This week, I’m running back an interview with one of the most popular episodes we ever did with Matt Pincus from 2022. 

Matt Pincus is without question one of the most successful entrepreneurs in the music industry. He sold his independent music publishing company, SONGS, for $160 million five years ago. And now, the music holdings company he co-founded, MUSIC, just raised $200 million to invest in music and music-adjacent companies. 

Though, Matt doesn’t see MUSIC as an investment fund, but rather a holding company. That’s because he’s taking an operator role in the companies he funds. And unlike the splashy catalog acquisitions that’ve dominated the space over the past few years, Matt is looking forward with his investments and targeting brand-new growth opportunities instead.

In particular, Matt sees big opportunities in the technology sector, web3, and even record labels and publishing. At SONGS, Matt was able to spot and develop up-and-coming songwriters, inking early deals with the likes of Diplo, Lorde, and The Weeknd. He’ll be tasked with finding similar success at MUSIC.  

Matt and I dove deep into a wide-range of topics during our conversation. Here’s a few highlights of what we covered:

[2:47] Why Matt created MUSIC

[7:19] MUSIC’s investment thesis?

[13:22] What Matt doesn’t like about the music business 

[19:36] Recent inflow of capital into the music business

[20:54] Two lanes to entering music business

[24:08] Finding left-of-center opportunities among musical talent 

[27:30] The structural problem of the music business

[30:44] Continuity was key to SONGS success

[35:59] The Weeknd as a business blueprint for other artists

[36:53] Sync business opportunities 

[43:46] Have streaming subscriptions peaked?

[48:12] Tiktok brought back music frequency

[51:13] Matt’s five-year predictions

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Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Matt Pincus, @mpinc

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TRANSCRIPT

[00:00:00] Matt Pincus: Defensibility in the music business is not a patent or a technology or some special recipe you have someplace. It's your understanding of music, the people that make it, and then your ability to develop relationships with people around the business and to keep your reputation such that people want to be with you. But the real key in, at least in the music technology side of it is you need to be able to spin the technology yourself and understand really how it works. 

[00:00:37] Dan Runcie: Hey, welcome to The Trapital podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more, who are taking hip-hop culture to the next level. 

[00:00:56] Dan Runcie: Today's episode is with one of the most successful music entrepreneurs of the past few decades. His name is Matt Pincus and he is the founder and CEO of MUSIC, which is a holding company that invests in music tech and music-adjacent companies. MUSIC just launched a 200 million fund to invest in this space, so Matt and I talked all about it. He's looking for companies that still have a clear understanding for how music gets made and understand the art behind it. He's also looking for startups that have a true defensible moat that is something unique that they can do. And he's also looking for the companies that have a huge total addressable market that can clearly grow and expand as we're seeing things continue to grow in this space. Our conversation covered a bunch of topics in this space. We talked about sync and the impact of that. We also talked about how much further streaming can go. And we talked about a bunch of insightful music trends. Really fascinating conversation. I feel like every few months we have one of those conversations where people reach out to me and say, Hey, I took a bunch of notes in that conversation. Thank you for this. And I have a good feeling, I have a good feeling that this is going to be one of those conversations. I hope you enjoy it as much as I did. Here's my chat with Matt Pincus. 

[00:02:16] Dan Runcie: All right. Today, we're joined by Matt Pincus, who is the founder of MUSIC, which is a holding company that invested music and music-adjacent companies. Matt, I'm really excited to have this conversation because you have had a very impressive career with what you did with Songs and everything that you had done in publishing specifically. And what always stuck out to me about you in this space is how you've identified opportunities where others didn't see them. So I know when I saw the announcement for MUSIC and the $200 million fund you launched, I said, okay, he's seeing something and he's seeing an opportunity to dive in. So what did you see? What made you want to get involved with this?

[00:02:58] Matt Pincus: Well, first of all, thank you so much for having me. I'm a big admirer of Trapital and your work in general. And I'm really happy to be with you here today. So, you know, I started music, it was sort of an organic process. I sold Songs after running it for about 13 years. And it was a fairly abrupt end. So we decided to sell the company and neither me nor my two partners really wanted to run it for somebody else. So we decided that once we sold it, it was time to step away and it was fairly quick. So, you know, I ran the company for 12-plus years. And then 90 days after the sale, I was out in the street, like, what am I going to do with my life? So it was a bit of an organic process. It started with meeting a lot of really interesting founders of music businesses and companies that were around the music business. It's obviously an interesting time in our business in a number of different ways. The streaming market has matured. There are a lot of music tech businesses with interesting founders cropping up over the past four or five years. The web three crypto business has, you know, started the early days of really coming online. And the way that labels, publishing companies, management companies reach audiences is really different than it was like, you know, six, seven years ago. So I met a lot of really interesting people. The first one was Steve Martocci, who was the founder of Splice. He and I hit it off particularly well. And I sort of said, listen, I've been, you know, doing talent deals with young people, you know, in the early twenties for the past 12 years, I think maybe the next chapter is working with founders of companies that are more like 10 years younger than me, as opposed to, you know, 20, early 20s. And taking the experience that I had in the last, like, four or five years of songs when we were trying to figure out how to really realize returns on the business and build on that to try to help people do the same thing. So I was out looking for, you know, are there interesting companies that I might be able to work with in some way or another? And the answer to that quickly became kind of yes, on the music tech side originally, in growth companies, when online music and music technology was shifting to a subscription-based backbone as opposed to a packet software business. And then also on the music side of it, you know, interesting independent labels, music companies operating in a different way. And so the first thing was, are there interesting companies out there? The second is, do they need capital and where would they get it from? And the third was, how am I going to get the money to invest in these businesses? So it was kind of a bit of a bootstrapping exercise where I would go find an opportunity to invest in a company, put some of my own money in LionTree, which sold songs for me and has been a partner and champion of mine since I sold the company, would invest some money too, and then we'd find some other people to round out the investment. We did that first with Splice, put about 20 million into the company over a period of time. We also did in the same way, made an investment in a company called HIFI, which is a FinTech platform benefiting artists in a bunch of different ways, and also with DICE, the ticketing business. And you know, they started, a couple of them did well and actually, they all did well. And so I decided that I wanted to raise some capital and have my own sort of, it's not really a fund. It's more of a holding company 'cause I'm less of an investor and more of an operator. And so the question became, how are we going to raise the money? Now Aryeh Bourkoff who runs LionTree is somewhat of a magic maker, and he took me on and introduced me to two families, the Schusterman Family and JS Capital, which is Jonathan Soros's capital vehicle. And they agreed to invest in a four-way partnership. So it's between me, LionTree, Schusterman Family, and JS Capital. And we formed MUSIC, which is a $200 million holding company. We do deals in a couple of different areas, music tech, which is sort of where I spent most of my time after Songs. We also invest in independent music companies like Songs. So labels publishing companies, management companies. Increasingly, a few of those functions are in one company, as opposed to when I was running Songs, it was like you were either a publisher or a label or a management company. And then we partner sometimes with a larger private equity firm if we are interested in acquiring something that's, you know, of a larger size. And so we're in the middle of one of those right now. And so we were able to find a bunch of interesting opportunity, a bunch of interesting ways, and it seems to me to be, you know, a really good time to be putting money to work in the music business. 

[00:07:32] Dan Runcie: Yeah. It's an exciting time to be investing in these companies and to be acquiring them too. And you mentioned something there about the types of companies you're looking at and whether they are modern music companies or whether they are doing something that's unique in the space. Can you talk a little bit more about your investment thesis and what you're looking for, and specifically, because, as you mentioned, you're not a fund, you're a holding company, so you're not necessarily just doing, you know, angel investments or early stage. You're trying to make investments for the long haul. So how does that shape your strategy?

[00:08:07] Matt Pincus: Very good question. And I think the answer to that depends somewhat on the different areas of investment. So the first is in the technology side of the business, which is kind of where I started as an investor. So, you look for a couple of things there. So first of all, you need to invest in companies, not products. So some of the music startups can be sort of, it's an interesting widget, but can it be a scalable business? So you need to make sure that you have a couple of things in order to know that you're investing in a company that has the ability to grow. So the first thing is you need your own tech stack and it needs to be built to suit whatever market you want to be in. So for example, with Splice, one of the reasons, and there were several, but one of the reasons I invested in the company was because Steve had built this subscription stack from day one of the company. So it was a native SaaS company in a world where the rest of the market needed to move from the old way of doing business to the new way of doing business. Splice was always in the new way of doing business, so it was going to be ahead of the curve. And so you need to make sure that your technical capabilities and your technical assets are going to, you know, be where you want to go. The second is that you need to make sure you're in a part of the market that has a big enough user base to make a real company out of it. You know, it's great to make a widget that, you know, 1500 people love, love, love, but 1500 people is not a lot of people. So you need to make sure that the addressable market around the business has a lot of users. And again, in Splice's case, you know, they are the content business in music tech. So they can be used in an infinite amount of applications across the business, which gives them, you know, a really solid user base. And so, you know, that's kind of the second thing. And the third thing is that you need to kind of own where you live or have the ability to own where you live. So, you know, it's great if you get into a category in the technology side of the business, that, you know, breaks some ground and shows everybody what can be done. But if then, you know, Apple or Google just says, thank you very much and does it instead of you, it's not so great. So you need to have a defensible business that you can build and scale. And again, back to Splice, you know, they are the content leader and I'm a music publisher by trade, so content is the water supply in the music business. You know, in publishing, it's the song that starts the whole conversation. Splice owns music. And so no matter where the market is going to grow, no matter where it ends up going, they have the supply that feeds the music tech business. And so it's inherently defensible when it gets up to a certain level. You know, at this point they have 3 million works in their database. To catch up to them is, you know, difficult, if not impossible. And so you need to be defensible now on the music side of what I do, which is investing in music companies, there's a couple of things I look for. So first of all, I don't do catalog acquisitions. I invest in people. So the first thing is that you need to have really talented executives that understand music and know how to find repertoire and make it bigger. I tend to like businesses that give advances to artists. There's a certain way, like at Songs, we built a catalog over a long period of time, but we built it through signing young writers and giving them advances. So I call it a mattress out of sheets. If you do that one after another, over many, many years and you do it well, all of a sudden you wake up, you know, 7 to 10, 12 years later, and you're like, holy shit, it's a big catalog. And so I tend to like businesses that advance money to artists and build catalog that way or manage catalog that way. There's a certain magic to understanding how to compensate artists and doing it fairly. So I tend to look at that. You know, the music business has changed a lot. It used to be that if you wanted to be an independent, you needed to own your own vertical. And you know, at Songs, we had our global administration business that we owned and built. We had our own technology. So we were self-contained, standalone competitor. Now I think, you know, solutions have become available everywhere. There's a lot of good publishing administration, a lot of good record distribution solutions. There's a lot of off-the-shelf stuff you can get. It's really about music. It's really about understanding artists and the music that they make and connecting them with an audience. So I look for people who uniquely understand that. Now that can be, you know, somebody who has a geographical lock on a particular kind of music. It can be somebody that has a particularly unique understanding of how the studio works because I think if there's one big change in the music publishing business lately, it's that it's gone really back to the studio. And the interesting companies are actually making songs in real-time in a studio environment. So it can be that. It can be that you have another business that you do and music is associated with it. So why not, you know, get into the music business while you're doing whatever else you do, but you need to have some reason why you have access to a particular group of artists in a particular kind of repertoire, and you're helpful to that in some way or another. And so it's quite a different set of things that I look for on that side than on the technology side. 

[00:13:34] Dan Runcie: And with the way that your firm is structured, too, I see parallels with the types of companies you're looking at, right? You're not just focused on one particular type of investment area. You have the music tech companies that you're looking at. Splice is an example. You also have the companies that are working more directly in music itself, whether that is giving advances or companies that have a unique edge on who they're reaching. And I think that translates as well when you're talking about the types of companies you're looking at because a lot of times, especially 10, 15 years ago, as you mentioned, there were more silos and now you're starting to see companies have different types of roles that they do or different divisions to try to be this nebulous term that I've heard several times as broader entertainment company. And while I think that that's effective, I could also see how that could challenge some of the challenges of being able to have a business that is defensible or having a moat and the focus that comes with that. So how do you balance that and what are the things that you look for when evaluating companies that are both trying to do it all, but also are trying to have something that they can be defensible with? 

[00:14:40] Matt Pincus: Well, so on the music side of it, you know, it's about relationships. You know, the good companies, their equity is their relationships with different people around the business. And it's really a human-centric business. So, you know, defensibility often is correlated with reputation in the independent music business, at least. That was certainly true of Songs. One of the big success factors of the company and in fact, like, kind of our asset was that me and Ron and Carianne had really good relationships around the business that we built over many years, and that allowed us to punch above our weight class. You know, when we were a very small business, you know, we acted as a bigger business because we were able to get champions that helped us along the way, both in terms of the artists that were willing to sign with us, but also in terms of, you know, other people around the business that took us on and helped us out. Oddly enough defensibility in the music business is not a patent or a technology or some special recipe you have someplace. It's your understanding of music, the people that make it, and then your ability to develop relationships with people around the business and to keep your reputation such that people want to be with you. You know, on the tech side of it, it's a little bit different. You have to make sure that your innovation curve is constantly there. You have to make sure, like, I would not invest in a business that did not have a technical co-founder. You know, ideas are great. Everybody's got ideas. You know, there's an app for anything. But the real key in, at least in the music technology side of it is you need to be able to spin the technology yourself and understand really how it works, which when you get into the crypto side of it's really interesting 'cause a lot of people understand the implications of it, but they have no idea how the shit works. They don't actually use it. And they get kind of confused thinking that it's much more complicated than in fact it really is. Or, you know, they get so fascinated with the technology that they don't make a product that stands on its own bottom and has value to the end user. So it's a little bit different in the different areas of the market that you look at. And one of the reasons why I like the field that I play on and I feel very lucky to be able to do the different things that I can do with music is because some of it is about sort of analytical, scalable technology-oriented investments. And some of it is just about people in tunes. And so you're kind of mixing a lot of different things together. You know, the one thing that I don't like so much about the recent music business is somehow we all slipped into talking about music as assets and fractional finance and cash flows and securitization. And I'm like, listen, if I wanted to do all that shit, I do it not here. You know, the music business is not assets and finance and cash flows and, you know, securitization. The music business is moving people, motivating people, creating an audience, assembling humans to want what you make, and distributing that and delivering it and all the rest of that stuff. You know, the fact like, listen, what I'm doing is either really smart or really dumb because either you can make a real investment business just out of the music business. And I think you can because there's lots of different types of investments in music and there's lots of growth and lots of possibility. But also, you know, it's a pretty small business. And I live in, play, you know, a neighborhood, the size of a postage stamp. We'll see if they can be done, but I think originally, you know, it starts with the creative and it starts with the means of delivering the creative to the people that want it. And then all of the rest of this stuff, you know, yield, debt payments, multiples on equity, bonds, all the rest of this stuff just is a happy accident that comes from doing your job well.

[00:18:35] Dan Runcie: I'm glad you mentioned this because there's a version of what you do that could easily look more like a traditional private equity firm, where they are just going in and doing all of the things that you just mentioned and they're coming more from that perspective, but in many ways, your defense is having this laser focus on music, but you're going deep within all of the areas that it encompasses. And with that, I have to assume that this also maybe has a bit of a flavor on what your take is about the money that has come into the music industry and some of those other non-music companies or those that are purely looking at it for the financial opportunity or for the noncorrelated opportunities and how that in a lot of ways, even though on paper, someone that's fundraising may see the money they can get from you versus the money they get from others. But I'm hearing it from the record labels. And especially the independent ones they're getting reached out to all the time now about acquisitions. And a lot of those calls are coming from non-music related companies that are trying to make those moves. So it's been fascinating to see how that shapes, but I do feel like you are going about this in a much more unique way than a lot of them are.

[00:19:49] Matt Pincus: Well, thank you. I really appreciate that. I will say that the recent, like, huge inflow of capital into the music business has one very good byproduct, which is it's giving a lot of money to songwriters and artists. Some of these catalogs getting valued at 20 times, 30 times, you know, NPS where they would've been valued at 10, you know, four or five years ago, maybe 10 years ago. It just results in people that make great music, making a bunch of bucks. And there's nothing at all wrong with that. On the catalog side of it, it makes a little bit more sense that some of these like larger capital vehicles are coming into the market and, you know, bidding things up and structuring the leverage in a certain way that makes sense. There's a big difference between what's going on now and what was going on when this first happened, like in 2006, 2007 timeframe because the people that are doing it now can afford it. They've got lots and lots of money. They don't need big returns on that money. They have the ability to structure this stuff financially in ways that don't make no sense. And so it makes, you know, more sense that people are doing that with the IP catalog acquisition business. When it gets to new music, you know, I think it's still a human business. I think you got to know the people, you know, and you have to understand how it's really about managing what I refer to as the working capital of the business. So, you know, you need to advance money, you need to collect that money, you need to reinvest the money. And so a lot of that, you know, it's not a big enough business that you can structure it like a bunch of bonds. You need to kind of understand the market that you're in, how many deals you could possibly get, and what about you ought to pay for them, and what kind of infrastructure you need to address all of that to do a good job. And that's hard to know from outside of the business. It's even hard to know, like there's sort of two lanes in the music business. There's people who came up through the building where they started at majors and they kind of built their career, you know, up from coordinator to director to senior director to VPs, SVP, EVP. And then they end up running the company, a lot of great people who came up that way. And then there's people who kind of feed in the wild. Like, come outside of the building and need to figure out, like, what's available. And there's some real differences, you know. Sometimes they cross over like Ron Perry who was an instrumental person at Songs from, you know, the very beginning to through time we sold and now runs Columbia. So sometimes that happens. Or Carianne who, you know, also was my partner at Songs who now runs Warner Chappell with Guy Moot. It's like there, you know, it happens, but there are really two lanes. And I think in the independent side, it's a lot about systematic A&R so about looking at, listen, none of us are overfunded with tons of money. So, you know, everybody's stretching the dough. And it becomes about how can I build this system in the world that I live that can do deals inexpensively, and then find the ones that are working and invest and push them forward. And all the great independent music companies, you know, Chrysalis, Jive Zomba, A&M Rondor, all the great ones throughout history sort of did that really effectively or were usually like the other ones. So everybody goes to the majors to get their offer. And then there's these other cooler guys that are there, like, you know, kind of fucking with the majors by picking off all the left to center stuff that was us at Songs. You know, and all those other companies I just mentioned were kind of some version of that. But there's kind of, all of these mechanics that come both from history, so understanding the history of the business, but also understanding the people and how they sort of work 'cause as much as the world is changing and it's changing a lot, it's still kind of about A&R. It's still about creative in some way or another. I mean, Carianne's superpower, which she's got many, but the original superpower was understanding not only what works well to picture, but the people that choose music in film and television, advertisements, video games, she's particularly uniquely talented at that. And that's still a core skill that people need to understand. So, you know, I'm the guy that kind of pulls the pieces together. I don't do any of those things. I, you know, originally hired some great people and now I try to invest in great people that do all that stuff, but it's still about understanding it and if you're coming purely from the outside, I think it's challenging.

[00:24:22] Dan Runcie: Yeah. And I think your career experience speaks a lot to this, right? You mentioned being able to find the left-of-center opportunities when you're at Songs, whether it was Lorde or The Weeknd. And you saw how those turned out. It worked out brilliantly. I'm curious to hear what you think about the way things are right now because, especially with the way that TikTok is and so many of the companies, whether it's the major labels or the independents, they all have access to the same information. So the cost of acquiring and being able to find and develop those same artists is much more expensive. So what do you think those left-of-center opportunities look like today in the current environment where it feels as if there are more and more outlets to find different types of people, but the way that people are going about it, it does seem like a lot of people are now playing a pretty similar game.

[00:25:13] Matt Pincus: You mean like a moneyball...

[00:25:15] Dan Runcie: Yeah. 

[00:25:15] Matt Pincus: ...type of, yeah. So, you know, again, I go back to like, there's sort of in the building and there's outside of the building way of thinking. So in the major system, it makes logical sense that they want to sort of hang back, see what reacts, and go and get it when it reacts, the more predictable something is the more you're willing to pay for it. That makes logical sense. There's nothing wrong with it. They're not idiots for doing that. It's just the way that they traditionally operate. And now it's about, like, seeing the shiny pennies and then grabbing them right away, whatever the cost, because music is much more efficient than it used to be. It used to be that you'd have to, like, release a whole album and sink a bunch of capital into seeing if something works. Now you can kind of tell pretty quickly if something's going to work. So it makes sense to pay a lot for something predictable, as opposed to, you know, paying a little bit for stuff that is wildly uncertain. So, you know, that makes total sense. I think on the independent side, and I really count in that like A&R mentality, like people who are finding artists and developing artists. So it's not just like, you know, independent labels, but it's also like, you know, Electric Feel is a really interesting company that does this, Hallwood. You know, APG is obviously the really great example of this, of finding artists really early and developing them into something or representing people who do that. A lot of, you know, that is about iteration and about understanding, you know, what makes a good story in a particular market. Now, part of that is the music itself. Part of that, most of it is the music itself, but part of that is also all the other stuff around it. You know, how you unfold the narrative, how you stage market entry for an artist. You know, all of those things, again, I come back to the stick to your knitting thing where it's like, as much as the world changes, it kind of remains the same to some degree. So, you know, the interesting and frustrating thing about the music business for people that run companies like I did at Songs is that there's just not that many good, really good, talented people, you know. If there's one structural problem in the music business is there's not enough, really good A&R people, promotion people, you know, creative people. 

[00:27:29] Dan Runcie: And why do you think that is?

[00:27:30] Matt Pincus: I think it's hard, for one, I think it's hard. And as much as people try to play moneyball, now I'm a big believer in systematic A&R, which some people would consider, you know, moneyball. So in other words, like having a funnel that gives you a group of things that might work, that I'm a big believer in that as a starting point, but that only gets you like 51% confidence. That's not much more than a coin toss. The rest of it is really doing the work of developing the product itself, the music itself, and then the story around it. And it's just a hard business, plus you got to know everybody, you know. So it takes a while to develop those relationships and those skills. One of the things that's interesting when I look on the music tech side of it that I think is one of the great things is that the technological development in music production is allowing people to learn how to use the gear quicker. So you're going to have hit singles coming from 13-year-olds within no time at all. And that used to not be possible because it would take you four or five, six years just to learn how to twist the knobs on a board. Like, it was hard. Now with like, you know, presets, with things like Splice, with AI-assisted creation, you know, anything that makes it easier for an artist to get what's inside of them out, the learning curve is becoming less steep. And that's a good thing because talent shines in that environment. You know, it's one thing to be able to, you know, have a knowledge-base to tweak things. It's another thing to just be a talented and expressive artist with urgency. And so maybe some of that will happen. And on the executive side, like on the A&R side, as things like radio, you know, radio's been so monolithic and so hard to penetrate. And now maybe it's loosening up a little bit, but it still takes a while to figure out what's going to work. It's very hard. And it is one thing to be a fan and be like, this is good, this is not good. It's another thing to take a look at something that doesn't yet exist and be like, this is what it will look like if we can pull it off. I don't have that talent, you know. I'm not an A&R person, but I watch people do it and it's pretty miraculous. And it's not just A&R, it's also promotion, which is an undervalued piece of the equation and increasingly, marketing, digital marketing, like the first cut of it was just, you know, sort of advertising on Facebook. Now it's much more sophisticated than that. And so I feel like it's just hard and I wish there were, you know, there's also the part of the problem in the music business is nobody trains anybody. There's no HR infrastructure. You know, I went to Columbia Business School and I had been in the music business. I didn't have one single meeting about a job that came through the school. 

[00:30:14] Dan Runcie: I'm not surprised. That wasn't the case for me either. 

[00:30:17] Matt Pincus:  That’s what I'm saying like, nobody trained you. I mean, I remember going on a job interview when I was like 21 coming right out of college or 23 coming right out of college with a guy at ICM. And he said, what do you want to do? I said, I want to be an A&R .He said, great, find a band. That was it. That was the interview. And so it's like, it's that kind of business, which is kind of wonderful in its own way, but it doesn't train people really. And so that's also part of the reason. We don't develop our talent, executive talent pipeline in a really great way.  And that's why people like, you know, Mike Caren at APG is so special. You know, the LVRN guys are so special because they bring along executives in a really concerted kind of way. And I wish there was more of that in the business in general. 

[00:30:58] Dan Runcie: Yeah, I think that's a huge opportunity for it. And I think you see a lot of it play out when there are executive shake ups and who gets picked for certain things and why people get picked for certain things. And to some extent, you see this in other places too, whether there's a mix of internal hires versus external. But one thing that I have noticed is the units that do tend to stick together, or there is some continuity there. You do see a lot of success happen if they understand what works, everyone's into it. And I think some of these other places where it could be a bit of revolving doors with who's in leadership, who's trying to get where it's very tough to have that infrastructure. 

[00:31:35] Matt Pincus: And that was one of the great blessings for me at Songs, which is not, doesn't speak well for the industry, particularly, but, you know, Ron and Carianne were two of the most talented people of their generation for sure. And the business didn't know what to do with them. The fact that I could get the two of them and we could all stay together for 12 years and build a company is like a miracle. And that was a big part of the reason why it all worked is because we knew each other really well and people knew us as a unit. We had different things we did. It's a little bit like, you know, kind of what's going on with the professional sports a little bit too, is, you know, it's great that all these individual players are celebrities. And again, great that athletes are making more money, but great teams don't stay together in the same way that they did before. And I think that's changing a little bit now because you don't have to do a deal with a major and get your money the traditional way in order to build a company. And that's one of the reasons I exist as MUSIC, is because there's opportunities to bring outside capital into the business under terms that look a little bit more like sort of venture capital or private equity, which is in a way more fair than the traditional music business has been on a per transaction basis. There's natural reasons why the major music companies finance the music business for as many decades as they did, and it's not to rip people off, it's because nobody else would do it. But now it's a different world and so hopefully some of these things will change. You know, when you have really great entrepreneurs that own their own business, as opposed to, you know, in some JV with a major that's really a compensation agreement, then it's in their interest, like it was in mine when I was running Songs, to bring along really talented people and find new ones. And so that's one of the things that I've sort of hoped for in some way. 

[00:33:24] Dan Runcie: Are there any artists that stick out to you as examples of yes, they're building their business and they're doing this the way that could be a blueprint for what we'll see more frequently moving forward?

[00:33:34] Matt Pincus: Ones that I talk about all the time is The Weeknd, which we were involved with, you know, from fairly early on. And Sal who's, you know, has been his manager for a very long time, and Cash. You know, I think you're going to see what they did with XO happening in a lot of different ways going forward, where you get a group of people that form a partner and distribute responsibilities between artist, manager. You know, there's people like La Mar Taylor involved with those guys that does all the visual. There's a lot of cooks that need to be in the kitchen to make something really successfully work. The label model of sign to a label, they'll do everything that existed in, like, the nineties is way long gone. Even management where you sort of have somebody who's a commission person that's just doing the business of an artist, that's not true of the good ones anymore. The good ones get in it with the artist and really help them build an entrepreneurial life. I mean, to be an artist now, you need to, like, be like a 140-character joke writer. You need to be an accountant. You need to have a corporate entity. You need to deal with all these different vendors. And you need to be like, you know, P. T. Barnum, like, step right up, step right up, check this out, you're going to love it. It's a complex skill set. And so I think one of the things that you're going to see in the talent representation business, like the management business is I think you're going to see more entity partnership formation, where people are going to go into partnership together. Managers and artists will be like Sal, Sal and Abel have been together for, how long now? Like, I mean...

[00:35:08] Dan Runcie: It's at least a decade, right?

[00:35:09] Matt Pincus: Yeah. And they've been able to scale and grow and make a lot of money and still be together. And that's because everyone provides value. I'm sure they adjust their relationship, however, over time, I don't know. But I think you're going to see that approach because it takes a village in a way to make really durable stuff. I mean, if you're talking about a viral hit that's here today, gone today. That's one thing. But if you're talking about really building a franchise over a period of time, it requires a lot of work from a lot of people. So I think you'll see sort of, you know, entity formation with partners that include business people and artists in with interest aligned. You know, Diplo's another one. I mean, you know, TMWRK and Diplo have been together for again, going back to since I started working with them. So that was 2011, you know? You look at firms like CRUSH, Jonathan, Daniel has built franchise after franchise of artists that stay with him forever. And he works with him as a partner and that's why it works. So I think you're going to see more of that going forward and and I think that's a good thing.

[00:36:13] Dan Runcie: Yeah, definitely. The Weeknd's a very good example because even from the origins of his career, you could see the mentality of where he saw things. Drake famously offered him the opportunity to come on OVO Sound. They had the whole Toronto connection, Drake put him onto that blog post and everything, but then he was like, no, I don't want to be under another artist when I think I can be just as big as that artist, even bigger and do my own thing and look what he's been able to do now. So I think a lot of it...

[00:36:41] Matt Pincus: And by the way, the record deal is a distribution deal. 

[00:36:43] Dan Runcie: Right. 

[00:36:44] Matt Pincus: You know, I mean, there you go. And so in terms of distribution of value, you know, if you can do it, if you're smart enough to have a cool head and plan like those guys did, you know, you can have a much larger enterprise than you normally would. So I hold them up as an example of, you know, what I think is going to happen and is happening really in lots of different areas of the business now.

[00:37:07] Dan Runcie: One of the other areas that has gotten a bunch of attention right now has been syncs, and this has been growing, I think, especially given what we've seen with people, especially from outside the music industry, trying to get more involved, but especially this past summer with Kate Bush being featured in Stranger Things. This conversation has been happening more and more. This is another example where it's a mix of that art and science of what does finding a good sync looks like and what happens with it. And I think so much of it, there's maybe a little bit of luck with just how the internet works and how things take off, but there's also a good amount of work that's put into finding the right type of placement for the right type of artists that could make all those things work to make it happen. So how do you view the opportunities for sync right now? 

[00:37:53] Matt Pincus: You know, it's interesting. I was sort of a student of Carianne. She taught me the sync business. I literally remember she had a binder where she kept every single interaction she ever had around a song and a placement. And she not only showed me how it all worked, but then we made a software platform out of her own process of how she did it. So I was trained by the best. One of the interesting things about sync is how it always comes back in cycles. You know, when we started Songs, it was like 2004, sync was the whole game. Like, between 2006 and sort of 2009 timeframe, it was the most important thing in a pitch. You know, it was responsible for a lot of our really early successes. And then when it became a largely pop business there in the early days of streaming, it was like sort of radio and super reactive and viral repertoire. It sort of stepped to the background for a minute. And now with the way that kids are bouncing around on a playlist from like, you know, Taylor to like a hip-hop track to, you know, Kate Bush back to Metallica and they don't care. It's become all of a sudden, perhaps one of the top, most important ways repertoire gets discovered now. It's amazing the enduring power of synchronization over time. The thing about sync that I think is interesting is part of it is selection. Like, is this song going to work to picture? But there's a lot that goes into making the deal happen. I mean, that Kate Bush deal as my understanding, I was not involved, but my understanding from, like, just hearing about it was that it took 'em forever to get the clearance done. So a lot of it is not only just is this going to work the picture? Is it the right BPM, the right mood, you know, the right tonality, the right cultural notes, which is a very special thing that music supervisors are particularly good at, but it's also the real politic of like getting the fucking thing cleared. And one of the things that I look at, I tend to have thesis sort of areas when I look at investing in the music business, and one of them is just how fuck the sync business is. That, you know, there should be a buy it now button in the music business if you want to use something for your film, buy it now. And if it was easy, people would pay more. But the problem is they have to roll around a glass to clear a copyright, getting the same deal with 13 songwriters and the master side and it's horribly inefficient. So I think part of the interesting thing with sync in the next generation is how do we do right by the music by making it more usable. Because there's also a couple of different ways this sync business cuts. So, you know, you have stuff that's used in a more traditional sense, and that has a real, like the standard pairing of like, it matter, it makes a huge creative difference and it's very hand selected. Front title and title, you know, big placement in a film television advertisement, but then you have this huge blanket sync business where a lot of the new promotion platform are AV platforms. It's technically synchronization, TikTok, YouTube, you know, Instagram it's technically sync. And I would argue that if there's one element of the business that gives radio a run for its money, it's AV platforms because what happens is people use it in so many videos that you end up hearing the song a thousand times, however many times it takes for you to be like, oh, my God, I have to hear it again. That's really the only place it happens and that's sync. There's a couple of different ways it cuts. You know, the great, like, placements of all time, and we had quite a few of them at Songs that sort of are like, you know, really make a song and make a film. Those are works of art. But also a lot of handling everything else is like maybe 50, 50 at best creative to handling. And so a lot of it is understanding, having those relationships, understanding how to price things, understanding how to clear repertoire, getting permission from the artist to do it. There's a lot of process that goes into it.

[00:41:49] Dan Runcie: Is there a sync from your days that song that you look back on that you were like, yeah, that's the one. It took some work, but looking back that's the one. 

[00:41:56] Matt Pincus: Wow. That's really, that be would a really better question for Carianne than for me. In terms of like the stuff that really made a difference to us as a business, one of the things that I think was meaningful was when Lorde did the Hunger Games soundtrack in the follow-up movie. That gave us a really good look at how music can be a content element in overall entertainment. The Weeknd did a similar thing with Black Panther where, so it was those sort of tie-in, you know, big-ticket where our music was woven into the substance of the film or the ad in some cases. That I think are really the special moments. Those are two that pop out. There's always like the random one where you have a relatively smaller artist and you get them a sync and, you know, it changes their life. It gives 'em more money than they ever thought was possible. There's also the ones, we had an artist who had a very high level of ethic and I won't name the artist, but independent artist, good earnings, but not a pop artist. And we got a $90,000 ad and for very good ethical reasons, he said, fuck, no, it's not going to happen, not going to approve it. And as much as I was like, it was to do early days of the company, it would've made a huge difference to write 90 grand into my books in a quarter. There's some beauty in the level of control that artists have over their own work in the music business that they don't in a lot of other media that I was like, you know what good for him, I guess we're saying no. There's this artisanal component to it that's really special.

[00:43:32] Dan Runcie: Yeah. Being able to have that power and knowing when it isn't right. I've heard similar things as well from other podcasters I'll talk to when they get pitched with certain deals and stuff, and they'll be like, you know what, that's just not a product I'm willing to do, or that's just not an endorsement I'm willing to have. And it could have been a game changer for them and their business and everything. But I think we're going to see more of this with creators as they just are leveraging their own independence and being able to make their own decisions. 

[00:43:59] Matt Pincus: Yeah, exactly. 

[00:44:00] Dan Runcie: Yeah.

[00:44:00] Matt Pincus: Exactly. 

[00:44:01] Dan Runcie: I want to close this conversation out talking about streaming 'cause I know this is a topic that you've shared a number of insights on over the years. And one of the things that you've said before that has always stuck out to me and resonated is this path that streaming has been on where it has been growing year over year, but a lot of people, especially in recent months, have started to question how many more subscribers out there are willing to pay the full price for streaming services and even if there is growth in some of these other regions where the revenue coming in is only a fraction of what it currently is now, what does that growth necessarily look like? So I hear that there's two camps there. Some people are skeptical about the future, but others are looking at smartphone adoption and just the way that things are trending as an indicator of where things are going. But how do you view the opportunity and especially streaming's growth from here on out. 

