself being an artist and being a part of the company. And in fact, I think we've all come to realize it's a huge advantage. When I talk to artists, I relate to them, I can understand their problems when we make decisions, you know, in the room. And I think I consider Connor and Matt artists and themselves. I think Matt, what he does on a technical level and building this tool, I've always fallen in love with the art of tech. And building product is very much like making music. It's a new creative entity that didn't exist before that you created the outside world. I think it's very similar. And I think Connor himself is a writer and an incredible artist. And if you don't have art and tech, then what do you have? You know, so I think we've all come to understand that, that the prettyboyshav journey is our guinea pig. And it's a part of our story. And it's cool. It's really cool. I think more than anything, the company is us three, and to have their support in that I think is first and foremost. And to have investors supporting them too, I think is first and foremost, I think people understand that it only really makes me better as a founder. And they're one and the same. You know, being an artist and having more artists lead music companies is kind of, I hope, the wave of the future. I think on a personal level. You know, I'm really proud of the music I've put out there. I think it's some of the best music out there, whether I'm a co-founder of that company or not. And I have a new album coming up that I think is just a huge step of growth and I think addresses a lot of my own values of growing up as an Indian American understanding my own perspective, telling my own story. And it's a story that when I was 15 the two things that my sort of Northstar were, were, man, I wish I could be an artist without having to be Drake and just being you know a sustainable artist because this is what I love to do. Why is it that somebody can be an accountant but I can't be a musician, right? And why can't those existences coexist? And I think for me, I think just seeing more people like me making pop music, more people like me, getting our nails painted, wearing earrings, wearing cool clothes, and breaking kind of the boxes that that we were put into. So, for me, I think all of this stuff comes from a deep sense of mission and a deep sense of serving our 15-year-old self. It's something that Virgil talked about a lot. And I think that's ultimately, you know, what I'm in service to when it comes to both Indify and the artists journey, but it's cool to see them coming together more and more, I had my first interaction where, I was actually with Peter Boyce and John Exley and we were in LA celebrating Peter installation actually just invested in the company. And it just turned Peter's birthday, and we were sitting having a great time. And somebody came up to the randomly and was like, Are you prettyboyshav? And you know, as a kid, you always, see, I was more excited than her. But as a kid, you always wonder, as an artist that'll ever happen. I think that moment is one that you know, we all got to share together, John and Peter, we wouldn't be here without them. They've been supporting for six, seven years. So to have that with them, you know, and be on this journey together, I think is super cool.Dan Runcie 36:05That's powerful. And those stories are always great when you hear them because you know your, it definitely won't be the last time.prettyboyshav 36:11Yeah, yeah. Let's see. Got more work to do then.Dan Runcie 36:15Well, Shav, this is great. Thanks so much for coming on and sharing both your journey as an artist and your journey as a founder, as we both say artists are founders and you're a great embodiment of that statement. But before we let you go, is there anything else that you want to plug? or love for the Trapital audience to know about?prettyboyshav 36:32Yeah, I would just say you know, follow Indify on Instagram and Twitter. I think it's a good follow. And, you know, we've done a lot of work behind the scenes in the last year and a half. I think we've got to do a better job of telling our story in front of the scenes and there's gonna be a lot of content coming in the next year and storytelling coming out of these artists and these incredible stories, you're going to find amazing music, so you know, give us a follow, follow the journey. Come along.Dan Runcie 36:57Good stuff. Good stuff. Thanks, man. prettyboyshav 37:00Cool. Thanks so much, Dan.Dan Runcie 37:02If you enjoyed this podcast, go ahead and share 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 leave a review. Tell people why you liked the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

Apr 29, 2022 • 32min

Young M.A and the $20 NFT

Apr 22, 2022 • 44min

How Fanbase Raised $6 Million Without VC with Isaac Hayes III

In less than three years, the Fanbase social content app has raised six million dollars (without traditional venture capital) and is inching toward the one-million user mark. How did co-founder Issac Hayes III take the app from nothing all the way to this? If you ask him, his life spent in the cut-throat music industry gave him the inspiration AND business chops to thrive within the tech space. As the son of legendary R&B artist Isaac Hayes, he was made well aware from the get-go of the exploitative practices by record labels toward musicians. Isaac would go on to notice similar exploitation with social media giants and their users, who were creating content and driving attention, but reaping little of the billions of dollars in revenues being reported by the same corporations.Fanbase is changing those optics. On the app, users can post content — written, photo, video, audio chat, and live stream — for a subscription fee. As Isaac sees it, “monetization for every user is the wave of the future.” For a full glimpse of how Isaac is building Fanbase into a disruptive social media force, you’ll want to tune into our interview. Here’s what we covered in the episode:[4:10] Fanbase Raised $6 Million From Crowdfunding — Not Venture Capital[6:34] The Most Important Investors Of Fanbase [8:10] Making Investing More Accessible[10:30] How Fanbase Is Acquiring New Customers[11:59] Fanbase’s Biggest Business Advantage (Not What You Think)[14:13] “Monetization For Every User Is The Wave Of The Future”[16:18] Why Artists Shouldn’t Sell Their Catalogs[22:23] What Isaac Loves About Technology[23:40] What Does Fanbase’s Future Fundraising Timeline Look Like?[26:38] Size Of Fanbase’s Team Now & In Near-Future[27:51] Atlanta’s Underrated Scene Outside Hip-Hp[30:39] Isaac’s Influence For Creating Fanbase[32:34] Getting The Music Rights Back For His Dad[33:48] Keeping Black Icons Relevant Post-Death[36:14] Will There Ever Be An Isaac Hayes Movie?[41:45] Fanbase’s New FeaturesListen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.coGuests: Isaac Hayes III, @isaachayes3 Trapital is home for the business of hip-hop. Gain the latest insights from hip-hop’s biggest players by reading Trapital’s free weekly memo. _______________TranscriptionIsaac Hayes III 00:00I think monetization for every user is the wave of the future. I keep saying it, I think that there isn't a person right now that isn't subscribed to at least one thing. And one subscription becomes more and more the common vernacular of how we engage with content. Social media is the last, you know, frontier that's left. You know, when you think about TV and film with Hulu, and Netflix, and Disney+, and music with Spotify and Apple Music, and print media with Forbes, and The New York Times, and Billboard, and then productivity software like Adobe Premiere Pro, Microsoft Word. Like, you don't... You're subscribed to something. You're probably subscribed to an app on your phone that allows you to edit your photos. And so subscriptions are just the language. And so I think that's going to be the language of the future moving forward.Dan Runcie 00:53Hey, 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. Today's guest is Isaac Hayes III. He's the founder and CEO of Fanbase. Fanbase is a company that helps creators better monetize the content they put out. And on Fanbase's platform, followers can subscribe for $3.99 a month to get all of the exclusive content from their favorite creators, or they can follow creators and they can spread love. Love is the primary form of engagement on Fanbase, and it's how creators monetize. The more likes and love they get, the more revenue that they get into their pockets. So Fanbase addresses a lot of the challenges that people have had about social media more broadly. And in this chat, Isaac and I talk about what the journey has been like. He's been able to raise $6 million through crowdfunding. He did it through this platform called StartEngine, and he's had many well-known investors on board, folks like Snoop Dogg, Charlamagne The God, Kandi Burruss, Chamillionaire, Roland Martin, and more. So we talked about his decision to go that path as opposed to the traditional VC route. Isaac and I also talked about the trend of music publishing and the catalog sales that have been happening, and why he actually thinks that a lot of musicians should not be selling their catalogs. He is not the only person to say this, but these voices have been a little bit quieter in this narrative. So it was great to hear his perspective on this. And then we also talked about the other hat that Isaac wears. He is the manager of his late father's estate. His father is the legendary singer, Isaac Hayes. So we talked about what that experience has been like managing the estate, and how his father's experience in the music industry had formed a lot of the work that Isaac Hayes III himself wants to create and the opportunities he wants to do through Fanbase. We also talked about what an Isaac Hayes biopic would look like, and who Isaac Hayes III would want to play his father in a movie. I think he had a pretty good answer. I'm a big fan of this person. So I think you'll enjoy who we said. We also talked about Atlanta's impact, and just how influential that city has been in culture and for Fanbase as well, we had a great conversation, and I hope you enjoy this as much as I did. Here's my chat with Isaac Hayes III. All right, today, we got Isaac Hayes III with us. He's the co-founder and CEO of Fanbase, an app that helps creators monetize the content that they put out into the world and get what's there. So Isaac, thank you for joining. And it'd be great to just hear from you how things were going with you and how things been going with Fanbase. What's the latest been?Isaac Hayes III 03:46Man, we just closed our second seed round of $2.6 million on StartEngine. So we've raised a total of $6 million in less than a year. It's been phenomenal. We're adding a lot of amazing functionality to Fanbase. And new features are rolling out in the next couple of weeks, a new version of audio, which is one of our flagship features on the platform that's monetized for all users. So it's an exciting time at Fanbase.Dan Runcie 04:10Can you talk to me about your fundraising process a bit because I know that you crowdfunded the 6 billion. You were able to do it at a few different stages. But what made you go that route, as opposed to the more traditional venture capital fundraising?Isaac Hayes III 04:25Two things: one was just a recommendation by a really good mentor of mine to do so. And it was in COVID, because, you know, we couldn't move. And I had a real kind of like off-putting conversation with a VC. And it immediately reminded me of the music business. And so in my mind, I immediately thought, okay, these seeds are like the label. And I'm like an artist trying to get a record deal. And so starting to gave me the opportunity to go independent, and sell my shares out of the trunk of my car to the tune of $6 million, which gives us better leverage, and lets people know that we don't need venture capital to raise serious cash. And so that's really how it, you know, wind up that being that way.Dan Runcie 05:06Yeah, I heard the comparisons from a lot of people. And I think that the thing you often hear from folks that do crowdfund is that it can take a lot of time to get there. But at least from what I've seen from your process, you were able to get several thousand investors in a pretty short amount of time. So what were the steps from that perspective to keep the momentum hot, and to make sure that you had a strong pipeline?Isaac Hayes III 05:29I think the best thing is, when you're, I think the biggest benefit was the fact that it's a product that the investors can actually use in real time. So it's not like they're giving to something, and they're investing in something and not knowing what the product will be or what it does. They're a part of it in real time. And it's something that's relatable to them. If I go and invest in a tech startup that does something to do with aerospace engines, cool, when I'm not with it every day. I just sit back and hope that they make the best decision possible with my investment. But Fanbase is something that I think is more personal to people because of where we are social media. So I think that gave it a lot of energy, because people are a part of the process, and they feel part of the platform and part of this journey together in real time. So it's something that you can use, you know, and then who better, I got to say, to give actual equity in a social media startup into the users themselves that will actually make the platform grow. Dan Runcie 06:20And I think you're able to find some influential folks with that too, right? You got Kandi Burruss, you got Charlamagne. And of course with their platforms, they're able to help amplify and can connect you with other investors or just other creators, given what they've done.Isaac Hayes III 06:34Yeah, but we honestly haven't used them in that fashion. And I actually don't typically want them or to do that particularly yet. And the reason being is because I like the fact that they are silent in their action, because a lot of times when people of notoriety step out in a space where they're invested in a platform and may turn other people off, that feel like well, I didn't get that opportunity. And in social media, it's more about the users. The most important investors on Fanbase, and we have some really big, big name investors, the most important investors on Fanbase are the actual users, the larger, broader, probably a sea of 8000 plus individuals that have put their money in and actually use the platform on a day-today basis, who will be those day-to-day, you know, hardcore super users. But relationships and those investors that are of a high stature like a Snoop Dogg and stuff like that, their time will come later. They all, I know, they all know exactly when they're going to get on and when they're going to turn the engine up on the platform. So we're just, you know, we're focused on the core audience and the core investors of the platform being what we really focus on at Fanbase.Dan Runcie 07:41And with 8000 investors, you mentioned $6 million raised, it makes it pretty affordable to, you know, for people to be able to have a stake, because I think that's one of the challenges that you often see from institutional money that comes through or some of the minimum buy-ins for some investments is that it isn't always the most accessible for folks that may be interested. So I think you're able to at least allow that to happen given the amount of people that were able to invest for the total amount you have.Isaac Hayes III 08:10Absolutely, I mean, the accredited investor rule has kind of been a barrier for all people, you know. I don't care what race you are, if it's a law that's been in effect since 1933, it's just only given opportunities to rich people to actually invest in early stage companies. So you're coming out of the Great Depression, if you ever wonder why none of your family members got a call to invest in IBM, or Microsoft, or Apple, or Facebook, and so on and so forth. It's this accredited investor rule that is given all the best opportunities of wealth to the wealthy. And so I love the fact that Barack Obama and Joe Biden pass the Jobs Act and allow people like myself to go to my peers and the public to actually have the same opportunity that VCs and accredited investors have to get a piece of the American dream by investing the same way that all these other people have been able to do for 83 years.Dan Runcie 09:01I think we're gonna see the rules continue to break down on that. I know now they have that flexible option where I think if you take the Series 63 or 7 or one of those tests, then you can become accredited. So that's one way to pass the income thresholds. But I feel like even that is probably going to break down at some point. That just feels like where everything is at it.Isaac Hayes III 09:22It should. I mean, one of the seed investors in Uber, a guy by the name of Oren Michels only invested $5,000 into Uber, but when it IPO in 2019 is 5000 was worth 24 million. And I'm like, well, how come we can go to Vegas and spend $5,000 on the crap table or go buy $5,000 worth of lottery tickets, but I can't invest in Uber. And I think that's the real crime is that, you know, it's okay that if you go blow your money gambling in that fashion, but not gambling in in the fashion of investing your money in a startup like Uber, which wound up being very, very successful, so the rules have to change and platforms like StartEngine are breaking down those barriers.Dan Runcie 9:59Right, especially when so many other people using it and giving these startups their early validation are the ones that believe and see in the future. So I feel like those dots got to connect eventually. But...Isaac Hayes III 10:10It will for sure.Dan Runcie 10:11Going back to Fanbase itself and how things are, I read that you have a goal be able to hit a million users in June. And it would be great to hear what your strategy has been in terms of acquiring customers. What's been the most effective thing that you've done to get more creators and users onto the platform?Isaac Hayes III 10:30I think the biggest thing is actually just word of mouth, right? It's the quality of the product. And then I think we're in a very unique time, a very opportunistic time for platforms like Fanbase to emerge, because of this transition from users wanting more access to their following, they're getting tired of words like shadowbanning and content suppression and stuff like that. And algorithms are becoming the enemy of the common user on the platform, or even the super user on the platform, because platforms typically are profitable off ad revenue. And so for that to happen, you can't simultaneously provide visibility for every user on the platform, and then run ads at the same time. That's counterproductive to the business model. Because if that's the case, then the people that buy ads would just go to the users themselves and run ads that way. And then you would have no business model. And so Fanbase is just you know, emerging at a time right now that I think the conversation is different. And ad based, ad-based revenue social media platforms are going to continue to change that puts us right, at the right time to continue to grow. So word of mouth. And then timing is just helping us, and then we have an amazing creative advisory board of young people. There's some other strategic partnerships, and I'm really excited to begin working on that, they’re really rooted in community and rooted in the culture of what we want on Fanbase, which is young, centennial people of all races, ages, backgrounds, creating content and