[00:44:55] Matt Pincus: Okay. So I think there's a couple of different things there. You know, one is just on-demand streaming and what the growth curve looks like for on-demand stream. I think the broader question is what does overall growth look like for music consumption going forward? And I'm not sure those are totally the same thing. So, you know, listen, Spotify's done an epic job growing that business. It's a difficult business from just the word go, you know, you're relying on content licenses, you're inherently undifferentiated. Like on paper, it looks like this is impossible. And yet they build an unbelievable business out of it. And I really, you know, sort of think it's worth, you know, whatever opinions people have about streaming, to take a step back and realize that the people who did this originally, you know, Larry Jackson and Apple Music, the people who did it originally did a really fucking tremendous job of making it work. It will mature. There's some debate over whether it may have already started to mature in some distinct ways in Western, you know, sort of developed economies and even maybe in some of the larger sort of secondary territories. The really interesting places that we used to see at Songs in our own data are high population, low discretionary income countries, Indonesia, Philippines, a lot of the African continent. I'm not sure it's necessarily in all of those places going to be an on-demand streaming function that, you know, ultimately wins the day. There are people fucking with a model in a bunch of different ways over mobile. Boomplay in Africa is doing a buyout model. You know, it can be woven with other kinds of entertainment in a bundle in a bunch of different ways. So the question of where on-demand streaming goes, it is a little bit like anyone's guess, but there are different opinions between reasonable people about how the growth curve looks. You know, one of the things that I really love about the web three thing, and I think it's in the early days of really grinding the gears to figure out what actually works, 'cause like this sort of, you know, sucking on the laughing gas tank and you know, watching your crypto go up or over now. So it's entering into like a moment where people actually like have to figure out how it works. But the thing that I think is true is that it's unlocked a premium, that people are willing to pay over the cost of consuming music permanently. How big that premium is, we'll see. I think it was overinflated and inorganic in some of the early times of crypto, not a lot, humans are doing it and they're doing it for high ticket prices, you know, but if you look at some of the stuff, for example, that's going on in Asia, where people are throwing money at artists they like just because they want to you know, people paying sort of eye of the beholder price to be associated with an artist that they feel strongly about, that they love early in their career. Like, that's not going away. So whether, you know, the subscription fatigue is a reality, whether effective penny rates, times units of consumption are going up, flattening, going down. You know, we'll see. I mean, the Goldman Sachs people think they're going to go up forever. I'm not sure I totally agree with that. But what is true is that the willingness of people to invest in artists they love is increasing. And I don't think that's going back to zero, so it may not be, you know, that subgrowth continues on forever and on-demand streaming, but it may be that there are other ways that people can figure out how to engage with artists that keep the value, you know, exchange going up. Now, the one thing about streaming that's interesting is that, you know, the TikTok thing, in ways that people, like, talk shit about it all the time, whatever, but the thing that's interesting is that it did introduce frequency back into the equation. And one of the things about music that's unique is that you need to hear a song a number of times before you like it. Like at first you're like, I hate that. And then you hear it like five times and you're like, maybe I want to hear it again. And then by like, whatever end time you hear it, you're like, I can't get it out of my head. I got to hear it. It's like, Barry Weiss used to call it a record finding its bottom, where it would kind of come out and people would spin it, and then it would drop and then at some level would start to rise again. That's a function of promotion. That's a function of frequency. And in the early YouTube time and on-demand streaming time, you didn't really have that. Like, the people couldn't make something frequently play. And the AV platforms, not only TikTok, but also Snap and Instagram changed that equation and that music needs that. The thing that I'm wondering where it will happen, where it will come back into the equation though, is the music press, which has largely disappeared. And so I'm looking for who, on a consumer level there, people like yourself covering the business, part of it, that are doing an extraordinary job, but who sort of tells people what's good, gets it in front of them, filters it and what does that look like? It's probably not printed on a page. It's probably, it's sort of associated, I think in some way with what's going on with the NFT world, you know, with getting people to buy in, getting a community of people bought to projects, but it's still that same mechanism of filtering. And so I'm wondering where that's one of my thesis areas that I have my on. Where's the next one of those? 

[00:50:08] Dan Runcie: Yeah, I think this is a role that, of course, MTV and so many other places own and were able to do so well decades ago. And now the commonality I've always referred back to is that TikTok in many ways is the new MTV, but it's more so in the broader sense of just the cultural appeal, but not in that solo aspect of yes, if you want to know what this group of people are pushing, or what is the thing that's in, this is the place to go to find that. And I think it's very tough, the way that things are right now, just with how fragmented things are. But people are always going to want to feel like they're part of what's in or feel like they know what's in that desire also isn't going away. So I think there were always be a space for this, no matter how fragmented.

[00:50:53] Matt Pincus: And people don't always know what they like. I mean, who knew that all these people love Kate Bush? 

[00:50:58] Dan Runcie: Right. 

[00:50:58] Matt Pincus: We all understand why. She's amazing. Song's amazing, but people don't always know what they like until somebody shows it to them and repeats it. And then all of a sudden they can't get it out of their head. And that's the magic of music. So how that happens, you know, the cool kids like it up from the bottom, you know, like to be selective, know about the stuff first. The general audience likes to hear things multiple times and then, you know, be addicted to it. And I think that those things will reinvent themselves in a bunch of different ways going forward. 

[00:51:27] Dan Runcie: For sure, Matt, before we let you go, do you have one big prediction for us on where you may see things in the next five years or one thing that you think will change from where music is right now to where things will be come 2027?

[00:51:40] Matt Pincus: Well, I think as I touched on before, I think younger and younger people are going to be making music that the world reacts. And that is going to be miraculous when it happens. And not necessarily in like a sort of criss-cross Whip / Nae Nae type of way, but in a real, like expressing the core thoughts and feelings they have and getting them out there in a way that sounds good to the world. I think that's going to happen in a bunch of different ways. I think the way that repertoire moves across the planet is going to be revolutionary in the next five years. If there's one thing that's really going to change, you know, it used to be that sort of music went west to east and technology went east to west. Now, I think that's all scrambled eggs right now. If you look at stuff, like, you know, some of the music that's coming out of West Africa right now and how it gets into the global culture. It's not like in a, you know, used to be like you had like a world music business. Like, that's ripped up and thrown away. And so I think, you know, the way that the in-country community relates to the diaspora community in around the globe is going to be really different. You know, I think if there's one thing I have my eye on, it's sort of how all that stuff travels. And obviously, there's some obvious examples like BTS. But I think this is going to happen anywhere and everywhere. And one of the things that I heard somebody say the other day that I felt was really interesting is that the music business thinks about countries in its marketing. You know, they've Europe and Asia and Australia, Canada, US. It should be cities because music is about scenes and it's going to travel that way. And so your Amsterdam strategy is going to be different from your Seoul strategy is going to be different from your São Paulo strategy. And so if there's one like broad thing, I think we're going to look at the way that music travels around the planet in a completely different way. 

[00:53:37] Dan Runcie: That's spot on. Look at the way we think about music here in the US. That should be an indication of how it should be looked at elsewhere, right? We know what Atlanta hip-hop sounds like compared to what you may hear in LA or even the New Orleans bounce sound. Like, it's so different place to place. So you look at a country like Nigeria, which is soon going to eclipse the US in population. What you may hear in Lagos would be completely different from other parts of the country. So that's a really great point. 

[00:54:05] Matt Pincus: Yeah. So that would be like, if I, you know, sort of, if I had to obsess about something, it would be that. 

[00:54:10] Dan Runcie: And I think a lot of people listening probably will too. This is a good one. I think that you got a bunch of notes for people to jot down. So Matt, thank you for making the time for this. This is fun. Thanks for coming on. 

[00:54:21] Matt Pincus: Thank you so much. I just really appreciate your thinking to me. And it's a pleasure to talk to you about all this stuff.

[00:54:27] Dan Runcie: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat, post it in your Slack groups, wherever you and your people talk, spread the word. That's how 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.

The first weekend of Coachella is here: Bad Bunny, BLACKPINK, and Frank Ocean will headline for 2023. Coachella is expected to gross well over $100 million with over 100,000+ attendees per day.

In this episode, broke it all down withMIDiA Research’s Tati Cirisano. Coachella started in 1999 as a niche festival for indie rock and quickly morphed into the biggest brand-name festival in the United States. These days, the Coachella brand is big enough to sell the experience itself, regardless of who’s performing — a rarity in the festival business.  

Tati and I discuss why that is, the implications, and what the future of Coachella could hold. Here’s what we hit on:

[1:20] Coachella’s brand sells itself

[2:19] Festival’s origin story

[7:09] Advantages and disadvantages of performing at Coachella

[9:09] Success by the numbers

[11:28] Coachella bump for brands, influencers, and local economy

[16:38] Untapped opportunities for future Coachellas

[22:02] How individual music show prices influence festival attendance

[24:22] Artists that are above playing Coachella

[27:08] The festival that’s the antithesis of Coachella 

[31:10] Festival lineups becoming homogeneous 

[39:36] Predicting Coachella’s 2024 headliners

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Tati Cirisano, @tatianacirisano

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Tati Cirisano: Being a performer at Coachella has become almost like a badge of honor or like something that goes on your one sheet, you know what I mean? Like, it's something that like gives you leverage as an artist and also is just, I don't know, seen as like it has a certain level of prestige.

Like I would compare headlining at Coachella to like, in the same way that a lot of artists would love to get like a rolling stone or a billboard cover, even if like, regardless of whether that's selling or regardless of what that does, just that as a concept has, is just something that's like on a bucket list for most artists.

I feel like headlining Coachella, if you're someone who's trying to be a superstar, that's like a bucket list item too. So yeah, it's, interesting How entrenched this festival has become in the music industry when you really think about it.

[00:00:43] Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more who are taking hip hop culture to the next level.

[00:01:25] Dan Runcie Guest Intro: Today's episode is about the business behind Coachella and the unofficial start to music festival season in 2023. Coachella's history is pretty impressive when you think about it. This festival started in 1999. It was announced the week after Woodstock 99, and the shit show that that festival. With just 60 days’ notice to then put on this festival that attracted just 25,000 people and ticket prices cost $50 each, and the headliner was Beck and the festival didn't make it money that year.

Didn't even make enough to continue in 2000, and it wasn't until its partnership with Golden Voice in 2001 that it was able to get things back on track and slowly build up to the behemoth of a festival that we see today. It's an event that attracts well over a hundred thousand people per day for the six days of the festival itself.

Two straight weekends and it attracts some of the biggest artists in the world. And this year they're especially making its footprint scene on the global scene. The headliners include Bad Bunny, Black Pink, Frank Ocean. There's also artists like Burna Boy, Calvin Harris, and many others that are making up this year's lineup.

To break it all down, I'm joined by Tati Cirisano from MIDiA Research. We talk about what this festival does well, how it's shaped music culture overall, and its broader impact on music festival culture. Here's our breakdown. Hope you enjoy it.

[00:02:55] Dan Runcie: All right. Today's episode is all about festivals and the granddaddy of them all, at least in the US, Coachella. We're here to break it down with Tati Cirisano from MIDiA Research.

Tati, welcome back to the pod.

[00:03:09] Tati Cirisano: Yeah, thanks for having me, excited to dive in. 

[00:03:12] Dan Runcie: Yeah. One of the reasons I wanted to talk about this with you is because I feel like Coachella reminds me of some of the conversations we've had about, a lot of these platforms that they, in many ways have become the bigger brand and the destination than the actual creators on some of these platforms. And I feel like Coachella, at least from a music festival perspective, has some of that because at least in the US this is the most popular music festival.

We've seen it expand over the past two decades. And while most music festivals do rely so heavily on their headliners, Coachella is one of the ones that it's still able to, in many ways, capture the same audience and just get a consistent following and culture around it. That doesn't seem like it's stood as dependent on the headliners, but they still get big headliners.

So how do you think that shapes the festival and how fans themselves interact with

that festival?

[00:04:10] Tati Cirisano: Yeah. I mean, just to like prove out what you're saying, I think, I'm pretty sure Coachella tends to sell out or at least sell a lot of tickets before their headliners are even announced or before the lineup is announced at all. So you're totally right. I think it's become a big enough brand in itself that people are just kind of, ready to buy into it. And I think it's because Coachella has It's kind of created a culture. I remember kind of the celebrity era of Coachella when like, you know, Vanessa Hudgeons was like the queen of Coachella and you could go and run into Rihanna and Paris Hilton and like they kind of created that aesthetic of like the hippie style and all of these things.

And so, when people buy a ticket, it's like they're buying into a lifestyle and a culture more so than the music itself. I think a lot of people go for that experience and to dress up and like buy into that, that lifestyle, maybe even more so than the music. and it does seem like Coachella over time, maybe because of that.

The lineups have become a little bit more like crowd pleaser and mainstream to me. Like I was looking, just in preparation for this episode, like kind of looking at the history of Coachella and I didn't realize that when it started, part of what Paul Tollett wanted to do was create like a more niche festival where you would bring together like a lot of niche artists and hope that they all have big enough individual following that, you know, putting all that together. Would be enough for a festival. and it seems like the complete opposite today. In many ways like I think Coachella still sometimes tends to have like more left of center artists that line up this year is like super diverse and interesting. But it does seem like they've maybe become a little bit more mainstream over time.

And maybe it is because the people are going not as much for the music as they're going for, like the vibe of it all.

[00:06:02] Dan Runcie: Yeah, and dating back to that first festival, it's kind of crazy that this even became what it is today because it starts in 1999. They announced this festival and put tickets on sale. I think it was two months before the actual festival started, so not that much time. They announced it the same week or the week after Woodstock 99, which is just a complete shit show, which said so much about where people viewed a festival like this and their headliner was Beck. They didn't make as much money, I wanna say like 25,000 people showed. So they couldn't even have a festival in 2000. They had to wait until the next year and do the partnership with Golden Voice and make it happen.

And then, yeah, fast forward to where we are today, where it is mainstream pop artists that are doing it. And what was once this niche culture of people that just really enjoyed indie rock music. It now is this mainstream thing. It almost reminds me of something like Comic-Con in that same way where it was this nerd thing with people that you know wanna do live action, role play, and Dungeons and Dragons, or dress up like Zelda.

And now every mainstream celebrity is there to promote their movie.

[00:07:19] Tati Cirisano: Yeah. And in the same way, you're going to dress up, you're going to like, kind of put on a costume, Coachella, it is kind of a costume for most people and like have that experience regardless of who's playing.so yeah, I totally agree. And I think the other thing, like over time Coachella has gotten to a place because of all that we're talking about, where it has such a, power on the festival market, like written into its contracts, like it has a radius clause that they get to release their lineup first.

They are the first festival of the season, mid-April is like pretty early, so there's also now like I think built in ways that Coachella tends to be kind of the North Star for all of the festivals, and so it's just the one that people are going to regardless of, yeah, regardless of who's playing.

[00:08:09] Dan Runcie: Yeah. I also feel like because it has a bit more of that brand and that audience command, regardless of who the artist is, I almost feel like it has a little bit of that Super Bowl effect where artists want to be able to perform on that stage because sure, they may bring some fans themselves, but they're likely gonna be reaching a new audience and having exposure to people that may not necessarily have tapped in general compared to, and I think Coachella is similar, but if you compare that to some of these other festivals that are so heavily reliant on that headliner themself. There's a case to be made that, okay, well if the headliner pulled those fans into the festival, then they have to then share those tickets essentially, you know, soft tickets with everyone else.

How does that compare to actual hard tickets that they could have done themselves? So, I feel like there's a Coachella advantage there. 

[00:09:01] Tati Cirisano: And there's also a disadvantage in that you don't get, I mean, I know that I'm pretty sure already, like the data that you get on who's in your seats at shows is pretty minimal. But when you go to a festival, you don't really know who's going to see the festival for you and you don't really know who dis how many people discovered you or how many people came to your set. It's not the same as like if you sell out an arena, you know, the number of seats that were there, you know what I mean? So that's also an interesting thing is like you are probably getting a greater audience and this artist might be the whole reason the festival is selling tickets, but nobody's actually able to quantify that.

[00:09:34] Dan Runcie: Right. And I feel like for some artists too, there's almost a bit of risk mitigation that can come with doing a festival. Risk mitigation may be the wrong word, but I think that's certain artists that have a lot of buzz or may have a lot of fanfare, it may be a lot harder for them to sell hard tickets.

But if they could perform in front of this large festival crowd, they get a big advance or they get a big guarantee with the, promoter and through their agent as well, they can feel much more confident performing in front of, you know, thousands of fans or maybe even tens of thousands of fans on stage, even though they may not be able to sell, you know, sell out a house of Blues for instance.

[00:10:14] Tati Cirisano: Totally. Yeah. No, and it also feels like being a performer at Coachella has become almost like a badge of honor or like something that goes on your one sheet, you know what I mean? Like, it's something that like gives you leverage as an artist and also is just, I don't know, seen as like it has a certain level of prestige.

Like I would compare headlining at Coachella to like, in the same way that a lot of artists would love to get like a rolling stone or a billboard cover, even if like, regardless of whether that's selling or regardless of what that does, just that as a concept has, is just something that's like on a bucket list for most artists.

I feel like Coachella headlining Coachella, if you're someone who's trying to be a superstar, that's like a bucket list item too. So yeah, it's, interesting How entrenched this festival has become in the music industry when you really think about it.

[00:11:02] Dan Runcie: Yeah, let's look at some of the numbers here, cuz I think that's another fascinating piece. So we don't have hard numbers for this. A lot of it is based on past things that have been shared. But in 2017, this festival grossed to 114 million. And they had around 125,000 people coming per weekend.

So if you roughly do the math thing, you look at ticket sales, I feel like that's like just under $500, like per attendee that ends up coming to the festival. And we likely saw similar, maybe even greater as well, because that doesn't take into account sponsorships that doesn't take into account these brand activations and other things as well.

And I know that Coachella is a festival that has taken some shit for not paying artists well, at least the artists that are further down that list, that have much smaller font size, I think it's seen as paying the headliners. Well, at least I was talking to, someone that understands the business well, and their estimates were that the headliners this year, so you have Bad Bunny, Black Pink, and Frank Ocean.

Their thought was, Frank Ocean and Black Pink got 4 million per weekend, so 8 million total and that Bad Bunny likely got 5 million per weekend. So then 10 total and then I believe that Calvin Harris's name was, towards the bottom of that list, like returned to the desert, Calvin Harris, I think he got one and per weekend. And then the artists that are on let second row, like Burna Boy and a few others, I think it was around like seven 50K per weekend but then it's a steep drop off after that, right? I mean, I remember hearing from Cardi B, this was, you know, after invasion of privacy, but still before, you know, she blew up, blew up. Or maybe it was the year before that, I forget. But she talked about how she was paid 70K, but she saw it as an investment in her career as an opportunity to pull up and get more. And obviously she's someone that you know, is now getting a million dollars. Private shows where she's doing 35 minute sets, but I feel like that like plays into that.

So I don't know if all of those artists are getting paid, but yeah, I think some of them are willing to take that because of the exposure. 

[00:13:14] Tati Cirisano: Right. Yeah, I think you're probably right. And the number that I would love to know is like how much money that, cuz I know you, you were also talking about the boost of the local economy and that I think it was400 million, in Coachella Valley. I'm also wondering, like, even outside of that, just the whole business of it, like you mentioned the sponsorships, the influencer deals, you know, H & M having a Coachella section in their store.

Like all of these things, I'm almost more fascinated by all of these kind of like satellite businesses around Coachella than the business of Coachella itself like I would love to know the total number for how much revenue this festival is just kind of generating for all these things outside of it, if that makes sense like, cuz it seems to go so far, like e every store has a festival section in March and you know that what they're really talking about is Coachella.

[00:14:06] Dan Runcie: Definitely. Yeah. Like, could we look at, I'm sure they wouldn't share this, but if Forever 21 and H & M and those types of stores shared, how much more do they get from, you know, their festival and attire, whether that's, you know, the flower headdresses or whatever, you know, the crowns and the stuff that people wear or just shut general outfits as well. And then I forget the name of the brand, but there's one of those brands that I'm sure many of them do, but they pay for all the hotels that are in Palm Springs, that are in Indio in the general area, put all the influencers there, buy all the clothes for them, and then buy all their tickets and just have them work almost the same way a reporter

would work the festival. 

[00:14:47] Tati Cirisano: Yeah. like what is the influencer economy around Coachella specifically? Like how much money is there? I would love to know.

[00:14:56] Dan Runcie: Yeah, I feel like, because if you count that, I wouldn't be surprised if you're over a billion, especially

like just when you count the overall impact for sure. 

[00:15:05] Tati Cirisano: did you happen to see the price of the first Coachella ticket? When you were doing your research, 

[00:15:12] Dan Runcie: I saw this a while ago, but I forget now. How much was it? 

[00:15:16] Tati Cirisano: Guess, guess, 

[00:15:17] Dan Runcie: oh, guess. Okay. I'm gonna guess it's like $75.

[00:15:20] Tati Cirisano: It was $50

[00:15:22] Dan Runcie: Oh, wow. 

[00:15:23] Tati Cirisano: Was and this year's was $550 and that's before, so 

[00:15:28] Dan Runcie: Wow. Wow. What a come up 50 bucks to see all those artists and then only 20 other 25,000 other people there. 

Wow, that's something crazy. Yeah. I mean, so 10X there, everything's grown. And then even just the expansion, right? Because I think it was around like 2007 or so that they first went to multi-day, then they went to multiple weekends. Yeah

[00:15:51] Tati Cirisano: I wouldn't be shocked if they added a third. I think anything more than a third weekend would be kind of overkill and maybe wouldn't be special anymore, but I actually would not be shocked if they made it a three weekend thing. 

[00:16:02] Dan Runcie: Yeah, 

[00:16:02] Tati Cirisano: One of these days. 

[00:16:04] Dan Runcie: I feel like it, because if you look at the opportunity, we can talk about this now, but if you look at the livestream play that's been happening, they've only been expanding that. So this was the first year that. So YouTube has been partnering to livestream this show since 2011, I believe, but this is the first year that all six stages are now gonna have a dedicated stream.

And I think the pattern that we've seen now is you have a artist like Beyonce, she obviously gets the full recording of her show. She then sells that to Netflix for 20 million dollars or however much that deal is, and then she ends up monetizing that. I assume that there's likely some compensation or some participation that Coachella and more broadly golden voice get from that piece of it.

But what could the stepped up livestream look like further. I mean, I've watched it in past years and it's nice, but could there ever be a Super Bowl level production that goes into at least some particular part of these artists sets? Because they're clearly putting more and more into it as it does become a big stage and you do have a little bit more flexibility of Yeah, it's not a 13 minute set, it's a hour long thing and the higher the production value, the more fans are gonna wanna see it, the more YouTube can get more ad dollars for it and the more goes to Coachella too.

[00:17:26] Tati Cirisano: Yeah, no, I think there's definitely an opportunity for that and not just higher production quality of filming the show, but also when you mentioned the Super Bowl, like having like commentators and doing interviews and there's like know what I mean like there's like a halftime like conversation.

I could see there being like hosts and like interviewing fans and things like that. I feel like that's probably happened at festivals before. before. I haven't watched that many festival live streams but I'm trying to remember, like Glastonbury's was really good, this past year and it was everywhere like, because they did such a good job with the live stream. There were clips on every social media app I looked at. It was all over the news. Like it really became this cultural moment.so I think, yeah, I think there's definitely an opportunity to like have a higher quality live stream that people will pay for.

I also think on the other end of things, I wonder how much more. Like UGC Live streams will come into play. I was thinking about this because, bill Wordy, who's the former, billboard, like editor-in-chief, he has a newsletter, you probably know, what is it 

called? Full Write No Cap 

[00:18:28] Dan Runcie: Full Rate, No cap. 

[00:18:30] Tati Cirisano: Yeah, he spoke recently, or he wrote recently about how so many Taylor Swift fans are live streaming the entire. concert for the Eras tour on TikTok and on YouTube and getting tips for it. And these streams are like pretty low quality and they're often like from the nosebleeds and you can't even see Taylor, but they're getting like thousands of viewers and people are paying them to do it, and he kind of suggested, like what could the opportunity be here, whether that's artists partnering with TikTok to livestream it or what I think is more interesting maybe is like partnering with creators to do this. If they're already doing it, why not create an infrastructure around it? But then I also don't wanna advocate for like, everybody to be at the show live streaming the entire show and like have their phones in their faces and like I know artists hate that.

I know fans hate that, I hate that. So it's an interesting question and I don't know exactly how it would look, but I feel like UGC live streams could come into play like on the opposite end of these, like more high production shows or live streams. 

[00:19:34] Dan Runcie: Yeah, I think so too because you, of course, there's always gonna be something for the high production quality camera that you see, and even that I still do believe is under monetized to a lot of extent. I mean, we don't have public numbers, but I could just assume based on what you see from sports and other rights.

But the UGC thing is huge because I just feel like you could have some unique angle. You're getting the experience yourself. I'd love to know like what those tipping numbers do look like. But yeah, I think it's huge because while a tour. I think there may feel like a less scarce aspect for that, and just in the fact that, yeah, you know, Taylor is only doing this once, but she's doing roughly 50 shows, right?

But there's only gonna be two of these times that, at least right now, that Frank Ocean is gonna be doing this headline set and it's, you know, when we release this podcast, it'll be right in this timeframe but like that's it. Like there's scarcity around that people wanna see that they're gonna wanna go back and watch it time and time again.

So I think there's something there. I feel like we start to see some of this where, I'm sure you've seen it. Artists are starting to record one of the shows from their concert and then have that as something that you could watch on Amazon or something you can watch on HBO Max or Hulu. So we're seeing some of that, but I still feel like there's an opportunity to get more fan, like even if you get fan views in there and get them, have some type of participation from when the doc ends up getting sold or whatever that is. I feel like there's a few interesting ways to do it.

[00:21:04] Tati Cirisano: I mean, I even think about like YouTube reaction videos and how like that's such a huge space of people. For all sorts of things, like listening to the new Taylor Swift album and live reacting, and people watched that and I could see a similar thing at a festival like live reaction to the Frank Ocean Set.

And then afterwards you're like telling everyone what you thought. Like again, I don't wanna advocate for more phones at shows, but I feel like people are already doing this and so maybe it's a question of like how to support it and make it a better experience. I don't know.

[00:21:36] Dan Runcie: Yeah, it'll be interesting to explore. I feel like the other unique thing about Coachella, we can talk a bit about pricing. You mentioned itself the price is 10X'd in 24 years since the first Coachella. But as this festival becomes more expensive as touring itself, especially to see these headliner type artists becomes more expensive.

You talked a lot about, or you mentioned how does that impact the actual experience and how does that impact what fans may wanna do? Like how do they justify buying separate tickets to see just one artist versus being able to see multiple ones in a festival?

What are your thoughts on that?

[00:22:13] Tati Cirisano: Yeah, no, I mean, I think there's multiple factors kind of pushing toward festivals. Being a kind of solution for a lot of fans today. One is, as I've, you know, shouted from the rooftops in so many of our conversations, like listenership is really fragmenting and people tend to listen to way a wider spread of artists today, making it kind of hard to have a mainstream or a superstar, or harder to have a superstar.

And they're also focusing more on songs often than artists. and then on top of that, costs for pretty much everything are skyrocketing. So yeah, if you're someone who listens to a wide range of artists and you're more likely to be, to kind of center your fandom around songs than artists themselves, and you also are not maybe able to afford going to five different shows anymore, why would you not rather go to see a festival?

And not that festivals aren't expensive, cuz their enormously expensive, especially when you factor in travel and the outfits like we've talked about and all of these things. But I just given all the trends with, listenership that we're seeing, I feel like festivals will become even more popular for consumers.

[00:23:23] Dan Runcie: I also think some of this may shift genre by genre, and to some extent I do look at it. A bit bittersweet to some extent because I look at festivals like, let's look at two of them rolling Loud and this Lovers and Friends Festival that I know had been canceled and I know they, had recently had one rolling loud, of course, is primarily rappers and hip hop artists, lovers and friends is more of that R and B that I think that a lot of millennials and even some,younger Gen X folks grew up with.

Because those festivals exist in that same way. It's great to be able to bring those artists together. I do wonder though, has that dynamic hurt any of those artists impact to be able to generate not just real fans that may definitely wanna see them by buying hard tickets, but how does that help them grow the fan base in a way that doesn't make them just reliant on doing, rolling loud and then just getting an upfront check to do that as opposed to the long-term gains that could come from. Okay, yeah, you may not be performing for as big of an audience relative to your social following, but what could that build up to down the road? And I think even for some of these legacy artists that are doing lovers and friends fest, I remember I was talking with someone, about this recently and they were like, yeah, you know, as much as you like lovers and friends fest like t hose artists are the more indirect way, seeing them all the way they do now. 

[00:24:48] Tati Cirisano: Right, like the festival makes a lot of like on paper, logical sense for consumers, but does it make sense for fandom? Like is it actually helping artists nurture fan bases or is it just feeding more into what I was saying about, you know, a lot of people just kind of listening to songs and not artists So yeah, I think that makes a lot of sense and a lot of these artists that are playing. Those smaller, more niche festivals are playing a ton of them. And if it's like Megan Thee Stallion is playing at 10 different festivals, why are you going to buy a ticket to her tour? Like, I think it could kind of cannibalize some of those sales or like diminish people's interests in, going to the tour as well, or maybe they go and they're like, oh my God, Megan was incredible during her shorter set. I want to go see her on tour like, I don't know, maybe it, goes both ways, but I do think that we might see more and more of those smaller and more niche festivals for all of the reasons that I've mentioned.

Like I think we've seen more and more, there's so many nostalgia festivals now there's so many, like speaking to a very specific scene, like, I forget what it's called, but there was one that was almost like, it was kind of like emo night, but as a festival, like I think we're, I think we're probably gonna see even more of that, and those are gonna be the ones that don't cost you, you know, two grand to go to Coachella.

 and it's maybe a little bit more accessible. so yeah, I think, I think we're probably gonna see more of those type of niche ones.

[00:26:14] Dan Runcie: Do you think that there's certain artists that don't need Coachella? I know we talked about how it's beneficial for headliners, but I thought a lot about the weekend doing Coachella last year, and he was a late edition, Travis Scott was supposed to be the headliner, but after Astroworld and the tragedy there, he didn't do it the weekend does it?

The weekend already had this tour planned. He did that tour in Southern California, he had still performed at SoFi Stadium later on that year. I don't know how the radius and the timeframe works out there, but I'm sure there must have been enough time there. But I wonder if, okay, beyond the $8 million, we could assume that he got from that.

I mean, that's roughly what he would make from one of these stadium rougnights that he would do on his own tour. Did that benefit him in the same way? I don't know. I mean, I think I can clearly see the benefit for Black Pink or even Bad Buddy and others where, hey, this is a statement. You're here on one of the biggest stages we have in the US and you aren't from this country and you don't live here.

There's a big, influence that that can have, but does it make sense for the weekend, right? I know that people have often talked about when would Taylor Swift do it, and whether that's talking about the Super Bowl or even Coachella, but even if we just talk about Coachella even if you paid Taylor 10 million dollars or 12 million dollars, is that going to be more beneficial for her when she can sell out football stadiums herself doing her own thing?

So

[00:27:47] Tati Cirisano: Right. It's been more important for Coachella than it is for Taylor Swift. to be at Coachella, I guess.

[00:27:54] Dan Runcie: I would think so, because I mean, on one hand, yes, we know Coachella is gonna sell out regardless, but they could get more of those fans that may do participate in other, you know, economic, you know, aspects of the festival.

[00:28:08] Tati Cirisano: Totally. Yeah. And they have more control over things and everything. Yeah, I think, you're right, for an artist like The Weeknd or Taylor Swift, it's probably more about like checking off that bucket list item or like having that prestige of performing at Coachella than it is like a material benefit.

I think you're probably right to question that, but then you're right. for an artist like Black Pink, it means a lot more and is probably a lot more impactful in terms of like revenue and fan building and things like that.

[00:28:35] Dan Runcie: Another topic you brought up about festivals right before we had started recording, you're talking about a festival you had went to recently in Knoxville, Tennessee, and it was spread out across different music venues in the city itself. And you also said you're done with festivals on festival grounds.

So can you talk a little bit about that? Cuz I think that could be interesting to dig into a bit.

[00:29:01] Tati Cirisano: Yeah, no, it was perfect timing to do this episode because I went to the antithesis of Coachella last weekend, which is, a festival called Big Ears in Knoxville, Tennessee it was a 10 year anniversary of this festival and in terms of the types of performers there, it was a lot of kind of like experimental and independent and folk music, instrumental artists, like Sun Ra Arkestra was one of the performers.

I also, my favorite performer was a rock band from Niger called Atron Delea, like it was all these kind of like from all over artists and so that was one part of it that was cool. It was very niche and it was very much a scene, kind of like I'm talking about having these like more niche scene oriented festivals and it was held across the venues in Knoxville, of which there are like, 10 or 15, and they're all about a 10 minute walk from each other.

And they also had performances in movie theaters and in cathedrals and in these sort of like non-traditional spaces and. It was just such a more enjoyable experience to me than being locked in a pen in like a parking lot and like, you know, having to pay $10 for water and like feeling very Lord of the Flies for 12 hours like, it was such a better experience and it also struck me how much it could be, you know, a big thing for the venues in that area. It's a big thing for the community and for the culture of the city, like, I don't think you could like turn Coachella into a festival, like across the venues in LA or like New York or something like, I don't think it would work for something at that scale, but it did make me think that, there could be more of, I think, and I'm sure that there are, I'm sure others exist, but that there could be more of these types of festivals that are a bit smaller, a bit more niche, and are held in a city.

And you're also bringing the music to consumers rather than people having to travel to someplace like LA like just having these festivals in smaller cities. I just think there's a big opportunity there and also just to innovate the festival experience in general. Like, why do we have to be, you know, in a parking lot and, you know, all that kind of stuff.

There's been better. Innovations in like, like I know the food at festivals has gotten a lot better over time. It used to be like frozen pizza was like your only option, and now there's like crazy food tents. But yeah, it just got me thinking about like how to innovate the festival experience and what the future of things looks like.

[00:31:23] Dan Runcie: That's a good point because it makes me think of the film festival variety that we see where there's different vibes, but a lot of it is based in existing venues, and it does bring a bit more traffic in general activity to that area, but it's a bit of a different experience, right? Whether it's, you know, Tribeca or even here in San Francisco or in Sundance, I mean you could also get a little bit of a different vibe too, where, okay, if you wanna go skiing in Park City, then you can go to Sundance in January, right? If you want to go on the French Riviera afterward, you can go to Cannes like there's so many different vibes, but I feel like in general, when people think of music festivals, it is wearing that Coachella outfit and being somewhere in an open field with not a lot of shade and, you know, like that type of thing. So I feel like it couldn't then, yeah, it could just bring a little bit more variety to some of these things. And the fact that it already exists is good, but it could probably bring a bit more, you know, boom, to some of these other areas that may want something unique and ideally, if they're not overlapping on headliners, which is another thing that I know is an ongoing challenge with these festivals. I feel like when Outkast did their whole festival run where I forgot how many they did in 2014, that was the first year that stuck out to me where I was like, oh, some of these artists are just going boom, boom, boom.

Same festival. Same festival. So you have that some artists that would do it in the same years, but then you also have some artists that will just come back and do the same festival time and time again, and it really isn't that much different.

What are your thoughts on that? 

[00:33:02] Tati Cirisano: Yeah. I wanna say one more thing about the big years thing, really quick before that question, which is, how that kind of festival could expand the audience, like the tam of festival goers like I would say about half of the people at Big Year's were 55 plus, these are not people that are going to Coachella, you know, like, I mean, maybe they are, but I, I think there's other demographics and other age groups that would enjoy going to a festival if there was a bit of a different experience.

So I feel like there's a lot of groups that were not hitting with the traditional festival market. and like this venue model could be kind of like that. but yeah, in terms of festival lineups getting a lot more homogenous, I kind of can't help but attribute it to the fragmentation trend that we've been talking about and how much harder it is to create a new mainstream superstar today. Like, y eah, I think that a lot of festivals are finding it harder and harder to find these kind of crowd pleasingheadline acts and there aren't as many new ones coming up. And it also seems like, festivals are kind of continuing to dip into these legacy acts from times when the industry was less congested and less fragmented like the Glastonbury lineup, it's Yeah, Arctic Monkeys, Elton John and Guns N' Roses. And it's like this could be the lineup a decade ago. So it does feel like not only are festival lineups becoming more homogenous, but a lot of them are tending to book legacy acts rather than newer, mainstream stars. Maybe because there aren't as many newer mainstream stars, I don't know.

[00:34:43] Dan Runcie: Yeah, I think that, that headline spot is probably where some of, I don't even wanna say contention, but some of that decision making can lie in, maybe a lot of this applies to festivals that aren't like Coachella a bit because they are a bit more reliant on the headliners themselves, and because of that, they're more likely to make, what they feel is safer picks and unfortunately, a lot of these safer picks end up being more male, more white, and more legacy acts that have likely been there before. So if they're like, okay, well we knew that Arctic Monkeys were, you know, huge in 2012, then let's bring them back in so we can try to command some of that same audience that is like, well, you also have local stars and others around the world that don't fit into those same categories that could do it. But they feel like that's a risk, unfortunately, and then if they do invite those folks, it's for less money and their name is smaller and they're not presented as a headliner in the same way. So I think that's one of the downsides of it.

And the fact, I think fragmentation plays into this, cuz I think, you know, regardless of who you are, it has just become even harder to have artists break out. The artists that do break out, they're more likely to maybe break out within their particular region. It's harder to have that same global appeal in that same way and I think we've seen maybe a few outlier examples of that more recently.

Especially when you look at Coachella's lineup this year with Burna Boy and Black Pink and Bad Bunny all having prominent placement in their festival. I'm curious what that looks like in future years. How do you maintain that? Because even from that perspective, yeah, there's other artists that are huge, but they've already kind of gotten some of the biggest ones that we've at least had at this particular moment.

But there's others. I'm curious. I forget if Dual Lipa has headlined one of the big, huge festivals in the world, I don't think she has yet, right?

[00:36:41] Tati Cirisano: That's a good question. She hasn't headlined Coachella, she definitely had a big set at Glastonbury, but I don't know if she headlined. I don't know. 

[00:36:48] Dan Runcie: Right. Yeah. I feel like that may have been a few years ago, but I forget if that was like before or after, 

[00:36:53] Tati Cirisano: Oh yeah. 

[00:36:53] Dan Runcie: of Nostalgia tour and then after that, just thinking of other artists that have gotten huge in the past recent years, whether you have Billy Eilish or SZA, I mean, there's a few but.

I'd be interested to see whether or not those names have become headliners, maybe we're seeing some of these festivals do this now, where outside Lasnier, which is, you know, right here in my backyard of San Francisco, their most recent poster. Instead of having three headliners, one per day, they have 10 artists that have big font size names, and then they have the other 60 or 70 that all have, you know, smaller, but it's all kind of the same.

And, you know, you just look at the names of these artists. I'll just say right now for outside Lasnier, Kendrick Lamar, Foo Fighters, Odessa, Lana Del Ray, the 1975, Megan Thee Stallion, Zed, Janelle Monáe, Maggie Rogers, and Fisher. and I mean, I'm, I'm not shy to be mean, I'm not trying to call anyone out, but there's certain artists on that I just mentioned there that would not headline outside lands if it was presented as, oh, these are the three headliners. And they may not even be on that second row either, but. Is that in some way reflective of where things are, where it may make it easier, and of course you could probably guess based on the order of those names, Kendrick Lamar's name is at the top, you know, of this list. But still like, is this some type of reflection of this fragmentation where you have all these different genres, most of these artists, more modern, current artists, except for, you know, Foo Fighters, a bit more legacy that has continued to play on but I wonder how often we'll see that with other festivals that are maybe closer to outside lands and Coachella where, you know, still a major huge festival, but they're not getting the same headliners that Coachella is.

[00:38:42] Tati Cirisano: Yeah. No, I think, you're absolutely right and I think we're gonna see that type of lineup more, at the same time as we're seeing that, there are fewer of these like Beyonce level mainstream stars, we're seeing a growth in the middle tier. We're seeing a lot more of these like, cult stars and also artists on that list who are huge but aren't really at the level of, you know, some of like Madonna or you know, these artists of the past, these icons of the past.

So I think it makes more sense rather than having, you know, three headliners to have like six, not as huge artists still have a really big following. I think that makes a lot more sense, for the festival, the people going, and I think we will start to see more of that just because of the way that fragmentation is playing out.

Yeah. I also wonder, when we're gonna start to see like the millennial version of legacy artists start to perform, like, was funny when I saw like the lovers and friends line up, I was like, oh my God. when you start getting an nostalgia festival marketed to you, that's when you know you're getting old.

That's when you know you're no longer like the youngest And like, I wonder, when we'll start to maybe tap into like 90s and 2000s era. Sort of icons, like I would love to see like Missy Elliot headline, Coachella, like that type of thing. And I wonder if that's gonna be like the next step once we've exhausted all the times that like Foo Fighters can possibly headline a festival 

[00:40:09] Dan Runcie: I know, right? Like 

[00:40:10] Tati Cirisano: Who are also that era but, you know, what I mean, like. 

[00:40:13] Dan Runcie: For sure. For sure. Yeah, because I feel like we saw. Dr. Dre and Snoop Dogg were headliners maybe around 10 years ago, and then they had brought, the Tupac hologram out infamously. You remember that? So, we did have that. And of course, you know, that kind of reminds me of the Super Bowl that, from a couple years ago.

But I do feel like there's a sweet spot there, given. Where Usher is right now, the popularity of his residency, I wouldn't be surprised if he jumps back on this circuit and he's doing less of the lovers and friends and he's doing more of the headlining major music festivals 

[00:40:49] Tati Cirisano: He would be amazing. 

[00:40:50] Dan Runcie: There's a huge opportunity there.

Yeah. Great performer. I think he still does great stuff. I wanted to see if I can go make it to Vegas to go catch this, residency before it ends. But yeah, I I think that there is a sweet spot there for that. I mean, you think about other artists, I think Justin Timberlake has probably done some of these already, so we've seen him do them.

I don't know if Britney Spears would probably perform in that same way. But we'll see. I feel like there's a number of artists that they can tap into from that era.

[00:41:18] Tati Cirisano: Yeah. Yeah, exactly. 

[00:41:21] Dan Runcie: And yeah. I guess before we wrap things up, are there any predictions you have then for let's predict what 2024 would look like? Three headliners. Who would you think would most likely be a headliner for Coachella 2024? 

[00:41:37] Tati Cirisano: I would say SZA, probably, I would say Dua Lipa I think she makes a lot of sense as a headliner too, just in terms of like how, I hate like, I don't wanna say like crowd pleasing or mainstream, but like, cause I feel like that sounds like I'm giving her shade and I'm not. I think she's incredibly talented, but like she would please a, a big swath of people with her music and she's a cool performer and she has some time now, I think, since she's not touring. but, okay. So Du Lipa, SZA, This is about to be an all female headliners. This is a bit of wishful thinking, but I would love to see, cause I don't know if she's ready for this yet, but I would love to see Rosalia, headline Coachella.

I think she's getting there and I actually saw her in 2019 at Coachella. She was playing the tiniest stage ever and she treated it like she was in a stadium. Like the production quality and the dancers and just like everything she put into it was incredible. And she's risen a lot over the past few years.

So, yeah, that's my trio.

[00:42:35] Dan Runcie: Nice. Nice. All right. We have one in common. We have SZA, so I'm gonna go SZA, Madonna, and Usher. I think that's gonna be my prediction, I feel like, Madonna has this tour coming up. Maybe she'll cap things off with a Coachella performance. But I feel like yeah, if you're gonna have this tour, I forget the name of it, you're gonna go back through all her eras.

I feel like there's something unique there, so, so, 

yeah. I know, I know. And we'll have to revisit this. We still have a number of festival lineups to get announced this year, so we'll have to check back in and see how do these continue to develop, what continues to shape in how these festivals continue to evolve over time.

So tati, this was great. Thanks for coming on.

[00:43:17] Tati Cirisano: Yeah, Thanks for having me. Oh, it's a pleasure.

[00:43:19] Dan Runcie: Yeah.

[00:43:20] Dan Runcie Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how capital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, Go ahead.

Rate the podcast, give it a high rating, and leave a review. Tell people why you like the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

This week, I’m running back an interview I did with Will Page in 2022. It was our most popular episode of 2022 and we talked about a lot of topics that are still timely and still being debated right now in the industry. 

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: 

[3:21] The Global Business of Music

[4:15] Vinyl Records $1.5 Billion Recovery

[08:54] Will’s Bearish View About The Future Of Streaming

[14:46] Ongoing Price War Between Streaming Services

[18:33] The Changing Economics Of Music Touring 

[21:44] Performing At Festivals Vs. Tours 

[24:57] The Evolution Of Music Publishing

[28:34] How Music Revenue Gets Distributed To Publishers

[32:41] What Does A “Post-Spotify Economy” Look Like? 

[33:44] 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 | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: 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

[00:00:00] Will Page: When you have 110 million households, and you have more than 110 million subscribers in the United States, then we are in a race to the finishing line before herbivore 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 than is left to extract an oil that's left is gonna be even more costly to get out the ground. I think we're in peak subscriber territory where at some point soon we're gonna start seeing growth happen through stealing other customers as opposed to finding your own.

[00:00:29] Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more who are taking hip hop culture to the next level.

[00:01:12] Dan Runcie Guest Intro: For today's episode, let's revisit the most popular episode that we did in 2022. That's the conversation that I had with Will Page. Will Page is the Former Chief Economist for Spotify, the author of Pivot, and Advisor consultant to many of the companies that are leading the music industry today. In this conversation, Will and I talked about a lot of topics that are still timely and still being debated right now in the industry.

The price of streaming. Streaming, especially for Spotify, is still $9.99 in the. Pound and Euro in many markets. But Spotify wants to keep that price for several reasons. They want to continue to grow as much as they can. They also want something in return from the record labels. They want some type of concession if they're going to raise their prices.

But as we've heard, the push has got louder and louder from the record label CEOs that want that price to increase. So we talk about some of the origins of that debate and where that may be. Then we also talk about some of the competition among the digital service providers as well, whether it's Apple Music, Spotify, Amazon Music, and others.

We talk about how it's transitioning from a herbivore market to a carnivore market now that the market's getting saturated. You probably heard that term a bit over the past year that originated from this podcast. So we talk about that a number of other timely things and more we'll eventually have will back on the podcast soon.

But this is a nice precursor to refresh the memory a bit and with some of the topics that are still going on in music today. Here's our episode. Hope you enjoy it.

[00:02:48] Dan Runcie: Some of the work you've done for a company that is very heavily focused on playlist, which is Spotify, and I think more broadly looking at the streaming era we're in right now.

This is a great time to chat because we just saw the IFPI results and streaming as continuing to grow as we've seen. But I feel like you probably spotted a few interesting trends about where things are heading, and I think that's a question mark 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

[00:03:21] Will Page: to you? I'll give you a couple. The first one is the global business. Well, last time I looked at 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 and where they 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 America, 22, 20 3% 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, you know, economic questions like globalization, questions, should poor countries catch up with rich ones? The 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. That's a positive problem, but I just wanna flag it, which is, that's not how it was supposed to play out. And then the second thing I'd wanna point to as well is 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 define 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 we're 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 what are we buying it for? I'll extend that as well. the cost of wall frames to frame vinyl on your wall often cost more than the record itself.

So I'm willing to pay more for vinyl to you know, framed on my wall than I am for the record. And by the way, I don't have a record player. There's a lot of people who will tick those bizarre boxes. But on the crater side, something else is interesting. This'll take a little bit of working through.

But if we think about the streaming model, it's monetizing consumption. That's what it does. So if there's an album with 10 songs, three killer and seven filler songs, and an album, and let's say Dan Runcie wrote the Three Killer Tracks and Will Page, he wrote the Seven Duff Filler Tracks. On streaming, Dan might walk away with all the money and I'll walk away from 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 cash. That's crazy because nobody knows what's being consumed and it's a lot of cash. If I just kind of do some rough math here of a million fans streaming your hip hop record on Spotify, and let's say they're stream. 200 times in a 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 seventies, the, one of the most successful records of all time was Saturday Night Fever, the Bee Ges and a bunch of other people. It's crazy to think that Ralph McDonald's Calypso strut his record there, which nobody has listened to, got the same royalty as staying alive by the Bee Gees because it was a vinyl record.

So to reiterate, on the consumer, I don't know how many of these vinyl records are being played, and on the crater side, it raises questions about how these craters are gonna get

paid.

[00:06:53] Dan Runcie: That's a good point book 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 is being purchased.

I think I even saw the stat that Adele's 30 album sold 8,000 cassettes. Or there was stuff tied from Stat about that, and I think the similar thing that you said, lines up having those people actually still own a watman 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? Or whether you're a songwriter, whether you, you know what's behind it, especially when you know that there's so much clear path to be able to determine, okay, this is going to be the lead single, this is what we're gonna push most from this album.

It really shifts things even more to where things are going in terms of a single market. Like the way that people have talked about pop music for a while now, right? And I guess that brings a, brings me back to the streaming trends that you mentioned. Overall, we're in this area, as you mentioned, streaming itself, the US penetration is grown from 22%, I believe you said is now through your 35, 37, 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 there, fair share of what they can.

It's streaming so. It's in like five, 10 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 goal point where we've maximized the global penetration of this.

What do you think about, where that is going?

[00:08:54] Will Page: Let 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 gonna call time on it? And then secondly, I wanna deal with the pricing point on its own lane as well, but on saturation point, you're now in a situation where I 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 are gonna see some point soon is carnivores.

Which is Apple will grow by eating into Spotify's growth, or YouTube will grow by eating into Amazon's growth. So the key question we gotta ask is when do we go from the herbivore market? We're in today to a carnival market of tomorrow, and I output Spotify's US subscriber number around about 45 million, Apple at 49 million. We dump on top YouTube. Amazon, Pandora, you're well past 110-120 million. Now, that's important because I reckon and 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 turbos of storage per six account holder. It's 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 are in a race to the finishing line before herbivore 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 than is left to extract an oil that's left is gonna be even more costly to get out the ground. I think we're in peak subscriber territory where at some point soon we're gonna start seeing growth happen through stealing other customers as opposed to finding your own.

So I just wanna 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 gross is gonna come at the expense of other players that then flips, you know, from the A side to the B side of this record. We flip it over to price and then the pricing debate is interesting.

I published this work called MELD Economics,uh, which we can cite on your, your wonderful website there. Which was to look at 20 year history of the nine 19 price point, and its crazy story back in the 3rd of December, 2001, over 20 years ago. Today Rhapsody got its license for a $9.99 offering, which had 15,000 songs.

First point. The origins of 9 99 bizarrely date back to the Blockbuster rental card. Some coed up label executive would've said, if it cost 9 99 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 welded into the future. So you just. 9 99 for 15,000 songs. We are now chatting in early April, 2022, and it's still 9 99 in dollar in Euro and Sterling, but we're offering a hundred million songs. That's the crazy thing. So in the article, Mel Economics, what I do is I strip inflation out in the case of the uk, 9 99 has fallen down to six pounds, 30 pence.

Remember, you know, Family Plan makes music cheaper too. If 2.3 people are paying $40.99, that's six pounds 50. There's way too many numbers in this conversation for Trapital, but still we'll stick with it. Student plan makes it cheaper too. So music in real terms, has fallen to six pound 30, which is less than a medium glass of Malbec wine, so 175 milliliters of Malbec wine costs than a hundred 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 $7.99 to $8.99 to $12.99, to now $14.90. In the space of 15 months, and I haven't blinked Disney plus. The reason I'm paying $4.99 on Disney Plus is because I paid $19.99 to get Cruella live on demand. So they're charging more and more, but only offering part of the wells repertoire set for eyeball content.

We are charging less and less and offering more and more of the wells. Ear hole content, so it's like two ships passing each other in the night. It's a very interesting dilemma.

It'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, $18.99, 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 a dollar, but that's from $7.99 for prime subscribers to that being $8.99. So we still have to cross that.

I wonder if I won't cost that.

[00:13:57] Dan Runcie: I mean, honestly, I feel like there's something here because when I think about this, I think about a few things.

Obviously you do have this fight where the artists wanna get more and the labels wanna get more, you know, not just for the artists, 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 boing. 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 $12.99, then they're going to lose those customers to the other streaming services that haven't jumped 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 these services. It's led it to be more of a price war then in video streaming, where most of them do have some differentiated content.

[00:15:02] Will Page: A hundred percent. And two things to bolt onto your very eloquent points 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 AirPods, which cost two years of Apple Music or Spotify to put in your ears 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 are improving the offer we're supplying more but we're charging less in real terms. And that's a really interesting kind of point kind of cut into. And the second thing, and we should get balance into this discussion cause it's delicates, we have to remind ourselves that, you know, there's 120 million subscribers in America.

There's still another 120 million to go, but we know they're not that interested in paying for music because they haven't paid yet. Now the best way to attract them is not necessarily to raise price. So we gotta remember that there's still, you know, oil to extract. It's not gonna be easy oil to extract, but the best way to get to it might not be to raise price, but there's a catch to this.

I can remember in the early nineties, right up to 2010 piracy, ripping the asset out of this business and concept 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 ours.

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 on.

[00:16:32] Dan Runcie: That'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 and still has 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 just said made me think about that being a factor potentially too.

[00:17:02] Will Page: A hundred percent. And of course, you've gotta distinguish the Spotify Apple music cost structure from that of the video streaming companies in that they have a kind of variable cost.

You double your business, you double your cost base. Whereas Netflix, you jump up costs and you have, you jump up your revenue, you know, you raise me from 7 99 to 14 point 99, the cost of that content was fixed. And I'm still consuming the Fresh Prince of Bel Air on Netflix to this day. That was a fixed cost deal that he did to get that content and that's margin to Netflix.

So, you know, the cost structure matters to this one as well.

[00:17:33] Dan Runcie: Definitely. And you mentioned live 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, more artists than ever are trying to tour and get out there trying to capture what's there, but also from an economic perspective from that.

Most people are only gonna 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 then 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. You did it.

[00:18:33] Will Page: Absolutely. Now on touring, I was lucky and I gotta 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 in the US but I think these points will carry. The first one was to work out how much is spent on concert tickets in Britain during the, 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 on recorded music, which makes sense, you know, you pay 120 pounds on the Spotify account, you're paying 240 pounds to go to Redding Festival. Two days in the muddy field in Redding, cost more than 365 days of all the wells. 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 gro came from stadiums, festivals, and to lesser extent arenas. The theaters, the 2000, 3000 capacity theaters like the Philmore 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, the festivals, the arenas, as opposed to the theaters, the clubs, the university venues.

And that's interesting cuz that's gonna 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? The cost structure for the insurance and all those things that bands have to consider when they're hitting the road.

I mean, credit to capital. You've had some great podcasts recently on this topic, but as, a big rethink coming along in this live music market, it's 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?

[00:20:22] Dan Runcie: I 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's earned more on those festival guarantees that she likely would on tour.

She's also done many private events where she's likely earned that save 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 major bag, you get the high number, the revenue that comes through, but maybe your fans will be a little bit more forgiving if your 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 Instagramable or talkable moment to then sell future tickets and just the production cost and everything with travel. 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 add residencies too. I know she's done a few different things in Vegas here and there, but yeah. Still yet to do that 30 city worldwide tour.

[00:21:44] Will Page: Yeah, I think you gotta think with your head and your heart. Your head says like you point out the economics favors festival.

Your back line's there, your insurance is covered. Travel's 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?

[00:22:05] Dan Runcie: Right?

[00:22:05] Will Page: I mean, 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 head and the heart's gotta 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 perform 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 a property market. If you have one too many tours or one too many festivals, you collapse live music industry. So there's ways in which people are trying to restrain the market to festival. At the expense of the theaters.

That certainly is coming through in the data. We're seeing the theater business take a kick in while festivals go on a roll.

[00:22:45] Dan Runcie: Yeah, because I think about, you look at the artists that are touring stadiums now, whether it's your Taylor Swift's or Beyonce's, they wouldn't be able to do that if they didn't have the individual tours at 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 wanna say necessarily short-term thinking, but I think you ideally wanna have some type of balance there, right?

Get the big bag that you can get from something else. It's almost no different. I think running a business, right? Okay, sure. You may be able to do a speaking fee or do some type of, you know, thing here or there, but hey, you can't do that all the time, especially if it's not an audience you're tapped into.

You still need to do some of the things that could set you up for the long game.

[00:23:37] Will Page: Yeah, and there's an infographic that I'll share with you to pass onto your audience here. I wrote an article in The Economist called Smells like Middle-Aged Spirit as opposed to Teen. Nice play on Words hat to Dave Gro and Kurt Cobain.

But what I was looking at was the average age of festival headliners over time. This is a du pessimistic Scottish economist. This is what you do with your spare time. Okay, so in the nineties when radio head to Glastonbury, the average age of a festival headliner is 25, 26 years old. all these hot bands were coming through the Brit Pop era.

You know, there was so much development of new talent. By 2012, I think it had 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 17 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 developed talent for tomorrow. That's just how we cash in our chips at the casino today. So it does raise questions, I'm not saying it's like the doomsday scenario here, but we just need a healthy balance of, you know, a seeded for future growth and then the big stage for exploiting that moment today, which could be the pyramid stage at Glastonbury, the headlights stage at Monterey over in the States.

So I just think we're getting a little bit lopsided here. We're a bit short termist and how this business needs to develop.

[00:24:57] Dan Runcie: Agreed 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 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 publishers, 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 in what the future opportunities are for that side of the business?

[00:25:54] Will Page: Well, 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 Dorian Loader, who worked in the music business from 1959 at Deca Records, right the way through to 2012.

She ran Enzyme records with Nigel Grange, Lucian's Half-Brother. They were responsible for Shead O'Connor, who sold 11 million albums based on the Prince cover. And she once said to me, will, this is how the music industry works. The record label pays for your drugs and the publishing pays for your pension. I just kind of, that's 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 then that piece of work that you cite is something called global value of copyright, where I'm really keen to educate this. Regardless of whether you're coming from a label perspective, a manager, an artist, a songwriter, there's a C with a circle on it called copyright.

We get that, and it involves record labels. It involves sound exchange. It involves artists. It involves ascap, BMI, GMR, Czek. It involves publishers, David Israeli, and the great folks at the NNPA. It Put the whole thing together for me, all this spaghetti and strain it out. And what I was able to show was that in 2020, copyright was worth 32.5 billion, way bigger than what you've just heard from IFPI way bigger than what Czek 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 weight of pate. In the cocaine capitalism days, you know, record labels back then. The split was much more in favor of labels, you know, more than three quarter 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 reporting record breaking collections, so you have a hair tore toys analogy here of labels going really fast and falling off a cliff.

Publishers just trundled along with record breaking, not massive record breaking collections, but it kept on growing their bases. So, the questions these throw up is what type of industry are we moving towards? Are we going back to a business model which paid labels over three quarters of the pie and publishes 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, come to the business, is that gonna have a completely different balance? Now why this matters to your audience is not just on the crater 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 years time, I go into my back cave again, calculate the global value of copyright, and instead of 32 and a half billion, it's 40 billion.

I'll come on Trapital show, I'll make an exclusive announcement. Copyright today is worth 40 billion, seven 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 gonna split publishing side or is that gonna split label side?

And if you're investing in catalogs, be the master rights, be the author rights that really bears, there's a huge educational drive here to understand the balance of this business of copyright.

[00:29:15] Dan Runcie: So there's a few things you've 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 Pelotons? What does that share of revenue from those plays look like?

[00:29:38] Will Page: So, The best way I could do this is if I just talk about ratios. There's three Rs in this business.

There's share of revenue, there's ratio in this rights pool. They mean different things. Most experts get confused. With these three Rs, I'm gonna stick to ratios. That is, if I give the label a dollar, how much do I give the publisher, the songwriter, this collective management organization. So we stick to the conventional streaming model Today, I would say that if you give the record label a dollar, you're giving the publishing side of the.

24 cents, you know, a decent chunk of change. But still the pure 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 sync right into deal, and you expand it to Peloton or TikTok, potentially even more, and then you can flip it and say, well, what happens if the future of TikTok is karaoke?

Not saying it's gonna happen, but it's not implausible if that was the case. That favors publishers even more. So there's all these weird ways that the business could develop, which could favor one side of the fence. The labels and the artists continue getting three quarters of the cash or the other side of the fence.

Publishers and songwriters start enforcing their rights and getting. A more balanced share and that that's what we need to look out for when we're investing incorporates. 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

[00:30:57] Dan Runcie: mm-hmm.

Well, like how much higher do you think? I mean, if you had to put a percentage on it for the TOS or the Pelotons, and I guess as well, you made me think of sync deals, right? Like for the folks that are selling, or their song gets placed on one of these hulu series or one of these HBO Max series, like what does that ratio look like, you know, from a ballpark for those.

[00:31:20] Will Page: So I think a 50 50 split would be the upper bend of the goal. If, if a song is placed in a Hulu TV show or you know, an artist I've worked with for many years, Yu Dito Brazilian composer, his songs now in this famous easy Jet commercial over here in Europe. The artists and the publisher would see around a 50 50 split of those revenues.

Now, would that happen in the world of streaming? Unlikely. But I think if you can get to a stage where you're giving the record label a dollar and the publisher 50 cents as a ratio, and I've gotta repeat the word ratio here, you know, that's potentially achievable with this post Spotify economy. I don't think it's gonna 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. If I can quote Ralph Simon, a, 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. It's a great reminder of just, you know, we're restless souls in this business. We've achieved this amazing thing in the past 10 years with streaming.

Got there. Banked there what's coming next, who would've thought Peloton would've had a music licensing department 18 months ago? Now they're like a top 10 account for major labels.

[00:32:30] Dan Runcie: It'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, it's, we always gotta be thinking about what's next.

And you mentioned a few times about a post Spotify economy. 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 where these other platforms in general, having licensing deals. But when you say, or what do you think about post Spotify economy?

What comes to mind for you?

[00:33:02] Will Page: Let me throw my fist, your words, your jaw, 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 the Epic Games. It's just acquired band. I learned a fascinating stat about bandcam, which relates to my book Tarzan Economics.

There's a chapter in the book called, "Make or Buy", where I sat down with the management of the band radio head. We went through the entire in Rainbow Story for the first time ever, a real global exclusive. 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 live from the Ben Zion. Best remix of Radiohead I've ever heard in my life is Amplive, Weird Fishez 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 Band Cap, 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 ban, an album, my own banquette, and you say name your own price, no minimum, and there's a guidance there of 10 bucks, the average paid is. People go above 40% asking, and that could be for a super rich blockbuster artist who tries something out in band camp.

That could be for some band who's broken Brooklyn, Robin and coins together, trying to make them breed. People go 40% above asking when you say name your own price. And that's interesting for me. there's a great academic paper by Francesco Cornell from Duke University. She asked, how should you price a museum?

An intuition says Top-down. 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 poor 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 $9.99 and not a penny more.

I think that's, we're suffocating love. We're putting a ceiling on love and we need to take that ceiling and smash through it and let people express love through different means. But I love that ban camp story. Whatever you suggest, I'll give you 40% above cuz it's art. We're not dealing with commodity, we're dealing with culture and that's why we gotta remind ourselves.

[00:35:13] Dan Runcie: It'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 had some vary of a 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. That's a great note to end on. Will, thanks again. Thank you so much.

[00:35:33] Dan Runcie Outro:

If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how capital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, Go ahead.

Rate the podcast, give it a high rating, and leave a review. Tell people why you like the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

If you had a billion-dollar fund to buy the full rights, masters, and publishing of ANY music artists — who are you acquiring to maximize shareholder value? This question was top of mind for real-life portfolio managers the past three years as music catalog sales boomed. Now my guest on the episode, Denisha Kuhlor, and I are asking ourselves the same hypothetical question.

In this episode, we’re doing a mock music rights draft. Akin to the NFL Draft, each of us getting seven picks. Any artists’ catalog, living or dead, is on the table for us to acquire. Our goal is to score the biggest ROI for investors on a 10-year timeline from purely catalog revenue — streaming, syncs, and partnerships, among other sources. Touring or merchandise revenue isn’t factored in, and neither are future catalog releases, only what’s already been released. 

As you’ll see on this episode, Denisha and I took very different approaches to our portfolios. One was more “risk on”, while the other was filled with more “blue chips.” Here’s what to expect:

[0:01] Draft parameters 

[4:51] First-round picks

[9:42] Second-round picks

[14:21] Third-round picks

[18:49] Fourth-round picks

[21:55] Fifth-round picks

[26:04] Sixth-round picks

[29:20] Seventh-round picks

[37:33] Honorable mentions 

[52:21] Up-and-coming artists

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Denisha Kuhlor, @denishakuhlor

Today’s episode was brought to you by feature.fm. Grow your fanbase  and music career with their marketing suite. Get 50% off your first three months by using code: TRAPITAL50

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

Denisha Kuhlor: We've talked about Burna Boy on the podcast before, so don't necessarily have to go over all of his stats, but I think that in one thing I'm finding with people discovering, music from the continent. Is that when they like the artist or there's things they like about the artist or the genre, they go back and listen, to the past catalog.

And so I feel like there's still a lot of untouched ground in terms of people discovering his music and listening to his whole catalog and given how timeless in a lot of ways some of his music feels, I think that we'll have new fans discovering him over and over for a long time and getting to also benefit from the upside of that catalog is great.

I'll also say, he's pretty feature light as well. He's increased the amount of features that he's had in some of his more recent albums, but even like him, some of his breakout singles, whether Ye or Last Last, were Independence, or songs that he did independently and didn't have people featuring.

So I think in terms of some of the big records, there's solo records, which is exciting and that his catalog has a lot of value for people to discover and wanna to.

Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more who are taking hip hop culture to the next level. 

Dan Runcie: Today's episode is one I am really excited for. This is a music rights draft. We are going to be breaking down the artists that we would most wanna have their music rights for. So today's guest friend of the podcast, Denisha Kuhlor, founder of Stan, her and I are both managers of billion dollar funds and we can acquire the full rights, Masters and publishing to any artist, living or dead.

And our job is to maximize value for our investors for the next 10 years. We each get to pick 10 artists and their full rights of music, and we draft them one by one. Denisha, are you ready? How are you feeling?

Denisha Kuhlor: I am, I'm super excited for this. like keep racking my head, I think till the last minute with each pick. but yeah, I'm ready to get 

Dan Runcie: started.

Right. It's funny because we're chatting about this yesterday and I almost wonder like if our chat yesterday like shifts anything, it's like, oh, okay. That's how you're thinking about this. Okay. That's how I'm thinking about this.

Denisha Kuhlor: Exactly, in a funny way, I have some more compassion for venture investors because I can see how societal shift or even group think can shift your perspective even if just a bit. 

Dan Runcie: Yeah, it's fascinating, and I mean with this, we did try to keep the parameters of it a bit clear because obviously in the real music rights acquisition world, there are many different strategies about how these firms are buying and acquiring these rights. Some of them are sitting and holding on them, but we are putting ourselves in a different bucket.

We are assuming that we have the means to maximize this catalogs and this artist's value through multimedia, through sync, through other partnerships, and just the revenue that it naturally generates as sound recordings themselves. And we assume that we're only acquiring what that artist has released up to that point.

Of course, what that artist continues to do in the future may shift the perception of the value of what they've done, but we are only looking at what they've done up to this point. So we're saying that just to lay the groundwork, because someone may be like, oh, what about so-and-so and so-and-so may be an artist that blew up in the past five years.

They may not have Steve as a catalog, but who knows? Maybe we'll both have a few of those picks.

Denisha Kuhlor: Exactly. Super exciting 

Dan Runcie: All right, so we are gonna be so a few things to just keep in mind as well for listeners. So a few of the factors you both considered were expected longevity of the artist music themselves, which is a big piece of this. You're acquiring these rights, you're trying to get a sense for what is the music that people are still going to listen to, right?

It's one thing if you dominate the charts, that you have a song that takes off, but there's a decay curve. So we're trying to find those artists that have the value, but have the much less steep decay curve as it goes down year over year. There's also a mix too. There's the stable picks, which a lot of the rights go after, which are attractive, but there's also some higher upside picks or some riskier bets.

Where do those fit in? And then we're also taken into account the share of the song recordings that the artists actually have given that certain genres such as hip hop or r and b and pop music specifically, there's a lot more collaboration. There's a lot more hands being shared in that pot. So, how does that line up with another genre where that artist may have a higher percentage of those things?

All those things get factored into how we pick this. So I'm ready to get started and I wanna give you the first pick so you can go and then I'll go after that.

Denisha Kuhlor: Oh, thank you, so my first pick is Mariah Carey. for a few reasons. One, Mariah Carey has one of the most amazing songs in her collection, with Christmas, right? Like it's just being Christmas time, every Christmas, you know, you're going to get, a spike in revenue. Mariah Carey's also been very notable, about talking about that.

She writes a lot of her own music, and I don't think how many people realize how much of a prolific songwriter that she is as well. And with the nature of R and B, much to what you talked about earlier with it being collaborative, Mariah Carey seems to be embraced by a lot of rappers for samples.

So while I definitely think it will be pricey based off literally, all I want for Christmas, if anything, I think that it's. It's a bit of a safe, but also Sure. Fire and, and stable. expectation revenue. 

Dan Runcie: That was my number two pick. So we're definitely aligned there. It makes perfect sense because even if you, all I want for Christmas is a big piece of the pie, I wanna say 300 million streams per year on Spotify was the stat that I heard, and I forget the exact revenue number that it generates. I don't wanna quote it, but it's huge.

Almost 20 number one singles that she's had. So the longevity's there, and as we know we're talking about this a little yesterday, but there's a reason that catalog isn't one that's getting acquired because, A, the people that own it, and I know she may own maybe some of the more recent stuff. I don't know if, Columbia still owns, you know, the stuff from the nineties, especially given the nature of her deal and stuff like that.

But I mean, it's up there, it's definitely one of the most valuable ones. So good. Yeah. Good for you on that one. So I'll take my number one pick here and the number one pick. For this, for me, so much of it was thinking about how millennials and this group are the dominant users of streaming.

Streaming makes up a bulk of the revenue for these streaming services. And who is the biggest artist for millennials overall? Just you look at the sheer numbers and everything like that, it has to be Taylor Swift. Miss 1989 herself, I will take those albums, especially these rerecorded ones, Taylor's version, because they're

Denisha Kuhlor: That's just what I was gonna ask.

Dan Runcie: Yeah. I may not get Scooter bronze version, but I'll get Taylor's version and I'll keep that. I think that it's rare to find a star that has as much impact as she does that is as recent in this way, I mean, just the pure demand for this Eras tour. She could have done 10 x times the number of shows and been touring for the next five years in a in stadiums and still had plenty of demand left over.

And of course, we're not counting touring revenue in this, but it just goes to show how big everything else is. The fact that midnights broke records, both in streaming and in hard sales, I think I saw 230 million dollars that album generated in its revenue. Of course. That her entire rights will likely be owned, you know, herself just given the Taylor's version of everything.

Currently I'm licensed with Republican Universal Music Group. But if in a perfect world you could acquire that, I will take that. She's able to dominate in all of these multiple platforms and if we're really trying to say, okay, 10 years from now, each of her albums is still in the top 50 of the billboard, 200, just from like a rankings perspective.

Well, not all of 'em, but a lot of them, and I think it's harder to come by. So yeah, I'll take T Swift.

Denisha Kuhlor: Yeah, I think it's definitely a solid pick her music evokes so much nostalgia especially as her fans get older, that they'll be listening to it for life, right? Because it's not necessarily attached to a moment or even a recency of today, even though they can appreciate that.

it's, yeah, it's music that's the soundtrack to their lives. So, it makes a ton of sense. And she's also another prolific songwriter, so I would assume, from an ownership perspective, it's quite attractive.

Dan Runcie: Yeah. Not as attractive as Mariah though, because I feel like Taylor more recently, especially with the more pop albums, there was a lot of Max Martin production and a lot of other big name folks and you know, Kendrick Lamar, guest verses and stuff like that. And Mariah had some of that, but I still feel like she always had like her single, you know what I mean? It's like 

Yeah.

fantasy was, they had a remix with ODB or they had a honey remix with the lock, but there was still the core Mariah version that was just

Denisha Kuhlor: Yeah, that's a great point. The breakout has frequently remained just her. Yeah. 

Dan Runcie: so we'll see. But yeah, who's your second pick?

Denisha Kuhlor: So my second pick, I thought a lot too about, like world music as we say, or just music that's global. much to your point as well around streaming. I kind of think that it's exciting to pick, an artist that can dominate globally that's, not necessarily a pop artist. And so for that, I went back and forth.

Probably two of the biggest artists. but landed on Bad Bunny, Bad Bunny to me is one just an amazing and exciting artist. He also has a great amount of volume, but much to the point we just made about Mariah Carey's, Taylor Swifts, I think he's really optimized a lot of his catalog, for music that he makes and that music that he solely makes.