monetize.Dan Runcie 11:56What are some of those partnerships? Anything you can share with us?Isaac Hayes III 11:59No, because... And the reason why I can't is because they're really savvy in the way there's things that I think, social media startups, I'll say this, like, I think Fanbase has the best advantage to become a social media unicorn by simply being in Atlanta. And what I mean by that is like Atlanta, is the epicenter of black culture in the United States of America. And what we know about Black culture is Black culture is pop culture. And we know about pop culture, pop culture is what drives social media. So therefore, if you're right at the epicenter of where the viral challenge is going to happen, or the newest, funny influencer, or the dance challenge, or the artist is at, being able to have them be part of Fanbase, and part of that community gives us a really big advantage. So some of those partnerships are rooted in culture, and community, and music. I can't announce them or anything, because it's really dope, though, the way that you have an advantage to do so. And I think a lot of the other platforms know that, which is why they kind of try to pivot in and out. And also try to acquire those users from Atlanta, those the talent, they're like, oh, let's pay them. Let's try to get them, you know, in the same way, but I think Fanbase just has a little bit more of an advantage.Dan Runcie 13:09I hear that and thinking, too, about making sure that the talent gets paid fairly. I think that's been the underlying theme for so much of why you wanted to create this. There have been so many people that we've seen have become viral sensations, or creators who have a strong following, but being able to really tap into that in a meaningful way hasn't always worked. And in some cases, it's everyone else making money instead of them. I think you would have that story about the ghetto Spider-Man and how the person behind that had blown up, but he's the one calling you like, hey, what do I do? Like, is anything that can help here? And you think about that, and you just think about all of these creators, whether it's folks on TikTok, that are, like the guy that does the hands video, you know, he is, you know, one of the biggest creators, but he isn't anywhere on that Forbes list of the top creators. So I feel like you’ll be able to bridge that connection of, okay, there's clearly a market gap here and how we can have a platform that can close that and how big of an opportunity that is.Isaac Hayes III 14:13It's an enormous opportunity. I think monetization for every user is the wave of the future. I keep saying it. I think that there isn't a person right now that isn't subscribed to at least one thing. And one subscription becomes more and more the common vernacular of how we engage with content. Social media is the last, you know, frontier that's left. You know, when you think about TV and film with Hulu, and Netflix, and Disney+, and music with Spotify and Apple Music, and print media with Forbes, and The New York Times, and Billboard, and then productivity software like Adobe Premiere Pro, Microsoft Word. Like, you don't... You're subscribed to something. You're probably subscribed to an app on your phone that allows you to edit your photos. And so subscriptions are just the language. And so I think that's going to be the language of the future moving forward. And so I think that's going to be the language of the future moving forward. And it just, it gives everybody a chance to make money as opposed to the people that the apps highlight to be most successful, because they're the best vehicles for ads to run in between their content. Think about that, like the larger audience on, the greater audience of a platform like Tiktok, since there's really only one kind of like channel. It's literally just a platform of short form video. So the wider audience on their demographic on that platform is a white audience just based off of the United States. So therefore, it would behoove them to have bigger white stars to run ads to monetize that larger audience. So that's what they kind of have to focus on. So Fanbase doesn't worry about that. It doesn't matter who you are. Everybody can be a superstar on the platform.Dan Runcie 15:42Yeah. And that piece about the subscriptions as well, it just, everyone having that and then seeing who can profit off of it. It also makes me think of an exchange you and I had had recently, we're talking about what's happening right now in the music industry and these catalog valuations, too. You had shared perspective that artists actually should not be selling their or publishing their catalogs, because how much room streaming has to grow. And you just look at some of the demographics on that. What's your take on it? And how much bigger do you think this market will get?Isaac Hayes III 16:18Man, I think it'd be massive. Like I said, at the time, last year was 400, I think it was 450 million people were on music streaming services this year, it's like 525. It's jumped up. That's like, you know, almost like 7 to 9% of all the people with the ability to have streaming services like Apple Music or Spotify on their phone, have them over the next decade by 2030, I think it'll be close to a billion people, so that, that'll be almost a little over double what is available. So imagine and that's only that's only like 1 billion, it's less than a billion, not even a billion people a music streaming services, but there's 6.3 billion people on the planet with smartphones, you know, satellite Wi Fi, satellite internet is going to be something that is going to actually be more connected, as opposed to where wires can go. You know, satellites can go to provide people Internet, and then with video, like, there's like 222 million people on Netflix. And there's 6.3 billion people, the available market share is massive. So I mean, as big as a company is Netflix is, they don't even have, you know, they don't even have 7% of the market of available people that can get on their platform, it's more like three and a half. So think of the growth potential that Netflix can have or anybody that's providing subscriptions via content they can have. That's why we're focused on person-to-person subscription content, which I think will trump everything in the future. Dan Runcie 17:42Yeah, it's interesting, because I think there's these two trends happening, because one of the reasons everyone's buying the catalogs is exactly what you said, people see the upside, were streaming's going n the other side, you're also seeing, whether it's Netflix or Spotify, the rapid growth that they may have had once starting to slow down a little bit. So you do think about, yes, you know, a service like Facebook, if we think of that as being like the most ubiquitous thing out there, you know, several billion people on it, but it's also because it's free, right? So it's like, there's some number of what are the total number of people that will be willing to pay $999 in the US for music streaming service, or whatever that price difference may be in their respective place. We still haven't gotten there yet. And I'm curious, you know what that actual number will be. And it's just so hard to know, because I think some people think it's going to be a lot higher. And there's other people that think that we’re close to that peak. So who knows.Isaac Hayes III 18:38I don't think we're anywhere near the peak because it's the nature, the market will grow as the youth grow. And so as kids are more like, kids are trained and kind of use to subscriptions, and virtual currency, and app purchases, it's that they've known that their whole lives. I remember when I was first discussing building Fanbase, I spoke to someone that was in their 30s, they were like, I'd never subscribed to another person, right? Why would I do that.? And then I was in the Apple Store, and I just randomly asked this 20, I think the young lady was probably like, 21 years old. I think I asked how old she was. She says I'm 21, I was like, if you could subscribe or what her favorite group was, and my first inclination that she was going to name a very famous artist, and she named an indie band, right? What's your favorite artists? I bet you're gonna name somebody like, you know, Ariana Grande. I said, if you could subscribe to that person for $3.99 a month, that band for $3.99 a month, and they would post videos and they were working on their album or exclusive photos and stuff like that.Maybe, they might let you buy, you know, tickets to their show before anybody else, would you do that? And her answer was like, fuck yeah, $3.99. And I'm like, that's when I was, okay, I gotta do this because they don't care. There was, I remember, there were legions of people that swore they wanted to own a mp3. And I'm like, man, it's $10 a month to listen to everything that's ever been created. Only your mp3 is out of here. That's a done deal. So I think the market will go as the youth decide. And the youth are showing their propensity to spend, or virtually, you know, their Cashapp and Venmo and PayPal, their NFT's, their crypto, they're all in that space. So I think it's going to actually explode way beyond what it is now.Dan Runcie 20:13Yeah, that's a good point. The other thing, too, is that there are just so many other services beyond the digital streaming providers that are offering some type of music experience that's going to drive up the platform, right? Like it doesn't always have to be streaming. It can be in app purchases, the same way that, you know, these kids go wild about V-bucks or whatever it is in these games, it's going to be the same thing there. As more and more of these companies getting music licensing, like, we're going to see that continue to happen. So it'll be interesting.Isaac Hayes III 20:42I'm telling you... I'm spending money on Call of Duty to make my gun cooler or wear cooler outfit. Kids are going to spend money to have access to shoes before anybody else can, tickets before anybody else can, experiences that no one else can have for, you know, small amounts of prices, and that give them exclusivity and clout and bragging rights. Trust me, I know exactly what's going to happen.Dan Runcie 21:07Let's take a quick break to hear a word from this week's sponsor. Let's talk more about today's sponsor Intercept Music. The company is on a mission to empower independent artists everywhere. This is a tale as old as time. Artists and labels have often had to choose between their creative freedom and autonomy and access to marketing and distribution that would catapult their careers. Well, that's no longer the choice, especially today, people can have both and Intercept is one of the companies making that happen. It offers a fully managed advertising and promotional service allows you to distribute your music and you have the opportunity to sell merchandise through its branded online stores. This is your one-stop shop to manage your career and take it to that next level. As an artist or label, Intercept can help you unshackle your monetization opportunities and, as Method Man said himself, you can use this platform and keep 100% of your shit. To learn more, go to interceptmusic.com and learn how this company is helping independent artists like you take their careers to the next level. You mentioned Call of Duty for yourself. Are there any other personal areas that you've been personally where, you know, attracted to, whether it's a single game or a solo thing where, you know, a majority of your attention has gone to?Isaac Hayes III 22:23Just call... I only play one game, Call of Duty. I've been playing Call of Duty for like 12 years, I like content. So I used to fly drones, like, all the time. Like, not just for the fun of flying, but the fun of capturing the actual content and creating content. But other than that, I mean... Social media is like, it's a passion of mine because I liked the connectivity. And I liked the potential. I liked the potential of being disruptive. And where we can create unique experiences via technology. That's one thing I love about technology, technology doesn't give my brain like a limit. I have conversations with my CTO and say, hey, you know, can we do this? And he's like, the question is not if we can do it, it's just how long it'll take us to do it. How many man hours? Well, we could do it. And that's the greatest feeling to have, like, can we make this do this and just do this? He's like, yeah, we could do that. But and so having like, your imagination not being limited. Only the, only limitation is your resources like man hours, and manpower, and funds. And cool. Like, I understand that part. So don't you know, don't give me $100 million dollars, move out of the way. You know, no, don't let me raise $100 million. You want to see an app, like be fly than anything you've ever seen? Fanbase is phenomenal. And we raised $6 million. Imagine what we do, and we raised 60, 600 million, it's gonna be phenomenal. That's why I'm excited. I'm like, oh, it's gonna be go time for sure.Dan Runcie 23:40So what does the future fundraising timeline look like for you? Where do you think you'll raise again? And how big do you think that'll be?Isaac Hayes III 23:46I mean, we've been getting calls, which is kind of curious, because I guess the A&R of what a VC is, their version of A&R has been starting to reach out because they see Fanbase making waves and so now, it's not me going to VCs, but it's VCs coming to us, which is better. So I feel we still have a lot of work to do in a short period of time. But I would like to raise a significant series, a somewhere, you know, in the eight figure range, really to get us, you know, in eight figure range to really get us where we need to be because there's so much involved with data and streaming and music licensing. And so these platforms have to be funded to scale and so we're gonna need it. You know, I love the notion of being able to continue to raise equity crowdfunding with people, and I think I'll find ways to continue to do that. But you also... VCs also serve a very good purpose of their knowledge, their relationships, their experience. So I'm not opposed to them. I'm just sometimes primarily opposed to the terms. So now we can have conversations that are different than that. I'm not opposed to the VCs, I'm just opposed to the terms. So sometimes we just have to work better and making sure we get fair terms by doing things on our own. Dan Runcie 24:54And I think the fact that you're at the place you're at now gives you the leverage to do that, right? I think one of the reasons that the unfair terms happen more often is because the founder or the founders don't come from that place of leverage. They're more so looking for the help just from being able to be sustainable, to keep the lights on and all those things, you have that piece of it checked off, given what you've been able to do with the money you've been able to raise. So it's more so, hey, we're trying to go a bit faster. We're trying to do this, this, and this, if you want to be in it would be great. But if you don't, there's other people knocking at the door who can make this happen.Isaac Hayes III 25:32Yeah, I mean, writing your own path, you know, coming from the music business, I look at like, I look at percentages, so I'm on a platform called PitchBook, where I can see like, how much equity was given up for what percentage and I'm like, what, gave up what, for 39% of the company, and like, hell, oh, no, you can't do that. Because you have to be strategic. And I know, sometimes we want to get our product to market so bad. And we want it, we feel that once we get there, doesn't matter if I gave him this much, it's gonna be successful, I'm gonna be able to do this, but you have to be conservative with equity, you can't be selfish. At the same time, people have got to invest money, they're gonna want significant portions of your company. But I think the more work you do improving your model on your own, the more advantageous you are as a part of the VCs, because now you can work together. I love my team, my team is brilliant, they're smarter than I am, I'm just a big idea guy that want to make sure, wants to make sure that the colors look good, and the energy is right. And then the rest is up for us to really, you know, structure this business. So I like writing our ticket that way by being independent, as I like to say. Dan Runcie 26:34So how big is the team now? And how big do you think it'll be end of this year?Isaac Hayes III 26:38So right now we have a team of 25 developers, and probably 15 other personnel or 40. But I think our development team would probably be 150, given a significant raise, and probably our executive team probably go from like, 15 to 30 people. So it would grow. I mean, you know, and that's with everything, running it, you know, at best case, you know, if I had it my way, because we can build faster and more simultaneous functionality. And then I love you know, being able to pay really smart people to make Fanbase do amazing things and in the right amount of time. So I'm looking forward to that though, we have a game plan to really scale up to a million users by June, it's two months. It's two months, as you know, it's April, you know, saying April 8, so we don't have that much time. But I'm looking forward to the grind.Dan Runcie 27:30And I also got to imagine that the Atlanta community and culture ecosystem you're around has and will continue to have so much of an impact on you. Can you talk about how beneficial it's been from that perspective? I know y'all got The Gathering Spot, and you have so many other execs there. How important has that collective been?Isaac Hayes III 27:51It's been invaluable, because the first conversations that I had about building a startup social media platform happened at The Gathering Spot, they were members that were in the tech space that I looked at as mentors, their names are Jewel Burks, Barry Gibbons, and Justin Dawkins. They are all accomplished tech professionals in their own right, and the fact that I could sit right next to them, like a kid, you know, being able to talk to like, talk to Michael Jordan or whoever be like, yo, how do you do this? How do you do that? How are you able to do these things, and then lending their ear and lending their voice and their information to me is invaluable. I think that was really, you know, the essence of community and Atlanta, especially in the black tech space. They're just tons of brilliant people and I've met met at those spaces, but those three individuals were like instrumental in helping me shape Fanbase to the company because they told me you know, why it's important that you have a CTO that has a stake in the in your company, why is important, like what your deck must look like, why you know, when it's a raise, how you scale, all these things that you have to bring together. And so that's the dope part about it. So the Atlanta communities are invaluable in that fashion. We're all like, there's no ceiling of what you can achieve in a city like Atlanta with black leadership. I was just telling you, I just saw a clip today about Justice Ketanji Brown Jackson being able to be elected to the Supreme Court, Symone Sanders said, if you didn't elect Raphael Warnock and Jon Ossoff in Georgia, that would have never happened, he wouldn't have had the votes or the leverage to do so. And so a political community that's aware, that's African American that understands how politics play in the ability for you to scale your business and city like Atlanta is invaluable. That's the probably, the biggest asset to being anybody in the