Additionally, and I know we're not counting touring, but the sheer amount of numbers he's done touring, I think has not only earned him new fans, but earned him kind of the same type of fan appetite that Taylor Swift has in which the music will evoke a certain nostalgia, whether they saw him perform it on top of a gas station or when he was driving through the Bronx, that leads them to want to continue to listen to this music for the rest of their lives, which hopefully will be financially lucrative.

Dan Runcie: He was on my list as well. You can't ignore just the huge, massive success of this last album, UN Varano Centi. We saw that album dominate week after week after week, and it, the songs are still on Spotify's Top 50 and they're still having traction there. And in an era where there's just so much more music, if you can get a song like that that comes out in 2022 that's still coming out or just an album, it's rare and I know we talk a lot about how monoculture itself is just harder to come by from a artist that is in the US or UK just because those markets are so much more saturated. But the closest we get to anyone reaching Beatlemania is someone like Bad Bunny. So that's a great.

Denisha Kuhlor: Exactly, exactly. I also think a lot both, Drake's wrapped about Bad Bunny numbers and Kanye's reference Bad Bunny's, success. And so I feel like even if his peers in the industry are kind of in some ways either looking at him aspirationally or like he's one that could potentially, hit my success, is also a great indicator.

Dan Runcie: All right, so the next pick I have here is, you mentioned him a second ago, the streaming king himself, 70 million streams. Drake, it's hard to think about the streaming era and not think about him. Just the massive hits that he's had and every time that he releases an album, it still creates this moment that few have the ability to be able to reach moving forward.

I know Birdman will never give up those rights, and Young Money extensively will never give up those rights, but if I had the choice, I would take it. I think the knock against Drake potentially though I will acknowledge is that one. Just the high number of features and samples with all that, there's a high, there's a less likelihood that he may own all or just have a higher percentage of the revenue coming in for this stuff.

But just the sheer volume of whether it's the mixtapes, the playlist, the little two packs that he puts out, the albums, especially some of the ones from like, especially the cash money albums, honestly, from, when was that? So I guess you had 2010, it was official first album, but you had so far gone oh nine and then everything up to Scorpion.

Yeah, those are the biggest albums of the last decade. So I'll take Drake

Denisha Kuhlor: Yeah. Yeah. super solid pick. As someone who has seen Drake in concert 10 times, there's a few things recently. Yeah. 10 times.

 Yeah. So a few things that stuck out to me with Trigg specifically, The Serious Show. So the serious show was a lot of like deep cuts or songs that he hasn't recently performed on some of his tours. And you could just see that fans loved it, right?

A lot of people wanted access to tickets and really loved the music. And then, lastly in part of, in going to these tours, there were so many times that I saw, that he would like go off of stage and to keep the crowd like engaged. They would do a whole set of his music that he wasn't going to perform, and the crowd literally went just as crazy as if he was on, if he was on stage so much to just like the emotional factor that his catalog has.

I feel like Drake has provided the music of a generation. And so, regardless volume wise, they'll be continuing to listen for a long time.

Dan Runcie: Who's your number two?

Denisha Kuhlor: So next I'm going with Burna Boy. one, we've talked about Burna Boy on the podcast before, so don't necessarily have to go over all of his stats, but I think that in one thing I'm finding with people discovering, music from the continent. Is that when they like the artist or there's things they like about the artist or the genre, they go back and listen, to the past catalog.

And so I feel like there's still a lot of untouched ground in terms of people discovering his music and listening to his whole catalog and given how timeless in a lot of ways some of his music feels, I think that we'll have new fans discovering him over and over for a long time and getting to also benefit from the upside of that catalog is great.

I'll also say, he's pretty feature light as well. He's increased the amount of features that he's had in some of his more recent albums, but even like him, some of his breakout singles, whether Ye or Last Last, were Independence, or songs that he did independently and didn't have people featuring.

So I think in terms of some of the big records, there's solo records, which is exciting and that his catalog has a lot of value for people to discover and wanna to. 

Dan Runcie: Yeah, he was on the list as well, and I think the attractive thing with him is similar to the bad Bunny perspective where almost more so because if you are one of the signature artists that is on this entire continent, well, I think for him, obviously more West Africa, but if you're one of the signature artists that's on this entire continent, you have the closer thing to that Beattlemania effect.

And as more people there have access to streaming as more of that just grows and develops, you're going to get that curve too that just grows naturally with what's already there. And you can't undersell that. And I think given an artist like that too, there's probably huge sync opportunities as multimedia and entertainment starts to grow from that, from, from those parts of the worlds too.

So there's a lot of value there. Yeah.

Denisha Kuhlor: exactly.

 Who do you 

have 

Dan Runcie: pick, this is a pick with the mind and not necessarily with the heart, but I am a, in the role of a asset manager or not the role of a fan. And my pick here is Eminem and my pick for Eminem, and the reason I pick him is because his music is still some of the most streamed music across the board.

And his Curtains Call album was the bestselling rap album in the UK in 2022. His greatest hits album from 2005 was the best selling rap album 17 years later. And I remember seeing that stat and I was just like, wow. And then you just think about the nature of his music. And even though he's someone that I feel, if you're someone that lives in the Twitter circles that you and I live in, Eminem is someone that I think has largely fallen out of

popular discourse.

And people do look at him a bit more, distinctly in a way that they did in 20 years ago. But if you don't live in those circles, which the majority of people don't, they still listen to his music and still revere him. And just on a sheer number perspective, there's probably more people that listen to hip hop that have an artist like Eminem and their top three and they're top two and not two.

And you look at some of the numbers as well for songs like Till I Collapse and Lose Yourself, that just get played over and over for people working out and all of these things. Those songs have a timelessness to them. I mean, on stats, he was the bestselling like recorded artist of the two thousands. He was up there for the 2010s.

He still tours massively, and even though a lot of his albums that probably generate the most revenue are songs that I'm no longer listening to, I can acknowledge that this has huge value. And as an asset manager, as a fund manager, I would do quite well with that, with his rights.

Denisha Kuhlor: Yeah. No, I don't know if that's where I would have went, but after hearing your explanation, it makes a ton of sense. Eminem fans are, independent in the sense that they're fans regardless of whether he's the top of a pop culture, relevancy or not. yeah, I think, that's really, really interesting.

And the Stan's side, he literally pioneered the word we all use today, so I think in some ways too, people forget just, how impactful culturally he's been. so yeah, that makes a 

Dan Runcie: Nice. All right. who's your.

Denisha Kuhlor: So for my next one, I kind of wanted to go in a direction of some newer artists that are still proving themselves out of it, but I think have a lot of potential. but keeping in mind to what they've done so far, I wanna go with Lizzo. I. think of Lizzo, you know, a lot of us were actually introduced, to her in because of a sync, in one of the, in a movie on Netflix.

I'm blanking on the name of the movie, but that sync actually introduced me, to her. I think that Lizzo's music is just like the perfect type of music for a movie trailer, in the sense of some of her upbeat, more like pop, pop records. It's like the perfect songs to usher in like a romcom.

So from a sing perspective, I think it has a lot of potential. She's also known as, pretty talented on the songwriting side, so I think the ownership would be, I think the ownership would be attractive. and in her last tours, she's done pretty well while also there were smaller venues, the fan base and her having an engaged fan base is definitely there as well.

Obviously and from an asset manager perspective, definitely wouldn't be looking to pick it up. But the numbers I've picked up, some of my earlier bets, but I think it would be a fun bet to have and see how it does in the future.

Dan Runcie: It's funny because she's someone that I think she has a very high diehard fan to fan ratio, if that makes sense. And I say that because she's someone who. Does quite well. She sells out arenas and she does multiple shows in some cities, in arenas, in an era where it's very hard to get artists that are topping the charts with their streaming to sell out the same venues.

The knock against her though is that she doesn't stream necessarily as well. Like she hasn't had an album that's like top the charts. I don't think she's had, you know, a 100K in the first week necessarily. But those fans do show up. so there's something to be said there. I think the other thing too, when you're mentioning the sync, I was thinking about, you know, that car, I think it's Carnival Cruise, that commercial, and it has that song that's like Hands to the Sky.

Show me that your mind, like, I didn't even realize that was a Lizzo song until I just looked it up because it was stuck in my head and I'm like, oh, that's a Lizzo song from like 2016, like Pret Truth. So I think you're right with the sync piece of it. I mean, a song like Truth Hurts Itself, juice, literally anything from whether it's special or the album before this, I think that there is strong potential there.

So I think Lizzo is definitely a good multimedia play. Assuming like we are in this role, you have the ability to maximize the asset.

Denisha Kuhlor: Yeah, exactly, exactly. It definitely comes down to maximization of the asset on her part, and in a way. I don't see streaming continuing to go up. I think her engage fans like her, they listen to her, and they keep it at, and they keep it at that. So without kind of very targeted, like a targeted approach to maximizing her syncs, the asset becomes less attractive.

Dan Runcie: So the next pick, and this is a bit strategic because I wanna take this artist before you take them, is SZA and. picking SZA because she obviously doesn't have a huge catalog. We're talking two studio albums really, that have came out. But if I could get those studio albums for a good price, I'm getting an album in control that is literally stayed on the charts for five years.

People are listening, streaming and buying the hell out of that thing, and it hasn't really stopped. And this album is setting all these records and every time you see what the 10, 11 weeks that SSA's SOS has been at the top of the charts, that's in the territory with like Adele, Beyonce and all these other artists because first here's breaking records for female R and B artists then is just, you know, female artists.

Now it's artists in general, like how many people are at those levels. So sure. I don't think I'm necessarily gonna have to pay Taylor Swift, Drake or Eminem numbers to get SZA rights, but this is a hits game, and if I can get two of her hits, certified hits albums, that could be worth more than 10 of someone else's mediocre ones.

Denisha Kuhlor: I completely agree. SZA is it makes so much sense. It makes so much sense. I'd also say what's so exciting about CSA when you think about it is two studio albums and being able to maintain that relevancy and the sheer amount of time that those albums have lived, is so exciting and you can continue to maximize those two albums even for years to come.

Because for everyone, it still feels very relevant.

Dan Runcie: All right. Who's your, you've picked five, right? Okay, so last two picks. who's your sixth pick?

Denisha Kuhlor: Yes. So I'm gonna keep the S theme here with SZA. and this one was somewhat a big streaming play. but Summer Walker, summer Walker was one that initially when I first made this list, didn't come to mind to be honest. But as I thought about it, and I will probably mention this more in some of my honorable mentions, but I was going for Usher, and I thought about the record that they had together and thought about a lot of the records that Summer Walker has broken.

 and shout out to the folks that love Renaissance, I think that people don't even realize or truly understand how big of an artist she's been, from a streaming perspective. she's had some really impressive numbers when she releases the album, she's done great numbers. and People continue to listen to her. I also think, you know, she's toyed around with retiring as well as not doing, as well as not doing tours, creating less opportunities for fans to be able to interact with her, which, fortunately or unfortunately leads them back to her music as that's one of the only sources of ways that they can interact with her.

So, I don't know if I see as much sync potential with an artist like her as I would maybe a Lizzo, but I think she can continue to generate solid, solid streaming numbers, for years, for

years. 

Dan Runcie: a good pick. It's funny, she's someone that's not on my list, but when you mentioned her I was like, I can't believe I'd even think of the think of her. But you're absolutely right. She has, especially from a streaming perspective, she has numbers that rival some of the artists that we mentioned before when it comes to streaming and on average, streaming is making up 70 to 80% often of the revenue that comes in from these music rights.

So, it makes sense to be able to have that. And I think that just given how much she's been able to speak to an audience that doesn't really have as many people speaking directly to them as well in this way of, okay, who is making music for black women, who is making like doing that? And I think when you think about it that way, that list does become slim.

Especially when we're talking about artists at this level, obviously, you know, touring and some of the more personal things of just like being out there that isn't her style, that isn't her vibe or her personality necessarily. But we don't necessarily need that and I think that there's clearly value in over it, still over it.

And, you know, the small features and things that she's done here and there since then. 

Denisha Kuhlor: Yeah. 

Dan Runcie: All right. So mine, I have two picks left. this is where it does get tough because, looking through some of these names and there's some ones that I like and, okay, so I am going to take Bruno Mars and I'm gonna take Mars because the fact that he has music that I think honestly can transcend in terms of the versatility of the music.

Songs like 24K Magic or Uptown Funk, or.

Denisha Kuhlor: Very intergenerational as well. 

Dan Runcie: Yeah. You hear, could hear it in the supermarket, you could hear it being out, like you could hear it in syncs or different types of things, even the more recent stuff with Silk Sonic and getting his chair of that with with Anderson .Paak there, I think there's a huge potential there.

I can't speak as much to the hard numbers, but I do think that the multimedia opportunities are there. He's a pit maker and I think it would be valuable to have his stuff in there.

Denisha Kuhlor: Yeah, so from kind of a multimedia or even multidisciplinary perspective, my next one is Pharrell.

Pharrell's been a part of a lot of really big records, records that feel intergenerational. I would say, and I don't know the numbers of this. I would say his streaming probably isn't in the highest percentile, but it's also not in the lowest percentile.

Like it's somewhere probably in the media, in the middle, given all the records he's been a part of. That makes it kind just a steady asset and also transcends multiple decades in a way that if something does come back in style, You can benefit from that upside. He also has a few records, I think about a record like Happy, that sync wise I think will continue to be used for years and years to come, in a host of ways.

So Pharrell is one that could be a really safe bet or maybe a really unsafe bet, just dependent on how, things go. But I think there's enough factors, in, which he falls kind of nicely in to justify the bet. But I will say I don't think it will be, I don't think it will be cheap

 but I do think it can have a big upside.

Dan Runcie: The upside smart thing about that pick, he's someone else I didn't think of, but I think it was a really good pick because you get the artist Pharrell and you get the producer Pharrell, so you get everything from, I forget that Sta but when was it? In 2002 or 2003, the Neptunes were responsible for 43% of the music that was on top 40 radio that was on, you know, pop So you get all those songs and then you get any of the stuff you did with NERD, you get any of like the Child Rebel Soldier stuff. I mean it makes a lot of sense. And then even songs like, Get Lucky was huge as well. I know that there's been a bunch of controversy around blurred lines, but I'm still sure that the revenue from that song continues to be massive.

So I think that's a smart pick.

Denisha Kuhlor: Exactly. And I think in the future we'll see kind of that doubling, right? artists like a Pharrell will continue to be super valuable when it comes to being able to capture the peak of their rights because they just have them.

Dan Runcie: Definitely, definitely. so then with the last pick, it's funny, I hesitated with this one a bit, but I'm gonna go ahead and pick it anyway. It's probably the catalog or the rights that would go for the most money if anyone's was on the table at all right now. And it's Michael Jackson and I'm going to take his, because the fact that Thriller is now over 40 years old and I think that the baseline for streams from that song and streams from everything else is quite high.

It is strong and there's value there. This is another one where I think I'm separating a bit of the personal versus the, you know, actual like business asset aspect of it, because I do think that the multimedia aspect of it. Yeah. You know, that would be difficult, and even me as an asset manager would probably be finding ways to create multimedia opportunities for that asset continuing forward.

But on the other hand, there's still Broadway musicals, there's still Vegas intimate shows that they are creating off of this person's music. I think Variety had released that report a couple of months ago that said that they were in talks of a 900 million sale for half of the rights. I forget like exactly what the terms would be and including a few things, but I felt like that was too big not to ignore from an asset management perspective.

So it would be the Michael Jackson rights for the final pick.

Denisha Kuhlor: Wow. That's a really strong, a really strong final pick and makes my last pick even harder. 

Dan Runcie: You had seven though, right? 

Denisha Kuhlor: Yes, I did. I did. My seventh one is just a different caliber

Dan Runcie: Wait, wait. You, oh, oh, oh. With Pharrell you mean?

Denisha Kuhlor: no, no, no, no. So my seventh one actually is, 

Dan Runcie: Wait, wait. Did we miss one? Hold on. Let me just run through it real quick. You had Mariah, Bad Bunny, Burna Boy, Lizzo, Summer Walker, Pharrell 

Denisha Kuhlor: Yes

Dan Runcie: Oh, oh. We both have one more. Oh, okay. I missed up. Okay. You're right, you're

right. Yeah. okay. 

All one?

Denisha Kuhlor: Yes. So my last pick is DMX. One, I think in a lot of ways DMX has a very unique style of music. It has a very unique style of rap. Talking to a lot of, or not talking to, but I guess watching their interviews. A lot of rappers are very inspired by DMX and he still gets credited, for, you know, rap styles or little lines that, artists borrow or throw in their music and he has a bit of a high sample potential.

I think we'll see some of his music sampled more and oddly enough, whether it's like a movie, like a Creed or something like that, this sheer like BPM of some of his music, is definitely attractive from like a sync perspective. For, upbeat movies that wanna like, leverage a rap song or leverage hip hop.

and I also think, and he's done very well in getting quite a few syncs when it comes to video games, I'm thinking about sings so often this podcast from a movie perspective, but gaming syncs are huge as well. and DMX's music is quite huge in the gaming community. So if anything, from an, optimizing the asset perspective, I would focus on optimizing his syncs for gaming, because of the BPM of his music.

And I think I would get it at a favorable rate.

Dan Runcie: Yeah, I couldn't imagine there might be some high ROI potential there, I would say and just given how dominant that run was, and I think some people forget. Yeah. Each of those first albums was just like, you know, topping the charts and everything. Especially from like 98 to 03'. it was, on, I mean, there were other rappers who may have had like, you know, bigger commercial success at that time from whether it was someone like Eminem or some others. But in terms of like relevance, that still matters to a lot of people and how that can continue. X is up there. Do you think we'll see an X movie at some point?

Denisha Kuhlor: You know, I hope we do. and that's how I reference, how a lot of rappers like, feel about him because musicians appreciating another artist are probably our most likely way. You see obviously 50 cent, 50 cent in TV and film production, Drake with Euphoria, even Childish Gambino, right?

So him being revered by other artists I think puts him on the best path for us to see that. which also would be 

Dan Runcie: Yeah. That's a good pick. So I think so. I actually, but now my seventh pick, because I'm like re-looking at these. I had Taylor, Drake, Eminem, SZA, Bruno Mars, Michael, and then now the seventh pick. this is tough, but, I'm gonna take the Weeknd and I'm gonna take him because 

Denisha Kuhlor: Oh, amazing. 

Dan Runcie: I think it's really hard to have a song that's been released like in the pandemic era of music that still tops the charts, but everything from After Hours is still getting so much radio play.

He just did a remix with Ariana Grande, Die For You, a song that came out now, what, seven years ago. And that song had topped the charts. He has this ability to just, I think it's him and a handful of other artists that just have this ability to make music that can continue to like pierce through. I mean, we didn't get as much of that from Don FM but I think even he himself, like that album didn't get as much, you know, focus the same way that everything from After Hours did.

And 

he has this way of just kind of capturing, a generation just with like the feel and the vibe, I think sync potential, especially as he's gonna be in more movies now himself and what that could look like. So, yeah definitely.

Denisha Kuhlor: That's super strong. He makes hits.

Dan Runcie: Another pop artist, so I know, you know, there's a bunch of Max Martin and other producers that'll get their share, but I'll take his, so, Yeah. No, super. Right. So yeah, so let's just round out the lists here. and then let's share. So with the first pick, and then in order you took Mariah Carey, then Bad Bunny, then Burna Boy, then Lizzo, Summer Walker, then Pharrell Williams and DMX. And then I took Taylor Swift, Drake, Eminem, SZA, Bruno Mars, Michael Jackson, and the Weeknd.

So, yeah. How are you feeling about your picks? Did you feel like you got the artist that you wanted? Do you feel like you, you know, got the ones that you wanted to like, lighten everything up?

Denisha Kuhlor: Yeah, I do. I think that some of those artists are bets that would hopefully, positively surprise me. but there's enough artists, within those picks that I know revenue will be generated and will have a positive upside regardless. If anything, we can continue to crown on Mariah Carey and some of Pharrell's records and even just the dominance Bad Bunny continues to have for a very long time while also seeing, how dominant, for decades to come an artist like a Summer Walker.

Dan Runcie: Yeah, I think if we were to look at these catalogs like, or look at both of our portfolios, I think you would have like the Vanguard Growth Fund and I would have like the Vanguard Blue Chip Fund if that makes sense. Right?

Denisha Kuhlor: Exactly. Exactly, exactly. 

Dan Runcie: You know, you may generate some higher returns, but with that, you know, there's more risk that comes with it as well.

but yeah, mine, think it's probably assumed that you would generate higher returns because I feel like SZA's probably the, not even like, oh, it's probably the pick of mine that is the least blue chip relative to the rest of them. And yeah. enough, even someone like Bruno Mars is probably more skewed towards less of that certified pick on mine just because of how much of a more, strong base the other artists do have.

Denisha Kuhlor: Totally. If I had to, compare thinking about venture, I would say you definitely took like a series C, series D, growth fund, with a few, maybe more Series A, like a series A pick. I think maybe this is to my roots, I took more of a series B potentially with a good opportunity fund and skewed heavily ine and seed, with a few of those artists as well. 

Dan Runcie: No, that makes sense. That makes sense. What were some of your honorable mentions? Yeah, maybe you can name like three, maybe first I wanna do honorable mentions, and then second, I wanna talk about some rising folks. Maybe some people that you would've picked, but maybe you didn't pick, because it's like, no, it's too early.

It's too early, right? But yeah,

Denisha Kuhlor: let yeah, no, 

Dan Runcie: with the honorable mentions like who are one or two that you had considered?

Denisha Kuhlor: For sure. So the biggest honorable mention for me is 

Usher, 

Dan Runcie: yep. He 

Denisha Kuhlor: um 

Dan Runcie: mine too.

Denisha Kuhlor: usher,

 the Vegas residency, the, tiny desk Usher's been having a phenomenal few last years. and I think people don't even realize the residency really brought it back for a lot of people. The breadth of his catalog's so talented, his music is intergenerational or continues to transcend generations. Usher was one that I thought a lot about. I was kind of going back and forth between Usher and Pharrell, and I picked Pharrell because of the exposure to so many other artists that he has. but Usher was a really, really big one.

Dan Runcie: Yeah, he was on my list too, because I think similarly, this Vegas residency has created a moment and it's hard to be able to do that. I can't speak to, I haven't looked at his stream numbers and I mean, I really even like back when I feel like Usher's music was at like the top of pop culture and stuff. I don't, I wasn't tracking, oh, how high Confessions on the Billboard 200. That's just not something that I thought or cared about time, but I think that he's won. He was on my list as well. Someone else that was on my list too was, Kendrick Lamar was on my list too, because good kid, m.A.A.d city's been on the charts for a decade plus.

People are still listening to that, and that's higher charts now than what the last album is. Mr. Morale, the big step was, I know that album was more controversial but the fact that Damn and, good kid, m.A.A.d city are still on the charts. You have still Pimp A Butterfly. You never know what type of multimedia opportunities that can turn into.

I think if you're talking at least in my opinion, like pure like bar for bar, like the best like rapper lyricist of the past decade plus, I think it is him and there's something to be said for what value have. So yeah, he was who I was going back and forth with him and the Weeknd, for that seventh pick.

But yeah, he was my honor, audible mention.

Denisha Kuhlor: Kendrick pick is strong. my rap honorable mention is actually J. Cole 

Dan Runcie: Yep. I had him on the list. 

Denisha Kuhlor: As someone that gets mentioned in, a lot of the conversations with Kendrick and I think for Cole, a few reasons. one, the whispers of retiring are looming and we know that he has the desire to retire sometime in the near future.

So I think people will cherish the records that he has even more, the fan base of the Dreamville built is super engaged. super active, and I think we'll be that way for a long time to come. And J. Cole, you know, picked up a lot of good features when he was coming up. Maybe it's the Rock Nation effect or whatever, but he has some amazing features, whether it's, party with Beyonce or just like, he has some really great features that he's gotten as well.

 So yeah, that's one I would be super excited to have.

Dan Runcie: Every time I look at hits, daily double stats, just seeing who's trending. No role models is always on that chart somewhere. and it's now been, eight and a half, nine years since that song came out. So it's a hits game. If I can get one of the biggest rap songs of the decade and one of the more popular rap albums of the decade too, then you take that obviously so many other hits as you mentioned Party, and a lot of the other ones that he's then.

But that song, I think itself is worth at least bringing the conversation up. A few people that I didn't mention, but I'm curious if they came up for you. We can just keep these kind of rapid fire before we get to the Rising But did you consider Ed Sheeran?

Denisha Kuhlor: You know, I did, I thought a lot about like having UK representation, . and he came up for me there. He's also done a lot of like features with, African artists, whether it's Stormzy, Burna Boy, but I ultimately shied away from him. I don't even know if I have the right things to point to it, but something didn't feel right.

Dan Runcie: Okay. He was on the list I had as well. I just preferred the other ones more.

Denisha Kuhlor: Yeah. Like it's not even fully like quantitative, like no. Yeah, It just, yeah, like he was compelling, but not compelling enough to make you wanna get excited. 

Dan Runcie: Yeah, it's like I know that Divide was a huge album. I know that Shape of You is probably one of the biggest hits of the past 15 years if we're going back that far. But yeah, you know, it's just kind of tough cuts. I mean, yeah, I'm sure that al that catalog will probably generate more revenue overall, maybe then like scissors, like someone that I took.

But I that Ed Sheeran's catalog isn't gonna come at, you know, a cheap cost, but who knows? So he's at least someone I thought about. Did you consider, this is going back a little bit further, but did you consider Celine Dion?

Denisha Kuhlor: Oh, no, I didn't. But Celine Deion makes so much sense for so many reasons, but I didn't, you know, I'm thinking about my picks, probably Mariah Carey and DMX were as far back as went and that's because I was thinking about the streaming optimization as well, with the number you said. And IFPI's latest report streaming is just taking so much of the conversation.

I would probably go for a lookalike audience to Celine Dion, so maybe more like an Adele, which also wouldn't come cheap. but audience that is a little more, well, didn't I take Adele? I think that Adele almost, in a way like Ed Sheeran, for all the right reasons. It's like, no, I wouldn't get pushback if I was thinking about my LPs comment saying, I don't get pushback in any way for picking Adele, but in a lot of ways Adele feels safe. And while her music is easily recognizable and does well, her type of music in a lot of ways, doesn't really feel like something that you play and stream over and over almost in the way that Taylor Swift's music does.

and so while ballads are great, and I think people really, really love them from a replay value on streaming, I just didn't get as excited as I wanted to.

Dan Runcie: I think you're right because I think that the reason that I didn't take her is because I thought that it could have easily been a catalog and rights that you would overpay for because of the name and everything that she's done. But when you look at the pure streaming numbers, yeah, I know that Easy on me had like broken records at the time, but still those records I believe got broken like a week later or a month later by BTS or whoever else, it was Bad Bunny and since then Taylor Swift, right? So yeah, I questioned the replay value and I do think that because, yeah, I thought that it would've been high compared to some of these other artists. Going back to the Celine point, I think you were right, because I also shifted a bit just thinking about how big the streaming error is and how that generates so much cattle revenue for this.

And one of the big thesis that I've had overall with music rights sales and acquisition is that a lot of these deals have overvalued the artists from the seventies and eighties and undervalued the from the nineties and two thousands. Because if you thinking about the dominant we're streaming as and who are the dominant generation of those consumers, as great as you know, Celine and others were, the songs that are most likely to resonate are like Taylor Swift and Drake, you know, are gonna be more relevant to this generation than Madonna or Celine Dion or some of the others.

And I did consider. Madonna as well, just thinking about it. I know this next tour she's gonna do on is gonna be big, but I held back then for the same Celine thing. It's like, yeah, maybe if this was 20 years ago when we were doing this draft in 2003, then maybe I would've taken Celine Dion or Madonna but I think that decay curve is definitely, you know, flattened a bit where maybe the upside, not just the upside potential, but the consistency just may not be, or not the consistency.

Obviously it's consistent, but it just didn't seem to valuable as some of these other picks.

Denisha Kuhlor: Yeah. No, I agree. And I think, you know, in like working the music or working the records, so you can optimize your catalog. You have to kind of think about who's making the decisions now or who's coming into power now. and some of those executives are younger. and so, thinking about how they might place value, even though they're familiar, obviously with the brand and the artists, on a premium for that music, I think it would be a much longer conversation much to what you said, which is probably why some of these artists were willing to sell, and kind of let the asset manager deal with the headache of justifying the value while they've extracted the value from the asset manager who's excited to go out and 

Dan Runcie: Yeah. Did you consider Beyonce?

Denisha Kuhlor: I did consider Beyonce. I just, it's expensive very, very, very expensive. it would be, I think, you know, Beyonce is an interesting one. She's actually one of my favorites in the sense that I think uses her catalog really well with all kind of the moments that she's had, whether it's the Super Bowl or, her Coachella performance.

She reworks her music in a way that continues to feel new. Like as an artist, almost to the point of where I also had trepidation with Adele, how Adele navigates her artistry. while I respect, and obviously we want artists that set boundaries. I don't know if it's in my best interest as an artist, right?

She kind of drops her music and waits long stretches before going back her choice to cancel her tour and do a Las Vegas residency, means there'll be a lot of places untouched unless she decides to, venture out. Whereas someone like Beyonce is exciting because her music is always being brought back, right?

I did consider, interestingly enough, Destiny's child, because I feel like I, it would get the upside of every time a Beyonce performs or has a big, moment on the world stage, at a price point. And maybe Beyonce's part wouldn't be up for grabs, but other people's would at a price point that would be attractive.

Dan Runcie: The other thing about Beyonce too is that she's kind of like Lizzo, but magnified in this sense that very high touring to streaming output, if that makes sense. But I don't get to collect tour revenue. I'm collecting the music rights and a lot of the songs from Renaissance. So if you compare the streaming of SZA's SOS to Beyonce's Renaissance, like it isn't even close. SZA's is much more popular there and the same way that I'm seeing good kid, m.A.A.d city and 2014 Forest Hill drives and Eminem's Greatest hits albums like still at the top of that charts. I'm not seeing the same thing for Lemonade or Beyonce in a way that's almost surprising because you feel like, okay, the generational impact, those records are huge.

Everyone revered them, but this is a game and they just aren't at that And I know you'd have to pay a premium because of it's Beyonce.

Denisha Kuhlor: Yeah. Beyonce is one of the biggest, and probably most vocal invisible fan bases in the world. but that doesn't also in some ways, show for the parts that we just talked about, right? Some of these younger fan bases or these fan bases for other artists, They care very much about streaming.

They were a digital native or streaming first, and they're going to continue to optimize for that. whereas, like you said, I think because Beyonce's fan base is so engaged, so passionate, you see the power of the fan base come out really in touring, whether they listen to Beyonce every day for the past year, I think the conversion and amount probably of minutes listened, for a Beyonce to, in terms of needing to then feeling compelled to buy a ticket is much lower than the minutes needed to be listened for a SZA or some of these other artists to then lead to that conversion of buying, buying tickets and so she has a fan base that's gonna support, like regardless way. and like you said, that's not well great. Not in our best interest.

Dan Runcie: Right. Yeah. Because it's 

like she's been making music for over 25 years now as a high profile public recording artist, and in that way, because of the touring and amount, amount times, you got to see her. It's almost like her touring business is closer to Elton John or Billy Joel than it is SZA in that way.

Denisha Kuhlor: Exactly. Beyonce is a touring artist who has the ability to use that fan base to parlay into super financially lucrative deals. But as you mentioned in the beginning of this criteria, unfortunately we'd not be seeing a lot of that. 

Dan Runcie: Right. And yeah, if you acquire the rights to Alien Superstar, you gotta split that with 24 different writers, so

Denisha Kuhlor: Yes. Another great point. Beyonce's been highly collaborative,and very good about giving people opportunities and also giving them credit. but when it comes to the piece of the pie, which I'm sure she could do based off her ability to get extreme amounts of touring revenue, high leverage, brand partnerships, but when it comes to the part that we can control as asset managers, we'd definitely be paying a high premium, and hoping for the best in someone. 

Dan Runcie: Got it. Yep. I agree. All right, so a few rising stars that I had had and considered, but didn't. So, I look at someone like, so it's funny, neither of us picked any country or rock artists, but I look at the popularity of someone like Luke Combs and even though I don't listen to that genre of music or as much, he's dominated the charts.

He has continued to just, you know, put out and, you know, someone that's still pretty young, I wanna say, I don't know, he is like late twenties, early thirties, 10 years from now, could we look back 

Denisha Kuhlor: and could 

Dan Runcie: this person have like, you know, impact level of like your, whether it's your Garth Brooks or Blake Shelton or like one of these other artists that like people just come to time and time again and they put up strong numbers both in streaming and in pure album sales.

Someone like that could be interesting. I feel like Morgan Wallen is someone else that fits in this category where he is also just high on the charts 

Denisha Kuhlor: and 

Dan Runcie: stuff. I mean, obviously his incidents and everything else that he's been notorious for would cast a shadow on that. And I don't know if I'd be willing that necessarily, but he's one that came to mind too.

And I think there's other artists too, like whether it's like, you know, Billy Eilish or Olivia Rodrigo it must have been like, okay, I could see them continuing, but we'll see.

Denisha Kuhlor: Yeah, I thought like a Rosalia, on my end, for example. the other two that came to mind, and this one I don't know how to feel, but something in me was like considerate. NBA Youngboy, he has a fan base that's passionate right? And is digitally native and they stream and they don't really need, the opinions of the outside world when it comes to music.

He was one probably not a category for Verizon stores and more honorable mentions, but I'll mention it. Anyway, Frank Ocean. I feel like there's value there, in Frank Ocean, for sure. And then, Rema, I feel like Rema is the next step, when it comes to music from the continent.

The folks at Maven have continued to do an amazing job, and you look at Calm down, it's one of the biggest records in the world. And not only, within Africa or the United States, but also within India, which I thought was just super interesting. So definitely a really, really global artist. He's had records, calm Down, is doing well before this Selena Gomez remix.

Dume B has been cited even on present Barack Obama's playlist. So I think he can hold his own, for sure. And feature wise he's very exciting as well. And he's still young enough, but with enough volume where I feel like I could get a competitive rate.

Yeah, I think so too. Yeah, those are good picks there. let's see, another group I thought of, or not group, but where were they on this list? Let's see. So I did consider some K-pop in the mix. I was like, okay, what would that BTS catalog look like, right? I mean, because I feel like in

the same rationale that you had about Bad Bunny and Burna boy, I was considering them as well.

I think what made me pause, I was. The fact that at least some of the group members now need to join the military, or at least on their like what does that look like? How does that impact the longevity of their music as opposed to them being able to kind of like ride the waves themselves?

So it'll be interesting, right? It's because I think especially now, it's like, I feel like, I don't know, in, earlier days when it was more common for popular figures, whether it's in sports or entertainment to be drafted, there was less pop culture. Things saturating their mind. So when they came back, it's like, oh, okay.

I don't know, this might be a bad analogy, but like, oh, Muhammad Ali's back still relevant. Okay. him, you know, he's doing opposed to a way where I hope by the time that BTS is like back in full effect again, that they still can command that same power that they once did. So,

Dan Runcie: Yeah. So that dynamic is also why I kept them off. I thought a lot about like boy bands, interestingly enough. So when you look at the Jonas Brothers or even One Direction, and it's almost like the, at their peak like level of fandom, that their audience like gives them, I almost feel like it can't be topped again, for so many reasons, right?

Like falls off in a way that you're really excited to embrace maybe when you're younger or them having a younger fan. Interestingly enough, the only person in, it's not a boy band, but that I feel like has captured that audience and has truly, really been able to maintain it, is the artist who did end up picking, which is Taylor Swift.

Taylor Swift was able to successfully, like, grow with her fan base from this like teen era. to now we see that the upside is there for her because her fans just have more disposable income that they can spend on something that was so important to them for so long in their. Did you consider Harry Styles?

Denisha Kuhlor: I did. but interestingly enough, I just go back and forth so much with, it feels still like a moment. I don't, I would like to see more catalog growth or more catalog volume before fully wanting to, before fully wanting to commit. It's one that I'd have on my radar, but I don't think, I'd be ready to start negotiating just yet.

Dan Runcie: That's fair. Even if you got the one direction stuff, his chair of the One Direction stuff.

Denisha Kuhlor: Now if I did that, that would make it, that would make it more attractive because it gives a bit of both worlds, the nostalgia from one direction as well as the bet on him as a solo artist but one kind of at least makes, whatever amount you spend, it gives a justification for it being stable to some some extent.

Dan Runcie: Yeah, I don't know. That might not have been the best hypothetical to pose at you though, because like when Justin Timberlake sold his catalog, that was just him as a solo artist that had nothing to do with NSYNC or Yeah. like that.

Denisha Kuhlor: Yeah. Yeah. 

and I think it's harder than we realize. And looking at a sync perspective, we would still need, even if we brought really valuable syncs sync opportunities, with their music, we would still need the permission of so many other people. So the sheer, operational output that would be required to truly maximize it, or at least that part of it, couldn't be taken lightly as well.

Especially when you have so many other artists in your catalog in which the sign off to get a sync could be much

Dan Runcie: Yeah, that's a good point. All right, well I know you and I could talk for hours about this topic and could probably draft seven more if we wanted to. I feel like we almost kind of did the, last part of the conversation. 

Denisha Kuhlor: We might need to have few more maybe pre-seed edition opportunity fund 

edition. 

Dan Runcie: Yeah, I feel like there's a few ways we could like set parameters around it where it's like, okay, only, you know, people under 30 years old. And then how does that change the or over 50 or people that longer with us or in a particular genre. I think there's so many others like that we didn't even mention.

But yeah. any last words before we wrap this up?

Denisha Kuhlor: Yeah, I mean, if anything, I have a lot of respect for the people that are doing this every day. I know, and you've interviewed some of the amazing firms that have really set out to, to do this work. but this is a fun one and I'm curious to hear everyone else's pick. So definitely tweet Dan and I.

Dan Runcie: Yeah. Please respond with the ones you like, the ones you didn't like, and let's, let's keep the conversation going. Denisha, it's pleasure as always.

Awesome. Thanks for having me. 

Dan Runcie Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how capital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, Go ahead.

Rate the podcast, give it a high rating, and leave a review. Tell people why you like the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

Short-form video has exploded in popularity the past three years, buoyed by TikTok. Copycat apps and features are now the norm across social media sites — Facebook, Instagram, Snapchat, and Instagram. MIDiA analyst Tati Cirisano joins me on this episode to break down the ongoing war between short-form video’s main players. 

The music industry is certainly keeping a close eye on the battle. Short-form video has been a boon for music discovery. Though, many music execs would also argue music has played a big factor in the rise of these platforms, and the industry wants to better monetize that.

Tati and I covered all this and more on the show. Here’s everything we hit on:

[02:59] Vine paved the way for short-form video

[05:56] TikTok filled void in social media

[06:53] Factors behind TikTok’s success

[10:19] TikTok is an entertainment platform, not social 

[13:20] Potential pitfalls for TikTok 

[23:10] YouTube’s biggest advantages 

[25:53] Overlap between YouTube’s short-form and long-form audiences

[29:37] Facebook and Instagram Reels are picking up steam

[35:19] Instagram Reels more natural to the platform than YT Shorts

[35:35] Meta’s advertising is both a pro and a con

[36:39] Active creator vs. passive watcher user bases

[38:35] In what scenario does TikTok lose top spot in short-form video war?

[41:50] Best platform for artists?

[43:08] Best platform for record labels?

[44:05] Best monetized platform?

[47:11] Will there be a new form of content consumption in the next five years?

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Tati Cirisano, @tatianacirisano

This episode was brought to you by trac. Learn more about how artists can bring web2 and web3 together for their fans at trac.co 

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Tatiana Cirisano: One of my pros to talk about something that I've just, I don't know if this is still true, but something that I've heard from marketers, music marketers in the past is that, Instagram just has more trust with brands than TikTok and other platforms that are new because they've been using it for so long.

[00:00:13] They know what the deal is like. It just has, better relationships in that respect. but if that's also leading to more ads on the platform, then it's kind of a pro and a con.

[00:00:42] Dan Runcie: All right, today we have a jam packed episode that is about the short form video wars, which platform will come out on top. And I'm joined by none other than Tati Cirisano from Video Research. Welcome.

[00:00:55] Tatiana Cirisano: Thanks Dan. Good to be back. Thanks for entertaining another rant of mine,

[00:01:00] Dan Runcie: No, this is good. And with what you write about what you cover, you're the perfect person to have this conversation with. There has been so much focus as anyone listening to this podcast, who knows about the influence of short form video, what it does for discovery, for music, for artists, how record labels and all these companies are tackling it.

[00:01:19] Now we have several companies that are vying for that spot with similar but different products. But before we jump into TikTok, YouTube, and Instagram, I feel like we gotta give props where it is and give a shout out to Vine because I don't know if we were to be here if it weren't for Vine paving the way, so, oh, gone too soon.

[00:01:41] Tatiana Cirisano: you're giving me flashbacks to the Water Malone guy. I don't know if anyone else is gonna remember that, but the specific things that went viral on that platform. Oh God,yeah. We have to give the shout out to Vine.

[00:01:53] Dan Runcie: It was the perfect example of constraints, breeding, creativity, six, seven, second videos, and people had whole narratives of storytelling there. It was so unique to see what people were able to do. I feel like at its peak I saw it was 200 million monthly active users, which obviously is a drop in the bucket compared to the services we're about to talk about.

[00:02:17] But at that moment, that felt huge. It really was the platform. And obviously I know that Twitter had other objectives and things there, but. It's almost like a little too early as well. I just don't know if culture was like right there. And even music itself with artists, I feel like there was a lot of influencers, but there's a few artists, but not as many that really tapped in where it was really a huge discovery platform.

[00:02:41] Tatiana Cirisano: Yeah, and I think also like people weren't so comfortable with creating content at that time, or it wasn't something that was like so readily available. Like now I feel like every teenager just kind of create, thinks of creating content as, you know, just part of the social toolbox. Or maybe they want to be a content creator and that's, you know, that's like a sort of a new aspiration.

[00:03:02] But I think at the time of Vine, maybe that's another reason it didn't pop off, is it wasn't like the consumer behavior wasn't there. There were some people that loved to make videos, but I think most people were just watching.

[00:03:11] Dan Runcie: Right, and I feel like too, the people that really popped off on that platform, They never quite got as big as some of the people that are on the platforms. We're gonna talk about, thinking about whether, you know, you mentioned someone where thinking about Alphacat or like King Bach, some of the others that were big there, and I know they had moments, but again, it was almost a little bit ahead of its time in terms of them being able to really take off the way things did in the late 2010s and ever.

[00:03:39] Tatiana Cirisano: Mm. I'm also trying to remember now because one of the major things that usually comes up for me talking about like why TikTok was so impactful is how it's such, it was such a big deal that it opened to the for you page instead of like a feed of people, content from people you already know. But in my mind, it was kind of like the first major social media platform to do that.

[00:03:59] But was Vine actually the first, I don't remember how the feed worked. Was it people you followed or was it just random?

[00:04:05] Dan Runcie: I forget. That's a good point. I forget someone listening probably will ping back and say that, oh, it was this way. But yeah, I completely forget. I feel like I remember there are videos I knew from people that I would go back and follow cause they easily wanted to go watch it. But yeah, I completely forget. And even if it was there, I don't think the algorithm had quite enough content to be able to make that happen.

[00:04:27] Tatiana Cirisano: Yeah, that's true. But yeah, the history is really interesting cuz you had Vine and then Twitter shut it down and there was kind of this void for people that loved the platform not having something similar. And then musically came around, but it wasn't really the same. It was kind of all focused on lip syncing.

[00:04:44] It wasn't, you know, people just making random videos. and I feel like it also had kind of a younger audience, like it was more like middle schoolers than high schoolers. And it just kind of didn't have that same, it didn't reach like the critical mass of, no offense to middle schoolers, but like it didn't have that cool factor

[00:05:02] so it's interesting like that happened. And then the timing is so important because I feel like we can't ignore the fact that TikTok launched in the US a few years before the pandemic and kind of reached that critical mass of users right when Lockdowns began. so yeah, I'm glad that you started with Vine cause I think the history is really important to look at.

[00:05:24] Dan Runcie: Yeah, and I think the TikTok piece is unique because before TikTok ends up launching in the US, Instagram and Snapchat have stories, which obviously isn't the same as what we're gonna talk about with Instagram having reels. But that vertical video, and I believe that when Instagram first came out, it was 15 seconds, I believe was the limit.

[00:05:44] So there was a bit of that trying to copy what Vine was doing to that extent. But then TikTok comes up with, you know, an entirely new platform. And I feel like the concept of a TikTok post is what then brings you to it's, For You page, and just [00:06:00] having that endless content role. Which a reel is, but a Instagram story or even a Snapchat story I tried to do at points, but never quite got there, which is why Instagram and Facebook more broadly has tried to make a pivot into that.

[00:06:15] Tatiana Cirisano: Yeah. And it was more about like from music's perspective, it was about users engaging with the music that they're fans of like when TikTok first started to blow up in 2020, it was all dance challenges. It was all people kind of putting their own spin on the songs that they loved, and I feel like that's also different from stories and like the other sort of video, sort of short form video, tools that we had before where it was maybe about

[00:06:40] sharing music, but it wasn't about actually engaging with it and putting your own spin on it. And I think that was the other thing that TikTok did that was really powerful from the music discovery standpoint, is inviting people to actually put their own spin on the things that they love.

[00:06:54] Dan Runcie: Right. There was a culture that was created around the music and around the content [00:07:00] generation that did not exist in those platforms, right? Like to your point, yeah, you could have had music playing while you're sharing some video that you naturally wouldn't have wanted to share on your Instagram feed, but that wasn't the same as trying to do your own rendition of Old Town Road, right?

[00:07:17] Tatiana Cirisano: And there weren't trends like TikTok is so trends focused, which is a key reason why songs tend to go viral on the platform. So, yeah.

[00:07:26] Dan Runcie: Yeah. And on that note, we should dive into it. So for everyone listening, there's three companies that will do our breakdown on, so TikTok Meta. and YouTube and what they're doing respectively in short form video. And on that note, let's start with TikTok and just highlight some of the pros and cons there.

[00:07:43] And I think we talked about a few of them, the cultureyou also talked about just the likelihood of users themselves wanting to engage and create in a way that they wouldn't on others before that, what are some other things that stand out about, like why TikTok has been able to have a strong position here.[00:08:00]

[00:08:00] Tatiana Cirisano: I mean, definitely their algorithm, their algorithm is scary good.I know a lot of people will say like, oh, TikTok knows me better than I know myself. And it's true, I get recommendations that are so hyper-specific. and if, you know, it's such a major tool for discovery for that reason.

[00:08:16] It's not just showing you things, it's showing you things that you will probably like. So I think, TikTok's algorithm is a huge pro for them. but I also think. at this point, aside from the algorithms, all of these platforms pretty much look the same or have the same user experience. I don't know as much from the creation standpoint in terms of like video editing tools, but from the consumer standpoint, they're all pretty similar.

[00:08:40] So I think at that point, the thing that will differentiate you is the culture, and I think TikTok just has a lot more cultural capital than shorts and reels do, maybe because it was first, like so many trends tend to start on TikTok and then trickle down to the other platforms, to the point where I remember like a year ago [00:09:00] or months ago, there were so many reels, users posting TikTok videos that still had the TikTok watermark that reels actually deprioritize them in the algorithm to like try to get people to not do that.

[00:09:11] So I think it's something that's hard to measure and can change very quickly, but right now I think the cultural capital is with TikTok and that's a huge pro for them.

[00:09:22] Dan Runcie: Right when you're the dominant player, when people are watching videos on other platforms and they're repurposed for yours, that's when you know, we rarely see the opposite of that happen with TikTok and that speaks to it, right? I feel like the other part of where TikTok, I think just stands strong and further proof of that cultural piece is, I think back to the analogy I know that I've said, and others have said about how TikTok is the new MTV and just in terms of its cultural influence on where people find things, and even though it's not the only place that is that artists or, [00:10:00] creators can post short from videos, it's similar in that even back in the MTV days, MTV wasn't the only place that posted and released music videos. You could watch them on VH1, you could watch them on BET.

[00:10:13] There were other channels that had it. And while I do think that, at least with BET specifically, there was a culture around there specifically for the black audience and a lot of the people that were interested in those artists themselves. The MTV itself was able to have a bit of this more like mainstream pop rock aspect that also they were able to reach into.

[00:10:35] And I think even if you look at VH1, I think that trended a bit older. So even though I think there was still success to be had with some of those other areas, you still saw that MTV ended up still being seen as the dominant player, clearly not to everyone. I think that, as I mentioned, you know, BET still was more relevant to some audiences than others, and I feel like.

[00:10:55] There may be some of that. could be true with the short form video aspect too, where I feel [00:11:00] like TikTok is still the dominant player, but are there certain types of users that may be more likely to find success on YouTube shorts or Instagram reels? I don't know if that's necessarily true yet, just because and we can talk about this.

[00:11:13] I don't know if we see the same breakdowns there, but that's one thing that I was thinking about as well. Even if you are the main cultural place, are the other areas finding their own folks.

[00:11:23] Tatiana Cirisano: Totally. No, and I wanna, think about that question of what platforms benefit, which artists. But you also just reminded me of something else cuz of your comparison to MTV, which is that TikTok considers itself an entertainment platform, not a social platform. And that's so key to me.

[00:11:39] And so interesting, like you'll see even in, in news articles and interviews, people will call it social platform and you know, the CEO or whoever's being interviewed will say, no, no, no, no, no, back up because we are an entertainment platform. And that's really different. I think, you know, YouTube shorts is a bit similar because most people don't go to YouTube or social.

[00:11:58] They go there to again, like be [00:12:00] entertained. But that's something that pits it sort of, or puts it in a different playing field, I guess, than something like reels because people have usually gone to Instagram to see content from people that they know, to the point where when Instagram like introduced a, you know, a TikTok like feed, a lot of people are like, I don't want this.

[00:12:15] I wanna see what my friends are doing. and I think that's changed over time with like influencer culture like I definitely follow a lot of people that I don't know at all. But in general, you know, these other spaces that might try and launch short formm video like Instagram are social platforms that people use for social reasons, and TikTok kind of puts itself in a different playing field by labeling itself as an entertainment platform, which also kind of, I think one of the benefits to that for them is, you know, I think it's part of the reason that people spend so much time on TikTok like there are stats for the average amount of time people spend on the app is ridiculous. It's something like an hour, like nobody does that in one sitting on Instagram, and it's probably because you run out of content.

[00:12:57] If you're following a certain number of people, [00:13:00] I run out of, you know, stories to watch or people's content to view. There's only so much you can get out of a social platform like that. But with TikTok, if you're there for entertainment, you can scroll forever. I've done it . So, you know, I think that's a key distinction.

[00:13:13] Dan Runcie: Yeah, that's a great pro and I think we can talk a little bit more about that when we talk about like who wins out, whether it's, you know, platform versus artist versus company. But, cause I feel like there's a tie in with that too. But that's a great point. What do you think some of the cons are about TikTok?

[00:13:28] Tatiana Cirisano: Yeah. I mean, I think the kind of obvious one is the threat of it being banned. but I don't know that's an interesting one because I feel like it's not talked about that much. It's always kind of an aside, and a potential, but it's unclear whether that could actually happen. what might end up being a bigger inhibitor is just the attitudes that that inspires like if parents are like, oh, the government might is trying to ban TikTok, it must be bad, let me tell my kid they're not allowed to [00:14:00] use it like I think the perceptions that people have about the app and their safety on it, they might be influenced enough by the threat of a band to be scared of using it.

[00:14:08] Like I know some people that kind of feel freaked out by it. so I think that could be a real threat or it could be an imagined one, but it could have impact either way.

[00:14:17] Dan Runcie: I thought a lot about the threat piece. I think the most likely scenario would be that it's similar to the discussions that we saw three years ago, where is there a US company that would potentially take over TikTok us and could that be the outcome? I know that a lot of that had pretty much died down with the US presidency transfer of power, and those discussions stopped.

[00:14:40] But I do feel like if anything I could see that, likely happening as opposed to a full on ban. We'll see though. I mean, because I feel like that could address some of the concerns. Hopefully if that happens, we'll see how whatever company that runs it would go about managing it. But that's how I see that piece of it, particularly playing out.[00:15:00]

[00:15:00] The other con that I've thought a lot about is, it's something Lyor Cohen, who runs YouTube, or at least he runs YouTube music, has talked about, he did an interview in, music business worldwide a couple months back, and he has, and I quote, he says, "Short form video that doesn't lead anywhere is the most dangerous thing I've seen in the music business in a long time."

[00:15:23] A lot of people are very familiar because it was one of those quotes where he didn't say the company, but everyone knew he was talking about TikTok. And the thing is, many of us know that TikTok is avidly trying to build up has its distribution service, but it's trying to build up its own streaming service so that traffic can go somewhere and that it can do that.

[00:15:42] It already has RESO in other countries, but it's actively trying to do that in the us but it still hasn't been able to do that. We know it. These are very cost intensive things to be able to do and do, right? I think it's worth talking about whether or not we think that is as big of a threat as positioned, but I do know that [00:16:00] that is one of the conceptions out there that you have this top of funnel that doesn't directly lead anywhere.

[00:16:05] So if you are obviously, record labels and others are tracking the pipeline of TikTok data that then leads to streams and things like that. But is the fact that that is a non-connected platform, at least the way it lives today, is that a risk in your eyes or a con?

[00:16:24] Tatiana Cirisano: I think it is a risk. I mean, I think that issue is getting worse. I feel like I brought this up maybe on another podcast we did too, but the fact that the same things that made TikTok so powerful, like having this for you page and having such a good algorithm also means that it's a completely lean back experience.

[00:16:42] I don't have to follow anyone on the app. I don't have to take any actions at all. All I have to do is open it and keep scrolling. So there's very little motivation to follow anyone. So that goes for content creators, but it also goes for artists who are trying to, you know, actually build and retain long-term fans, rather [00:17:00] than just having a hit go viral on the platform, maybe it translates to a streaming bump and that's the end of it.

[00:17:05] so I think that that is a bit of a threat. there's something else I was gonna say about that too. oh, that I think another point in all of this is, these platforms are no longer just competing for users. They're competing for creators because that's who's actually supplying the content, especially if you're an entertainment platform.

[00:17:22] TikTok is kind of like, if Netflix was like, we're not gonna actually create any movies, we're just gonna have users upload their own, you know, like the users are supplying the content, the creators are who they need, and they need to appeal to them. So I think if enough creators get frustrated with feeling like they can't build a following on TikTok, musicians include, they might try migrating to a different service, and maybe if other services can do that better, they'll stay there.

[00:17:46] So I think for that reason, it is a risk yeah, it's clear. I think it is something that TikTok is thinking about.

[00:17:52] Dan Runcie: Yeah, It does need to be acknowledged. I think as I've thought about this a few ways, I think that the challenge that was presented by [00:18:00] Lyor would imply that there is a higher conversion rate from YouTube shorts to YouTube, and that they have the data to be able to prove that. Theoretically, I do think that that makes sense in terms of absolute numbers though, it would be very interesting to see how many streams absolute it actually leads to, just given how much more massive TikTok is relative to YouTube shorts in terms of just the amount of people actually watching videos on that platform on a regular basis.

[00:18:29] And I think the other cod with YouTube, just to underscore something you had said was that, if artists themselves, or whether it's more broadly creators do start to feel like they're being more marginalized on the entertainment platform, where their name gets smaller and smaller and it's less important about who they are, and it's more important that they are just someone that is providing content on this platform, then they may be more likely to go some.

[00:18:56] Like a YouTube, which we could transition into now, but go more sort like a [00:19:00] YouTube, which has tried a position itself as more friendly to its business partners as opposed to primarily itself.

[00:19:07] Tatiana Cirisano: Yeah. And I mean, TikTok is, presumably trying to prove right now that it doesn't need music as much, the music industry believes with the kind of experiment they're doing in Australia. So I think that, relationship aspect is really important to all of this.

[00:19:22] Dan Runcie: Yeah. And then one last thought on TikTok too that this just made me think of. I know a couple weeks ago, Snoop Dogg had re-released the Death Row Records catalog, at least the album he owns. Exclusively on TikTok. it was a window wink thing one week before he released it more broadly elsewhere.

[00:19:40] While I do think that's probably more likely to be a one-off thing, just because it's a unique scenario where he is an artist, non-major record label that owns his content exclusively, he can choose to do with it what he wants. I'd be interested to see if that changes things and if TikTok does get more involved with exclusivity, especially if it builds out its [00:20:00] own music streaming service.

[00:20:03] Tatiana Cirisano: Yeah, a hundred percent.

[00:20:04] Dan Runcie: So we'll see how that one goes. But let's transition over to YouTube now, and I think we talked a little bit about this, but I think some of the pros that it has is that it clearly is YouTube short specifically is clearly a top of the funnel for YouTube. And YouTube already has this algorithm and everything built in there that makes it very easy for creators to be able.

[00:20:28] Actually monetize and we've seen many artists be sustainable success stories with how they've tailored their music releases to working on YouTube and be a young boy is one artist that comes to mind there, there are several others and the fact that this can essentially be a way for them to just spread more awareness to others on the platform to then capture more eyeballs and at least of what we've seen, it feels like there is growth, at least of what YouTube has publicly shared.

[00:20:54] I believe I saw the most recent number was 30 billion views per day for videos that were being [00:21:00] posted there. So there are a few things that seem to be working in its favor on.

[00:21:05] Tatiana Cirisano: Yeah, and I think the sort of, what Lyor Cohen was talking about, like that ecosystem play that YouTube shorts has, is, it's a major pro for them whereas on TikTok, an artist is kind of posting an isolation on YouTube, maybe their shorts.

[00:21:21] It's all on the same platform, and shorts can lead to their music videos or their vlogs on YouTube. And that could, in turn, you know, lead to their music on YouTube music. And I think that ecosystem is really powerful and that's what TikTok would be going after if and when they do launch a Western streaming service.

[00:21:39] So for right now, I think that's probably YouTube Short's biggest advantage. And it's biggest sort of, way to like convince creators of its value, convince artists of its value and get them on board. and I think they're clearly trying to do that.

[00:21:53] Dan Runcie: Great point. Another one too that that made me think of is another of YouTube's strengths is [00:22:00] they clearly are as I mentioned before, they are artist friendly in that it is a place where you can grow, monetize, you have the people that you're trying to reach there. But I do think that the fact that they're just stronger relationships that they have with the industry overall.

[00:22:18] Does tend to play in, I mean, YouTube is very vocal about how much, or YouTube music specifically is very vocal about how much money it pays out to the music industry. It's made it a clear goal that it wants to surpass Spotify to be the platform that generates the most for that. And I think a lot of that transfers as well to on the artist side, whereas you mentioned a platform like TikTok, trying to be less reliant on music.

[00:22:40] YouTube is actually trying to double down more than that, and the fact that there's just more stability in general. Obviously TikTok is the opposite of this, where we're still not sure will there be a band, will there be another company owning it? But with YouTube, it's the rare platform that 18 years into its [00:23:00] existence, people are still discovered it, people are still finding ways to be able to tap in. It competes with so many other entertainment platforms in so many ways that whether it's for attention, for content, for revenue, at least from a revenue perspective, it's not too far behind Netflix, if not in the same category, and it's all free content and the international reach, there's a lot there, and I feel like that's stability and that longevity, there's something to be said there.

[00:23:29] Tatiana Cirisano: Yeah, that is something that I was gonna bring up too, is just how massive and far reaching YouTube's audiences. it's, you know, one of the most global platforms and one of the top like, the platforms that have the most penetration, I guess is how we put it in the data terms of, you know, weekly active users, globally.

[00:23:48] And a question that kind of comes out of that for me though is like, how much overlap there is, I guess between the YouTube audience and the YouTube shorts audience. and I don't really know the answer to that. I mean, you would think that [00:24:00] a lot of habitual YouTube users trickle down to using shorts, but I'm not sure.

[00:24:06] I think YouTube is, a lot of people use, YouTube on a desktop or on a smart tv, not necessarily on the app, on their phones, which is kind of the main place for using shorts. I think Shorts has, I know actually that Shorts has, a younger user base than YouTube as a whole, which also makes sense cuz YouTube just has more users in general.

[00:24:24] But that's like an open question that I have too is how much overlap there is there, because that would impact this ecosystem strategy that they have.

[00:24:31] Dan Runcie: Yeah, that's a good con to highlight and I feel like. ties into with just user behavior on the platform too. TikTok, there already is this mind thought of this is the place where I can just scroll and get lost for hours. And on YouTube, if you're using the app on the phone, it's a separate tab that you have to click into to get to shorts because they're all at the bottom, whether it's shorts or regular videos.

[00:24:55] You click into shorts and then you hope that it's a similar type of experience. The [00:25:00] difference though, is that YouTube's algorithm is very YouTube overall, that algorithm is very much based, a bit more on YouTube itself is now the second largest search engine we have, and at least from a YouTube itself standpoint, there's a bit more of a likelihood of it giving you repetitive content and repetitive information of, if you've seen one thing, you've probably seen all the things from this type of niche that you're interested in. Almost in the same way that Spotify can do that, because I know that's a very streaming thing to give you so much of what you already know to keep you sticky. But sure, from video it's different especially if you're trying to optimize from an entertainment perspective. You're trying to keep up with the new trends. You're trying to see what's there. This is your opportunity to just scroll and do that. So can YouTube shorts optimized for that as well, because optimizing for that type of algorithm is different than optimizing for the destination music streaming service, especially from a consumer [00:26:00] behavior perspective.

[00:26:01] Tatiana Cirisano: No, and, as you mentioned before with Vine, if you have a smaller user base, you also just don't have as much content to continue serving so that the user can scroll forever. You don't have as many niches to go into like, I think part of the reason TikTok works so well is because since it has.

[00:26:16] like what does it have? Like a billion users more. since it has so many users, every possible niche is on there. So whatever hyper-specific thing you're into, TikTok can serve you the content for that. But I don't know if that's something that these other platforms maybe reels more than shorts, but I don't know if these other platforms really have access to that level of niche.

[00:26:36] Dan Runcie: That's a good point. And on that note, let's talk about Facebook and Meta and everything that they're doing, both with reels on the Instagram side and reels on the Facebook side. I feel like one of the pros there that works out for them is that, it is so well monetized just from an overall business perspective, what they're able to do from ads and how they're able to generate that a bit more so on Facebook than [00:27:00] Instagram, but still they're able to monetize that quite well, and I think that that does work into their favor because at the end of the date, this is obviously less about the artist and the industry perspective, but more from the company perspective.

[00:27:14] Your ability to make that have a high ROI is strong. And at least from recent reports we've heard from Mark Zuckerberg, whether it's at earnings calls or some of the Meta town Hall meetings, it does seem like reels both on Facebook and Instagram are a growing source of eyeballs. And even though that is less money now relative to the more established streams that would only naturally grow over.

[00:27:37] Tatiana Cirisano: Yeah. you know, you're reminding me too that Facebook did roll out that ad revenue sharing program for creators. and for the music industry for rights holders, which I don't think that that's available on reels yet. I've seen some reports that it could be in the future, but, you know, that is what it seems like the music industry is trying to get TikTok to agree to.

[00:27:58] so, you know, I would imagine that's a better [00:28:00] deal, you know, from the music side of things, and that's definitely important to all of us.

[00:28:03] Dan Runcie: For sure. Any other pros from Instagram or Facebook?

[00:28:08] Tatiana Cirisano: Yeah, I think, they already have huge built-in user bases, which is, useful. They're kind of, they don't have to ask users to download a new app or like open a new tab the way, or I guess it's the same as YouTube shorts, but it feels a bit more built into what users already doing on the platform.

[00:28:28] But that kind of also leads me to another point that I've been thinking about with this is, it's so interesting how like TikTok is an app, but on these other platforms it's a feature. Like TikTok is a standalone app for short form video, but when you go on Instagram reels, it's just another feature in the toolbox.

[00:28:43] Kind of similar to how, you know, when Snapchat had stories, originally had stories, Instagram just added that as a feature and kind of stole the concept away. And it was, it worked because it was just another tool in the toolbox for its users. I don't know if that's a pro or a con, but it's an interesting [00:29:00] differentiator to me.

[00:29:00] they're positioning this as just another tool. I don't know.

[00:29:03] Dan Runcie: Yeah, I think you maybe think of two things there, so I think that new features like that do work best when there is a audience that is either searching for this answer or searching for this type of solution that's already tapped in with how they consume and how they naturally engage with the platform. And I think that's been one of the differentiating factors between the copycat attempts from Facebook that work and the ones that don't work.

[00:29:31] Like why I think that Instagram stories took off in a ways is because, In a way, even more so than it did for a Snapchat, is that you had this core group of people, influencers, who were already using Instagram, but there's just so much pressure to post these perfect photos on the main feed. So stories helped, co helped solve that, and it helped solve that in a way that.

[00:29:54] even more so for that target audience on Instagram, because Snapchat didn't really have as many [00:30:00] influencers, at least to the same extent. Instagram still had a much larger group. So it's like that group that our, the group stole the feature bin, that feature was even more relevant cuz they had more of the target audience than you ever did.

[00:30:11] That was already relevant to like, how they were going about it in a way where I feel like some of Facebook's other things like facebook dating for instance, that they've like started and I don't even know if it's still going on. But sure, you have all the active users that naturally would want to, like most of the people using Match or Tinder probably already have Facebook accounts, but that isn't like tapped into like how they naturally use the platform.

[00:30:34] And I bring that up in this case because I think that reels is a behavior that is more closely aligned to the Instagram experience than shorts is to the YouTube experience because there was already a mindless nature to some extent of how Instagram was being used. Sure, I know there's differences based on to the point you mentioned earlier of people saying, Hey, I wanna see [00:31:00] my friends.

[00:31:00] Not necessarily all this to other stuff, but there's still a mindlessness to seeing your friends or just scrolling through the

[00:31:07] feed and.

[00:31:08] Tatiana Cirisano: that's a really point.

[00:31:09] Dan Runcie: And YouTube didn't really have that scrolling through the feed dynamic. Sure, the algorithm could suggest things, but the algorithm suggested things in a way that was almost closer to Spotify's algorithm suggesting things than it was to Instagram.

[00:31:21] suggest you the next thing.

[00:31:23] Tatiana Cirisano: That's such a good point. And it reminds me about how I was saying before, like people on Instagram will run out of stuff from their friends to look at. So maybe reels is the solution, maybe it's like going back to what you're saying about like solving a user need. Maybe it's you run out of things from your friends.

[00:31:40] Here's reels where you can scroll mindlessly forever and see content from people you don't know. I don't know. That's a great point.

[00:31:48] Dan Runcie: Yeah, no, thank you. It's something I've thought about too, because I feel like, yeah, running outta content is clearly a thing, cuz I feel like we've all had those moments on Instagram where, we're taping this now, it's almost March. You'll see posts [00:32:00] from the end of December that come through on something and you're like, wait, what?

[00:32:03] Why am I getting this now? Like this isn't even timely anymore, but it's something that went viral then. And that obviously isn't something that happens on TikTok in that same way.

[00:32:11] Tatiana Cirisano: Yeah, you you don't get a thing on TikTok that says you're up to date. When I get that on Instagram, like , when I get that on Instagram, I'm like, that's how I know I've spent too much time on this app. It's the equivalent of Netflix going, are you still

[00:32:23] Dan Runcie: Right. You still there?

[00:32:25] Tatiana Cirisano: you don't get that on TikTok if you got that on TikTok, like I need, someone needs to help you.

[00:32:32] That's such a good point. That's such a good point. So yeah,

[00:32:35] Dan Runcie: Some of the cons, I will say just with reels, both from Facebook and with Instagram, though a lot of ads and a lot of ads, and this is part of the double-edged sword about how well it's monetized, right? But a lot of ads that I don't hear people complaining as much about ads on the other platforms.

[00:32:53] Tatiana Cirisano: Mm-hmm. , that's something, I hadn't even thought about here, and you're totally right. many more ads on those platforms for sure.[00:33:00]

[00:33:00] Dan Runcie: Yeah, and I think too, just given that point I mentioned about influencers being a core demographic for Instagram overall because that's been the core audience there. How does that translate necessarily as much to artists? And I know that there's some overlap there with some artists who very much position themselves as influencers.

[00:33:18] But if you're an artist who really isn't about influencing in that way, is ls going to be as effective, relatively speaking, compared to some of the other short form video platforms.

[00:33:29] Tatiana Cirisano: Yeah, and I think that also gets to the, cultures that are different on these platforms like I think similar to what you were saying about how Instagram influencers like stories because they could be more off the cuff. I think reels still has a feeling of being a bit more professional and less casual than TikTok.

[00:33:47] TikTok feels a bit more casual, off the cuff weird. You don't get as much weird content on Instagram reels. It's a lot more curated and, professionalized. and it's interesting because I actually had, as one of my [00:34:00] pros to talk about something that I've just, I don't know if this is still true, but something that I've heard from marketers, music marketers in the past is that, Instagram just has more trust with brands than TikTok and other platforms that are new because they've been using it for so long.

[00:34:12] they know what the deal is like. It just has, better relationships in that respect. but if that's also leading to more ads on the platform, then it's kind of a pro and a con.

[00:34:21] Dan Runcie: Yeah, definitely. That's a great point. The brand piece too, and I know that TikTok is clearly trying to do it with some of the reports they've put out some of the positioning trying to get itself to be seen as a home for brands to be able to tap in. But Instagram has owned that space for quite some time.

[00:34:37] Tatiana Cirisano: Exactly.

[00:34:38] Dan Runcie: Yeah, any other pros and cons on reels before we move?

[00:34:42] Tatiana Cirisano: Well, I guess one other thing I'll say, this kind of applies to everything, but you've made me think during this conversation. I would love to know what percentage of people on each of these platforms are lurking versus also posting content. cuz I think that would impact our idea of like how deep the trove of content can go and how that impacts the [00:35:00] algorithm and the niches you can get into likeI sort of have a theory that because TikTok is a bit more casual and off the cuff, it might have more of a, percentage of its users are posting content. Like I've never, I don't think I would ever make a reel. It feels very influencer to me, but I would post a TikTok cuz whatever, like, it just feels a little bit more casual.

[00:35:17] So I think that's an interesting question to me is what percentage are creators and what percentage are just like passive users?

[00:35:25] Dan Runcie: That is a really good question. Yeah, it would be good to see that, right? Because I feel like TikTok kind of has two things going forward one, it does seem less formal from a content release perspective of just being able to share it. But on the other hand too, anytime you get into the absolute numbers of over 1 billion, approaching 2 billion monthly active users specifically on this feature of the short form, you know, For You page, it does lend itself to likelihood.

[00:35:56] Each time you go outside of that like concentric circle, I feel like it's a higher [00:36:00] likelihood of attracting more lurkers than hardcore users. But it'll be great data to be able to see. That's a really good point.

[00:36:06] Tatiana Cirisano: Yeah. We'll have to put that in a survey.

[00:36:09] Dan Runcie: I know, I know. We'll have to get those answers somewhere, but so now that we've talked about each of these, TikTok is the company that is clearly in the lead, both from a reach perspective, how long it's been established with this particular platform itself, and outside of the potential government sanctions or anything there, is there anything that you could see that could change the likelihood of that continuing relative to these other two services?

[00:36:34] YouTube shorts and Instagram and Facebook reels.

[00:36:37] Tatiana Cirisano: Yeah, it's a good question. I mean, the thing that immediate. Comes to mind for me is it's licenses with music and its relationships with music knowing that those are negotiations that are happening as we speak. I think if TikTok were to suddenly, I guess this is the thing that they're kind of trying to test in Australia, but if TikTok were to suddenly lose a lot of popular music, what would that do to the platform?