city is, is probably that there's a political foundation that has been built on for over 60 years that kind of gives people the energy and the confidence to try things that no other people would try. Like Tyler Perry saying, I'm gonna build a movie studio, like L.A. & Babyface, and we're gonna bring a record company to the city, like someone like The Gathering Spot, or Pinky Cole with Slutty Vegan, or Tracey Pickett with Hairbrella. Like all these amazing startups that are coming out of Atlanta, Georgia, and have come out of Atlanta, Georgia. So it's a place for you to dream and excel.Dan Runcie 30:02It really is. It's remarkable just to see how much of it stems in. I think so many of you as well have roots in music and how I think that has been the core of what you all have been able to do and achieve. And it makes me think a lot about where your inspiration for why this is so important to you came from. You would obviously seen your dad's experience in the music industry and some of the challenges he had had with unfair contracts and things like that. Can you talk a bit about how that through line was for you in terms of the influence and seeing that inspire where you want to be the most impactful and how that shapes Fanbase?Isaac Hayes III 30:39Yeah, so I mean, as a kid, getting into the music industry, the first thing I learned, before I learned about music notes, I learned about music publishing, and it's just because that's what your family's gonna tell you is like, look, all this creative stuff is great, but know your business, right? Because you can get taken advantage of, don't get caught up in it. It's a joy, like creating music, being a creator is the best feeling in the world, making songs that people want to dance to, and that are part of their lives. And never forget, if you don't have that business, it's going to be something that you're going to wind up having a bitter taste in your mouth about because you've created all this great music, but do you really benefit from it, people that exploit you. So content ownership, ownership of your content, exploiting your content to your benefit has always been something that's been in the back of my mind. So that's why I say I've approached tech with a music industry mindset and nothing gets grimier than in the music business. So like I said, you know, tech is nothing compared to, like, the record business. So if you can handle a record business, you can handle tech, because the deals are what the deals are. The deals are straightforward, you know, the music history just makes up their rules. And so I had a great teacher and my father and my mom who just taught me about the business. So I think that helps a lot. It gave me, it gave me quite a bit of perspective of why artists deserve to get paid more for the content they create. And that's any user on social media. Those are the people that are making these dances go viral. Also the people that are being funny, those are people that are bringing really great thought-provoking content that gets you thinking, get you inspired, get you to vote, get you to, you know, to protest. So we have to, you know, make sure that those people have an opportunity to really make sure that they monetize their energy in that way.Dan Runcie 32:16Definitely, and I hear you on how the music industry, there's so there could be so much lack of clarity on these things. I know one of the things that you've also been pushing towards is to get the music rights back from your dad's music. How has that process been? And where are things right now with that?Isaac Hayes III 32:34So it's just a matter of time. I mean, the good thing about Copyright Law is they expire, they return to the original authors. And so we're just in the process right now of terminating so much as a case publishing, we've terminated all the songs that he wrote from 1963, all the way up to 1968 into going into 69. So there's, you know, his entire songwriting catalog as a songwriter we haven't even gotten to the Isaac Hayes era, but we've terminated you know, one of his biggest works was a song called Hold On, I'm Comin' that he wrote for Sam & Dave that gets used at commercials all the time. So that process is moving along, you know, very steadily and now there's new opportunities and new deals for my family, or equitable opportunities, and the ownership is ours. So it's a great spot to be in right now.Dan Runcie 33:19That's good to hear. I mean, because we've definitely know how tough it can be especially on your side, whether you're an estate manager or you're just more broadly trying to get it back for the sake of your family or loved one so that's good to hear. And on the estate side of it, I know you do manage that. Definitely heard a number of stories of different people that have managed estates over the years, both the good that comes from it, but also some of the challenges as well. Can you talk a little bit about how your experience has been on that front?Isaac Hayes III 33:48I mean, well, I was looking at it,I look at a brand, it’s like a hot air balloon. And so the higher the balloon goes, the more people see it. So it's a job I'm going to stay to get that balloon as high as possible before you try to do things so people say well, how come there hasn't been a you know, a movie on your father I was like, well, there's more work the balloon gotta get a little higher. We got to, people got to see a brand and build it. So it's been tough because I think a couple things like icons, black icons are not always held to the same standard or represented in media the way that white icons are. And what I mean by that and that's the job above actually the black community to uplift its own icons to do so. And when I tell people all the time I said, look, you go to the grocery store, and you can practice this exercise, you can go, you can go to the grocery store, and you're always going to see one of four people in a magazine at all times. You're going to see John Wayne, Ronald Reagan, Elvis Presley, or Babe Ruth, at any time. And all of those guys have been dead for quite a long time, but they never let you forget their icons. They never let you forget Audrey Hepburn, they never let you forget Marilyn Monroe, they keep their legacy and their icons immortalized by continuing to push them and elevate them through media. Now in black culture, we typically do that for a period of time, but you don't typically see Dorothy Dandridge, or Sammy Davis Jr., or James Brown, or Martin Luther King, or people on covers of magazines just cause right, it's usually in some drama that, you know, some tabloid is trying to bring back up, but just for the sake of doing an amazing pictorial on, you know, Ray Charles, and to let that continue to uplift his legacy. That doesn't happen that often. So we have to take better care of our black icons, and continue to uplift them in media to do so.Dan Runcie 35:32That's a good point about the same faces you already see in the magazines, or you go to the grocery store. I think all the names you mentioned are the ones that you often see. On the movie point, though, I do hope that we do get in Isaac Hayes movie, at some point. I know you're saying that, you know, these days, you got to wait for the bubble to get a little bit bigger. But it's one of those things we're in this moment now where you're seeing, I'm sure you've seen it, too, so many music documented, whether it's documentaries, or the bio pics themselves, and some of them are a lot better than others. But you still know that they all had a ton of money poured into them. So hopefully, while this run is going on, that bubble can meet and the stars can align to make something like that happen.Isaac Hayes III 36:14I think so. I mean, we definitely have a documentary that must be told before feature film, I think a biographical nonfiction version of what really happened and what my dad's life was really like is a story that I think should be told first, and then we could dramaticize that and infantilize that in a way that I think brings young people and old people together. And I have that in my mind of how we merge all these genres together, these generations together to really tell the story of Isaac Hayes because I think he's probably the most relatable icon to the current generation of any icon that's passed away, by the way that he looked, by the way the type of music he created because I'm like, it's like, there's not too many people that still wear clothes like Michael Jackson, or wear their hair like James Brown, but there's several black men with bald heads and beards and sunglasses still in 2022. So the relatability is there. And then in terms of evergreen music, it's just like people continue to sample him to make new records. So I think he has the most connectable thread to the youth coming from his generation to now so we're definitely going to capitalize on that, expand more on that in 2022 and 2023.Dan Runcie 37:32Who would you want to play him in a biopic?Isaac Hayes III 37:27Ah, I've said this before. Just off first glance to the surface is probably Jonathan Majors, right? I like Jonathan Majors. Jonathan Majors is a phenomenal actor. I looked at him, I said he could play him. But then there's like, you know, you never know. I mean, there's always this sea of amazing, you know, talent out there, especially from people... I always get trouble in saying it but let me tell you something, the UK Brits, the Brits got those actors. Like they come from places like, I'm like, most of the shows I've watched on TV, the actors are British, like what? Like Snowfall? Like All American? The Walking Dead? It's like, yeah, those are the guys that you wouldn't know. They're so good at what they do. You would have never thought that but they're so classically trained. And then there's some, you know, amazing actors in the States as well. But you know, even Daniel Kaluuya. I'm like, oh, man, all these dudes? Brits be crushing it. So who knows, though, but Jonathan majors is an amazing actor. And I think he could do a great job portraying Isaac Hayes.Dan Runcie 38:24He's a good one. I'm excited to see what he does at this Creed movie coming up. And the range is there, you saw his Marvel thing, and I've done of course, Last Black Man in San Francisco. He's so good.Isaac Hayes III 38:35Yeah, I'm like, What's he gonna do a Ceed? I'm like, okay, what's going on? Like Creed 3? That's gonna be a good one right there.Dan Runcie 38:41I know. I know. Yeah. Isaac Hayes III 38:41It's going to be interesting.Dan Runcie 38:42That will be good.Isaac Hayes III 38:42Yeah.Dan Runcie 38:43Daniel Kaluuya, of course, I think he's one of the best under 40 actors. I mean, period. He's one of the best folks under 40 we got right now. So I mean, obviously, what he did with Fred Hampton was amazing. So I think he would be legit, but it's good that you brought up the British piece because it's one of these things where we both know, if that happened, people would be you know, all up in arms like they are about a lot of black British folks that play American actors, thought or based off of American icons. But it's like you yourself as the person representing the estate in the family is like no, I would endorse this based on what you're seeing. We know how that conversation would go.Isaac Hayes III 39:24Oh, yeah, no. Yeah, I think again, like I said, Jonathan Majors was the first in mind that I had. And again, you never know who's out there by way, like, even like I watched it just by actors in general. I watch Winning Time, the story about the Lakers and the guy that plays Magic Johnson, they just found him like,Dan Runcie 39:37He's so good.Isaac Hayes III 39:40He's so perfect for the role. That's what I'm saying. Like there's always the right person for the role, it's out there. You got to find them. But it’s just like I said, I don't think he's, he hadn't been in anything, I think, a lot of stuff. I don't think he'd done a lot of stuff. But they were like, it's this guy in California, like, give them a go. See, when we came in the room, he smiled. It did that. Like, it's Magic Johnson. He's killing it. So yeah, you always know that and I think, and also, here's another dream of mine, though, is I do want another Shaft film. I want another Shaft film with a modern Shaft, right? I want a modern, you know, modern day Shaft and the person that I think that should play that is Mahershala. Ali. I would love to see Mahershala Ali as a new Shaft do that. I know he's about to be Blade, his plate is full. So but again, yeah, I think Shaft go modernize is something else to do, such a big part of my dad's career. So and I think there will always be an appetite to have a black, you know, superhero in the sense of saying, a person that stood up for his community and fought crime and as a stand up black man. So I think there's always the ability to do that, too.Dan Runcie 40:41Oh, yeah, I think he would be great at that type of role. And I think that Blade definitely gives you some of that imagery of, you know, the black trench coat and everything. And the whole vibe, too. But yeah, I think that'll be good.Isaac Hayes III 40:53Sure.Dan Runcie 40:53Even what artists would, you know, cover the version that your dad did, and you know, with that, I mean, thinking about that, too, for the song perspective? Isaac Hayes III 41:03Yeah, we have a lot of unreleased, I have a lot of unreleased Isaac Hayes music that was recorded around the same time. And trust me, it's some Shaft D stuff in there, some stuff. Like I've been holding on to it for years now. Like I think I transferred those masters in 2014. For eight years, I haven't even really let some of that stuff. Like I said, they won't call about another Shaft at some point. And I'm gonna be ready. I'm gonna be ready to let people check it out.Dan Runcie 41:25Oh, yeah. You know, the call is coming soon, especially the way that content works right now, the call's coming soon. Isaac Hayes III 41:30Absolutely.Dan Runcie 41:31Well, Isaac, this has been great. It's been great to chat, hear more about Fanbase, hear about some of the other things you're working on with regards to the estate. But before we let you go, is there anything else that you want to plug or let the Trapital audience know about?Isaac Hayes III 41:45Of course, to download Fanbase, we have a new version of audio, we have audio chat rooms that are monetized. So a new version of audio is coming in, like, probably, like a couple of weeks, we have our version of TikTok and Reels called Flicks so you can make short form video. And we have stories that are for followers and subscribers. So you can put your stories behind a subscription paywall as well. And I think that's something that's amazing, too. baseLike I said, monetizing content for everybody is just something that I think the world is gonna be all immersive in in the future, say right now is that kind of that friction point where it's like, is it really going to be a thing? And people are going to resist it at first, but once it becomes part of the norm the same way with all these other media verticals, our social media is just a next vertical for subscription.Dan Runcie 42:46Definitely, we see where it's all heading right. 10 years ago, people thought it was gonna be crazy, like, oh, you're gonna pay people at social media to do posts and now influencers do it on the regular. It's just a matter of timing, platform, and everything. And I feel like you got the right mix.Isaac Hayes III 42:40Thank you very much. Appreciate it.Dan Runcie 42:42Thanks, Isaac. This is great. Appreciate it. If you enjoyed this podcast, go ahead and share 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 leave a review. Tell people why you liked the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

Apr 15, 2022 • 56min

The Future Of Music Business With Economist Will Page

One of the most unique insights into the state of the music business today doesn’t come from a record label exec. Not from an agent. Not from an artist. No, it comes from Scottish economist Will Page, who served that role for Spotify from 2012 to 2019 — a period of explosive growth for the streaming giant. But if you ask Page about streaming’s future, he’s not nearly as optimistic as the rest of the industry. “The party has to come to an end,” as he told me on this episode of Trapital.Page believes the music industry is transitioning from a “herbivore market” to a “carnivore” one. In other words, future growth will not come from brand-new customers — it’ll come from the streaming services eating into each other’s market share. Not only has subscriber counts possibly tapped out in Page’s opinion, but streaming services have also put a ceiling on revenues by charging only $9.99, a price that hasn’t budged in 20 years despite giant leaps in technology and music catalog size. That against-the-grain prediction was one of many Will shared with me during our in-depth interview. But he has plenty more research- and experience-backed thoughts on touring, vinyl records, Web 3.0, and everything in between. Believe me, this is an interview you don’t want to miss. Here’s everything we covered: [0:00] The 3 R’s in the business of music[3:15] Will’s experience being a DJ[7:10] Lopsided Growth Of Music Streaming In Global Markets[8:59] Vinyl Records $1.5 Billion Recovery [13:18] Will’s Bearish View About The Future Of Streaming[15:22] Ongoing Price War Between Streaming Services[22:59] The Changing Economics Of Music Touring [26:16] Performing At Festivals Vs. Tours [30:50] The Evolution Of Music Publishing[34:32] How Music Revenue Gets Distributed To Publishers[37:35] What Does A “Post-Spotify Economy” Look Like? [40:00] Will’s Biggest Issues With Web3 [47:01] The Current Business Landscape Of Hip-Hop Listen to Will’s mix right here: https://www.mixcloud.com/willpagesnc/we-aint-done-with-2021/Check out Will’s Podcast, Bubble Trouble, where he breaks down how financial markets really work.Read Will’s book, Tarzan Economics: Eight Principles for Pivoting Through Disruption.Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.coGuests: Will Page, @willpageauthor Trapital is home for the business of hip-hop. Gain the latest insights from hip-hop’s biggest players by reading Trapital’s free weekly memo. _____TRANSCRIPT Will Page 00:00The best way I could do this is, I just talk about ratios. There are three R's in this business, there's share of revenue, there's ratio, and as rates pool, they mean different things. Most experts get confused with the three R's.I'm gonna stick to ratios that is, if I give the label $1, how much do I give the publisher, the software, there's collective management organization? So we stick to the conventional streaming model today, I would say that you get the record label $1, you're giving the publishing side of the fence 24 cents, you know, a decent chunk of change, but still the poorer cousin of the record label. On YouTube, I think it could be as high as 35 cents, 40 cents even because there's a sink right involved in those deals.Dan Runcie 00:46Hey, 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. Today's guest is Will Page. He is the author of a book I cannot recommend enough. It's called Tarzan Economics. It's a guide to pivoting through disruption. This is a must-read if you're working in music, media, or entertainment. He is also a Visiting Fellow at the London School of Economics. He is the former Chief Economist at Spotify. So if you are interested in where the music industry is heading, where trends are going, this is the person to talk to. I was first put onto Will’s work, he had released this white paper called Rockonomics. And it was a breakdown on how artists were using Twitch. I wrote about the report in Trapital because I was fascinated by it. And then he and I started talking from there. So it was only a matter of time before he came on the podcast. Will and I covered a bunch in this episode, we talked about the growth of streaming, we also talked about the growth of vinyl, and how that impacts the economics for a lot of artists and songwriters and publishers. We also talked about the price of streaming services. Most services are still $9.99 per month in the US. So we talked about why that is for music compared to video streaming, where Netflix Hulu, and Amazon have been increasing their prices for their respective services. We also talked about music publishing and why Will thinks that that catalog will continue to grow. We talked about live music and some of the potential constraints where now the next 24 months everyone wants to go on tour. But there's only so many venues and so much money that consumers have unwillingness to see live shows. So we've talked about that we talked about trends in hip hop, we'll have a bunch of exclusive numbers to share in this. And it was great to talk to him. It's been great to also Jessica T to learn from him. I honestly do believe that he's one of the sharpest minds in the music industry. And it was a pleasure to have him on this podcast. And I hope you enjoy this conversation as much as I did. Here's my chat with Will Page. Alright, today we got the one and only Will Page with us. He is well known in the music and media space as an economist, but he also spent a lot of time as a DJ. And I feel like that could be a good place for us to start the conversation. Will, talk to me about your DJ experience and what you've been doing there recently.Will Page 03:22Well, I've been DJing since the age of puberty. And it was all inspired by one lyric by a rapper called Mike G from The Jungle Brothers from an album called done by the forces of nature, where he dropped his library. He said it's about getting the music across the message across getting it across without crossing over. And unlike a 14-year-old kid when I hear this, and I just thought about those words, getting the music across without crossing over, how do you get out to an audience without diluting its integrity. I'm only 14 at the time. But that just resonated with me so strongly, and I just kind of dedicated a huge chunk of my life to trying to get the music across to an audience that would otherwise not have heard it. And I'm not diluting how it's been presented. That's what a DJ can do. You can thread songs together in a way that gets music across without its dilution without crossing it over.Dan Runcie 04:11And I feel like, for you, you've been able to carry that through, you had we're not done we are done with 2021 I was able to do a quick drop for that as well. So I think what's likely inspiring for a lot of folks is that there's so many people that have music backgrounds and passions early on, but there's a pause if they're not able to continue that but you've been able to keep this as part of your charity, which I think makes so much of what you do with this space authentic because you yourself are someone who releases music.Will Page 04:40Yeah, I mean, the mix cloud allowed me to scale what I was doing anyway, if I go back to university in the late 90s early noughties you'd make mixtapes mix cassettes. There's a great way to date girls, but you could only do maybe like 50 100 at tops. Mix cloud allows you to take what you do and scale it scale what you love to do and the mixer UK only gave us a drop for weighing in dama 2021. That makes us no-hit 27,000 on Mixcloud meaning have overtaken Erykah Badu one of your former guests, I believe. So, you know, to get to 20,000 unique people with a mix that you care a year crafting together, that means the world to me.Dan Runcie 05:15It's a lot. And that's powerful, too. I imagined that you're always not just finding the sounds that make the most vibe for the year. But you're also thinking about, okay, what is the way that things are moving, especially at the pandemic? I feel like it's such an interesting year to have something like that. Because I think for some people, it's a year that they want to remember a year, they don't want to remember as well. But I feel like you probably already have a few things lined up for the mix you'll do at the end of 2022.Will Page 05:45Yeah, I mean, you're always looking for the bands that are not on Spotify, not an Apple Music, I think about half of my mix this year, you will not find in a streaming service. And I'm proud of that you're going to Discogs to find those rare white label bootleg vinyls, you're going to the source to the artists who are in the studio recording. And to you know, profile bands like Sault, or London-based bands, S-A-U-L-T, on that mix. That meant the world because I've been watching them rise over the past few years now. And, you know, to this day, nobody has any idea what the band look like, who the band are made up of, you know, this, like punk music, they're rejecting the system, they're doing it completely separately. And they're, you know, not hitting millions of people on Spotify with their music, they've let the music do the talking. So I often think about mixed culture as a break it down this way, the internet can scale just about anything, but it can't scale intimacy, and a playlist or as an intimate, that's just a bunch of songs straddle together and work them through the shuffle play feature, but a mix, a DJ mix of 60 minutes seamless mix, where you have vocal drops, you have beat mixing, you have layering, all those techniques that you've honed over the years, that's intimate. So what I'm able to do with mixtape culture is to scale intimacy, and that goes out for every other DJ you've had on your show. That's what we're trying to do right.Dan Runcie 07:05For sure. And I feel like that's a good segue to chat a little bit more about some of the work you've done for a company that is very heavily focused on playlists, which is Spotify. And I think more broadly, looking at the streaming ever we're in right now, this is a great time to chat because we just saw the IFP results. And streaming is continuing to grow, as we've seen, but I feel like you've probably spotted a few interesting trends about where things are heading. And I think that's a question of art for a lot of people streaming continues to grow, but how far can it grow? What are we seeing in terms of differences within genres or regions? What are some of the things that stuck out to you?Will Page 07:43I'll give you a couple. The first one is the global business. Well, last time I looked at the United Nations, I think there's 208 countries in the world, the global yearbook that we're discussing here, has I think, 58. So we have to be careful what we define as global. I think Africa's clubbed together as one continent with a need to work on that. But I think the global business is growing, but it's also becoming more American. So if you go back to when Spotify launched, Americans made up 20 to 23% of the business round, about just over a fifth today, it's 37%. So we have seen the business grow and become more American. And that raises questions, economic questions, like globalization questions, should poor countries catch up with rich ones, a theory says yes, the reality often says no, so we're seeing this kind of lopsided growth where the business is growing, but it's growing in favor of an American market, the biggest country is growing at the fastest rates. That's a positive problem, but I just want to flag it, which is that's not how it was supposed to play out. And then the second thing I'd want to point to as well as just vinyl, this vinyl recovery is just Well, I don't know how much my bank balance is responsible for this vinyl recovery. But I'm telling you, is defying the laws of gravity. Now we're now looking at Vinyl being worth one and a half-billion dollars, which is more than it's been worth in the past 30 years. It's worth more than CDs, cassettes, and downloads the three formats that were supposed to declare that vinyl is dead, but there's two things you can kind of cut out the vinyl recovery, which I think will be of real interest to your audience. Firstly, on the consumer side, I saw a survey which suggested that the majority just over half of all vinyl buyers today don't own a record player. I mean, something's cooking here. So why are we buying it for now I'll extend that as well. The cost of wall frames to frame vinyl on your wall often costs more than the record itself. So I'm willing to pay more for vinyl to be called New framed on my wall than I am for the record. And by the way, I don't have a record player that a lot of people will take those bizarre boxes, but on the creator side, something else is interesting. It'll take a little bit of working through but if we think about the streaming model is monetizing consumption, that's what it does. So there's an album A 10 songs, three killer and seven filler songs and an album Let's say Dan runs, he wrote the three killer tracks, and we'll page the seven Duff filler tracks. On streaming, Dan might walk away with all the money, and I'll walk away with none. Because we're only streaming the killer tracks and nobody's touching the filler. As the album model kicks out from vinyl, I would get 70% of the cache. That's crazy because nobody knows what's being consumed. And it's a lot of cash by just kind of do some rough math, you have a million fans streaming your hip hop record on Spotify. And let's say they're streaming it 200 times in the month when the album drops, you only need 20,000 of them of that million to make the same amount of money from vinyl than you would do from streams, which is entirely plausible. But then how do you pay the copyright owners from those songs on an album is very different from how you pay them on a stream. If you go back to the late 70s. The one most successful records of all time was Saturday Night Fever, the BGS, and a bunch of other people. It's crazy to think that Ralph McDonald's Calypso struck his record there, which nobody has listened to, but the same royalty as staying alive by the BGS. Because it was a vinyl record. So to reiterate, on the consumer side, I don't know how many of these vinyl records are being played. And on the creative side, it raises questions about how these creators are going to get paid.Dan Runcie 11:16That's a good point. But that I don't think is being talked about as much about the vinyl search, because there's so much like wow, about just how much has been purchased. I think I haven't saw the stat that Adele's 30 albums sold 8000 cassettes or there’s a self-titled stat about that. And I think the similar thing that you said lines up, I think those people actually still own a Walkman or whatever type of cassette player that they have. So I do think that that is something that probably there could be a deeper analysis on. Because a lot of the people that write the filler songs, how do they feel whether you're a songwriter, whether you know what's behind it, especially when you know that there's so much clearer path to be able to determine, Okay, this is going to be the lead single that this is what we're going to push most from this album, it really shifts the exhibit more to where things are going in terms of a single market and like the way that people have talked about pop music for a while now. Right. And I guess that brings me back to the streaming trends that you mentioned, overall, we're in this area, as you mentioned, streaming itself that US penetration has grown from 22%, I believe you said is now 30 to 3537, somewhere around there. But where do we go from here because as you've written before, the price of music streaming, at least the monthly subscription hasn't necessarily been increasing. The average revenue per user overall, because of the international growth is decreased. And you have plenty of people that are still trying to get their fair share of what they can. It's streaming. So it's in like 510 years from now, if you could see into the future. Where do you think streaming distribution is I think the good thing is that people have smartphones, and there's more and more growth from that perspective. So streaming is going to grow. But on the other hand, the economics of these things do have some theoretical point where we've maximized the global penetration of this. What do you think about where that is going?Will Page 13:17Let me unpack it in two different lanes. Firstly, I'll deal with the saturation point question which is, you know, how long can this party keep going for it's three o'clock in the morning, who's going to call time on it? And then secondly, I want to deal with the pricing point on its own lien as well. But on saturation point, you're now in a situation where I'd put it as in America, we've had herbivores we've had Spotify growing Apple growing, Amazon growing, YouTube growing, everybody's reporting growth, Pandora even is growing. What we're gonna see at some point soon is carnivores, which is Apple will grow by eating into Spotify as growth or YouTube will grow by eating into Amazon's growth. So the key question we got to ask is, when do we go from the herbivore market we're in today to a carnivore market of tomorrow, and output Spotify as your subscriber number right about 45 million, Apple at 49 million, you dump on top YouTube, Amazon Pandora, you're well past 110, 120 million. Now that's important because I reckon there's around about 110 million qualifying households in America that has at least one person who could pay for a streaming service. This is crucial, because if you look at what Apple one's bundle is doing $30 a month for news, music, television, gaming, fitness, and two terabytes of storage per six accountholder is a household proposition. They're saying to the home, I got you convenience. Everyone under this roof is covered with Apple products. So when you have 110 million households, and you have more than 110 million subscribers in the United States, then we're in a race to the finishing line before herbivores turn into carnivores. In oil. We have this expression called Peak Oil, which is we know that we've extracted more oil in the world and has left to extract an oil All that's left is going to be even more costly to get out of the ground. I think we're in peak subscriber territory where at some point soon we're going to start seeing growth happen through stealing other customers as opposed to finding your own. So I just want to put that warning flag out there just now we're partying like it's 1989 Fine, but at some point, the party has to come to an end and growth is going to come at the expense of other players that then flips Neil from the east side to the B side of this record, we flip it over to price. And then pricing debate is interesting. I published this work called MelB economics, which we can cite on your wonderful website there, which was to look at the 20-year history of the 19 price point. And it's crazy story back in the third of December 2001. Over 20 years ago today, Rhapsody got its license for 999 offerings which had 15,000 songs first point, the origins of 999. Bizarrely deep back to the blockbuster rental card, some cooked-up label executive would have said that it cost 999 to rent videos from blockbuster. That's what it should cost to rent music. Secondly, there was only 15,000 songs with limited use case there was no smartphone back then no apps, no algorithms, that was all a weird world into the future. So you just had 999 for 15,000 songs we're now checking in early April 2022. And it's still 999 in dollar and euro and Sterling. But we're offering 100 million songs. That's the crazy thing. So in the article MelB economics what I do is I, strip inflation out in the case of the UK 999 has fallen down to six pounds 30 pence. Remember, you know family plan makes music cheaper to have 2.3 people are paying 4099, that's six pounds, 50. There's way too many numbers in this conversation for capital. But still, we'll stick with it. Student plan makes it cheaper to sew music in real terms has fallen to six pounds 30 which is less than a medium glass of Malbec wine. So 175 milliliters of Malbec wine costs more than 100 million songs, which is available offline on-demand without adverts that for me is certified bonkers. I don't understand what we've done. We're offering more and more, and we're charging less and less. And you only have to leave the ears to the eyes on the video streaming to see what they're doing on the other side of the fence. Netflix has got me from 799 to 899 to 1299, to now 1499 In the space of 15 months, and I haven't blinked Disney plus, the reason I'm paying for 99 and Disney plus is because I paid 1999 to get Cruella live on-demand. So they're charging more and more, but only offering part of the world's repertoire set for eyeball content. We're charging less and less and offering more and more of the wells, your whole content says like two ships passing each other in the night. It's a very interesting dilemma.Dan Runcie 17:49It's intriguing because when you look at the way that video is structured, as you mentioned, you have all these price increases. And I think Netflix for some plans is you know, at 99 It's approaching that level. But in music, it's this thing where yeah, there's some price differences where I think I saw today that Amazon music is increasing $1 But that's from 799 for Prime subscribers to that being 899. So, Ross thatWill Page 18:17I wonder if like what caused that?Dan Runcie 18:21I mean, honestly, I feel like there's something here because when I think about this, I think about a few things, right? Obviously, you do have this fight where the artists want to get more and the labels want to get more, you know, not just for the artist, but for themselves. And obviously, Spotify wants to earn more logically you would think, Okay, if you increase the price, and people just understated the economics of what's likely, if Spotify increased up to 1299 a month for the standard base rate, how many folks would blink. But to your point earlier, I have to imagine that the fear is looking at the trends and where that penetration is, if they jump up to 39 or 1299, then they're going to lose those customers to the other streaming services that have been shoved there yet, because of that thought of, you know, shifting to that carnivore mentality of competing with each other. So because for roughly 80% of the content that they do offer, it is roughly the same between each of the services, it's in when's it to be more of a price war, then in video streaming, where most of them do have some differentiated contentWill Page 19:26100% And two things to hold on to a very eloquent point there. And firstly, let's just remind ourselves that Apple launched superior sound quality, you may remember the commercial of lossless audio, you buy your air pods, which cost two years of Apple Music or Spotify to put in your years and you get superior sound quality, the subtext underneath it said at no extra cost. That was the actual marketing message. So there again, we're improving the offer. We're supplying more, but we're charging less in real terms. And that's a really interesting kind of point can occur. into it. The second thing and we should get balanced into this discussion, because it's delicate is we have to remind ourselves that, you know, there's 120 million subscribers in America, there's still another 100 and 20 million to go. But we know they're not they're interested in paying for music because they haven't paid yet, the best way