[00:36:59] [00:37:00] so I think that's the first question that comes to mind for me, just from, you know, music industry stand

[00:37:06] Dan Runcie: Yeah, I hear that. I could see that I thought about this too, and I had a tough time thinking about something that could really shift things. I do wonder about, If monetization itself and revenue generation does become an issue for TikTok moving forward, how that can shape the nature of the experience of the platform, right? Because meta and Google being YouTube's parent company are both so much more established. They've been around for years generating revenue at a pretty steady clip. And while at least the way TikTok is right now, it does have the advantage of being under bite dance, which has several, you know, has a lot of money coming in as well.

[00:37:49] I do wonder how profitable that will be. And obviously we saw how meta adapted to try to make money, where we're complaining about how [00:38:00] many ads there would be on the platform, could any potential changes there from the need to get more money, change that user experience in a way that could decline the user experience for this core demographic.

[00:38:12] So that's definitely a risk for TikTok.

[00:38:14] Tatiana Cirisano: Yeah. And also kind of going off that, if any of these platforms were to provide a much better way somehow for the creators on the platform to earn money from it, and then the creators were to go to that platform, that's where the audiences would be. So I think that creators actually have a lot of leverage right now, with that, because I think you can tell that all of these platforms are kind of competing to be the most sort of creator friendly, TikTok is updating, its fund, its creator fund. after getting a lot of complaints about how it was working, YouTube shorts, I think announced an ad revenue share program. So I think that could shake things up is I, I don't know what it would be, but if one of these platforms had ways superior monetization tools for the [00:39:00] creators, I could see the creators migrating there and their audience is following.

[00:39:03] Dan Runcie: Right. Yep. Good point. They all have funds to some extent, but you clearly need more than money if everyone else has it too, right? Like how is it gonna be used in an effective way? So it'll be interesting to see how that plays out.

[00:39:16] Tatiana Cirisano: Yeah. But at the same time, it's like, even if another, say that another platform say that YouTube Shorts had way better monetization for creators, but it still has a smaller audience. Will creators migrate there and hope that their audiences follow them? Or do they feel like they, it's better to have the larger audience for, you know, leveraging brand deals and things that are outside of the app like.

[00:39:36] Dan Runcie: True. Yeah.

[00:39:37] Tatiana Cirisano: I don't know what would be the better deal.

[00:39:41] Dan Runcie: Yeah, no, that's a good point because I think as we saw in the Spotify era, it was very easy for artists that didn't care about streaming and Spotify to ignore it and be very proud about them ignoring streaming back

[00:39:52] Tatiana Cirisano: Exactly. Yeah.

[00:39:53] Dan Runcie: 16. But all those artists are now on Spotify because they were like, can't beat 'em join them pretty much.

[00:39:59] Tatiana Cirisano: [00:40:00] Right. Like will TikTok always be the place where you can't afford not to be?

[00:40:04] Dan Runcie: Yep, exactly.

[00:40:06] Tatiana Cirisano: I mean, not forever. that's the thing about social media. nothing stays. It's popular, I don't think forever, but you know, how long can it last? I don't know.

[00:40:14] Dan Runcie: Yeah. No, we'll see. We'll see. All right, so a few, quicker questions here as we're getting to the tail line butwanna break this down for which of these platform do you think is in the strongest position for each of these groups? Artists, record labels, and, the parent company, the company itself overall.

[00:40:30] So let's start with artists. Which of these companies do you think creates the most value for artists? And let me not just say companies be clear. Let me talk which short form video platform.

[00:40:41] Tatiana Cirisano: Yeah. Well, it depends how you define value, I guess. Because if you were saying for having a hit or influencing streaming numbers? I would say TikTok getting discovered, I would say TikTok, but if you're saying for developing a [00:41:00] sustaining long-term fan base, no matter what the size is, I might say YouTube shorts because of that ecosystem that it has.

[00:41:07] Dan Runcie: Yeah.

[00:41:09] Tatiana Cirisano: yeah.

[00:41:09] Dan Runcie: I think that's a good way to frame it cuz I TikTok down as well, just because of the absolute numbers part of the algorithm, how many people you could reach. But I think that your per user approach or even the ability to do conversion of actual fandom. YouTube probably has a bit more tight in there.

[00:41:27] It's kind of like a short term versus long term

[00:41:29] Yeah, definitely. And it's like, okay, do you want this absolute number or do you want who you're most actually able to have as a real super fan down the road?

[00:41:39] Yeah.What about record labels?

[00:41:40] Tatiana Cirisano: That's a good one. Because I mean, we know that by far, YouTube as a whole is generating more for the music industry for record labels than any of these platforms. But when it comes to shorts, I'm not so sure it might be TikTok

[00:41:56] Dan Runcie: Yeah,

[00:41:56] Tatiana Cirisano: in terms of the bottom,

[00:41:58] Dan Runcie: Yeah, it's tough. I was stuck [00:42:00] on that one too. I think my answer still leaned YouTube, but that's probably thinking about, A the overall tie in and the clear

[00:42:07] connection to have it feed into the broader video platform, but then also what it seems like Leo's goals to make that be a clear thing.

[00:42:16] So that was the thought there. And then most value it created for its parent company. Which one would I be saying.

[00:42:24] Tatiana Cirisano: okay, so we have TikTok bite Dance, YouTube, Google, Instagram, Facebook. that's a really good, that's a tough one.

[00:42:32] Dan Runcie: I went with meta for this one because I

[00:42:34] Tatiana Cirisano: That's where I was leaning. That's where I was

[00:42:36] Dan Runcie: it's. , I think it's the most well monetized, at least from what a social media user is able to do and what they're able to generate from a sole Facebook user on average is so much higher than any of these other platforms. And the fact that this could potentially be a funnel into that is strong.

[00:42:55] And I know a lot of people may roll their eyes, if you're a certain generation the thought of a [00:43:00] Facebook reel even as opposed to an Instagram reel. But there's an audience for it and there's a reason why it's there. And that may not line up with contemporary artists, but that may line up with some, you know, other established artists that are clearly trying to reach that base.

[00:43:12] So I feel like there's something there.

[00:43:14] Tatiana Cirisano: Yeah, I think that makes sense. That's where I was leaning to. These are good questions.

[00:43:18] Dan Runcie: And then I just to close things out, we talked a little bit about this earlier. Well, you touched on this a little bit earlier, but will there be a new form of consumption, content consumption that could take over as the place for music discovery and its top of funnel in the next five years?

[00:43:35] Tatiana Cirisano: Yeah, that's a great question. What did I touch on earlier that related to.

[00:43:39] Dan Runcie: You were mentioning that there's a new social media platform like every few years that like comes through. So even though TikTok is in like a

[00:43:46] Tatiana Cirisano: yeah.

[00:43:46] Dan Runcie: today, we don't know what it's gonna look like in the future.

[00:43:49] Tatiana Cirisano: So I have a couple answers to this. One thing that I've been really, it's so funny, every time we do this, I always have a timely report coming out on the topic. I don't know how you have like [00:44:00] this somehow, this telepathy to know this, but I was wor I'm working on this report right now that's very related, which is about how potentially the next step for all of this, for music and social media could be, not only are you opening TikTok and adding, you know, a Taylor Swift song to your post, but you're also remixing the song, or you're adding your own vocals or you're actually changing it. So going a step further in what I was saying about, users engaging, creating their own spin on the music that they're fans of, they would be actually changing the song as well.

[00:44:33] Dan Runcie: you wrote about this recently, right? About like

[00:44:35] Tatiana Cirisano: yeah.

[00:44:36] Dan Runcie: and like, and music having its Instagram moment.

[00:44:38] Tatiana Cirisano: Yes, exactly. So the same way that Instagram brought kind of mainstream photography tools to the average consumer, and TikTok did the same thing with videography. when will music be part of that? When will music making and recreation tools actually be part of these platforms? And when I've talked to people who know way more about this than I do, and said, you know, why hasn't [00:45:00] this happened?

[00:45:00] A lot of it is about how hard it is to simplify music making into a mobile screen, let alone like, put it on top of a social app. and that's why, you know, I had the AI tie into my blog post is because, there are companies that are using AI to simplify that process and make this possible. So like Snapchat is a company that is like semi-related to short form video that we haven't talked about, and they have an integration right now with a company called Mini Beats, where you can remix the song that you're putting on your post. so I think that's not necessarily like, it's not a new platform, but it's a new way of consuming like I think creation as a form of consumption is like probably the next step.

[00:45:44] Dan Runcie: And that ends up being the catalyst for how so many of these platforms grow. We talked about TikTok and just how it was able to attract this group of music in some way was the backbone for user generated content. And then it just attracted so much, and everyone's talked about what AI looks [00:46:00] like, I was watching some video the other day about some guy that looked and sounded nothing like Kendrick Lamar had this voice alteration thing that made him sound just like him.

[00:46:09] And while it's not quite AI, I think there's a lot of elements there. So whoever taps that and then that can then be the launchpad for the next thing. Something like that could easily overtake and become the next dominant social media player. But we'll see. It'll take a couple years to get to 1.5 billion

[00:46:26] Tatiana Cirisano: Probably more than five.

[00:46:28] Dan Runcie: probably five.

[00:46:29] Tatiana Cirisano: probably more than five just because of licensing really. But, I mean, I think the interesting thing to note there is this type of behavior is kind of already happening like I notice a lot of with sped up songs and how the music industry actually adopted that after sped up clips were going viral on TikTok, like users are already modifying the songs and then uploading those modified versions.

[00:46:49] So imagine if that capability was actually part of the platform itself.

[00:46:52] Dan Runcie: Right, right. It's like everyone saw DJ Screw make a, you know, huge influence with this for this chopped and screwed music. [00:47:00] So it's only about time that you make it easy to make that accessible for users.

[00:47:04] Tatiana Cirisano: Yeah. So we'll see.

[00:47:05] Dan Runcie: Yeah. So we'll see. But Tati, pleasure as always. Thanks for coming on and yeah, we'll definitely have to stay tapped in with what you have coming up next on this topic.

[00:47:14] So relevant to this discussion.

[00:47:15] Tatiana Cirisano: Yeah, thanks for having me again. Always a pleasure.

[00:47:18]

The artist-entrepreneur-investor Mr Eazi has no on-off switch. Who he is in the recording studio, on stage, and on the boardroom are the same. With business and music, Mr Eazi has found parallel industries that allow him to be the same person.

He’s founded both emPawa Africa and Zagadat Capital to feed his business appetite. The former invests into African artists and helps them scale. Meanwhile, Zagadat Capital invests into tech startups, most of which are inside the continent. 

Then there’s Mr Eazi, the Afrobeats artist. He’s collaborated with the likes of Beyonce and J Balvin, and also taken center stage at Coachella. After taking time away from music amid the pandemic, Mr Eazi is back in album mode now. Holed up in Cape Town currently, Mr Eazi has plans for two new albums this year.

I caught up with Mr Eazi to cover his never-ending pursuits in music and business. Here’s everything we chatted about:

[0:22] How Mr Eazi is balancing artistry and entrepreneurship

[1:40] Similarities between music and startups

[6:19] Taking equity stakes in artists and what an “exit” looks like

[10:50] How Eazi measures success for Empawa artists 

[13:00] Eazi’s investment thesis for startups

[18:10] Startup success trends in Africa 

[21:30] Lack of capital is biggest challenge to Africa’s startup scene 

[29:45] Raising awareness within the continent

[32:20] Biggest obstacle that African artists face 

[36:52] Uncleared sample on a Bad Bunny song

[40:45] Impact of Western companies investing into Africa

[47:35] Mr Eazi is in album mode

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Mr Eazi, @mreazi

This episode's sponsor is Symphony. Put your fanbase growth on autopilot with the first AI-powered platform that brings all your artist marketing workflows in one place. Learn more at symphony.to/trapital

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Mr. Eazi: part of me deciding to be an artist was reading the book, the Jay-Z book, Empire State of Mind. And that was when I saw it clearly and I was like, oh, wait a minute like this music is a business and the music gives you access, it gives you access to capital, access to the network it puts you, gives you a seat at the table

[00:00:20] Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital Dan Runcie, this podcast is your place to gain insights from the executives in music, media, entertainment, and more. Who are taking hip hop culture to the next level.

[00:00:48] Dan Runcie: All right. Today we have the one and only Mr. Eazi, the artist, entrepreneur. How you doing man? Welcome to the pod.

[00:00:56] Mr. Eazi: I'm good. I'm good. I'm chilling. What's, going on

[00:00:59] Dan Runcie: Me. I'm good, man. Trying to keep up with you. Trying to keep up with you, man.

[00:01:03] Mr. Eazi: I'm trying to keep up with me, bro.

[00:01:06] Dan Runcie: Well, let's talk about that because you are someone who sits at this intersection of artist, investor, entrepreneur, and you are doing all of those three jobs and more. And it's also happening at this moment where the entire continent of Africa is booming from an entrepreneurship perspective, booming from a music perspective.

[00:01:29] How does it feel right now? How are you operating being at the center of that?

[00:01:34] Mr. Eazi: To be honest, I just feel like it's a blessing to be born or to be existing in this time. where like you said, everything is just like taking shape and, you know, yeah, it's exciting and it is for me. It's like every day I'm seeing opportunity left and right and just figuring out what is fun and what is doable and just, you know, going from thinking, oh, I'm an entrepreneur, to oh, I make music. And, it's similar cause it's products at the end of the day, on the bottom line, it's like you're selling music or you're selling some other product. And I thought they were two different things, but you know, I'm seeing how it's one and the same.

[00:02:17] It's just exciting to realize that I don't need to be two different people like I still be the same me and operating both walls.

[00:02:27] Dan Runcie: So how are they similar for you approaching both music and startups?

[00:02:32] Mr. Eazi: So I feel like every artist is like a. because the artist has a brand, has a feel, it's like a service product, it's an emotional product, right? And every artist, you know, that IP, there's an IP with every artist, and the artist usually needs investment to scale. And like coming from, like when I went outta school straight into an incubator program called 440NG and I kind of, there I learned how, you know your idea and your business, you know, you have the idea, you put it together, you iterate as the business keeps on going. So what you thought was the business at the beginning, you know, your customers could give you feedback and then you realize it evolves, it accelerate and you are trying to be as lean as possible and grow to the point where you have that critical volume to sort of like ask, what's the word as, proof that this is a valid idea either via customers or via revenue. And then you try and get to, you know, you try and scale, and you figure out what's your, unique value proposition is, and that's like where the startup, what's your unique value proposition?

[00:03:46] Who are your customers? What's the idea? You take it to market, you test it, you go get investment. And it's the same thing with every artist so at the time where I decided to do music full-time, I was in an incubator program, and so I just started to see the similarities with the music. I'm like, okay, let me test it, put it out, people listen to it, you know, gimme the feedback, you know, and the point where I decided I was gonna take the music as a business was when like I got the first person reach out to me and say, Hey, I want to pay you for a verse. So that was the first signifier to let me know that, okay, maybe I'm onto something.

[00:04:22] Then I started to have my early fans then Lauryn Hill reached out and said she wanted me to come play at her show. And I thought it was a fluke until I found myself in America performing in Lauryn Hill, coming out to say, I love you, thank you so much for coming. And like all of that is like with a business, with a traditional startup, it could be different things, but for me, the revenue, the number of users, aka the fans, all of that were signifiers.

[00:04:51] And then I just needed, you know, the capital to take it to the next level, right? So I think those are the similarities, and I've tried it when I started emPawa it was at the beginning, it was to test if they were one and the same. So I was like, okay, Y Combinator send, you know, picks a few, start a couple of startups, you know, does incubator program put funding and whatnot to them?

[00:05:18] And then maybe 20% of them you know, end up working on, and I did that with 100 artists across 11 African countries, over 30,000 entries then picked 100, then gave them the same amount of money, created the emPawa YouTube channel to host their videos, service it the same way, and in the end, start to see the ones that organically started picking up.

[00:05:41] And we had success with that. So for me it was like, oh, wait a minute it's one and the same. I've proved this. And that's when emPawa then turn from, you know, the, program I was doing to actually full service music company, because I had proved that it was the same and in the same way you invest in a song.

[00:06:01] I remember the first Joeboy song, the visualizer cost me $500, and then the song ended up having like 30 million views in like a year. And you know, Joeboy just went boom, boom, boom, boom, boom. So, I start to say, okay, there is a process here and perhaps we could do it with other artists, you know? So to answer your question, that's how I see both as, you know, one and the same in a way.

[00:06:28] Dan Runcie: That makes sense. And I wanna talk about emPawa specifically because this is you bringing so many of those startup concepts to music like you said, you saw Y Combinator is doing. How could you apply that here? The difference though is that with Y Combinator, the promises of course, an exit, so they're hoping this companies get acquired.

[00:06:47] They're hoping that they go public in music though. What does that look like for you as someone that is taking equity stakes in the artist? What does your return look like? What does your exit look like?

[00:06:59] Mr. Eazi: So, I mean, first off, the return is like when you invest, you know, you invest to create the content, you put it out, put some marketing, and you start to see, you know, the streams coming, the revenue coming, the artist is now doing live shows, getting endorsement deals, you know, you could get four, 5x, 10x multiples, you know, and time.

[00:07:24] so that's, one. But secondly, like on a developmental standpoint, you could develop the artist and then a big label comes and says, oh, we wanna upstream. So upstreaming is like a sale. It's like an exit, and you could still have passive rights to get passive income, on the artist. So those are like the kind of like returns and the kind of like exits.

[00:07:48] Plus you could just invest in the IP, buy it up, and next thing somebody wants to sample it and then they have to write you a big check. And it could happen now, it could happen in like 10 years, in 15 years time, you know, you could have a record just lined. I'll give you an example, recently the Joeboy record that didn't make it to the Joeboy is one of my artists.

[00:08:09] The song didn't make it to his album, and so we then licensed the song to a guy called Lakizon, you know, he puts out the record, you know, there's not so much thought to that. I wake up one day, Bad Bunny has put out, an album and I'm just listening to the album cause I'm a fan and I hear a record there and I'm like, basically what I was trying to say is, so you have that record that didn't make it to the album, Right? And it's just there and we license it to this guy and the next thing the record appears on a Bad Bunny album.

[00:08:43] And that's like the biggest artist in the world last year by a lot of metrics. And so that's like an example, you know, an exit because you make this record and then boom, and the upsides are like, you know, so high. And right now on the market, even if you wanted, you are seeing, you know, my mentor, one of my mentors, Merck Mekadalas, you see how many multiples from 10 to 23, 24xlast year's revenue on, you know, buying rights for music. So I think there's multiple exits and even just the music and music IP as an asset class has been proven to be a valid asset class by Merck and the likes. For instance, I was, I was part of the deal, the KKR deal that bought, I don't know if you saw that some time ago, that bought a law of the rights, including the Weeknd et cetera.

[00:09:36] I was part of that deal, via one of the companies, and you could see how you could see what an exit looks like. So there's multiple exits for music, whether it's an upstreaming deal from the label or it's a straight up acquisition of the catalog, or it's just multiples of revenue, the artist is now beginning to earn or if your label, you could get your entire label could become upstreams or you could go into a JV type situation.

[00:10:06] Dan Runcie: So that speaks more to the flexibility that's offered with being able to invest in music. It isn't just this one time event that you're hoping for as a startup investor.

[00:10:17] Mr. Eazi: Yeah. 100 percent.

[00:10:19] Dan Runcie: Yeah. Yeah And with that too, you mentioned that you have a hundred artists that at least came through the first cohort, over 30,000 had applied and when you are measuring your success for them, I'm sure that each of the things you mentioned are the things that you hope for, but along the way, what are some of those key performance indicators or what are some of those things that you're looking for to hope that traction can be gained to hopefully get to the point where you do have, positive financial event that comes.

[00:10:51] Mr. Eazi: I mean, it starts with like hyper local recognition. So, you know, I give example, there was this like I think she was 18 or 17 at the time, Nik, her name is Nikita and she's from Kenya. She had joined the program, she didn't make it to the top 10, but we put out the video and you know, that song started to gain local traction in Kenya even though she didn't make it to the Final 10.

[00:11:17] And by local traction, I mean like number of downloads, it made it to radio, you know, it made it to press picking it up. And even though she wasn't part of the software and I didn't give her full on funding, she got signed to Universal. So for me that's a testament of like the success and those are like KPIs like, okay, does it get to radio in your local country?

[00:11:40] Does it get, you know, that local, you know, appreciation from the fans in your country? And then when does it start to transcend, and there's nothing wrong with you having a popular song in Kenya or in Tanzania, but by the time it starts to go from Tanzania, you know, to rest of East Africa and then comes to the west, you know, those are the things you look out for and, you know, next level is by the time you start getting booked for shows based on the 1, 2, 3 singles you put out,

[00:12:11] Dan Runcie: That makes sense. That makes sense. Let's shift gears a bit to startups, because I know that's the other space that you're actively in. What is your thesis for investing in startups?

[00:12:22] Mr. Eazi: Right now, what I do is like, you know, I can bring some form of value to. So when I look at like the idea, or like when my team, you know, sends me some deal flow and we kind of walk through it, it's like, okay, aside the money, what else can we bring to this business? You know? And if I'm able to spot some extra form of value I can bring to help the business kill.

[00:12:53] Then I want to invest, you know, it could be marketing. Can I add some marketing? Can I add some of my experience here? Can I leverage on my network in this other side? Aside the money, and most of the investments I've been making haven't been personal. They've been via my collectives, Zagadat Capital, and Zagadat Capital is basically, for now, it's 12 people like myself, young, successful African boys or girls who usually, you know, find it boring to speak to the financial guys and you know, have some form of liquidity. And so when we get the deal flow, and I just look at who's in the collective and who can add value, then we bring it to, the collective and then we invest.

[00:13:45] So it's majorly been, it's like 90% being Africa focused because I feel like there's so much opportunity, on the continent and also on the sentimental level. The amount of impact the investment does when it's, on the continent makes, is something that's bigger than just the money.

[00:14:07] And the money is great like, you know, we've seen a lot of African companies hit and cross a billion dollar evaluations to become unicorns. so you know that, can happen. But at the same time, the impact, and it's always fun when I go to an office that I'm an investor in of the like employees, they're excited that Mr. Eazi is in our office and Mr. Eazi is a shareholder like, you can't buy that. And I think that's what I always wanted because like part of me deciding to be an artist was reading the book, the Jay-Z book, Empire State of Mind. And that was when I saw it clearly and I was like, oh, wait a minute like this music is a business and the music gives you access, it gives you access to capital, access to the network it puts you, gives you a seat at the table and you know your merch, merchandising could be like the three cap that chance the rapper does, or it could be Uber or it could be, you know, Power Pay, which I've invested in that, you know, is the number one mobile money focused payments aggregate on Africa doing over 1 million transactions a day, you know, and so it's, different things and I know how I can bring value beyond my, cash it and just watch it grow. And it's exciting

[00:15:28] Dan Runcie: That makes sense. So that collective, that operates a lot like a syndicate. You all are sharing deal soon where you can add value. What stage do you normally invest in and how much money are you normally putting into startups?

[00:15:41] Mr. Eazi: You know, it's different like we've done like some seed stage. we did a company that was looking at listing last year on the LSE. We've done growth stage as well, so it really depends, it depends on where it comes to us, and it could be as low as, you know, 25K check, which just gets maybe if it's a 25 K check, I might just take 50% of it and just say, Hey guys, do the rest, and I just put it on the platform we use and boom, boom, boom, everybody just clicks and it's, done. Once it's done, it's done like I just invested in a platform called Ruka Hair, and it is a startup that, you know, provides hair for, people of African descent based out of London.

[00:16:30] And that was a small check for, and it is growth stage, you know, so it really varies. and there's no rule. Yeah.

[00:16:41] Dan Runcie: That makes sense. Yeah, keeping it flexible and gives you the opportunity to see everything that's coming through. What are some common trends that you're seeing? What are some things that you're seeing from the founders or from the startups that are coming through, especially the ones that are getting markups and getting closer to exits?

[00:16:59] Mr. Eazi: I'm seeing like, you know, companies that solve fundamental, problems. You know, and I know there's so much bars on FinTech, it's like everybody just gets a hardon for African FinTech. But like, for instance is, if this products are solving specific, like there's a company called Eden Life, which I invested in.

[00:17:26] And what this company does is like, you know, there are a lot of people like myself who, we don't in town enough, like enough for us to like have a chef and all of that. And we have very busy schedules, so we want like meal preps delivered to us and we want like our laundry picked up, you know, that's a very middle class, sort of like early into the job market, like pre family kind of types. And so that kind of product is a product that's like valid because like you're solving a particular need, you know, or PISA for instance, that are invested in. So PISA gives remittance based lending.

[00:18:13] to, people in Mexico. So you know, the love Mexicans in the US sending money back to, Mexico to their family and their loved ones. And PISA uses that data of how much you get your current every month like my mom and dad, I put them on allowance. Like I pay them an allowance every month, Right? So we use like, by the way, for clarity they don't need it like they're good, but it's just something I do. And the other people in cultures like African culture, like in Africa, it's a pride for you, even if your dad is a billionaire, like being able to do something for your dad is like, it's like a pride.

[00:18:53] It's like you've achieved, right? So you have people sending money back home, you know, either to Mexico or to different parts of Africa to either family that need it or to do stuff with it, like build a house back home or to help the family school fees or whatever, or just out of sentiment, like, it's like paying your tithes.

[00:19:15] I don't know if you're Christian, it's like when you pay 10% of your income to the church. It's something like that. and then there's all that data, all that data because it's like salary, right? it comes every month, usually on a certain day. So PISA uses that information to provide loans to people.

[00:19:34] And that's like a need, that's a specific need. So that's what we are seeing, Yeah.

[00:19:40] Dan Runcie: What are some of the bigger challenges right now for startups in Africa?

[00:19:45] Mr. Eazi: I think one of the biggest challenges is, you know, getting funding and you see a lot of, like African startups, YC has been doing a great job, but there are, you know, and like, future Africa, which I'm part of and I'm an advisor, you know, investing in these projects. But raising fund is like so hard.

[00:20:07] There's still a hesitance when it comes to African startup raising funds, especially at seed stage. And usually this is not a lot of money. It's like from 20K checks to like even hundred is a lot of money, you know, but that 50 k to, get you into flight mode. So I think that's the biggest issue is not lack of ideas, it's, you know, getting funding, especially local funding that's not a lot of local funding sources. There's few options like the YC's and it's hard to get in generating that local funding is still a problem as a lot of the, you know, organizations and a lot of investors are still trying to understand this whole tech investment and valuation.

[00:20:55] I have my uncles ask me, you said this company is, is what, $20 million? Do they have 20 million cash in their account or do they have, buildings? Where's the building? Where's the physical asset, you know, it's that culture going from brick and mortar to technology and understanding evaluation and all of that.

[00:21:15] And, then you have sectors that are now like so hot that valuations are going crazy you know, And you have, like, depending on what sector you are, a lot of the countries are just catching up to technology. And in some places there are no laws written for the kind of products you are creating.

[00:21:38] So if you're not in sync with the regulators, the regulators might pass a law that is detrimental to your business and all of a sudden you wake up one morning and your successful business is now killed just like the motorbike railing company. I forgotten the name in Lagos. That was really growing and then with one day regulations like no motorbike, transportation in Lagos, boom, dead.

[00:22:04] So, I think it's not just in Africa-peculiar problem. It's like, for instance, with crypto and, you know, a lot of, you know, countries trying to understand what is going on. So you're having innovation outpacing regulation and you know, if there's no proper interaction you are having like regulations could just like be the end of use.

[00:22:28] So I think access to capital, and in some sectors, depending on your sector, regulation as well could be a major setback.

[00:22:38] Dan Runcie: The access to capital piece, I could see that, especially since the friends and family round is such a key piece, or having the angels outta there, such a key piece to help make that happen. But if the people that have the financial means are fewer and far between, you know, whether it's folks like you or others that are in your syndicate or maybe some of the other co-investors you have, that means that the deal flow that you all get is heightened even more so because there's just so fewer other places, which makes you all needing to be even more selective, I can imagine, than you maybe otherwise prefer to be. I mean, how do you feel in that perspective as someone that wants to see the space grow, but you know that you can't back everybody even though you know, I'm sure inherently you wish you would, but you still have your own rubrics. You still have your way that you evaluate things, and that likely has to be even heightened given the number of deals that you're seeing.

[00:23:32] Mr. Eazi: Yeah, I mean like, well one of the things I pray, I have some days, fuck you money. Do you understand? To just like, because like 1.2 billion people in Africa on the continent. And it's like, if you think of the amount of money that comes back to Africa from the African Diaspora, it's like, I think it's like over a trillion dollars a year.

[00:23:54] So there's so much opportunity. And, but like you said, what this does is it makes things a little bit harder for people, you know, entrepreneurs who need the money and the proof is in the pudding. Like I always say, like although it takes time and things are changing, don't get me wrong, things are changing.

[00:24:15] They are more local, VCs, funding, but like I probably know like five people with networks over a hundred million, right? But now, for me to get to the point where, and these are people who've, amass all this wealth with brick and mortar businesses. So now you know, there's a job to do to sort of like show proof, show validity that, hey, I invested at this point, it's not for Gen Z it's not a pyramid scheme.

[00:24:50] And like show people and then you get more people, coming in. And I have seen like some of my friends who are like billionaires now start to set up separate funds to say, okay, you know what? I don't really know what this tech thing is about for, but you know, put the money in future Africa or put it in some other fund and try to learn.

[00:25:11] So it's more sort of like publicity and sometimes the drop, the setbacks are when there's a big startup out of the continent that then runs into all sorts of scandals and then, you know, it causes five steps backward. And that's not peculiar to Africa like, I mean, you seen what happened to ftx, right? So that happens everywhere.

[00:25:35] The only differences, you know, because it's still kind of new. It causes more negative effects, you know, so I think there needs to be more education, more pr to the successes of these companies. Every success is a success and should be, you know, communicated and things would get better because there is capital on the continent.

[00:26:00] There is like lose capital on, the continent looking for where to invest, you know? So I mean, things are changing like Future Africa. I always keep mentioning Future Africa, like they've been able to show that, you know, they know what they're doing. There is a method to the madness. They could deliver results in terms of like revenue, you know, they invested in Move, which is a company that provides, you know, the cars for Uber drivers and it's, you know, I think it's now a unicorn and that's like a very particular need because, you know, drivers need cars, but they don't have the capital to purchase the cars, right? And going through the banking routes, you are gonna have to bring collateral, your mom's name, your grandmother's house, plus the high interest, you know, so they've identified, and this has been a problem, it's still a problem to today that they've been able to solve.

[00:26:54] So I think the more people know about this, the more education, the more things will open up.

[00:27:01] Dan Runcie: The PR piece you mentioned is interesting because from my side, living in the states, I'll see the articles about a company like Carry1st, which I do think has had a fair amount of PR, I feel like one of their announcements got an got an article in the Hollywood Reporter, so I remember seeing things like that, but I feel like it does become fewer and farther between, at least from what you are seeing, from the awareness of some of these

[00:27:27] Mr. Eazi: Yeah, you're correct and it's not so much I understand why like there's a lot of PR outside looking PR like you said, you know, New York Times, you know, LA blah, blah, blah, because that's where the money's coming from, right? But like, I'm talking more intra-Africa PR like for the money on the continent, you know, because that's like easily, like it's right there in your face, you know, there's enough money in Lagos for them not to be any need to raise capital from outside . You get what I'm saying? There's so much capital in Lagos, like from Lagos, you feel me? Or from Rwanda, you know, and, Rwanda is trying to position itself as startup, you know, pro-startup investing, you know, so there's money on the continent and it's like

[00:28:22] that's what I mean by PR and publicity and awareness. if I wasn't friends with, like, I met in, was co-founder of, Flutterwave with and then Andela, you know, and then Move. So three unicorns, right? And, you know, we've been friends and we've been investing together. if there was not that proximity to him or to Shola the founder of Paystack that got bought by Stripe, I wouldn't know that this was going on.

[00:28:50] You feel me? Maybe, you know, I wouldn't have known. So that's what I mean, you know, because like every A-list, Afro-B artist can be you know, can be invested, you know, so that's exactly what I mean.

[00:29:08] Dan Runcie: It is interesting you bring up the music piece because I'd be curious to hear how you feel some of these challenges that African startups may face. How do the African artists themselves fare in that regard? Do you think that they have similar challenges with funding or with regulations in that way?

[00:29:26] Mr. Eazi: There's regulation issues, like for instance, collecting, publishing revenue on the continent. It's a joke, right?

[00:29:34] Dan Runcie: Why is that?

[00:29:34] Mr. Eazi: Or collecting streaming revenue because like for you to be able to collect publishing revenue, you need the government to enforce the laws for the radio stations to pay you, you know, publishing royalties on the music they place for the bars to be able to pay for what they play, like for the use of your music. So you need strong in a lot of African countries, these laws are there, but there's no enforcement because I would say it's worse for creatives because people still look at the creative sector as a joke.

[00:30:08] The orange economy is like, ah, that's not really business like that's just young people with dreadlocks, just singing and dancing and jumping across the world. Yes, they hear the music everywhere. Yes, now things are getting better because they're seeing teams at the Grammys, they're seeing Burna Boy, you know, and whiskey doing Madison Square Garden, but there's not a lot of education for them to really understand the business of music or creativity.

[00:30:36] So even, I remember like two years ago I spoke to almost all the bank MDs, or three years ago, almost all the bank MDs in Nigeria trying to convince them on why music is a business is a valid business, but I couldn't get funding. And that's me being a successful African artist showing the revenue, showing all of that, like I once got on a panel with, you know, a financial institution that was meant that. they have a fund, they have like a 500 million dollar fund for investing in creatives. And I was on a panel with somebody there and the person said, oh, it is impossible to protect music IP, it is difficult to protect music IP, and I was like, whoa, whoa, whoa, whoa, whoa, What? And like, are you kidding me? Like, there's Shazam technology, there's like, every song has an ISRC code and like if you upload the song in Kenya or in in Afghanistan, like on YouTube, like it will pick it up instantly. So when you have a situation where you have an institution that has up to a billion to invest in creatives. But you are having the key stakeholders who decide who gets what telling you or speaking out confidently and saying is hard to protect the IP, you know, then that just shows you where it sucks. So there's still a lot, but I feel like that's why there needs to be more education, you know, just like for startups to music, to let people realize that this is a business, like there's revenue to be earned. Not just live revenue, like streaming revenue, publishing revenue, especially now that the world is looking to Africa. Like you're seeing early starters jumping on Afro Beats records, like, what's that song?

[00:32:31] Essence, Essence was a hit song before Justin Bieber jumped on it. It was already a global smash. Peru was a, global smash before, Ed Sheeran jumped on it. So you are having like pure Afro Beats records in our local language produced locally in some hotel room in Lagos, you know, going on to be big songs globally without any major support from without necessarily, you know, I know A and R like support, like his producers locally. And you're seeing this, so you do know that this is the time, or you know, like the example I gave, you know, Bad Bunny, you know, sampling a Joeboy record and putting it on his album, putting an Afro Beats record on his album, you know, that's an ex example.

[00:33:18] Dan Runcie: And by the way, that was declared properly and like I'm about to go, you know, go crazy with the lawyers to make sure I get my bread. And more importantly, the writers and the producers get, their due credit and revenue and, you know, Did Bad Bunny's team reach out before this?

[00:33:39] Mr. Eazi: No, no, no, I literally just listened to Bad Bunny's album and I just heard Joe Boy's voice at the end of the record, and I was like, I've heard this record before. And then I realized is a record, I didn't make it to his album. And I'm like, wait a minute. And then my team start speaking to them since May of, last year.

[00:33:55] And it's just back and forth to the point where I'm like, okay, you know what, you guys have had fun with this. Like, I'm just going brazen on this, let's get lawyers. Let's make it like a proper lawsuit. But what I'm trying to, or you have, you know, Beyonce, you know, doing the Lion King, the gift and having created from all of Africa put it so like, you know, you are having Drake, you know, with Whiskey on one dance you're having Ed Sheeran, Justin Bieber jump on multiple Afro Beats records that are Afro Beats records. You're having people more and more people sampling Afro Beats records, you know, and maybe not giving proper credit or do, or you are having, like I once produce. and was on co-produced and wrote and featured on a record involving Bad Bunny on the Joint album and Afro Beats record.