to attract them is not necessarily to raise price. So we got to remember that there's still no oil to extract, it's not going to be easy oil to extract, the best way to get to it might not be to raise the price. But there's a catch to this. I can remember, in the early noughties, right up to 2010 piracy, ripping the asset out of this business. And concert promoters were saying, We love piracy because the kids are getting music for free so they can pay more on concert tickets. I wonder if now they're saying we love Spotify because they don't raise prices, which means we can raise hours, this is not a discussion of how to rip off the customer. This is a discussion about value exchange. And I just wonder whether recorded music is leaving value on the table. That's the key point to hammer home.Dan Runcie 20:57That's a good point. And I think that also made me think too, could there be some notion of maintaining the perception of Spotify as something that still has high pricing power is still as high consumer surplus because then that helps the stock price. And then seeing that the major labels are all invested in Spotify itself. It's about like having that perception of you know, the future growth and whatever it is. So what you've just said made me think about that being a factor, potentially to the 100%.Will Page 21:27And of course, you got to distinguish the Spotify, Apple Music cost structure from that of the video streaming companies, in that they have a kind of variable costs, you double your business, you double your cost base, whereas Netflix, you jump up costs, and you have you jumped up your revenue, you raised me from 799 to 1499, the cost of that content was fixed. And I'm still consuming the Fresh Prince of Bel-Air on Netflix to this day. That is a fixed-cost deal that he did to get that content. And that's margin to Netflix. So you know, the cost structure matters in this one as well.Dan Runcie 21:59Definitely. And you mentioned like music there. And I think there's a lot to think about from that perspective. I feel like we're in this post-pandemic. I mean, we're still not out of it. But we're in this post-quarantine era, art more artists than ever are trying to tour and get out there try to capture what's there. But also from an economic perspective, from that most people are only going to go to a certain number of live events per year. And we have this 18 to 24-month run coming up where everyone wants to make up for what they couldn't do in the past two years. How will that shift not just who that goes on tour together? And then how they may split those profits, what the availability looks like. And if they're not able to do what they may have done on tour in the late 2010s. How does that affect future touring? I think that's a piece of it that, you know, we still haven't necessarily seen the impact of but it just feels inevitable based on where things are heading.Will Page 22:58You did absolutely know on touring. I was lucky and I got to do some great work on the UK live industry. And I can only speak for the UK here. I know a lot of your audience knew us, but I think these points will carry across. The first one was to work out how much is spent on concert tickets in Britain during the normal year of 2019. And the answer was 1.7 billion pounds. That's more than was spent on recorded music a lot more than was spent recorded music which makes sense, you know, you pay 120 pounds on your Spotify account, you're paying 240 pounds to go to Reading Festival for two days in a muddy field and reading costs more than 365 days of all the world's music. But what I noticed there was the industry is changing in its growth. I showed that between 2012 The year of the London Olympics, and 2019 the live music industry in this country had exploded and grow but it was lopsided. All the growth came from stadiums, festivals, and to a lesser extent arenas, the theaters, the 2000 3000 capacity theaters like the Fillmore West over where you are, they were getting crushed. They were actually shrinking in size. So we have this lopsided live music industry which is going right in the direction of the head as opposed to the long tail. The stadiums or festivals The arena is as opposed to the theater as the club's the university venues. And that's interesting because that's going to change the dynamics of how you make money from live. Do you go from doing your tour of an album to doing a tour of your festivals for that record? And what does that mean for the cost structure for the insurance and all those things that bands have to consider when you're hitting the road? I mean, credit to trap tool. You've had some great podcasts recently on this topic. But as there's a big rethink coming along in this live music market is not the same as we had back in 2019. It's changed fundamentally and it is the breadwinner for most artists' income I think it makes up about 70% of what an artist has to live for comes from the road that vanished. How do we get it back?Dan Runcie 24:49I feel like Cardi B has been a good case study on this specific point here, right. It's been four years now since she released an album and she's yet to go on a true proper tour in that time, that said she's done plenty of festivals where she served more on those festival guarantees that she liked what on tour. She's also done many private events where she's likely earned that same amount, if not more. So, there's a whole economic argument to be made. And I think there's also some risk involved, too, right? I think that festivals do give you the opportunity to get that nature back, you get the high number, the revenue that comes through, but maybe your fans will be a little bit more forgiving if you're set-piece at your festival isn't the most extravagant thing, especially if you're not the headliner at it. But on a tour, I think it changes it's a little bit more pressure. Everyone wants to see that Instagrammable or tick talkable moment to then sell future tickets, and just the production costs and everything with traveling. It still is something that is very worthwhile, but I think we've just started to see some of that segmentation there, especially for someone like her I would have to go residencies to I know she's done a few different things in Vegas here and there. But yes, I still yet to do that. 30-city worldwide tour?Will Page 26:12Yeah, I think you got to think of your head and your heart. Your head says like you point out the economics fevers, festivals, your back lines are your insurances cover travels already covered. I have numerous Hip Hop bands perform at festivals in Europe. And that's one of the big advantages. The costs are all taken care of by the festival. But your heart says what does that do to intimate relationships with your fans, right? You're staring at 50,000 Strangers in the muddy field. That's different from staring at 2000 friends in the Fillmore West. So the heading the horror is going to come into play here. What I would add, though, is that there are rumors I would say here in the UK, at least that the promoters are saying I'll pay you a ton of money to film at the festival to make sure that you don't go on tour. And that's an interesting situation. If you build one too many houses, you collapse the property market. If you have one too many tours or one too many festivals, you collapse like the music industry. So there's ways in which people are trying to restrain the market to festivals at the expense of the theaters that certainly is coming through in the data. We're seeing the theater business, take a kick in well, festivals go on a roll.Dan Runcie 27:12Yeah. Because I think about you look at the artists that are touring stadiums now whether it's your Taylor Swift or Beyonce is they wouldn't be able to do that if they didn't have the individual tours, that smaller venues when they were starting out being able to build that intimate fan base, like you said, like you get to that point, right. And I do think that as good as festivals can be it is much more of a lucrative cash grab that is I don't want to say necessarily short-term thinking. But I think you ideally want to have some type of balance there, right? Get the big bag that you can get from something else. It's almost no different than I think running a business right? Okay, sure. You may be able to do a speaking fee or do some type of you know, the thing here or there. But you can't do that all the time, especially if it's not an audience are tapped into. You still need to do some of the things that could set you up for the long game.Will Page 28:05Yeah, and there's an infographic that I'll share with you to pass on to your audience here. I wrote an article in The Economist called smells like Middle East spirit, as opposed to teen spirit and ice play on words had to Dave Grohl and Kurt Cobain, but what I was looking at was the average age of festival headliners over time. This is a doer pessimistic Scottish economist, this is what you do is your spare time. Okay. So in 92, and Radiohead did Glastonbury, the average age of a festival headliner was 2526 years old. And all these hot bands were coming through the Britpop era. You know, there was so much development of new talent by 2012. I think it got up to 58. And I got a lot of criticism for that article, but then Glastonbury that year had the who and Lionel Richie headlining, which I think was 70 and 73 years old, apart, and then you can see the conveyor belt problem, which is okay, it's a quick cash grab, it makes sense. But that's not the conveyor belt of how we develop talent for tomorrow. That's just how we cash in our chips at the casino today. So it does raise questions. And I'm not saying it's like the doomsday scenario here. But we just need a healthy balance of, you know, a seedbed for future growth. And then the big stage of exploiting that moment today, which could be the permanent stage at Glastonbury, the headlights siege up on a roof and mistakes. So I just think we're getting a little bit lopsided here. We're a bit short term system, how this business needs to developDan Runcie 29:25Agreed on that. Switching gears a bit. One thing that you wrote recently that stuck out to me you did this deep dive on music publishing, and I think this is another area that kind of has some of that short term, long term perspective on it, because you look at the people who get the share of the copyright pie, at least today. And from a music streaming perspective, a lot of that has been much more in the favor of the recorded side and then the people getting compensated on the recording side. But with that the songwriters and the PA brochures. A lot of them necessarily in that timeframe didn't get a lot of that. But I think in this wave now where we're seeing more catalog deals, and we're seeing people understand the value of that things may be starting to shift and there's likely other things as well. But what do you think about the way that the publishing side has been seen and what the future opportunities are for that side of the business?Will Page 30:23Well, the way that labels and publishing were taught to me in terms of what makes them distinct from one another goes back to my Aunt Doreen Lauder, who worked in the music business from 1959 at Decca Records right the way through to 2012. She went enzyme records with Nigel Grange loosens half brother, they were responsible for Sinead O'Connor who sold 11 million albums based on the prints cover. And she once said to me, Will, this is how the music industry works, the record label piece of your drugs and the publishing pays for your pension, just kind of as a nice succinct way of summarizing how the business works. That was then this is now clearly times have changed, I think. But it reminds us about you know what makes the business different. And that piece of work that you cite is something called global value of copyright, where I'm really keen to educate this industry, regardless of whether you're coming from a label perspective, a manager or an artist or songwriter, there's a C with a circle on it called copyright. We get that and it involves record labels. It involves SoundExchange involves artists involves ASCAP, BMI, GMR says EQ involves publishers, David Israeli, and the great folks at the NMPA, and Wall Street, but the whole thing together for me all this spaghetti and straightened out. And what I was able to show was that in 2020, copyright was worth 32 and a half-billion dollars, way bigger than what you've just heard I FPI, way bigger than what CS EC would say, this is the entire thing. And the split was about 65% labels 35% to the publishers. Now if you go way back to 2001 when we used to sell CDs by way of pallet and cocaine capitalism, these have no record labels. Back then, the split was much more in favor of labels no more than three quarters labels less than a quarter to the publishers. And what we've seen happen in the years in between is quite an interesting story. Labels went from boom time with CDs to bust with piracy, and now they're booming again with streaming. And the inverse the opposite happened publishers as labels went bust, ASCAP, BMI, kept on recording record-breaking collections. So you ever hear the toys analogy here of labels going really fast and falling off a cliff publishes as trundled along with record-breaking, not massive record-breaking collections, but he kept on growing their base. So the question he threw up is, what type of industry are we moving towards? Are we going back to our business model which paid labels over three quarters of the pie and publishers less than a quarter? And is that a good or a bad thing? Or in this post-Spotify economy where we're seeing companies like peloton Twitch, TikTok comes to the business is that gonna have a completely different balance. Now, why this matters to your audiences, not just on the creator side. But also on the investment side, you pointed out catalog valuations we can dig into that if you want. But just a high-level point is let's say that in a few year's time, I go into my Batcave again, calculate the global value of copyright, and instead of 32 and a half billion is 40 billion, I'll come on traps or make an exclusive announcement cooperate today is worth 40,000,000,007 and a half billion new dollars have come into this business, I want the audience to start thinking about who gets what share of that marginal new dollar, is that going to split publishing side? Or is that going to split the label side. And if you're investing in catalogs, be the master rights be the author rights that really matters. There's a huge educational drive here to understand the balance of this business of copyright.Dan Runcie 33:45So there's a few things you said there that I wanted to dig into, of course, for streaming Spotify and its competitors around 75% is going to the recorded side a quarter to publishing but from a breakdown what does that look like for the Tiktoks? The Roblox and the peloton what is that share of revenue from those plays look like?Will Page 34:08So the best way I could do this is if I just talk about ratios, there's three R's in this business, there's share of revenue, there's ratio, and as rights pool, they mean different things. Most experts get confused with three R's. I'm gonna stick to ratios that is if I give the label $1, how much do I give the publisher, the software, there's collective management organization. So we stick to the conventional streaming model today, I would say that you get the record label $1. You're giving the publishing side of the fence 24 cents, you know, a decent chunk of change, but still the poorer cousin of the record label on YouTube, I think it could be as high as 35 cents 40 cents even because there's a sync right involved in those deals. And then when you take that observation of imposing the sink right into a deal and you expand it to peloton or tic tock potentially even more, and then you can flip it and say well what happens in the future of TiC tock Because karaoke not saying it's gonna happen, but it's not implausible if that was the case that favors publishers even more. There's all these weird ways the business could develop, which could favor one side of the fence, the labels, and the artists continue getting three-quarters of the cash. On the other side of the fence publishers and songwriters start enforcing their rights and getting a more balanced share. And that's what we need to look out for when we're investing in corporates. That's what we need to look out for. If you're a singer and a songwriter. And you're trying to understand your royalty statements.Dan Runcie 35:27Like how much higher Do you think I mean, if you had to put a percentage on it for the Tiktoks or the pelletize? And I guess as well, you made me think up sync deals, right? Like for the folks that are selling, or their saw gets placed on one of these Hulu series or one of these HBO Max series? Like what is that ratio look like, you know, from a ballpark for those?Will Page 35:50So I think a 50-50 split would be the upper end of the goal. If a song is placed in a Hulu TV show or you know, an artist I've worked with for many years Eumir Deodato, Brazilian composer, his songs now in this famous EasyJet commercial over here in Europe, the artists and the publisher would see around a 5050 split of those revenues. Now would that happen in a world of streaming? Unlikely, but I think if you can get to a stage where you're giving the record label $1 and the publisher 50 cents as a ratio, and I got to repeat the word ratio here, you know, that's potentially achievable, that listen, post-Spotify economy, I don't think it's going to happen with the business we're looking at today. But I think that's a potential scenario for the business developing tomorrow. That's the thing is, if I can quote Ralph Simon are a longtime mentor to me, he always says, this industry is always about what's happening next. And then he goes on to say, it always has been as a great reminder of just your will restless souls in this business, we've achieved this amazing thing in the past 10 years, we're streaming got that bank there. What's coming next, who would have thought peloton would have had a music licensing department 18 months ago now they're like a top 10 account for major labels.Dan Runcie 36:59It's impressive. It really is. And I think it's a good reminder. Because anytime that you get a little bit too bullish and excited about what the current thing is, we always got to be thinking about what's next. And you mentioned a few times about a post-Spotify economy. And what does that look like? From your perspective, I think there's likely a number of things that we've already talked about with more of these other b2b platforms or with these other platforms, in general, having licensing deals, but what do you say? Or what do you think about post-Spotify economy? What comes to mind for you?Will Page 37:32Let me throw my fist your words, your joy, and try and knock you out for a second. We talked about price for a minute. And we talked about streaming. We haven't talked about gaming, but you noticed that Epic Games just acquired Bandcamp, I learned a fascinating stat about Bandcamp, which relates to my book tours and economics. There's a chapter in the book called Mako by, where I sat down with the management of the band Radiohead, we went through the entire in rainbow story for the first time ever a real global exclusive to explain how that deal worked out what they were really achieving when they did their voluntary Tip Jar model. And by the way, can I just put a shout out to one of your listeners, and fly from the Ben-Zion I bet remix of Radiohead have ever heard in my life is live. We're fishies Hip Hop version of the entire album. But Radiohead tested voluntary Tip Jar pricing. Now check this out. If you put your album out on Bandcamp could be a vinyl record. Remember, it's the people who are paying to stream who are also buying vinyl. So if you put a band and album out on Bandcamp, and you say a name, your own price, no minimum, and there's a guidance of 10 bucks, the average paid is 14 People go about 40% asking, and that could be for a super-rich blockbuster artists who try something out on Bandcamp there could be for some band who's broken Brooklyn Robin and cons together trying to make them breed people go 40% above asking when you say name your own price. And that's interesting for me, and there's a great academic paper by Francesca Cornelli from Duke University, she asked how should you price a museum and intuition says top-down mindset, the museum should set the price adults 10 bucks kids, five bucks pensioners, some type of discount arrangement, but she said no, let the visitors set the price because that way rich people will give you even more and poorer people can attend. And you'll see more cash overall. And I would like to see a little bit more of that experimentation around pricing compared to the past 20 years where we've had a ceiling on price where if you really love a band, all you can give a platform is 999 and not a penny more. I think that's we're suffocating love. We're putting a ceiling on love. We need to take that ceiling smash through it and let people express love through different means. But I love that Bandcamp story whatever you suggest I'll give you 40% above because it's our we're not dealing with commodity we're dealing with culture and that's what we got to remind ourselves.Dan Runcie 39:43It's like the Met model right where at least the last time I went it was like $20 was the recommendation but to your point it at least at some variable threshold, but the people a lot of the people that go there that have a lot of money end up giving much more so I hear you on that I, I noticed though, when you're talking and thinking about the future of this, I didn't hear many of the typical buzzwords and things that you hear about the music industry. Now whether it is NFTs or Web 3.0 or Metaverse, well, maybe to some extent with the Epic Games comparison, but what is your take on that piece of the puzzle, Spotify era.Will Page 40:20I need $1 and a glass every time I hear these words. So I'm just back from Austin, Texas, South by Southwest, a vague recollection of what happened over there. But I'm telling you, those words were bouncing around more than anything else. Here's a way of capturing of your listeners. This is the first time I've been to South by Southwest where nobody asked me what band did I see last night? Everybody asked me what VR headset that, I try this morning. And that's a sign of the times there and that is a sign of the times. Hey, did you try the Amaze VR headset? You know the make the stallion booty tour? Yeah, I tried that this morning, what Band-Aid nobody wanted to know about bands with pulses. Everybody wants to know about VR headsets. So we live in interesting times. And I think we're in a bit of bubble trouble here. I really do. I don't think this whole thing has been thought out correctly. Firstly, I'll give you an example of where I think the problems gone wrong. And secondly, I want to give you an example from history to show that we've been here before. So with NF T's, it is not. It's not an example of a woman who is happy to spend 1000s 10s of 1000s of dollars on a handbag because they can walk up and down Sixth Avenue and people will see that woman carrying that handbag, the signaling value isn't there. You know, I can buy a token that says I've seen the Mona Lisa on this day and put it in my locker. And if I show you my locker, you can see that I've seen the Mona Lisa that day, and you could buy a token and put it in your locker and you could show your friends that you've seen the Mona Lisa that day, but nobody can buy the Mona Lisa, we can just buy this NFT adaption of the Mona Lisa, but we can't share it across platforms. And that's where I'm struggling. That's where I'm struggling as irrational as that might be to spend 20 $30,000 on a handbag that makes you feel good having the world see you were fine. Do what you got to do. But with NF T's is not a cross-platform token. I'm worried that that's a problem with the model with the price of NF t's just very quickly, there is a term I want to introduce to your show called wash trades, which will meet a legal of 1936 which is basically if you're selling your house, you might employ an estate agent on the buyer side as well as the sell-side to cook up the price. And you can see if you try to do this in the stock market, you spend a lot of time and the chokey six years in jail for manipulating prices. Wash trades have been illegal since 1936. I think there's a problem with wash trades, manipulating the price of NF T's because they're unregulated. So I don't want to be the doer pessimistic, Scottish economist, in the room here pour cold water on this hype machine. But I have some issues with the product. And I have some issues with the price the product is docked to your locker and your locker only the price can be manipulated by ways which be declared illegal in financial markets. Conventional financial markets by wrapping that up. Here's my lesson from history. No Dan, in your record collection. Do you remember a rock band called kiss? Oh yeah. Were you a member of Kiss Army by any chance?Dan Runcie 43:08I was on the show.Will Page 43:11Right so if we go back to before I was born 1975, Kiss one of the biggest rock bands in America had something called Kiss Army for their super fans. So you could have kiss wallpaper because models. You could even have Kiss toilet paper. That was one of their top sellers. You could wipe your butt who key with Gene Simmons. That was one of their biggest sellers. And in 1975 They ran a competition on the competition was to say Hey fans, if you want to see a picture of the band with the makeup off there does famous black and white makeup. And we're going to have this competition you pay to enter and five lucky winners will be sent a photograph of the band for the makeup off. Now you're thinking NF TS kiss 1975 Where's he going? Follow me. Hysteria breaks out all these kiss fans in the kiss army want to see Gene Simmons and Paul Stanley with a makeup off. So crazy hyperemic competition the winners are announced the envelopes are sent out. There was five lucky winners get the envelope. They need scissors to open the envelope a pill it is black and white photograph of Kiss with makeup off. And after five seconds of exposure to natural light. The picture feeds genius, genius marketing incredible. But I'm struggling to see the difference between that and 1975 Kiss. You're competing for photographs, which feed in natural light and NFTs today so something I stress my big tours and economics is when you stare into disruption. It's really important to remind yourself that you've been here before and I think Gene Simmons and Paul Stanley have been here before.Dan Runcie 44:37It's an interesting take. And I do think about the first piece of what you're saying just in terms of something that stays in your wallet. And how do you share that elsewhere? I have seen some of the social platforms making it easier to be like oh hey, you could connect your Coinbase wallet to this whether it's Instagram or I think they're working on it now or to Twitter and you could make that your profile Make sure or you know the people that of course, you know will right click copy paste and save it put that as their profile pictures in different places. So I guess in their minds that's their version of being able to walk down fit that with the duty at Birkbeck, right. Will Page 45:15That's interesting. That to your point, that takes you back into handbag territory that corrects for the problem. Let's see if it goes but equally does the NFT lose its exclusivity when we do that as well. So it might work in the short term and might lead to the demise of NF T's over the long term because they're not that special. After all, they're just an icon for your profile picture. So is great to hear that there's that type of thinking going on that justifies my, justifies my view.Dan Runcie 45:41Who knows? I mean, we're still early right but I do think that if I see your profile on social media, you turned into a board ape, we may have to have another podcast conversation I did.Will Page 45:55But I tell you asked him was obsessed with these topics. Even Austin, Texas Music conferences, get obsessed with the next big thing but this year, it was just bizarre how many references I heard to web three NF Ts, but if they can just give a quick shout out to the company amaze VR who are doing the mega stallion tour I watched make the stallion four times in Austin, Texas, I saw more VR of Nicholas Deleon and I saw of any live bear. But you know, they had the longest queues of the entire conference. If you judge success by queues demand exceeding supply, they won South by Southwest for the longest queues.Dan Runcie 46:27That's impressive. And of course, it makes a big star she's been doing a lot. I've heard a lot of good things from base VR too. I think that though, it'd be a great point to pivot and talk a little bit more about hip hop, the as we know, hip hop has been able to see a lot of its potential even more so. In the streaming era with us, given the popularity that's there. We've seen the numbers, we've seen the growth as well. And I know that you've studied this a lot, especially on the international perspective, just seeing how hip hop is growing in other countries. But I think some of that growth is looking different than what we may be used to seeing in the US. So what is your perspective right now on the state of hip hop with regards to streaming,Will Page 47:09you speaking about something that's close to my heart, but if I can start by saying, one thing that your podcast has done for me over the years, that reminds us of that famous quote, which has been reiterated by many rappers, which is rap is something you do hip hop is something you live, and we can forget that from time to time can drink a bit too much Kool-Aid and forget those golden words. Rap is something that you do. Hip hop is something that you live, you don't have a choice with hip hop, you live it, rap, I mean, you could play a jazz track, then you could do a rap track, you have a choice there, but hip hop is an eighth. And I want to pull those words up. Because when we talk about the genre of hip hop, I wonder whether it's really a bit of a square peg in a round hole here to take words, which means describe a lifestyle and their attitude or mentality, and then say that it's now a genre. Maybe rap should be the genre and hip hop should be the culture. So I just want to throw that out there for your listeners. And I'd love future guests to come on and pose them that question. If we're discussing the genre of hip hop, are we missing a trick that aside, some stuff which has been popping with hip hop mean, firstly, just the size of the audience in America, just north of 90 million people, there's 90 million regular listeners of hip hop that is phenomenal. If you think about how far the genre has come, the culture has come in 30-plus years. And secondly, who's out there in front. I mean, I would put YouTube as the number one venue for hip hop in the United States, Spotify, Apple, Amazon, they're all doing their things. But I think it's worth just reminding ourselves how important YouTube is to our culture. As opposed to Amazon Spotify. Apple is depressing your thumb on a piece of glass during a track. Repeat. Rap is something you do hip hop is something you live and you've had to Mercer, one of my longtime mentors on your show, just we'll back to that past podcast to get to where I'm coming from on that point. I think the interesting thing for me speaking as a non-American on a podcast with a large American audience to watch how it's growing out of the countries and one of the most interesting things for me was non-English speaking hip hop. Now, my sister who's a French translator, Annie, she introduced me to a rapper called MC solo way, way back in the day, back in the 90s. Even and I don't speak French, but the rap was just incredible, like the way that the French language flowed over a beat. He certainly won't recall any tempo. That was incredible. So, you know, I've always had an appreciation for how hip hop travels beyond its borders, playlists. Without Borders. Hip hop is without borders. So I just wanted to introduce your audience to a very interesting backstory in Holland and the Netherlands, where Spotify the first country, we scaled him outside of Norway and Sweden was the Netherlands. We got big there really quickly 2011, 2012 era and because we got big we could put some local foot soldiers on the ground to help with curation. And for the first time ever in the company's history. We started taking Hip Hop curation seriously outside of our core markets and because we're supplying curation that was met with demand and all of a sudden, we started seeing these Dutch language hip hop artists explode in Holland, Ronnie flex being a great example. I think around 2018, we ran the data. And we learned that Drake was the number one artist in the world on Spotify. Yet in Holland, he was an eighth biggest hip-hop artist. And the seven above him were Dutch rapping in a local language of Dutch. And that was just jaw-dropping to think about globalization, culture, back to the Jungle Brothers the lesson they taught me in 1989, getting the message across without crossing over how you can have local language, hip hop travel, like no other genre there is across the world. And you're seeing that happen in Germany, France, you're seeing it happen in Asia. And so it's important to apply a global lens to hip hop and ask what is it about this culture, which is leading it to travel in a way that other cultures are not traveling is that the expression is that the belief is that the conviction that comes through hip hop, and that's that there's a book on that topic, and then you'd be a perfect person to try and write it, I can get you an agent. And I'd be out of my depth, but just so really important see to so which is why is this culture traveling, like no other culture, I can see on a music platform.Dan Runcie 51:12It's fascinating. It's something I've thought about a lot. I'm glad you mentioned that, because I think about a rapper, like Devine from India, or I think about some of the artists from the Middle East as well. And I think there's similar trends there where hip hop is still the most dominant thing, but they're artists that are from their regions are the ones that are the most popular. And I think it stems back to thinking about the origins of hip hop and looking at where a lot of those other countries may be. Now you look at what the public enemy had done, or even look a bit earlier, like Grandmaster Flash and have done their share of realities of the environments that they're in their storytelling in a way that isn't being done by the mass media. And we're in an era now, you know, more than ever, we see everything happening in the world where, what a lot of the heads of states, or what a lot of the governments or main distribution, communication platforms in these countries are sharing isn't necessarily reflecting what's happening in those places. So because of that, you have people wanting to speak out on that. And I think that because people realizing what the public enemy was able to do in some of those other groups here by them saying, you know, we are the black CNN, we are the voice communicating that I think you saw a lot of that in these other countries. So even if it's different artists, you're seeing them share their version of what's happening on the ground. And I think, like anything else, the evolution of that continues to grow over time. It's been, it's been really fascinating to see that. And I think that is what, at least for me always makes it feel like this is the global language that keeps everyone connected in this space. Even if people are speaking clearly different languages from artists you don't know there's that common theme that you can tell even if you're watching a music video or getting a vibe of what they're doing. There's so many through lights there.Will Page 53:02Those comments are deeper than Loch Ness, so they can quickly top it up with two thoughts, just thinking aloud here. This is why I love about your podcast is with the way you take the conversation with just firstly, just a historical point. And as I mentioned with my book tours and economics, when you're staring at the disruption to remind yourself that you've been here before, when I hear stories about suppression by governments leading to a rise of hip hop as a culture rap as an art form. You just got to go back to 1877 New Orleans and remind yourselves how jazz came into being your Creole people. You know, when Jim Crow laws were reintroduced through the backdoor before since the African American community overnight, so you took classically trained middle-class Creole people brought into a culture which had the blues and African drumming, and out of that suppression came the creation that was jazz. And it's just I love when you alluded to government suppression resulting in creativity. It's just interesting to think how we keep on you know, history doesn't repeat itself, it rhymes. And it's rhyming here when you start to think about the origins of jazz to what we're seeing happen with hip hop. And then the second thing I mentioned earlier that, you know, the internet can scale just about anything you want, but it can't scale intimacy. I wonder whether that's what hip hop is doing because it's, it's a postcard its storytelling is beginning with the word imagine and asking you to imagine the picture these words are creating, you know, that's doing something which I don't think your conventional verse-chorus, verse, chorus, rock or pop song is going to deliver. So the message getting the message across without coordinate crossing over. The message that we're getting across with hip hop is different from other forms of music. And that might explain a little bit about success at home and overseas that we've seen on streaming.Dan Runcie 54:43Definitely. Well, well, this is great. Thanks again for coming on. If you're listening, definitely make sure that you check out Tarzan economics. I can't recommend this book enough. I think that will is extremely sharp. And he's a thought leader in this space and it's been great to learn from him. So well. Thanks for coming on. And before we let you go, is there anything else that you want to plug in or let the travel audience know about?Will Page 55:07I have gotten no more travel plans to the States this year. But if they can just ask the audience to check out the mix on Mixcloud we ain't done with 2021 with a shout-out from Dan Runcie, himself, and many others, Mike G is on that mix Lord is on that mix. But I just hope that your audience because the show trapped will mean so much to me. I just hope the audience sees me as a DJ first and an economist a distant second that I can just land that point at the end of this podcast, I'd be happy.Dan Runcie 55:33That's a great note to end on. Well, thanks again.Will Page 55:36Thank you so much.Dan Runcie 55:38If 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 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.