[00:34:45] So you're seeing is becoming more global and global. So we need to be able to tell these stories to the funding sources back home to establish that this is indeed a business. So it's education the same way education for the startups, but even more for music because music was never, and creatives, you know, was never looked at as a valid business.

[00:35:09] It was looked at as things, people who don't graduate from school or people who just wanna be jokers do. But right now people are sitting, wait a minute, wow, that artist bought car that artist's bought a house. that artist did this, did that or Grammys or this, that, that. So, but there still needs to be more information back home to the business side of the music to know that behind that sold out.

[00:35:36] MSG is a check, and behind that billboard is a check, you know, and even the TikTokers, like I was speaking to someone at the bank and explaining to my bank MD friend that, you know, I showed him a lot of payments, like TikTokers in Nigeria are getting paid as much as $10,000 to put up a post on their TikTok.

[00:35:59] 17 year old, 18 year old, you know, and I had to show this and he was like, what? Are you serious? And then he went back to ask his kids. And find out that, oh wow, this is a thing, you know? So it's that education, I mean, because there is the capital on the continent, it's just like, how do you get it?

[00:36:17] And it is a lot of work to do to basically explain and explain and explain. And one needs to have the patience. And it's hard to do that while still running my label, doing everything I'm doing, putting out music for myself, you know, so, you know, but thankfully I'm not the only one doing it, Don Jazzy is doing it.

[00:36:39] Olamide is doing it. They're more examples. So one way or the other people are saying it.

[00:36:44] Dan Runcie: How do you feel about the investment in African music that has come from the West? So thinking about Universal Music group opening up record label in Africa and some of the other majors having different concentration in Nigeria or elsewhere, how has that been and what type of impact has that had, if any, on your end?

[00:37:07] Mr. Eazi: I mean, I think it's good. It's a good signifier because all these labels were in Africa from the years before Fella, right? You had all these labels in Nigeria before, you know, the nationalization where, you know, the government had passed that all the companies should be nationalized and the labels got sold to local owners.

[00:37:26] So you are just having, you have Majek Fashek that was on the late, late show, the late night show in 1991, bro. So when people say, oh, African music is then becoming popular. It's been popular. And it's coming back again with technology and everything. So I think it's good. I think the more, you know, major labels coming to Africa, but not just as, or let's test to see what happens.

[00:37:52] But the more investment that comes, the more structure there will be for the business and the more signifiers, you know, to show people who wanna invest, you know, so yeah, I welcome it. And I think there should be more funding and there should be more, like the local companies should be autonomous, you know, I think that's been the only drawback with the majors, pardon of me, I might be wrong. Don't quote me where you are seeing the local, you know, Universal Nigeria or Sony or whatever, you know, that lookout team not having a lot of, autonomy in the checks they're writing to the artists or taking those risks they have to get approval from maybe South Africa or, you know, London or LA.

[00:38:43] Meanwhile, everything is happening on the ground in Lagos, so you are having distributors. So I think a lot of the most recent successes have been by more distributors than record label in breaking artists. So more like Empire or ONErpm or the Orchid or emPawa or, you know, Believe, because these distributors are more flexible and have been able to give a lot more autonomy to the local guys who are running, these local companies to write those checks because like, what is somebody in London like with all due respect, like I always say this as a joke. There's no songwriter in the world that would've written, I don't care how many Grammys you've, gotten, you cannot write Soco, Soco, Soco, Soco, Soco, baby.

[00:39:42] You. That's the Wizkid song, you can't write that song or, one of my favorite artists Wande Coal, there's a part of his song where he just spits jibberish, like he don't mean anything, like it's a vibe. So like without due respect to your A and R ears, you don't know the music like even me, I'm from Nigeria, but I always have to be updated.

[00:40:09] So there needs to be more investment and more autonomy. But I love it like the more labels come in and the more distribution companies come in and there's this competition, the more money is invest invested. And when you invest money, then you start to structure it then you start to say, Hey, why are we not making as much money locally?

[00:40:29] Okay, let's invest in touring, you know, in Nigeria, in on the continent. let's go lobby for enforcement of collection of royalties. So, yeah.

[00:40:40] Dan Runcie: Have you seen any success stories from the major record label side in Africa yet?

[00:40:48] Mr. Eazi: There's none that comes to mind in terms of breaking an artist. So you have Wizkid signed, you have Diplo signed, you have Burna Boy signed. you know, and this is like A-list, A-list, right? But if you look at all the artists that have broken Buju for instance, initially signed to Burna Boy and then Empire, broke him, you know, that's Buju, Fire Boy via Empire and Olamide's YBNteams, you know, independently broke with, her record. I think she's been upstreamed now. So in terms of sort of like carrying that conversation, you know, outside to the rest of the world, yes, I'm sure there's been a lot of success like the Wizkid record, you know, Burna Boy, entire Renaissance.

[00:41:44] And you could go on and on, but in terms of actually finding an artist and breaking the artist, there's not a lot of successes. And I think that's down to autonomy because, you know, you have some executives moves from the label to the distributors and do well, you know, we just understanding you know, how to a and r and how to put our music, on the continent, and you can't just bring like somebody who's of Nigerian descent and just expect that they don't understand. Like, I am Nigerian, but every time I go back to Lagos, I'm like, whoa, the sound has changed, you know? So that underground on the ground, you know, and there's a lot of work.

[00:42:31] Dan Runcie: Definitely, and yeah, I know that there's so much interest, but like you said, if they don't have the control or the ability to really make decisions on their own, I can easily see why an Empire or some of the other distributors have been able to have success there. But Mr. Eazi, man, this was great. I feel like you gave us a snapshot of where everything is right now on music and investing side.

[00:42:53] But before we let you go, for you, what's big on the road for you still beginning of the year? What's big on the deck for you? What do you got coming up?

[00:43:02] Mr. Eazi: I mean, I kind of like needed a break from putting out music and touring and when COVID happened I was like, oh, thank God, like because I was battling with, oh, if I should, I pause, like it was just routine doing the same thing and it was like too much for me. So I was able to have that pause, and put some of the attention towards like growing emPawa with my co-founder.

[00:43:27] And then leaving it to him to sort of like, you know, and come back to iterate, iterate change the model, blah, blah, blah, build the team. And I just went off and started doing like investment and putting more time in the startups I was investing in. And now, I'm in Cape Town recording. I'm putting out two albums this year, one in September and one in, I think April or May.

[00:43:55] So I'm just recording that now and I feel like, and now I want to go back on the road, but not first as my usual live band touring, but first as sort of like a curator, where I bring like, you know, the way Major Lazer tour where they have the sound system with Walshy and Diplo and Ape Drums. But instead of Diplo and Ape Drums, I select like the DJs, maybe one playing Afro Pop, one playing Ama one playing something else.

[00:44:27] And I am the Walshy Fire, sort of like putting it together, hype man MC. So that's what I want to tour. The first part of the year once I put out the Chop Life album, so that's called Chop Life. To chop life means to enjoy life. So I'm making an sort of Afro dance album that I'll put out first and then I will talk as Chop Life sound system with doing these parties.

[00:44:53] you know, of majorly Afro Beat parties, sound system across the world. And then I dropped the album, the second album, and I taught as, okay, this is my album tour. So that's the plan. Hopefully I'm able to complete the first album. The second album is done, it is just in mixing a mastering, that's the September one.

[00:45:13] It's done just in mix. And my string phase and then this first one, I'm recording. That's what I'm recording right now. Recording downstairs.

[00:45:21] Dan Runcie: Nice. Nice. Well, looking forward to all of that, man, and thank you. No, this has been a pleasure. And yeah, so people that wanna follow along and keep up with all that, where should they go to follow you?

[00:45:30] Mr. Eazi: Follow me everywhere on social media @mreazi, M R E A Z I, Mr. Eazi. Yeah, everywhere, everywhere on social media.

[00:45:44] And I wanna see you at one of my shows. You have to come maybe when I do the parties, where are you right now?

[00:45:49] Dan Runcie: Me, I'm in San Francisco

[00:45:51] Mr. Eazi: Cool. I'm, sure I'll be coming around LA, San Fran, at some point

[00:45:55] Dan Runcie: Yeah, come through.

[00:45:57] Mr. Eazi: I'd send you an invite,

[00:45:58] Dan Runcie: Definitely, definitely. All right, man. We'll talk soon.

[00:46:01] Mr. Eazi: All right. Have a good one. Thank you.

[00:46:03] Dan Runcie Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how capital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, go ahead.

[00:46:24] 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. 

The gaming industry is larger than music and film combined. We’ve seen big music collabs in Fortnite, Roblox, and more, but there’s room to leverage music even more.

That’s been a big focus for Vickie Nauman, who works at the intersection of music and gaming. She consults for major record labels, game developers, and more through her company, CrossBorderWorks. She’s also worked on big virtual concerts, like David Guerra and Saweetie in Roblox, and VR games like Beat Saber. 

But there are plenty of friction points between music and gaming. As Vickie said, the music industry likes to get money upfront, whereas gaming is fine getting it on the back-end. Then there’s the long process of clearing music from rights holders to even use in games. It makes it tough to move quickly

It’s even more challenging because of how fast technology is changing. New virtual experiences are being created daily, which adds pressure on the music industry to sort this out.

Vickie and I covered all this and more. Here’s everything we discussed:

[1:40] What attracted Vickie to gaming

[2:40] The gaming moment that finally struck a chord with the music industry

[4:33] Similarities and differences between gaming and music industries

[10:09] Why Travis Scott’s Fortnite concert clicked but others haven’t

[9:53] Can gaming have its Kate Bush - Stranger Things moment 

[15:47] Why the music industry plays catch up to technology

[21:33] Clearing 143 writer’s share for David Guetta’s Roblox concert

[28:45] Dot-com bubble era of web3

[30:45] Music will evolve differently in web3 experiences

[36:17] What’s slowing down virtual reality adoption?

[41:26] AI is coming at the music industry like a freight train

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Vickie Nauman, @vnvnvnvn

This episode was brought to you by trac. Learn more about how artists can bring web2 and web3 together for their fans at trac.co

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Vickie Nauman: There are not an enormous number of opportunities for music and games. It's gaming is similar to the music industry where there are a handful of huge, huge, huge gaming studios, and then there's an inordinate long tail of small to mid-size gaming companies and, you know, very, very similar to music.

[00:00:19] So the few big studios, a lot of them are doing, you know, licensing and they get music in. But it's been much more common over the years to gaming studios just hire a composer and they just create a song that is right for the mood and the moment in the game, the gaming studio owns it and they're just done.

[00:00:40] You know, they don't have to worry about licensing or business models to incorporate music into the games. But I think for the most part, the music industry always likes to get their money up front, and the gaming industry likes to get all the money on the back end

[00:00:55] Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from the executives in music, media, entertainment, and more. Who are taking hip hop culture to the next level.

[00:01:22] Dan Runcie: This episode is all about the future of gaming, and today we'll be breaking it down with someone who understands this space in and out. Vickie Nauman. She is the founder and CEO of CrossBorderWorks, which is her consulting and advisory firm, which works with some of the biggest major record labels, streaming services, and more on the intersections of word music meets technology, gaming, and several other emerging tech platforms.

[00:01:47] We talk about what music and gaming's challenges and opportunities are in the future, how games are monetized versus music, some of the opportunities there. We also talk about the music industry itself and why the music industry often sometimes plays catch up with regards to emerging technology, how that impacts her work.

[00:02:07] And what it can look like for gaming, to have that huge sync moment that Kate Bush running up that hill moment like we saw on Stranger Things. What could that look like for music in a video game? I think we've seen several successful examples over the past couple of decades, but we'll continue to see more as gaming in the Metaverse, Web three, and AI continue to intersect and influence this space.

[00:02:29] Really great episode. It was great to have her share her insights here, and I hope you enjoy it. Here's our chat.

[00:02:36] All right. Today we're here to talk about gaming music and so many of the intersections it has, and wanted to talk with someone who understands this space better than almost anyone that I could reach out to Vickie Nauman, who has consulted and worked with many of these companies in music and gaming.

[00:02:53] Vickie, welcome to the pod.

[00:02:54] Vickie Nauman: I am so happy to be here. I'm a huge admirer of your writing and your work and it's an honor.

[00:02:59] Dan Runcie: Thank you. Appreciate that. So what is it for you that attracted you to this space? It's been an emerging space for some time, and it feels like the music industry is now starting to put more emphasis in, but you had been focusing even before the current wave has been there. What attracted you to it?

[00:03:16] Vickie Nauman: Well, I've always looked at gaming and I'm one of these people who for years was telling the industry. Gaming is bigger than music and film combined, you know, it is a massive, massive industry and they're, you know, and almost all the monetization is built on low friction, high engagement in-app purchasing.

[00:03:37] And so companies are releasing games that are free and they're making billions of dollars. There's, you know, there's lessons for the music industry. I feel like it all fell on deaf ears. People are like, yeah, yeah, yeah, you know, companies come to us and. We wanna license them our whole catalog, and they don't want it.

[00:03:53] And so there's nothing for us to do. And then, Marshmello did a set in Fortnite and got 10 million people to listen to his music, and that struck a chord in the, you know, in the industry. you know, and importantly, it didn't necessarily resonate with the digital business people who were always, you know, under an onslaught of new companies coming to try to get rights.

[00:04:19] But it was in marketing and a and. and then there was like, it was a moment where I think everyone started to realize the power of gaming and the hundreds of millions and billions of people who are playing games as a new platform in a new way for artists to reach, fans and to break artists.

[00:04:37] And it was interesting too because at that time I was working with Beat Saber. and they were this was in 2019 that all of this happened. And, Beat Saber was still an independent studio out of Prague, brand new game. And we were trying to get some of first songs in to that game.

[00:04:55] Vickie Nauman: We had worked with Monstercat before and we had these original soundtracks in there, but we didn't have any, huge major label acts and we were trying to license Imagine Dragons. And so I heard firsthand from labels and publishers all throughout that process of like, wow, you know, we really want to do more with gaming.

[00:05:16] And I credit a lot of that to Marshmello.

[00:05:20] Dan Runcie: And you talked a little bit about how gaming is just so much bigger than music, and part of it is because they're not necessarily selling the content itself. They are selling what you can do on top of it from things you can buy or other things that are less friction. The frictionless, as you mentioned.

[00:05:38] Had any of that come up, especially after the marshmallow event? Did any of that come up in any discussions about like, Hey, could this be an opportunity to rethink monetization a bit more broadly? Or maybe think about the bigger picture? What have some of those discussions been like?

[00:05:54] Vickie Nauman: Yeah, it's been really interesting actually because they're really in aggregate. There are not an enormous number of opportunities for music and games. It's gaming is similar to the music industry where there are a handful of huge, huge, huge gaming studios, and then there's an inordinate long tail of small to mid-size gaming companies and, you know, very, very similar to music.

[00:06:18] So the few big studios, a lot of them are doing, you know, licensing and they get music in. But it's been much more common over the years to gaming studios just hire a composer and they just create a song that is right for the mood and the moment in the game, the gaming studio owns it and they're just done.

[00:06:39] You know, they don't have to worry about licensing or business models to incorporate music into the games. But I think for the most part, the music industry always likes to get their money up front, and the gaming industry likes to get all the money on the back end. And so you know, there are these friction points that, you know, marrying a business model into a game is kind of an art because if you've already got an existing model and it's free, or there's, you know, in-game purchases, then how do, you know, do you try to incorporate music into that? Do you just pay the rights holders and get a deal for a certain period of time, or can you create a revenue share and some way to participate in the upside and, a lot of gaming companies are even huge companies are still new to this. And so they're kind of what I would call, like dipping their toes into the pool, you know, testing the waters and trying some small things. And then trying to figure out does this work for us?

[00:07:44] Do we need to, you know, do we need to create a big stack of technology to manage the rights? Most of them do not have an appetite to do. They certainly have the skills, which is part of what's so fun working with gaming companies is they have amazing engineers and really great minds about problem solving and coming up with these ways to engage users.

[00:08:06] But nobody really wants to dedicate engineers to building a rights management system. And so I think everyone is, you know, all the companies that I work with, they're trying to kind of simplify things with music, try it out, find out what their users want, what their gamers want, because that's another big thing is, you know, you have to ask, you know, gaming is such a culture and such a subculture and each game has kind of a different community in it and a different vibe, and so you really wanna make sure you're getting that. Your assumptions of what kind of music is going to work are in line with your user's expectations.

[00:08:45] There was one company that I worked with that was like, had a lot of underground, you know, all, their users thought of themselves as very underground and they did a music thing that their users thought was too commercial, the gamers rebelled . So, so, the best thing is to ask the people who are gaming, ,you know, and your products.

[00:09:02] Ask them what they want.

[00:09:04] Dan Runcie: Yeah, that customer base, especially with gaming, I think is huge cuz it makes me think a lot back to that Travis Scott Fortnite integration, which was almost three years ago at this point, but it was the perfect combination of so many things. At the beginning of quarantines with the pandemic, but also there's such alignment between the type of person that's on Fortnite with the Travis Scott fan as well, which is why I think that one worked much better than some of the other A-list artist superstar artists collaborating in a digital gaming environment.

[00:09:37] Vickie Nauman: Yeah, I think that's a great, I think that's a really great point, and you know, because of the dynamic of gaming and the kinds of things that we're seeing, you know, it's not like a service that has, it's just music and it's going to put out hundreds of thousands or millions and millions of songs and just saying, You know, something for everyone, you know, let the end users find the music that resonates with them with, when you're picking and choosing a couple of artists or a couple of songs, you know, you kind of have one shot. And it reminds me of, you know, I used to work in radio before I started doing all of this, and. there was so much science to the choices that we made in radio because we knew that you know, we had one signal and we had to choose artists.

[00:10:24] You know, if we said our demographic is, you know, 18th to 34, urban men and women who are professional and make a hundred thousand dollars a year and above, if that's your demographic, then you have to say, what kind of music and what kind of programming and what kind of announcers and events. Gotta get it.

[00:10:45] And that's very similar to the way things are when you're doing things in the metaverse or gaming where you're like, well, we're just doing, we're picking a few things and we really wanna light them up, but we need to get them right. We need to get the user experience, we need to get the right artist to fit with the right user base.

[00:11:04] And then how we present it, how we monetize it has to also be something that fits within the gaming community.

[00:11:14] Dan Runcie: That makes sense. And I feel like that lines up with something else you had said in recent interviews talking about gaming syncs and the potential there and how there may not be as much because a lot of the game developers are doing in-house music now, but it can grow in the future. And I'm thinking about, especially this past year, we saw the Stranger Things moment with Kate Bush running up that hill and I assume like it's only gonna be a matter of time until we see a gaming moment that is at that level or something like that, or maybe there already has been ones that have been at that level.

[00:11:45] Vickie Nauman: No, I think it is a really good point there as well that, that I think with the Kate Bush moment or Fleetwood Mac with the skateboarder and the, you know, cranberry juice that we've had these cultural moments in social that have, Absolutely lit up music for a new generation, which I love.

[00:12:05] I mean like kids bought tickets to see Fleetwood Mac in concert after listening to 20 seconds of one song. And that's so exciting and I think, it will get there with gaming. and I think when you think about the limited number of opportunities and then then the limited number of artists or songs that can be integrated into every game, I think that we are really, really at the early end of the early part of that spectrum.

[00:12:34] I don't think we've even begun to really let the music industry and the gaming industry come up you know, with that Kate Bush moment or the Fleetwood Mac moment. and I think that, what I love about gaming as well as you know, other kinds of audio visual is that when you hear it, you know, you hear the music differently when you're gaming and you know, like Beat Saber, I've worked with them for many years.

[00:12:58] Vickie Nauman: I also work with Niantic on, they have a new NBA game and you know, with Ubisoft and some early stage gaming companies but with Beat Saber there are certain songs. that I've always loved. Like there's a, you know, a bunch of Green Day songs that are some of my favorites that I've listened to for 20 years, but now I've, played them in Beat Saber, and now whenever I hear the songs, I hear them differently because of the experience of having this immersive gaming and this gaming experience.

[00:13:30] So I think there's, I think there's just so much potential that we haven't yet been able to tap into. Some of it is also because there's been so much friction around licensing, and for the most part, I think sync licensing is the best way to do things in gaming because you want something specific and then you know, the artist and their team want to know how their music is being used and you know, you, take something to rights holders and if they're like, you know, we need more money or we don't like that rev share, or that artist has a conflict. And then you're like, okay, well, you know, we'll move on to something else. And then you know, ideally you get an artist and a label and a publisher and a writer and those teams that all say, wow, this is great. I would love to have my music in this game.

[00:14:21] And that's really where I think that, you know, if we can get those, all of those things right. that's the start of it.

[00:14:28] Dan Runcie: Yeah, and this conversation too is making me reflect on a few things. Cause I feel like music and gaming have gone through ebbs and waves like for instance, I know that there's always been music in games like Madden or like the NBA 2K series, for instance. But I think back to like Grand Theft Auto.

[00:14:43] I know one of the things there, they always had music. So they had this Vice City game that came out 20 years ago and that was all eighties. So I feel like for a lot of people of a certain generation, that was like their thing to go to. And then a couple years later, Guitar Hero and Rock Band, huge. Right?

[00:14:58] And then I think even those songs reintroduce, especially some of those classic rock song rock songs there. And you also had some of those Def Jam vendetta. video games as well. So now I think what's different of course is that these are more so, okay, how do we integrate them into these digital environments, the metaverse and things like that.

[00:15:15] So I'm excited to see, I still think that there is huge potential to see one of those moments happen, and who knows? I mean, I feel like the Kate Bush moment was largely, I don't wanna say unplanned, cuz obviously people expected it, but no one would've anticipated that it would've taken off that way.

[00:15:32] But that's how these things.

[00:15:34] Vickie Nauman: Exactly. I know, I know. I love it. like a lightning in the bottle, you know, where you're just like, wow, you know, we didn't, we really couldn't quite anticipate that things would resonate like that and, and especially reaching a gen, a new generation that probably otherwise would've never heard of Kate Bush.

[00:15:50] but I also think that with. you know, with music and gaming, what's, what's also so fun for me personally, is I've been doing music licensing and write based things for like 20 years now, you know? So I feel like an old lady when I say that, but I'm always the one chasing everyone, you know, I'm chasing labels and publishers and trying to put things in front of them, you know, what do you think of this? What about that? Have you thought about it? Is this approved? Is it not approved? Can we move forward? No, we can't. gotta start over. And this is the first time in my entire professional life where I. artists, publishers, labels, and songwriters coming to me now and saying, I wanna get my music in games, you know, and I wanna get my music in the metaverse.

[00:16:36] Vickie Nauman: how can we get band in the Metaverse? And I love that because, you know, for me, like self selection in the industry is huge. It's really frustrating when you have to drag people kicking and screaming into the future and into experiences. So I love it when people contact me and let me know which of their artists on their roster are really interested or even better, which, artists are gamers themselves and then they are already part of the community but then they want to take it a step further with their music.

[00:17:08] Dan Runcie: That's good to hear because I often feel like the music industry is playing catch up when it comes to emerging a new technology. In so many ways, dating back 20 plus years at this point. So the fact that people are coming to you now is good. Do you feel like that is true overall? Do you feel like the industry is at the moment, like right in step with where things are going?

[00:17:29] Or do you still feel like there's a bit of catch up?

[00:17:32] Vickie Nauman: I think there's always a bit of catch up, just simply because, you know, technology moves at such a pace. None of us can really quite keep pace with it. And then there's always these very similar dynamics where there will be some new technology that comes around, whether it's, you know, on demand streaming or live streaming or gaming or virtual reality, and now metaverse and NFTs and fractionalizing rights and all of those things in web three, and there's a very common pattern where these technologists, they look at music and they say, oh my gosh, this would be fantastic for my platform, you know, it will help me with adoption and relevance and get in, get some artists and some music in there, and fans will come and it'll all be great. And then they start talking to the industry and they learn about how music writes work, and that you usually can't just go to an artist and get what you need. They're usually signed or they have some management and they publishing is probably administered by someone and they all have their ways of doing business. And there's a moment where everybody then, you know, they have to decide, do we have an appetite to do this? Or should we just move on to something that isn't as complicated? Because music is great when you get it right, but not all companies really wanna do things right.,You know, and so, you know, we kind of go through this every time when there's new, you know, new user experiences that are emerging.

[00:19:06] And I think that the music industry is always, you know, takes all these things in. and then they start thinking, number one, is this a fad or is this something that's going to last? Is it worth us spending time and cycles to really engage with the companies on this particular kind of experience? And then how can we extract value?

[00:19:30] How can we make money? How are they making money? Is our deal going to outlive the the survival time of any given platform or company? There's a lot of people, I mean, it's very frustrating sometimes to do licensing, but I have empathy with all of the, with all of the rights holders, because I'm in the same boat where companies come to me and I have to just like, oh gosh, you know, it's a great idea, but you guys have never done anything before and, you know, can you build this? Can you execute you? Can you take it from a PowerPoint or a demo into a fully functioning product? And it's hard. And so I think that, you know, the labels and publishers they have assets to protect and they're, you know, and now increasingly artist management companies are also in the mix because a lot of things require artist name, image, and likeness rights.

[00:20:26] And sometimes that can come from the label, but sometimes it. So they're all in a mode where they have something to protect, they want to exploit and, you know, make money, but they have a lot to lose if they do things wrong. And so there's this inherent mismatch between how quickly things move in technology and how slow and methodical the music industry is about deciding.

[00:20:52] Whether they wanna move forward. And then there's the other issue, which we're faced with right now, which is all of these emerging use cases and people being kind of afraid of agreeing to the wrong terms and setting a precedent that they're later going to regret. And so, . when technologists complain about the music industry and they're like, they're so slow, they're so backwards, they don't understand our vision.

[00:21:20] It's like, well, they have a lot to lose. You don't have a lot to lose cuz you're a startup and you have a big idea. But these guys have, you know, they've been, you know, 20 years of companies just like you that have come before. And so I always try to encourage, I always try to encourage people not to just, you know, get so frustrated with music that you know that they abandon it because a lot of great Id great ideas die on the vine because of these mismatches. But to be patient and to also, you know, maybe you think you need Jay-Z. But I would challenge most early stage companies, you're probably not ready for Jay-Z.

[00:22:00] You know, like let's, you know, maybe find some earlier stage artists that might be more appropriate to your size and budget and a little bit more forgiving. And then you get product market fit and then start expanding and, you know, might end up with Jay-Z, but maybe you might find you don't need, you know, you don't need that to resonate with users.

[00:22:24] Dan Runcie: Right. The break thing things fast mentality of startups just doesn't always line up. And that's a good point too. You get approached by so many companies, you don't know who's gonna be there. And obviously that probably requires some level of evaluating these startups to see what makes sense. That's just one side of it.

[00:22:42] The other side of it is the patience to be able to see these things through. And I know you've seen this yourself with David Guetta and making sure his music can be cleared. Can you talk a little bit about that process?

[00:22:54] Vickie Nauman: Yeah, it was really crazy. I mean this was a project I did with Warner Music Group and I love what they're doing cause they're really trying to create a pipeline to get their artists into metaverse and new web three based experiences. And so, this was a year ago, David Guetta was doing a DJ set as an avatar in Roblox, and he originally had chosen 26 songs and then we narrowed it down to 20 songs.

[00:23:23] but you know, what I found was that those 20 songs represented 143 shares on the publishing Plus, almost all of them had shared masters. And what many people don't realize is when you're listening to music and you see, you know, here's a song featuring, you know, Shakira or somebody else, that featuring usually means that artist is probably on a different label.

[00:23:50] Vickie Nauman: And so even the sound recording can end up having multiple owners. and there was a certain point in the process where I start looking at these songs and I quickly saw like, wow, there are, you know, 10 of the songs that had, you know, all these writers who are not on a PRO, so they're non society, they don't have a publishing administrator.

[00:24:18] They may own one or 2%, which if you're in streaming and on-demand audio streaming, it doesn't really matter, the services can still use the music, even if you can't find the person who has one or 2% but if you're doing sync licensing, you need to have a hundred percent of the publishing at a hundred percent of the master recordings or the sound recordings cleared in advance.

[00:24:42] So I chased down. All of these people, these writers and people who had small shares, you know, they weren't registered anywhere. I found them on social media and got everything, got everything in there and approved. But for me, it was kind of an exercise in how well prepared or how poorly prepared are we for the world that's coming, which is all of these metaverse, web three-immersive platforms that are building creator tools directly into the platform, assuming that artists can just be nimble. And then you look at this, it's like David chose these songs, he wanted to mix these songs. And that's so unsustainable to think of, you know, being able to harness innovation.

[00:25:38] When you have 143 different rights owners that all have to be harmonized around the same deal, and then a third of them are people who are not even, you know, technically in the ecosystem of music, but they still have shares. And that's true for hip hop and electronic music. Pop music also has an enormous number of writers, but they tend to mostly be with pros and have publishing administrators. But in hip hop and electronic music, there's just a ton of people who are contributing to big songs, but they're completely outside of our ecosystem.

[00:26:16] Dan Runcie: That point reminds me of the news that had came out when Beyonce released her album, The Alien Superstar song had 24 songwriters on, and people were like, oh, well how does this happen? And I think for some people it became a bit of an eye-opening. Well, this is how a lot of this music gets created, and these are the people that either had a hand or they helped sample.

[00:26:35] There's so many things. And then if someone goes and samples, they only have superstar in the song that's gonna have all those same 24 writers, plus whoever helped them with that new song.

[00:26:44] Vickie Nauman: Exactly. I know, and like when you watch the Grammys and they go through the , the awards for composers, you know, and there's a paragraph, all these names that have contributed to each of these songs. and I think about it a lot though, like, you know, we've kind of, if you go back in history to the olden days, you know, fifties, sixties, seventies, you know, like in the fifties and sixties, most artists, it was very common to have a songwriting group and then an artist, someone performed someone else's songs.

[00:27:20] And then when the rock music came around, we had bands that it was like a big deal. Like we write our own songs. And so in that era, like if you're licensing rock music from the seventies, eighties, or nineties, it's great because there's like one or two writers on every song and it's usually the band and they've written every single thing.

[00:27:43] So you, you know, you wanna license one Green Day song, you're pretty much going to have the same mix across all of their music. And then you fast forward to the way people create now, and we have this incredible fragmentation where we have on average seven writers per song, but it's outsized in electronic music and hip hop.

[00:28:05] And so we have 10, 15, 20 writers on every song with these tiny shares and that just a trend of how people collaborate and how they create and samples and you know, people in the studio and people all, you know, collaborating all over the world. But I think a lot about where the industry is going. And Metaverse and NFTs and Web three and, you know, where you know, again, all of these platforms are assuming that you as an artist can come in and bring all the rights you need to be able to do something interesting with your fans and whether or not this is going to drive a different kind of creation because, it will definitely the artists who have just a one writer or a couple of writers.

[00:28:55] And who really have tight control over everything are at a much bigger advantage to be able to be nimble in the, in this next iteration of music experiences than writers, than artists who have 20 writers. And some of them they don't even know. And so, you know, I'm going to watch this because like, there's a producer, Poo Bear, you know, contributed to a lot of big songs, but he's doing an NFT project and he's just made a decision. I'm gonna write, perform, do everything on these songs that I'm doing in the NFTs. Cause I don't want to, you know, have to pull in an entire army of people to get them to approve.

[00:29:36] So I feel like, you know, thinking creatively about how you can take advantage of things without having all of this, administrative burden. It might drive and change some of how we see music being created.

[00:29:50] Dan Runcie: That's a really interesting point because I think broadly, everyone's been trying to figure out specifically with Web three and what's ahead, how do we best make this work? How do we make this into a real business vertical that can drive real revenue. It isn't just a fad. And I know you've spoken about this in the past, how felt like we were at this .com bubble era of Web three and where things are now more proof of concept, but not actual businesses, like more features, not necessarily companies, but where do you feel like we are now and if any of the things that have been good examples, does anything stick out to you to be like, okay, like that's generally how this could be done and how we could approach Web three.

[00:30:33] Vickie Nauman: Yeah, This does really remind me of the early two thousands, because. There are so many things that, like in back then, we would do things like order a pint of ice cream to be delivered by someone and no markup. And it's like, that's ridiculous. That's not a real business. But it was a proof of concept that you put your name in, put a credit card in, you order something and they promise to deliver it and it, comes to you.

[00:31:02] And so, I feel like, you know, and then out of the ashes of all the companies that burn through venture capital, you know, inflamed out or had some great idea, but there was no business model to it. And somebody else then saw it and said, if we do what they did, but we do it this way, you know, we're in the midst of that process.

[00:31:25] And back then out of the ashes of everything grew, companies like Amazon you know, and there were certainly lots of casualties, but I think we're kind of in that phase right now with Web three, and I'm still really bullish about it, but I think that we've, I think that we have now because of crypto and what people saw with FTX, you know, their eyes have been open a bit.

[00:31:51] and a lot of the companies that have been doing things with music and NFTs and, you know, some of them have been really lucrative and successful, others haven't, but it's all part of the process. but I think that some of the things that I see I think that music is going to evolve slightly differently in all of these web three experiences than maybe, non-musical, activities.

[00:32:14] Like, especially in NFTs. I think the dynamic of, you know, of buying and collecting. Visual art is going to have its own trajectory. But I think, music in token based communities, I mean, I think there will be a point where we'll probably look back and be like, damn, remember when we talked about NFTs, non fungible tokens?

[00:32:35] Sounds this ridiculous name. But I think that what we will see is these artist communities that are artist centric, that are token based, and it's like fan clubs 2.0, you know, interactive fan clubs with different ways to, you know, limit membership. Maybe you can co-create with the artist. Maybe you are getting a access to ticketing or the artist in some way.

[00:33:04] that there's benefits and ways to pull a small community of people around an artist together. And then We've had a lot of these artists direct to fan initiatives for many, many years that most have failed because they required the artists to do too much. The artists are artists, you know, they wanna be artists.

[00:33:23] They don't want to spend all their time, you know, on 20 different platforms. But I think these are different because I think there's something inherent about, you know, artists and fans that is the most golden connection that you can possibly have in music. And we currently have artists and fans and then, all the different platforms and labels and publishers and, algorithms and transaction engines and, you know, followers and all of these things that are keeping many, many, levels separate of separation.

[00:33:58] And now I think we can bring them much closer together. So I think that's one experience that I think is going to have an enormous and outsized, positive effect for music. And I think some of these will have music in them and some of them won't. And, some of them will be more about the artist's brand and their likeness and you know, their personality, their identity.And then I think another, use case in web three is, this fractionalizing rights and allowing users to invest in music. because this requires, you know, SEC, you know, this is like full investment, you know, you have to really, really get that right. I think there will be very few companies that end up in that space.

[00:34:44] I think it's 

[00:34:45] Vickie Nauman: just you know, the lift is too much for the average, but I think there will be a really viable marketplace. And I've talked to writers and performers who are also even signed, cuz if you're signed to a label or a publisher, you know, you're not gonna fractionize their share.

[00:35:01] Dan Runcie: Right.

[00:35:02] Vickie Nauman: And that's also something I always have to tell the companies that want to do this.

[00:35:05] Like I'm going to now tell you some really disappointing news. but they're interested in doing some fractionalization of maybe just their writer's share or their performers share. And that's super interesting. And so, you know, how can we make that another income stream.

[00:35:22] And then I think the third area that I'm really bullish about is the experiential side of, you know, we, we've seen during the pandemic, you know, and starting with starting with these things in Roblox and you know, Fortnite and you know, having these kind of pop-up experiences. Again, that's a proof of concept that if you put an artist in as an avatar and create some sort of activation, that people will come and they will buy virtual goods and they will have a great time.

[00:35:56] So I think you know, that's, again, we're just barely scratching the surface of where these more experiential things will go with AR VR. Just, you know, web-based and mobile-based and, you know, avatars, you know, live streams I think fit in there as well. And I also think that the way the internet and even websites, the way that they work now, where you are, kind of view, go to a menu and you click on things and you get a flat page that tells you this is, you know, who the people are, this is what the products are, you know, like even the most basic things about how we engage online I think are going to change. And so I think there's going to be much more, you know, immersion and interactivity and real, you know, real time engagement. And to me that's just feels like that's just so perfect for. You know, small artist, activations where you don't need 20 million songs.