Apr 8, 2022 • 43min

Audiomack CMO Dave Ponte’s Plan to Grow the Pie for Artists

It’s been ten years since Dave Ponte co-founded Audiomack alongside Dave Macli. The decade has been strong in international growth for the music streaming platform — Audiomack recently became Nigeria’s number-one overall iOS app in a given week — but if Ponte has it his way, Audiomack will next become THE “home base” for artists, a place to begin their entire musical journey. The platform has rolled out numerous features to support those lofty ambitions, plus has several others in the works. One of the features that is live is the Supporters monetization tool. Launched in December, the tool allows fans to directly pay artists in exchange for a “badge” that memorializes their name in their profile and that of the supported artists. In the four months of being live on-site, Supporters has created $30,000 in new revenue for artists on Audiomack. As Dave told us in the episode, unlike competing streaming services, Audiomack is concerned with increasing the “size of the pie” for the entire music industry — not merely finding additional ways to ”slice the pie.”Dave and I spoke at length about artist monetization — and how Web 3.0 possibly fits into the equation — throughout the episode. Here’s everything else we covered: [0:00 Big Start To 2022 For Audiomack[0:55] Evaluating Audiomack’s Supporters’ Monetization Tool Post-Launch[3:38] Updating The Supporters’ Product Over Time[6:47] $30,000 Created For Artists (So Far) With Supporters Tool [10:25] Artist Campaigns On Audiomack[14:28] Audiomack’s Newly-Launched Creator App [17:50] Mobile App “Stickiness” [20:23] Audiomack’s “Home Base” Aspirations[24:05] Artist Resource Guide On Audiomack[27:52] How Brian Zisook’s Twitter Threads Influenced Artist Guide [30:20] Different Dynamic Between Audiomack & Other Platforms[32:55] Audiomack’s Biggest Challenges [38:42] How Does Web 3.0 Factor Into Audiomack’s Future?[46:26] Audiomack Motivated To Bring AfroBeats To AmericaTo listen to more Audiomack Trapital episodes, check out the two below:Audiomack Co-Founder & CEO Dave Macli: https://trapital.co/2020/11/16/dave-macli-on-audiomacks-role-in-music-streaming-partnership-with-djbooth-and-global-expansion/Audiomack VP of Product Charlie Kaplan: https://trapital.co/2021/12/10/charlie-kaplan-on-audiomack-supporters-artist-fan-monetization-and-streaming-business-models/Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSSHost: Dan Runcie, @RuncieDan, trapital.coGuests: Dave Ponte Trapital is home for the business of hip-hop. Gain the latest insights from hip-hop’s biggest players by reading Trapital’s free weekly memo. ________TRANSCRIPTIONDavid Ponte 00:00We cultivated all this. We aggregated all this. And now we're providing all of this for free. We're not charging anyone for it. If you go on the Audiomack app, you'll be able to access them. And you'll be able to learn and find out the answers to these questions because, frankly, I didn't even know a lot of these answers. I mean, there's so much to learn in the music industry. And you know, I know some things but there's a lot of things that I don't know. And I’ve, when going through this guide, learned a lot. And it can be one small decision that an artist would make, that can make a huge impact on their career in their life.Dan Runcie 00:39Hey, 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. Today's guest is Dave Ponte. The Chief Marketing Officer and co-founder of Audiomack. Audiomack is a music streaming platform and a music discovery service that reaches more than 20 million people across the world. It was great to chat with Dave because a few months back, I had talked to Charlie Kaplan fromAudiomack. This is when they first launched their platform, Supporters. Supporters is a tool that brings artists and fans more directly together where fans can directly contribute to a release of an artist give money to the artist for that, have their name be associated with that, and be able to show that badge through the Audiomack platform. We talked about the rollout of that we talked about how that fits more broadly, with Audiomack strategy to be a home base for artists and how it's doing that also through its creator app, through its artist's guide, and a few of the other things it has planned. And that pivots us into a discussion about how Audiomack’s strategy fits within the broader music ecosystem in the broader streaming service. There are much bigger streaming services, but many of them are still copying a lot of the moves that Audiomack has done. So we talked about what that dynamic is where Audiomack is growing most right now and how this company is thinking about the future. And when you think about web3, when you think about all these other things, how much of this is an actual opportunity, how many of these things are buzzwords or just fluff, Dave and I get into all that. I had a great conversation with him. Here's my chat with Dave Ponte. All right, today, we got Dave Ponte here from Audiomack, and I got to give him credit, the company has been having a pretty good run lately. They launched some new platforms, they've been growing internationally. Dave, we got to get the latest on how things have been going on your end?David Ponte 02:50Things have been going great. We're really happy about how 2022 is shaping up. And we have a lot of great new features and platforms and apps and other things that are going to help artists, you know, improve their careers and move music forward.Dan Runcie 03:06Definitely. Yeah, I think it was a couple of months back, I feel like that, we're making the rounds because I had had Dave Macli about a year ago or so, had Zeon after that, and had Charlie Kaplan on most recently. And we talked all about Supporters. And I feel like this is a pretty big launch for you all when Charlie came on, we were just talking about the launch and the goals of having something where artists and fans can connect more directly in just bridging that line together. And now you have at least a few months of it to see how things have been going. So how has that been so far? How is Supporters?David Ponte 03:42I'm really happy with how it's launched. The product has worked really well. There hasn't been any when you're developing software, and you're adding a new feature like this, which is a completely different way that we would approach typically how our app would work. You know, we're a streaming platform, you know, you could play songs, you could follow artists, you could do all the things that you would do in a streaming platform, but now we're adding this e-commerce functionality. So it's a new foray for us. And it's gone off really, very smoothly. All the artists' supporters have been able to buy badges, it's all the finance and reconciliation portion has worked out very well, and the artists are really happy about this additional revenue stream that they can now employ.Dan Runcie 04:24Nice. I got to imagine for a lot of the artists, it brings them closer because that's one of the reasons that they're likely building on Audiomack as opposed to elsewhere. I feel like one of the pitches that you all have had from the beginning is that – A. you're going to have artists that are much more in control of what they're doing from how they're building their brand on your platform. And then I think, in addition, you're not necessarily always working with the artists who are more bound by a major record label or another entity. So by being able to have what I imagined a lot of independent artists using this tool and bring it up to you whether that is the through-line there, and of course, we're seeing so much happening with platforms in all different types of technologies trying to bring folks together, but I think you are able to do it in a way that is seamless, and it's visible because I think at the end of the day, people do want to be able to show off their fandom, and who they support.David Ponte 05:19Yes, one thing that, you know, I talked to Charlie, you know, who was one of the main architects of this feature, and he was a guest on your podcast, I recommend everyone had to listen to him if you listen to this now. But he told me I was very, he's a very eloquent guy. And what he told me and I thought it was a good way to look about it is, this is the first hour of the new year with this supporters product, there's so many different things that we want to add, and that we're in the midst of adding when I wanted to share a couple of those on your podcast. And, and, you know, we always had this challenge, Dave Mackley and I write what your things are never going to be perfect. When you release a new product, a new part of our product, a new app, you're never going to release it. So you have to just eventually push it out, let the people experience it, consider their feedback, and then work that into future iterations. So that's what we're doing here. There's a lot of new things we want to add. And we want to revise. And, you know, I'm not just gonna sit here and tell you everything's perfect, right? That would be boring, number one. But number two, it's not reality, especially with when you're dealing with app development. So one of the things we realized was the price of the supporters' badge, overall, I think was too high. So about a month into the program, we actually reduced the prices, the cost of the badge. So now, you know, you could buy a badge for $1 instead of $2 US and obviously changes depending on where you are, I don't think we're a global app, we're really big in Africa, particularly West Africa, and Nigeria have gone up. And once we lowered the price for the lowest cost badge from two to $1, we saw a lot more people buying badges and supporting those artists, we actually ended up creating more revenue for the artist with this small but impactful change. And we don't want, you know, the whole concept Audiomack has to have a low barrier to entry, whether an artist or whether you're a fan, you know, Audiomack is a free app, you could download, begin, take music offline for free, no matter where you are in the world. And if you're an artist, you could have unlimited space to upload your music, you have unlimited opportunities to look at the data, glean insights from how people are consuming your art. And now they can support you directly by buying a badge, a Supports badge. So that was one small but big, really big change, impactful change that we saw, and we made about four weeks into the launch of the product.Dan Runcie 07:41So I think that's a key point. Because I think a lot of people from the outside may look at the price sensitivity of $2 to $1 and may not think it's much but that's what we're seeing in you know, the Western world and being able to think about that relative to the price of a streaming service increasing or anything like that. But you're obviously global, and you're growing in places where that difference makes a lot more or that difference is much more meaningful. So do you have any stats or any, how that difference is from a quantitative perspective of how much of an increase or usage rate you saw from lowering the price from two to one?David Ponte 08:17Well, I don't know if I have that stat, particularly I wish I did. But we have more badges sold. I think once I did have my team collect was just the amount of money that we've made for artists since launch and that's 30,000 over $30,000. And that's a good point. We had that mindset. Obviously, we're a New York company, we're Americans. And we know it's hard for us to think about how what it might be like for someone in Nigeria or someone in Tanzania, for example. But we eventually figured it out. We got feedback from a lot of our ambassadors on our team out there. And I think the way probably to think about it is the streaming rate, right? So you know, you make a certain amount per stream on Spotify, title, Apple Music, SoundCloud, Youtube, Audiomack. And we're an ad-supported platform, right? So the majority of people who consume music on Audiomack do it for free. As I mentioned, we make money on ads, though the revenue from those ads pays the artists. So what we thought of is how can we increase the size of the pie? As opposed to how can we create more and more slices of that pie to split around, right? So if you look at some of the other streaming platforms, you know, powered royalties or this or that they're not making more money, they're just sending the money to different places, right? There's not more money in the pot. Let's send it around to more people that you listen to and that's not a bad idea. Inherently, I don't mind that at all. And that's good. But what we're trying to do is increase the pie. So when you buy a supporters badge, that pie is increased for that particular artist. And if you are making you know, $150 on 100,000 streams or you're making and maybe on Spotify $400 for 100,000 streams, again, depends on where you are and where you're listening. But if you get a certain amount of supporters, you know, we have a couple of artists that have 100 supporters on one song, now you're making even more than you are on Spotify. For that one song, everything is sort of comes into this effective stream rate, which actually is an advertising term that we flipped a little bit effective CPM or effective stream rate is sort of the amalgamation of all the different revenue that you're bringing in, that you could then turn to give to that artist.Dan Runcie 10:32That makes sense. Because if you're thinking about supporters, and you're thinking about just how many artists, you know, total that $30,000 or plus worth of revenue, then you're likely, as you mentioned, you're probably going to have a few at the top, it sounds like there's a few that have 100 or more supporters, but I see. But it does seem like something where you know, as it grows, and it continues, that'll be good. But at least in my perception, you get some if I'm wrong, it seems like it's most likely going to be you know, a few artists that end up doing the doing really well with it. But then their success in a lot of ways not only paves the way for others, but if they become case studies, they could be like, Oh, look how much money so and so made for being able to support us that influences others who either are already on Audiomack, to push their supporters more heavily or encourage us folks that may be on a different platform to come in short years and do the same.David Ponte 11:27That's a really good point. That's what my job and the marketing team's job has been to work with artists to create campaigns for those artists a way to get their fans engaged, but also to prove and provide a template for artists that might follow those artists that we're working with, to then do their own campaigns. And we've seen some of that, I'd like to see more, you know, when we built some additional functionality, and some changes, I think we will see more. But I wanted to give you some examples of some of the cool campaigns that we've seen artists do. So one is this is a Latin pop artist, her name is Noemi, and she had a really cool idea she came to us, we've helped her sort of put it together, essentially, one of her friends makes custom sneakers. So they made three different customs types of sneakers that like know, the sort of look and of the sneakers are obviously correlated to what her album and our theme of her album was that you support. And then when you support it, you know you have a chance to win these custom sneakers that she's going to sign that the artist is going to sign and send that. So she had a good amount of supporters, but not too many to where if you bought a badge, you would have no shot, right? I think she had close to 30 supporters for this. And one of those supporters will get this custom pair of like Air Force ones that are really, really dope. That was really cool example of how one artist, you know, created something with their fans and made some money in the process. But really, it was really to get more attention about her song. We had another artist, a huge dancehall artist, Alkaline, one of the biggest artists out of Jamaica, he's really big in Florida, there's a very large Jamaican diaspora in South Florida. And like the Fort Lauderdale area, I think there's more Jamaicans Jamaican-Americans there than anywhere in the US. So we got a concert, they're very highly sought-after events that happened actually just this past week. And if you were, he picked five supporters to come to the show on his behalf. So you, if you supported him in his song, you'd have a chance to win tickets to the show. So I thought that was really really interesting. He has such he was already getting he had more supporters than anyone who really didn't like do a campaign. He's just a mass of artists and Audiomack is really big in Jamaica and in the Caribbean. So his fans are really excited about that. I think a couple actually flew to Florida for the show. And they got a bunch of merch Audiomack merch, they got Alkaline merch, and they're really, really happy about that. So those are a couple of examples that I was really excited about, just like how we could bridge the gap from online to real-life, like a real-life experience.Dan Runcie 14:01Yeah, the Alkaline story hits home for me, I've actually been getting better again, I have family in the Fort Lauderdale area. So that speaks volumes there. And I feel like I'm thinking about the other places of the country that have pretty big shake-up populations, of course, New York, but also our for the county, which is where I'm from you got a good amount there. So I feel like alkaline has some Audiomack real estate there as well. But I think you know, zooming out of it and talking to you and you know, most of your colleagues as well at Audiomack. I do see the broader strategy around getting creators on board, how do we best support them? And how do we empower them to maximize what they can do and use our platform to make that happen? I know you all recently launched the Creator app as well, which I think is also along these lines. So can you talk a little bit about that and what you thought the market needed that made you want to launch this?David Ponte 14:55The Creator app, again, Charlie Kaplan, he was the architect of this and there was really a gap in the market, right? Like, if you look at our competitors, it's just not something that they focus on, right? Like the, you know, for our competitors, the majority of the music that they get are from distributors. So there's no touchpoint between the platform and the artist. And again, that's what our goal is to draw the shortest line between the artists and the fan. So more intermediaries expand that line, as opposed to shortening it. The Creator app is a tool that allows artists to through an app environment and not a website environment, what you could do on our Creator dashboard on the web, but the app allows you to engage with fans through comments. It allows you to see your stats, see where people are playing your music, what geographic area, see, you know, the graphs in terms of how many streams and how many playlists, ads, and favorite favorites are getting. And we're adding monetization to this as well. In fact, it's almost done by the time people statistics should be, the monetization functionality should be available in the Audiomack creator app. And what this will do is allow you to withdraw money from your audio Max stream earnings and your supportive edge sales directly. So this was a really, really important feature because, you know, if you think about if you have crypto, right, if you have the Coinbase app or one of these other apps, you probably look at seeing how much money or you're losing or gaining on a given minute, right? With crypto, you open your banking apps all the time you open your stock apps, if you have investments, when there's money involved, people are gonna want to check it all the time, obviously, it's their livelihood. So we're gonna give the artists the ability to withdraw directly from the Creator app and put that money in their pocket. And hopefully, they'll use that to expand their artistry, develop their career, and invest in tools that help them, you know, create more art for all of us. So the critter app is actually grown more than I thought we've already beat our goals. You know, we had goals for the marketing team to exceed a certain amount. And we've already exceeded them way early. So there's a high demand for it. And I think our competitors don't really take that part of the artist's lifecycle seriously. And I think it's really important. So we were happy to swoop in and provide that value for our artists.Dan Runcie 17:08And I think for the folks listening, to a lot of people, no, of course, you have the web interface, but a lot of the companies do go through this transition where okay, we clearly have it's available on the web. But let's build the app. And there's a number of reasons why I think it just leads to more stickiness, more usage. But are there any other advantages that you all had in terms of, okay, this app, whether it's the potential to have a moat around this, or the potential to have something stronger, because, of course, as you mentioned, a lot of it was available through the web before. But I do think that you know, an app just allows you to have likely a few more lasting touchpoints, and being able to add a bit more direct valueDavid Ponte 17:47100%. The whole concept of having an app is how can you make it more sticky, right? You know, all the social media apps are designed to essentially monopolize your attention, right? And for better or worse, that's how the app world is and how the world is. So how can we make it more sticky? What are the things that artists really want to glean from an app like a creator app, you know, some things that make them you know, make better decisions, or provide insights that allow them to pivot, if things aren't working or put more resources into something is really working, they need the information to do that. And it needs to be an ease-to-access that information, you know, to access our Creator dashboard, you know, on the web, it's not the smoothest situation, it's made for a desktop website. So an app allows you to just see it, click on it, and then instantly access, it is much quicker. And we had a similar, it was a similar process back in 2015 when Audiomack was just a website. And we started to see all the web traffic going down, and all the mobile web traffic going up. And that was probably similar for a lot of companies at that time period, and then once we created the apps at the beginning of that year, the game changed for us, and it's just something about an app that people love, and it's probably because it's made to monopolize their thoughts, unfortunately.Dan Runcie 19:07Yeah, definitely. And with this, you talked to a fair amount as well about your competitors. And of course, you're in the unique place where to call it DSP or digital streaming provider, maybe a bit too blanket because I think each of them are so different in what they offer. But I do think that you all have such a unique place where for a lot of it, maybe the competition at this point is if there is a home that an artist more likely to independent artists is trying to build and grow their career, it's whether or not that home is with you or with another else even if they may still some of them especially as they grow, they may still want to have the awareness wherever their listeners may be, so they may still put some stuff elsewhere but it's about Okay, where's that home base? Because I think no different than a company now. There's all these platforms where you could put your attention and everything but most people are poor. I'll be picking one or two to focus on and put everything behind. So I assume it's probably that way for artists, but it'd be good to hear from your perspective how that lens is, with competitors. Knowing that, you know, I'm sure you probably want to have that home base. But there are other artists that may, you know, have their feet in a few different waters.David Ponte 20:20That's exactly right. Home Base, I mean, I believe Dave probably has used that exact language verbatim, to describe what our goal is, you know, we want an artist to again, open up that Audiomack app and see if everything is going and then go from there. I always tell artists, when we speak to them, I'm not asking them to do everything, and only on Audiomack, right, Audiomack is a piece of their puzzle, they're going to have to put out visuals, they're going to have to use other platforms to gain fans. And that's fine. But we want them to really start their day and start their journey with Audiomack. So we have a couple of tools that are coming out very soon, that should reinforce that brand vision of becoming the home base for an artist at first place that they start the first song they upload the first 10,000 plays that they get. And it's incredibly important, it's incredibly competitive because we're, you know, really a David and Goliath scenario here, it's not a coincidence at all, our name is Dave here. So, you know, we're dealing with companies that are in the billions and billions of dollars of revenue. And, you know, we have to use that to our advantage, you know, similar to that old story from the Bible, or, you know, you have to be nimble, you have to outsmart them, you have to out-innovate them. And sometimes that works to your advantage if you want to add a product. And you know, Dave, and I and the team are behind it, we'll do it quick. You can't do that at a big company with all the bureaucracy, and that's owned by shareholders. So we try to innovate, you know, and be ahead of the wave as opposed to following the way and that's precisely it was creating that home base being the first place that artists journey so that one, they remember you in their laurels, you and we've seen that with a lot of artists, you know, that we've helped launch that are big now. And they come and they still, you know, fuck with us, for lack of a better phrase, pardon my French, but they come back and they still come to our studio, they're still meet with us, still create content with us and still promote Audiomack links.Dan Runcie 22:18Yeah, and I think you alluded to this artist's guy that you have coming up because I think a lot of it's that right? What is that playbook that you want to be able to give artists that they can see, and I'm sure it's involving Audiomack, but you're probably addressing the broader music ecosystem and chess promotion as well. Is there anything more about that rollout? And what that will look like for artists to share? Let's take a quick break to hear a word from this week's sponsor.David Ponte 22:45Yeah, so the artist's guide is going to be a free educational resource and glossary for artists, musicians, primarily, that are just starting or have recently started their career in their development as an artist. So the way that we approached it is if we're an artist, what would I search into Google, right? Meaning when do I need a manager? Or what is publishing? Or, you know, when do I get a lawyer? Or when should I get a record deal? Or what distributor should I choose? Anything that you might like, type into Google is kind of how we thought of it is something that we wanted to provide that answer for. And we had our very talented writer and editor, senior head of their, Donna Jasmine, best-selling author, Donna, who had interviewed dozens and dozens of industry experts from companies ranging from you know, Sony, to Universal to BMI to just all the big companies that do provide services for artists, and ask them the answer to those questions that you might type into Google. So we cultivated all this, we aggregated all this. And now we're providing all this for free, we're not charging anyone for it. If you go on the Audiomack app, you'll be able to access them. And you'll be able to learn and find out the answers to these questions. Because, frankly, I didn't even know a lot of these answers. I mean, there's so much to learn in the music industry. And you know, I know some things but there's a lot of things that I don't know, and I wouldn't be going through this guide learned a lot. And it can be one small decision that an artist would make that can make a huge impact on their career in their life. Right? If maybe they just hesitated before they signed that deal they might have not been locked in. Or maybe if they just chose that distributor that you know, provided them an entryway into all these different playlists or, you know, whatever. They would have been better off saying we're very excited to drop this should drop it into some point on April 22. And I really think people are going to be excited about this. We'll also have a video component which we're calling artists one on one. It's really really cool. So basically, it's, you know, a narration of these answers, and we have a whole animated series devoted to that similar to Schoolhouse Rock. If you remember We're from back in the day. So it's like Schoolhouse Rock vibes, but with artists' education, so we realized that a lot of artists, you know, aren't going to read long paragraphs about stuff, just Realistically speaking, or just people, in general, see a long paragraphs, and we're not going to read it. So we created this audio and visual way to consume that, as a lot of artists probably will learn better that way. So they'll be able to figure out some of the answers to these questions that they've been interested in learning about.Dan Runcie 25:27Does the artist’s guide include following Z from Audiomack on Twitter to make sure you stay up on the latest?David Ponte 25:34So I will tell you the truth in his tweet threads are one of the inspirations for this, I'm not even capping at all this sort of predicated our decision to do this, because his threads get so much engagement. And people are genuinely interested in learning about this stuff. Sometimes people are afraid to ask, they don't want to be known as a beginner artist, right? Artists, especially in rap and hip hop, you know, you start off as successful write your first song, you're already talking about how you're really successful, you might be hesitant to maybe admit to yourself that you need to learn about these things if you're going to be successful in the long term. So hopefully, we could provide this to any type of artist who, you know, even shows the slightest interest in gaining this knowledge. Dan Runcie 26:20Yeah, I agree. And I said that in there because I think it's 100%. We just know how especially Twitter is as a platform, there is always going to be some crazy take that rises to the top, and having someone like Zia there to be like, “Hey, I'm going to call the bullshit, how would I see it, and this is how it is.” It always gets engagement or the organic tweets that he has, and I remember telling that to him last time I saw him like, I mean, he knows it, but I'm like, you know, you're doing good work. And that's why these things are valuable. There's so much that isn't necessarily there out in the open even as much information that there is now and sometimes sure you can listen to some of these clubhouse rooms, where you're not always going to get the most helpful information out there, you may get passionate voices that sound like they know what they're talking about. But that isn't always the case. So I think that having something like this, that's easy to access, because at the end of the day, you know, whether it's on Twitter, or whatever, so there's only so much reach that we have. But knowing that your platform with audiomack is the biggest reach that you all have as a company being able to bring that altogether doesn't make sense. And I mean, I think for you all, this is how you kind of have that David versus Goliath piece because the other companies don't necessarily put the same things out to the same extent they have their own version of it. Like, I know that one of the major DSPs put out a report a couple of weeks ago about some of their stats, and we always see those things. But I think that it's a little bit tougher for the companies that aren't as forward about supporting independent artists are really trying to be that advocate when their role is much more to serve and be their, you know, their main customers than major record labels versus your main customer is the artist. So it's a very different dynamic.David Ponte 28:03That's a very nice way to put it, you can probably frame it in a way that sounds much more nefarious and evil. But listen, if another company is helping artists succeed, we are not going to be, have any problem with that. That's ultimately what we want. That's why we're agnostic. You know, if an artist has success and one of our competitors, I will never say don't do them, or our competitors might say that about us, right. But ultimately, we want them to become successful. Because, you know, for example, like the artist I was talking about what lotto she just came out with are really good. Um, she performed at one of our shows, you know, a couple of years before the pandemic. And you know, we had her come by our studio, we created content with her when really, she was not very well known outside of Atlanta. And now she's an amazing, like, a huge star was a huge hit album. And she came back and she did one of our fine-tunes, which is one of our video content series. And she came back and she did that for us, her, and her fans. And if we didn't have that we didn't establish that trust with her and her team, you know, multiple years ago, then she would have just not came by when she was in New York. So, you know, I think when you put out a good energy, it comes back to you, we really believe in that. So the other companies that might have an interest in not having artists be educated, unfortunately, there probably would not want that, because then they might not get the best type of deal when they're working with those artists. And unfortunately, that's how the music industry is. And we're hoping to change that as much as we can.Dan Runcie 29:34Are there ever any challenges that you do? Face, just given the position that you're in? Of course, I mean, on one hand, I do look at what you're doing very different than some of the major streaming or some of the much larger streaming services, but they in many ways are still offering a service and you know, at a much larger scale, but how does that impact your strategy or your goals for what you're doing? Are there any regular challenges that their presence creates, or that you know, you all have, as you know, your role in the, as a streaming platform?David Ponte 30:09We do have many challenges, it's tough, part of the challenges stem from just growing, you know, just as any business grows, you know, more employees, you know, more money, more problems, kind of thing. I think we want to expand even more globally, one of our focuses, right, so as the CMO, you know, me and the other executives figure out are what, what are we focused on, we have to kind of think of things in that way, where it's like, alright, let's focus on what we're going to do for the first half of 22. One of them is how are we going to bring African music to the rest of the world, and particularly to the diaspora in the US, right? So we're really big in Africa, where we help sort of paved the way for a lot of Afro beats music to be popular in the UK and in the US. So we think we want to expand this music elsewhere to other places where people might want, you know, whether you're a part of the diaspora, or whether you're just someone who might like the Afrobeat vibe, which is most people, you know, in Europe, you know, Belgium, Germany, you know, we're looking to get into Punjabi music, and they have a large diaspora in the US, Canada, UK. So the challenge is having to do all these deals with all these labels, and get them to allow us to get licenses around the world, and especially in Africa, where we have such a large user base, and we have a lot of leverage because we are very big there. So, you know, we want to get the best deals we can. And it's a tough deal. Doing licensing deals with labels is very, very tough. It takes our team a lot of time, it doesn't move quickly. As I mentioned earlier, we're used to moving quick and being nimble. And then when we work with large companies, it takes a while. So that's a challenge for me being the curator, and the marketer is trying to figure out, you know, how can I get these artists to get more fans getting more fans means I need their music to be available in more regions. So that's certainly a challenge. I think another challenge is just how can we maintain our differentiation? What are our competitive advantages? You know, a lot of times, you know, we're working with to combat these other companies, they have such large budgets and resources. And, you know, we have to fight the urge to try and follow them instead, to create our own path or own blue ocean, which was a book that came out years ago I read that made a big impact on is how can I, you know, create our own blue ocean. And, as opposed to following and trying to catch up, let's have them chase us instead. And we've had some success doing that a lot of the big streaming services have copied us, and a lot of the things that we've done, which is flattering, but annoying, too. So how can we maintain our value proposition, but really fortify it, as opposed to saying, We got to do more things like they're doing because they have so many users, so it must work. Let's do what they're doing. So that's a challenge is to try and say, All right, let's How can we accomplish it a different way? How can we keep this person engaged in the app in a different way? So part of that is things like artist’s guides, orders, and Audiomack World in general, which is sort of a, which is where the artists guide is going to be part of the Audiomack World, which is essentially a blog interview site. That's any streaming service, right? streaming services, utility, you have songs in there, you go to the live streaming service, the same songs are in there. There's not much difference between Spotify and Apple Music, you know, besides some UI, maybe podcasts. But you know, Audiomack World is an entire site that you could read and learn and discover artists without just relying on a playlist algorithm to put it in front of you at the right time. We have this other way, really the old way, because we come out of the blog era. No, we're born out of the blog era. So that was how you discovered music at the end of the arts in the beginning part of the 10s. And we tried to take what was special about that, where you learned to read about artists, and you learned about them through interviews and stuff like that on blogs, and we're taking that and we put that in the utility of the streaming service. So we're trying to just build that out and really showcase our the artists that use us in a different way than other streaming services.Dan Runcie 34:15Right, and that point to about them copying you, that's, you know, not surprising at all because I think to your point, you're doing unique things, you're able to move a bit more nimbly, and I'm sure you likely also get acquisition offers, especially in this climate that we're in now. And if you're just like thinking about, you know, where things are, I think even things in terms of the future, whether it's, you know, web three or the metaverse, there's opportunities that you all like we have to be able to make moves in those areas if that's something that's on your roadmap, a bit easier than some of the others because they are larger companies, and it's just tougher for them to pivot in that type of way.David Ponte 34:55Yeah, Web 3.0 is interesting. Everyone likes to talk about web three. It's changing the Internet as we know it, slowly, but surely, a lot of it is hype. You know, there's some music streaming services that are Web 3.0 and some up cool ideas, and I like them. And then other ones are probably scams that people are gonna lose a lot of money on, I think one of them, 80% of the tokens are owned by one person. So it's, whatever you see something like that, you have to question, you know, the actual motives of that one person there. No, and they've already done a lot of shady things that I will get into. But other Web 3.0 music companies are doing cool things, and we look at that we go, we might be able to do something like that. Again, if it adds value to artists, it could put money in artists' pockets, and it's like legitimately and the value exchange between the fan and the artist is equal, then you're damn right, we're gonna look into doing that. There's some awesome, exciting things we're looking at, in terms of, again, this concept of supporters, how can we create a real-life experience from something that was born out of the app, if you buy a badge, a supporters badge, maybe that's an NFT, maybe that NFT gets you access into a shop, or it gets you access into, you know, sell merch, or something like that? You know, can you accomplish those things without having to, you know, waste a lot of electricity, maybe, but maybe there's a way to do it cheap. It could be on the blockchain, you know, you could validate the token that someone has or the NFT that they have, and then provide, you know, that gets some access into something or, you know, helps create a community around. I think a lot of the appeal of web three is that it's a community in a discord. Right? All the big ones are in a Discord. You know, people want to be part of a group of like-minded individuals. So it's maybe not because of the blockchain, but because you're in a community, right? So we're trying to think about, how can we accomplish things with does web three, make it more efficient, cheaper, easier, more lucrative than we would employ that, but we're not going to do it just for the press, which some companies are are doing and watch.Dan Runcie 37:05Something that I thought about, I remember thinking about this back when I had the conversation with Charlie, and he was first explaining the idea behind supporters is this is a concept that other platforms outside of music have done on the blockchain, but you aren't really shown that, okay, you could still have these dynamics off of it. And I'm not going to get into the whole discussion of if you could do something on versus off-chain, that and you still do it on-chain. But I do think that it highlights that a, if you're going to do something in this space, it should really be either an additive in a way that you're leveraging something that you didn't have like I think there's a very easy connection of thinking of what could a token look like for a supporter of a particular artist like Iran? Like I think there's plenty of things there. But does that enable you to do something that you couldn't currently already do through the current audio Max supporters? Or does allow you to do it better or more efficiently or something to build to the future? I think, I mean, I could imagine that that's the thought process, as opposed to just kind of, oh, let's do a web three thing. And then let's do that. But I've seen it, you know, different pitch decks and all these things. And it's like, I don't know if that's quite the way to do it, but I feel like, for you all, there's a clear through-line there.David Ponte 38:22Yeah, there is. And that was well said, I concur with what you just said, you know, there's, do it to add value. Don't do it for the like dog and pony show part of it, where it's like, we're on-trend. We're doing all this Web 3.0. Now we're worth more, you know, one of the things you know, our supporter's badge, you know what I like it if like if you bought a supporters badge, it was actually an NFT. And we minted it for you. And then you could keep that, or you could sell that or trade that. That would be great. I mean, there's obviously a ton of work involved with that. One of the things that I think a lot of companies are wrestling with is that you know, Web 3.0 is inherently decentralized, right? Businesses are not decentralized, they are centralized. And you want to keep it centralized because that's how you control things. And that's ultimately how you're going to make money. But if you put it on the blockchain, and it's decentralized, you don't control it anymore. And that can be a bad thing, can be a good thing, but could be a bad thing, too. And there's risk involved with that. And obviously, companies are about mitigating risk. So I do think there's a couple of things we're looking at that could be really interested in adding a lot of value to artists, you know, being able to scan and an NFT to get into a community. Right? If you buy a supporter's badge, you are now eligible to be messaged by that artist. So like Wiz Khalifa did, he did, did a supporters campaign, people supported him, and he gave them you know, I forgot the amount I think 25% or 20% off of March. So he sent them a message. Thanks for being a supporter. You know, I'm really grateful and you know, by I just came out with a new capsule and you get 20% off so stuff like that, you know, can you then take your NFT or somehow prove that you have that as opposed to putting in a code? You show them that or scan that or do something? There's a lot of potential for sure.Dan Runcie 40:11Yeah, I think so if we're just thinking about separating the noise from the opportunity, I think there's still a lot of room to grow with that for sure. But I think we'll get there. I mean, like I've used as an analogy before, I think we're very much still in this, like pets.com era of things. And that's not necessarily a bad thing. But that means that there is some grift, there's some good, and I still think we're kind of in this period, where the real champions of this era are still, you know, may still yet to emerge. Some of them may have already started. But we'll see. It's an exciting time for sure. But we get to the tail end. And before we let you go, I know you shared a few things that you already have in store and a few things that you have coming up. But is there anything else coming up soon for Audiomack that you want to plug in or let the tribal audience know about?David Ponte 40:59I mentioned how we're going to, one of our goals is in focuses, is to bring Afro beats to America. And we've done this to some degree, we want to keep doing it. You know, all of us here are just such big fans of that type of music and that wave, you know, whether it be Burna Boy, David, Joeboy, Fireboy, Tiwa Savage, Yemi Alade, there's just so many great artists and also from South Africa, we're really big fans of Amapiano and sort of the South African dance music scene. So we want to bring that type of dance music to the US and be at the forefront of that. So there could be a tour coming up with a few artists that are going to be coming maybe to a city near you. Or maybe if you buy a supporter’s badge for these artists, you'll get certain types of access, maybe you get to meet the artist. So we're trying to take what was cool about supporters and about Audionmack and the app, and then turn that into real-life things in the real experiences that are turned into just unforgettable memories for that fan. And great revenue opportunities for that artist. So stay tuned.Dan Runcie 42:04That's awesome. Good stuff. I'm excited for you guys. This will be good. We'll definitely keep in touch with you and stay in lock with what Audiomack is doing. But Dave, thanks for coming on. It's been a pleasure.David Ponte 42:14Thanks for having me, Dan, and it's, I love what you're doing. I'm the one who puts the podcast on our trending section on audiomack and helps you get more fans like that. So please keep uploading, keep helping people, learn about the music business and the music industry, and I'm thrilled to be on and can't wait to see how my voice sounds when I listen to it later.Dan Runcie 42:37No, I appreciate that. No. Thank you. If you enjoyed this podcast, go ahead and share 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 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.

Apr 1, 2022 • 48min

The Broccoli City Music Festival

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