[00:36:52] You just need a couple of artists who really want to do it. And I think that we will have just a really, really wide range of ways for people to enact more meaningfully with artists performing online.

[00:37:03] Dan Runcie: Yeah, I think the collectible piece was a key point, and I also think that artists just being able to have communities around this too. I think we probably overestimated the investing piece just because I don't think that the average fan is going to be as interested in that piece, and I think that was a big selling point.

[00:37:21] It's almost in the same way that like we all may have Apple devices, but how many of us are owning stock in Apple as a result of us wanting to see the thing right. But I do think that the collectible piece is huge. Obviously you see it in people wanting to have physical media, whether it's cassettes or vinyls going up.

[00:37:37] So there's an aspect there that I think will continue to be tapped into, but it'll be fascinating to see how that plays outthe other emerging technology space that I know you've done some work into is VR itself. And I know that one of the companies that you worked with extensively was acquired by Meta and although you know, from my purview, they seem to be one of the more successful companies in a landscape that I think has been a bit slower to have that mainstream adoption than a lot of people thought with VR more broadly. So where do you see with that space right now?

[00:38:10] Vickie Nauman: Yeah, it, you know, VR at the beginning, you know, it had so much promise of, you know, being, you know, being transported to, other worlds and having, you know, having this 3D environment around you. But I always felt like it's going to be gaming, that would be the catalyst to this because I think there's also, you know, there's also something like how much time does anyone want to sit in a headset?

[00:38:39] And you know, you generally, it's kind of like, you know, remember when 3D TVs, we're huge, and everyone's like, no, we're not gonna sit around our house with these funny glasses on for hours at a time. It's just not going to happen. But I think that gaming has really been an enormous entry point in, and, you know, Beat Saber is the VR game that was acquired by Meta and continues to do extremely well with this customized gaming rhythm But I think that, you know, part of it is we need the headsets and things to shrink and we need them to be, a little bit more, you know, a little bit more comfortable. We need to be able to spend more time in them, and we need to have more experiences than we have right now.

[00:39:28] And I think that there are things, you know, there are lots of companies that are starting to build even like, you know, meetings and,you know, are we going to have meetings with people in the metaverse and in virtual reality? There are companies that are doing enterprise-based training for employees that are using VR you know, and using these technologies in ways that I think is not gimmicky, but it will actually lend, it will actually lend to human emotion and feeling close.

[00:40:00] but I think with everything with web three, we're going to have a blend of, these things, you know, AR is generally considered to be more accessible than VR because you know, you don't need as much equipment. But I think as, all of these things grow and we start to get more platforms and you know, more variety of use cases that we'll probably see a blurring between AR and VR and lighter weight.

[00:40:28] hardware and more cost effective hardware, and that will just help to grow. That'll help to grow the market.

[00:40:36] Dan Runcie: Yeah, I think for a while VR kind of had a bit of that sharper image vibe, I would say where, Yeah, you know, you go in the store, there's these cool forward technology things, but not necessarily something that I would wanna have in my house, right? And I think over time, to your point, the headsets get smaller, gets a bit more accessible.

[00:40:54] We'll eventually get there. It's just a matter of the use case said, Yeah, to your point, I think gamers, if anyone, you think about the people that are gonna be wearing a headset while they are playing Call of Duty or whatever it is, they're probably the audience that's more likely to have another device over their head as they are interacting with game.

[00:41:13] Vickie Nauman: Exactly. Exactly. And I think, you know, fitness is another area that, with VR originally was like, oh yes, you know, are there ways to simulate, you know, downhill skiing and hiking and cycling and, you know, being in this expansive different world than being in your house. but you know, you don't really wanna just be sweating, you know, sweating in your, headset either. And so I think the only, like, there probably needs to be some evolution, if that's a big enough market to support specific hardware of fitness, you know, then there probably are people who really want to do that. but you know, we're still kind of trying to figure out what this entire next iteration of the internet is going to be, and I can't imagine that VR won't be a part of it.

[00:42:05] Dan Runcie: And I think the other emerging platform that'll likely or emerging medium, that might likely be a part of it somehow is AI and that's the one thing we haven't talked about deeply yet today, but where are you at right now with AI and let's fast forward five years from now, 2028. What role does AI have with music, and specifically with what the major record labels and their artists are doing?

[00:42:28] Vickie Nauman: I know. I mean, it's just like, I feel like web three is, we kind of have some time because I feel like you know, companies are building infrastructure, there's lack of, you know, horizontal integration and interoperability. We have time to kind of keep experimenting and figuring it out. AI is coming at us like a freight train right now, and I think maybe five or six years ago when.

[00:42:54] AI and music first came on, the first came on the horizon. A lot of people were freaked out by it. Then they listened to the music and said, that's pretty bad, you know, now, we're not worried anymore. But now music's getting way better. and I think that, I kind of look at it in a couple of different, you know, avenues because I feel like the first thing that I see is artists. And artists are always the first to embrace any kinds of creator tools. You know, they're not afraid of technology, they're not afraid of tools, you know, you think back to drum machines, you know, my God, the drum machine's gonna eliminate drummers, you know, we don't need drummers anymore. Well, we didn't, you know, we still need drummers.

[00:43:41] But it did serve a purpose. Practicing and, you know, don't need to have you know, a drummer there to practice your songs. Don't need to always take a drummer on tour if you're doing some sort of small, intimate shows, but we still need great drumm. so I think that artists are probably going to be the first ones to embrace and use technologies that are like, think of plugins to DaaS and, you know, and that you've got a writer's block and you want to have something kind of help pull some things out of your head and break through that.

[00:44:13] So I think like that is going to be a really, really robust market. And those are still very much human creations. They're just tools that are now a little bit more advanced.

[00:44:25] you know, the opposite end of it is text to music, 

[00:44:29] and that's where I think like, we have no idea how that is going to play out and who owns it either.

[00:44:37] I think that electronic music is kind of the first use case because it's easiest to replicate and come up with, you know, a new electronic mix that's AI generated as opposed to something that is, you know, got, you know, 12 instruments in it. But, I still feel like there's a line there around what are the areas where it's, music is still kind of human created and you can never get it away.

[00:45:03] Vickie Nauman: And live music for sure, you know, there's nothing that replaces being in a room and you're waiting for your favorite band to come on stage. And we're all human and we're all there in this shared experience. and I also think that there are things about human creativity and music that surprise you and that, you know, kind of, you know, a human can take you down an emotional path or a musical path that you never, ever would've anticipated.

[00:45:32] And that's something that, that seems inherently human. But I think there's a lot of things, like a lot of background music. A lot of music that's kind of music for sleeping, music for concentration, you know, non-descript, you know, unknown artists production. I think that area is probably ripe for disruption by AI.

[00:45:57] , you know, but it just still doesn't answer some of these fundamental questions about the copyrights of, if you fed an AI engine, millions of songs and it can now reproduce music based on a text command, you know, who owns that? You shouldn't t he music that was fed into the AI participate in that.

[00:46:20] Dan Runcie: right. Because right now there's nothing that's necessarily pulling them, that they're pulling these from whatever, lyrics, websites that are there, but the lyrics, websites aren't, you know, pulling from those. So a lot of issues to sort through.

[00:46:32] Vickie Nauman: Yeah. what do you think about?

[00:46:34] Dan Runcie: I mean, I'm excited for the potential because I do think that if the industry is able to get it right in some way, if there's a way to fairly compensate people, like let's say that whether it's open AI or one of these companies has some way that they have a licensing agreement, no different than the record labels have licensing agreements with the streaming services or the dsbs. If you have something there that attributes some level of, okay, how much was pulled from here, and even if it ends up being some fractional aspect or whatever it is, obviously it would most likely all be some fraction, some way to attribute that back, especially if that becomes the next viral TikTok hit.

[00:47:14] If that then spawns the journey for the next person to release the next big song, and you think about, whether it's the next Billy Eilish or whoever is creating music in their bedroom that's gonna release the biggest album of the year, like that's likely where this is gonna come from. I do think that's some of the things that we discussed in this conversation about how.

[00:47:32] because the industry is more likely to not be in this break things fast mentality, to make sure that things are right. It's more likely to play catch up on some of those things, which I think, you know, could be frustrating to see it play out, but it's completely understandable just given how these things play out.

[00:47:49] So maybe we'll see some more, of this happen from independent artists or those that are doing more things where they own everything themselves, kind of to your point with whether it's Poo Bear or other people like that, experimenting. Okay, what could that look like? So I think we'll probably see some type of innovation there.

[00:48:06] Or maybe there's even a solution where some company has more rights to more of the royalty free or independent artist owned music where that can then be used as something derivative from where the OpenAI or chatGPT three or some of these companies can pull from. But I think we're a little ways away from that.

[00:48:27] Vickie Nauman: But there's clearly no stopping it.

[00:48:29] Dan Runcie: Yeah, no, this is a train that is gonna continue to go on for sure. But Vicki, this is great. I feel like we covered a bunch of stuff, especially with gaming and so many of its intersections. And if people wanna follow along with you and the work that you're doing, where's the best place that they should follow Thank you so much.

[00:48:47] Dan Runcie Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat, post it in your Slack groups. Wherever you and your people talk, spread the word. That's how 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.

Burna Boy will be the first African artist to headline a UK stadium show when he performs at the 60,000-capacity London Stadium this summer. It’s the latest sign of Burna’s starpower and Afrobeats exploding popularity.

The Nigeria-born artist is one of the genre’s biggest stars. Burna has reached this level because of consistency (six albums in nine years), savvy performing strategies, and a headliner mentality. 

To break down Burna’s rise, I talked to Denisha Kuhlor, founder of Stan, which helps artists identify and grow their fanbase. Stan has used Burna show giveaways to develop insight into his wide-spreading fanbase. Here’s what we discussed:

[3:05] What sets Burna Boy apart from other African artists

[6:26] Burna’s show at London Stadium

[7:26] The Burna fanbase

[7:52] Streaming era impact on African music

[11:56] Returning to Coachella after 2019 drama

[17:05] How Ye incidentally helped Burna break out

[19:16] How fame is perceived in Africa vs US

[20:45] Fans of Africa’s “Big Three” artists battling each other

[21:50] Burna’s “contested” Madison Square Garden sellout

[24:11] Possible missteps in Burna’s career

[27:54] Projecting Burna’s future shows

[32:20] His best career move

[38:03] Building record label infrastructure in Africa

[44:06] Five-year prediction for Burna’s career

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Denisha Kuhlor, @denishakuhlor

This episode was brought to you by trac. Learn more about how artists can bring web2 and web3 together for their fans at trac.co

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Denisha Kuhlor: I think it was interesting, him being so vocal in the approach he took, I think a lot of, Ayra Starr did a documentary for Spotify and she's quite big, especially within West Africa. And she talked about touring in the United States for the first time, and she basically said that she viewed it as an opportunity to make someone her fan, right?

[00:00:19] Like, just by someone attending her show, her goal was to convert them into a fan. Whereas, Burna definitely takes the approach of, "you should either already be one or recognize my fan base for what they are." I think in his case he's lucky cuz he's been able to back it up. especially when you look at Coachella to now.

[00:00:40] but definitely a, an approach that's consistent with his brand. 

[00:01:11] Dan Runcie Guest Intro: Today's episode is a case study style breakdown on the one and only Burna Boy. I was joined by someone who is a near expert when it comes to the world of Burna Boy, and that is Denisha Kuhlor, who has been on the pod several times, and she is the founder of Stan, where not only does she focus on how artists can engage their fan bases, she's actually been involved with ticket giveaways for Burna Boy's upcoming stadium show in London. So she has insights into what these fans are like, what are some of their preferences? And we talked about all that and more. We broke down, Burna Boy's rise. What are some of the key things to his success? What are some of the challenges? Talked about some of the other moments that he's had that we wanted to talk about.

[00:01:57] Where does that stand with him? What is his standout moment and where things could really go for him from here on out? Really great conversation. If you enjoyed the one we did on Cash Money a couple weeks ago. This is something similar, but about an artist who is really having this moment right now, and we broke it all down.

[00:02:12] Here's our breakdown on Burna Boy.

[00:02:14] Dan Runcie: All right, today we have our case study style breakdown on the one and only Burna Boy, and who else is gonna join me then? Someone that understands him and the work that he's done in and out over the past few years. Denisha Kuhlor Welcome back to the pod.

[00:02:29] Denisha Kuhlor: Thanks so much for having me. 

[00:02:30] Dan Runcie: Yeah, and I wanted to talk to you because you wrote that piece in Trapital several months ago, talking about how artists who have relied on music festivals, maybe there's something that they may regret down the road in terms of actually getting in there and building the true fanboy fan base. And you used Burna Boy as an example of someone that went through this and obviously he's blowing up. He's had a huge year and we've now seen so much growth, especially in the past few years of just how so many African artists have been able to rise and grow platform.

[00:03:05] But Burna Boy has clearly been able to hit levels that many others haven't. What do you think it is that has set him apart?

[00:03:13] Denisha Kuhlor: Yeah, I think one, just Bruno boy is very compelling, as an artist. I've seen him perform, last year twice. his Madison Square Garden show. Then I got to see him at, Afrochella now, Afro Future, in Ghana. And one, he is a live band, as crazy as that sounds, I feel like that's rare and rarer these days. as consumers, it kind of feels like we've gotten used to maybe a DJ or kind of that accompany accompaniment. So the live band aspect is a huge one for me, and I think he's very compelling on stage and has great, charisma. and then lastly, I kind of feel like he was everywhere this year.

[00:03:53] You couldn't really. Escape him, whether it was last, last, as a hit or, him touring so much of the United States. I feel like if you didn't know about Burna boy, maybe a year or two ago, last year was definitely just a true breakout year for him on the global stage. 

[00:04:09] Dan Runcie: Yeah, I think that makes sense. I think there was a couple other things that stuck out to me too. So he has been able to position himself as a leading man. I am the person that's headlining. I'm not just gonna be the person opening for the artist. gonna be the person that is doing the guest first.

[00:04:27] And I do think that's some of the other artists who rose up from Africa, they have done a bit more of the, "okay, let me jump on the Drake verse. And then that becomes Drake's or things like that." although I know that Burna has done several guest appearances and feature shares, it hasn't been in that same way.

[00:04:45] And I think he's still just been so focused on himself in that way. And of course it could take a little bit longer to develop, but it's almost like how in Hollywood you may see someone that is always positioning themselves as supporting acting roles. If that's where you're taken to blow up, it could be hard for the industry to see you.

[00:05:04] The lead actor, but if you're willing to do the lead actor roles for the smaller things and you get the right thing, then you become seen as the lead actor on the big I feel like that's 

[00:05:14] been his experience. 

[00:05:15] Denisha Kuhlor: I'm totally aligned with you when, just based off you talking about that makes me think about some of his features on the continent. And he's largely broken those artists, right? You look at Bnxn,formerly known as Buju, right? 

[00:05:27] And the Lenu remix who was signed a Burna. I first heard about Amapiano,because Burna Boy got on the Spoon, No No remix, and one of the biggest breakout stars of the continent, Asake, the Zumba remix, this year. So I agree, I think he's positioned his features as more as like, let me lend a helping hand and let me get your distribution and your visibility. But if I was. In African artists or emerging artists from the continent vying for a feature in some ways, I'd probably wanna Burna feature over potentially a big artist from the west. 

[00:06:04] Dan Runcie: Yeah. And I think a lot of that is with his. And his persona, and we can get into that in a minute, but I that played into a lot of this. And as you said, he's been every run the past year and we're setting stage for an even bigger 2023 where he will do his stadium tour at London Stadium, the first African artist, a headline and do that.

[00:06:26] What does that mean for his career?

[00:06:28] Denisha Kuhlor: Yeah. One, I think it's just huge and a testament to how far music from the continent has grown. I think, you know, you look at the story or how people paint the narrative of how music from the continent has grown. And so often it's kind of like, oh, there's a population of people here or there's little, you know, subsets of people that are interested in the music.

[00:06:51] Whereas now, it's makes it very clear that this is world music, right? This is pop music in a lot of ways in that people have embraced this music in the same way you look at, Latin music, right? And people are singing whether they know Spanish or not. I think it's really a testament to the ability to do that. So it's very exciting. 

[00:07:13] Dan Runcie: Yeah. I think you've also had a front row seat to this as well, because with your work at Stan, you've been doing ticket giveaways and things like that to really tap into who the Burna Boy super fans are.

[00:07:26] Denisha Kuhlor: Yeah, so we've found two things working with Burna Boy fans or Burna Boy fan pages. Is that, or maybe even three. I find that one you have the fan that maybe, it reminds them of home. So typically a fan with roots or ties back to West Africa or Africa more broadly, who's now living abroad or first generation, but there's a sense of nostalgia or home as a result.

[00:07:52] I think you also have fans that are like learning or being introduced to, Africa. Through his music, which has been really fascinating and really cool to see us talking to a fan, based in France, right? That like taught herself pidgin and like wants to visit Nigeria because she's such a big Burna boy fan.

[00:08:11] and that's also really, really cool to see. And then third, I think you just have like hometown pride, right? Like you look at people in Lagos or even other African cities and people are just really, really proud of what he's been able to do. So it's interesting seeing all the subsets of fans together.

[00:08:29] Denisha Kuhlor: But as someone who's attended his shows, I think it's exhilarating when you watch it all come together. 

[00:08:36] Dan Runcie: And just for some context for the listeners, what does your giveaway entail and what does that process look like?

[00:08:43] Denisha Kuhlor: Yeah. So, we run live interactive trivia games that allow us to test a fan's knowledge and how much they actually know about the artists. So everything from lyrics to questions that fans would only know if they watch music videos to general information about Burna boy that you probably would only get if you read his interviews 

[00:09:04] or you just deeply know about him. Every time we're crafting these games, I actually learn so much more about, these artists that we work with. And so I say that to say, I'm continuously surprised not only by his fans' knowledge of his music and his lyrics, but also how intentional they've been about truly learning about him and what they feel he represents. And so I feel like he's done a really good job of being consistent in that narrative.

[00:09:32] Dan Runcie: I think too, one of the other things that really works in his favor is that in the rise of the streaming era, we're seeing the rise of local repertoire and local language artists being able to rise and not just have to rely on Western cultures. And I think that the music industry has shifted a bit, or at least from a mentality perspective, and you could see this on the Spotify daily charts.

[00:09:56] You can see there's so many places where there were so many artists who were used to being able to have that global footprint of essentially exporting their music elsewhere than making so much money they're now seeing less and they're seeing less because a lot of these artists are being able to do it themselves, and it's not just.

[00:10:16] Burna Boy's being able to do this in West Africa, but he's being able to do this in France, which has, you know, a large West African population and some of these other corners of the world that do, and I'm curious to see how that will continue to develop, because you know how the diaspora and certain regions that.

[00:10:34] You see more fans of West African artists than just West Africans in general, and how that will align with where someone like Burna Boy continues to tour and where some of the bigger concentrations of his fandom end up being.

[00:10:49] Denisha Kuhlor: Yeah. I think, you know, interestingly enough, like he also probably benefited from the rise of like macro things that maybe couldn't plan, but like one black panther, right? Black Panther, like reignited people's curiosity about Africa and maybe in a way in which, they hadn't thought of before you look at things like the year of return in Ghana in 2019 and this bridge or this desire to have a bridge between black Americans in the United States and you know, people in Ghana.

[00:11:18] And I think all those like, factors made people, got people excited and got excited in a way that his music just set the stage. If you came to Ghana in 2019, you were gonna hear br boy and people were gonna take it back, right? 

[00:11:33] Denisha Kuhlor: Davido said it best. He said, you know, Afrobeats will succeed because in America, everybody has one African friendand whether you realize it or not, like, you are exposed in some way, and I think as people's proximity changed and curiosity about each other and where people are from grew, especially as it relates to Africa, he really benefited from that. 

[00:11:56] Dan Runcie: That makes sense. That makes sense. And I think the other thing too, that I think about for him this year, he of course has the huge stadium show in London, but he's also coming back to Coachella and very famously back to Coachella after being quite upset in 2019 about the size of his name on that Coachella poster. And this day, this year, this time around, his name is much bigger. Still not a but I'd be curious know what you think, like how he must have felt about that process. Was there some level of buy-in? Because I could see at his level him thinking that, okay, I'm a superstar. I should be a headliner. But if they're now putting him on that second line right under the headliner, then how that may affect him. Obviously it's still great placement, but. Yeah.

[00:12:45] Denisha Kuhlor: Yeah. You know, it's interesting and I remember when that happened and in some ways I think it probably helped his brand and really showed like it was a testament to the type of artist that he desired to be. I do, you know, think it's interesting because you do see within Africa stars that are huge, right?

[00:13:04] And maybe they're numbers, quantitatively don't show up on the Spotify charts, they're on YouTube or they're on other platforms. there's still quite of downloading, that exists within just Africa as a whole. So sometimes we don't necessarily see an artist as set the way we would, maybe with an artist in the States or with a huge listenership in the States, from a charts perspective or immediately.

[00:13:27] But I will say is I think it was interesting, him being so vocal in the approach he took, I think a lot of, Ayra Starr did a documentary for Spotify and she's quite big, especially within West Africa. And she talked about touring in the United States for the first time, and she basically said that she viewed it as an opportunity to make someone her fan, right?

[00:13:48] Like, just by someone attending her show, her goal was to convert them into a fan. Whereas, Burna definitely takes the approach of, "you should either already be one or recognize my fan base for what they are." I think in his case he's lucky cuz he's been able to back it up. especially when you look at Coachella to now.

[00:14:09] but definitely a, an approach that's consistent with his brand. 

[00:14:14] Dan Runcie: Right? Because I think that part of it too is there's clearly a western skew for a festival like Coachella. I know that when Burna had complained back in 2019 about where he was, people had shown where Kendrick Lamar was, I think it was 2012, and how small his name was compared to him being a headliner several years later.

[00:14:35] Denisha Kuhlor: The difference there though is that Kendrick Lamar is from Compton, which is which is driving distance to Indio, California where Coachella is, versus Burna boy may have numbers, may have the base, it's is that base, if they're not a strong contention of them in the in Southern California, are they going to be able to get there?

[00:14:58] And I do think that the fact that he is, you know, second because this year you're headliners, unless someone pulls out, you never know what happens. But, right now your headliners are Frank Ocean, Bad Bunny, and Black Pink. So he's, you know, just under there. So you never know what could happen. Things shift all the time, but I assume if based on his placement, it must be a pretty decent size bag as well.

[00:15:21] At least I know for the headliners, the last I checked a few years ago, they were getting paid 4 million per weekend, which totaled 8 million total. so that's what I would assume the payday would be for, Bunny, Black Pink and Frank Ocean, but then that next row down probably isn't too far below that.

[00:15:40] I mean, I'm sure it is less money, but I don't know how much less.

[00:15:43] Sure. Yeah. Yeah. And when you look at like negotiating from just a hard tickets perspective, in terms of what he's been able to drive from last year alone, he definitely had some strong leverage from a negotiating standpoint.

[00:15:57] Dan Runcie: definitely. And with someone like him too. I know that we've talked a lot about artists and how they're able to develop true fandom, and I think true fandom is the people that are showing up at your. Concerts and they know the words of everything and not just singing the TikTok part that goes viral that we've seen from whether it's many artists that have experienced that, that have had TikTok hits that have blown up.

[00:16:24] How do you think that impacts someone like Burna boy, I don't necessarily feel like he is making music, quote unquote for TikTok. I know a lot of the stuff that blows up their artists don't have any control over, but how do you think that skews, like how do you think that soc or short form video has played a factor, if at all, in his career and his rise?

[00:16:44] Denisha Kuhlor: Yeah, I think a few ways, one, touring, right? I think people want to go to a Bea boy show even if they haven't seen him before or only know a few songs. So I think it's definitely been really, really helpful there. I don't know how many, people know, like the story behind Ye, one of his breakout hits, but like SEO just like really helped him.

[00:17:05] So he had the song, Ye. It was already uploaded to streaming platforms, and then Kanye came out with his album. . And so a lot of folks search for Kanye's album, but his, was still like ranking pretty high on Spotify. They actually released a video that that day or around that time thinking, thinking Kanye, for, for the album name.

[00:17:25] So I do think in, this is what's so interesting. He's very true to himself in the sense that he's definitely not an artist that like hopped on those trends, right? Like TikTok is not really potentially his thing. he's not gonna be doing any TikTok dances, so he's still been authentic to himself. While I think galvanizing his fans or letting his fans know, he appreciates their effort and I believe his fans look at it more so it as like, let's spread this message, regardless of his participation.

[00:17:58] That's something I always get from his fans specifically, it seems like you have different artists, with fan bases. Like the Barbz need Nicki to participate, they want Nicki to participate, right? 

[00:18:09] Whereas Burna fans, I feel like they do their own thing. They know the temperament of the artists and what he likes to do, and so they don't, they're not really like rushing for him to, adopt maybe some of those technique. 

[00:18:23] Dan Runcie: And that's an interesting breakdown. Do you think that any of that is compared to where the artist is from or just the nature of their fans? Thinking specifically about the Barbz versus Burna Boy's fans.

[00:18:37] Denisha Kuhlor: Mm. that is interesting. You know, I can't say with certainty, but what I will say and as I've spent more time in Ghana is that there's a level of familiarity. I find, past, maybe, I don't know what it is, but past like, experiences that maybe invoke a certain socioeconomic status. There's a level of familiarity, that you'll find these artists like I've definitely maybe seen, or you can be in spaces with so many of these artists just casually like going to a restaurant or, you know, like you living your.

[00:19:16] And, I do think that invokes a certain sense of familiarity in which fame is perceived differently here. like in Ghana specifically, you see a lot of, a lot of artists here with very little to know security. just like really doing regular things. it's very different, whereas the fame is more sensationalized it feels, in the states, like you can be in the club with Burna, he's walking up and there's not gonna be the, oh my god, Burna, like that kind of thing. It's very different in that way. So maybe that wouldn't really add much, at least to his core or his home base fans, because that familiarity is there. 

[00:19:56] Dan Runcie: Yeah, it feels a bit the closest thing that I would. You have in the US is Atlanta, where you would have the artists that are at the mall or you see them walking around and stuff. And it isn't necessarily the same level of frenzy, although that may be a little bit different now, but in like, you know, the nineties, two thousands, you would see them a bit more.

[00:20:17] And I think there was a bit more of that vibe that felt a bit more natural like, you know, you go to Magic City or something like that and you would see someone. I think the other thing that is distinctive too with the US fans versus maybe some of the fans, others, is that online, I think you do see a bit more of that hive behavior, specifically from a group like the Barbz, where I think there's almost a falsification to them.

[00:20:45] Denisha Kuhlor: And in that, I mean the reactiveness to the other side and what they're saying, and there's almost the galvanization of that and how the barbs can galvanize in Cardi B take down, or a snide comment of someone trying to come at Nicki in a way, but they that bit of catalyst to feel galvanized.You know what's interesting? I do find it that I do think that Burna fans and maybe the big three, so for folks listening, within Africa, the big threes typically referred to as DeVito, Burna boy and Whiz Kids. So they all have their, various fan bases. And the only time I really feel like that's activated.

[00:21:27] Seeing how their artists are doing in the West and comparing. Right. So, you know, obviously with Burna winning the Grammy, but and I talked to you about this, like his, Madison Square garden numbers were quite contested. Like if you actually look at the Twitter account that shares,ticketing information. That one was like retweeted so many times because it was the fan bases going back and forth.

[00:21:50] Like he actually did sell out MSG versus didn't he? So it's very interesting because while, you know, in some ways like his hyper localized approach in terms of the themes of his music is what's propelling him on the world stage. I do think these fan bases are very curious to see just how well they're doing and they use that as the point of comparison, as it relates to other African artist. 

[00:22:13] Dan Runcie: Wait, what was the contention that the fans had about the MSG sellout?

[00:22:18] Denisha Kuhlor: Yeah, so there were a few things. One, they felt like there weren't enough seats available. 

[00:22:23] Dan Runcie: Oh, you did tell me about this. 

[00:22:25] Denisha Kuhlor: True . Yeah. Like it was a true sellout. And, at first folks didn't believe that he had sold it out. So, it's also interesting with fan bases because you're now seeing like novice or people, fans knew to wanting to understand how the industry works and also wanting to dig into what that means. But that, I think gave the confirmation that he did sell it out,and led to other fan base battles over the discrepancies. 

[00:22:56] Dan Runcie: Right? Yeah. Cuz you and I talked about this. It isn't like if someone just books like a music hall or a House of blues, purpose of that is for music venue. So the capacity's listed as the capacity, but for some of these sports venues, it could be very different because artists have such different set pieces and stage and production and you don't wanna perform with your back to people like yyou're gonna be different places. So 

[00:23:18] Denisha Kuhlor: Exactly. 

[00:23:18] Dan Runcie: You can't compare the sellout for a Knick's playoff game capacity and be like, oh, well that had more people than Burna Boy's selling out MSG. It's like, it 

[00:23:27] Denisha Kuhlor: Exactly. And that was a lot of, the conversation, which I thought was so interesting. But I also think it it came about because of how he branded it, right? One Night in Space was the name of that. It wasn't part of a tour, anything, it was just one night in space. And so there were gonna be a lot of eyes on that event, regardless.

[00:23:48] Dan Runcie: Yeah, and you know, people always try to poke holes when they see something that surprises them that they probably wouldn't have, you know, seen otherwise.

[00:23:57] So we've talked a lot about the things that Burna Boy's done well, how he's got to this point. Do you think there's any missed opportunities so far at this point in his career or anything that you've looked back on and be like, huh, I wonder if he did that differently, or even things that he may be doing after?

[00:24:11] Denisha Kuhlor: Yeah, so, I obviously have a company around fan engagement, so some of the fan engagement has been interesting. I will say, one thing that's been, very pleasant for me has been some of his intentionality around connecting deeper with his fans this last album he did host quite a few meet and greets, and had people bring their albums or you know, even bring their kids and like that kind of thing.

[00:24:37] I felt like he was really like seeing and touching people, which is something that in the past it didn't really seem like maybe he was open to or necessarily had the appetite for. So that was nice to see. It sounds like, or at least for me, the professionalism when it came to One Night in Space was also great. 

[00:24:56] the show started on time, ended on time. Can't necessarily say the same for some of his shows within Africa. And that can be due to a host of reasons, but it definitely does lead to, maybe folks will get different experiences. And that's what's so tricky in some ways about artists, in supporting artists.

[00:25:16] He's also headlined Afro Nation, Afro Nation, Puerto Rico. They've pulled out the day before and he was replaced with Rick Ross, which upset a lot of fans. So, I say all that to say, I think. It's a Burna Boy production or Burna Boy affair. it seems like everything is phenomenal. and just A- plus end to end when there are other stakeholders.

[00:25:41] The process doesn't always seem as smooth, at least for the end user experience, for the fan. so I, I think it sometimes becomes a question of like are we going to continue to pursue some of these opportunities with other stakeholders, whether that's festivals or, just some of these other events, right?

[00:26:00] Denisha Kuhlor: Or are we going to take the bulk of our production or the bulk of our events or how a fan can interact with me from a live performance standpoint in-house, and control the end-to-end experience that way.

[00:26:13] Dan Runcie: Yeah. And I do think that this strength weakness here lines up with the things that we're saying before, right? If he's someone that wants to be the lead, you wanna be the focus. You're gonna put more energy into the Burna Boy Productions and you may take a slight at things that are not that right. And I think it's unfortunate if some of that distribution skews between the things you do outside of Africa are the things you do in the Western world that do buttoned up, but then when you're back home it has less energy, less focus because yeah, your day one fans of your stans are gonna feel like, okay, well now that he's stadium status, what do we get?

[00:26:52] Denisha Kuhlor: Yeah. and in fairness, you know, some of that is probably, you know, thanks to the regulation, like there is no coming on at 2:00 AM at MSG. Like they will set everyone home. You'll not be allowed to perform. they will charge you a fine. so there's also I think just some of the like, again, the standards upheld within these ecosystems.

[00:27:12] But it breeds a dynamic that it's unfortunate and I think is happening just overall where consumers are privy to this at this experience. As a fan that goes to see a show, I don't really wanna hear the promoter and technical issues and like production. I paid my money, I took my money to see this artist.

[00:27:35] So, now the fact that fans are being so exposed in a lot of ways to all the elements behind these things, not only are making them more sophisticated consumers, in deciding whether to patronize you again, but it's taking away some of the magic that was entertainment and like show business. 

[00:27:54] Dan Runcie: Yeah. I do think that for someone like him specifically, it is important to work on how could this product be the best that it can be? Whether you are doing it at home, whether you're doing it elsewhere, and obviously knowing where you're doing it elsewhere, you're involved with other productions, there's things that are gonna be outta your control.

[00:28:13] And I know it's asking someone that is naturally more focused on putting more into the things they have more control into to still bring that same energy elsewhere. But hopefully, I'm sure that he wants to be eventually a headliner at a Coachella or a Glastonbury. I'm to do other stadium shows as well. That'll actually go to the next thing that I'll ask you, I think that if that's the goal, then some of that energy has to con continue there. So, two questions here, this is a two-parter. So the first one, obviously London is the first. Well, I don't wanna say the first, but at least it's the one of the biggest stages that he has had himself.

[00:28:51] I think, you know, we'll see how many tickets end up being sold. I assume it'll probably be at least like 60,000 or so, just given the size of that place. But where do you think, if you could project where the next stadium shows would be based on his fan base, based on what you know, where do you think those would I would say Texas , somewhere in, Texas. I mean, Dallas and Houston have some of the biggest African populations, within the United States. And so when I think about that, not only do they have African, you know, or they're first gen or immigrant populations, but a lot of people have also been exposed just by proximity.

[00:29:31] So I think, yeah, I think it would be either Houston or Dallas. Definitely somewhere in the States, I do think he could do somewhere else in Europe, but if looking at the data really does concentrate, at least in London and with the disposable income, I think that would allow for a show like that, for a show like that to be successful. Another thing about Burna that's interesting is, he's been touring. So a lot of these fans, you hadn't seen him two years ago. You definitely have had your opportunity to see him now. even when I think about, by the time I saw him at Madison Square Garden, I could have seen him at Afropunk right in New York as well.

[00:30:14] He did summer or he was supposed to do Summer Jam. So there were like multiple opportunities, even just within New York to see him. So I wonder though, before he does that. There will be a bit of a, break, or at least new music so that the consumer feels like they're seeing something. 

[00:30:31] Dan Runcie: What about Paris?

[00:30:32] Denisha Kuhlor: Yeah. So Paris is a really interesting market. He has a ton of fans in Paris and I talk to them quite often. I don't know though. I, I don't know if a stadium show can work there just yet. And part of the reason is because I do think that the market rewards in some ways, , those who try.

[00:30:53] And while he's done a ton of podcasts, a ton of interviews, a ton of things, I can't say how much he's actually interacted with, you know, some of the French press andsome of the opportunities there. He did do something really cool, recently or, yeah, not too recently. where he did a like deep cuts performance for 300 fans and he just announced it on Twitter and folks got to go.

[00:31:19] So I think he can work up to it just quantitatively. It might take longer than other markets.

[00:31:27] Dan Runcie: Yeah, Paris was one that had in mind I think, those things you mentioned make sense. New York was another one too. Just given that MSG show and you have the MetLife stadium, I feel like like that could eventually happen.

[00:31:39] Denisha Kuhlor: Yeah. Yeah. I think New York makes a lot of sense. It's pretty close to, obviously, you know, DC and Virginia, which also have big African populations. New Yorkers have seen him and know, someone who attended the MSG show. I really felt like there was like a sense of pride, like folks were really excited to be there, and to see this. And it definitely makes you feel like in events. And one that you could partake in multiple times for sure.

[00:32:07] Dan Runcie: Right. And two, with this, we talked about his missed opportunities, but what do you think about the best opportunity or the best move that he has made so far in his career?

[00:32:20] Denisha Kuhlor: Yeah, I think one consistency. He's been pretty consistent about releasing new music, whether it came to the album that he released during COVID, as well as his latest album now. There's definitely a strategy, I think, of always being focused or always looking ahead or being able to see what's next.

[00:32:40] And so he's been able to use consistency through his own music, but also relevancy by jumping onto trends that are new, whether it's or not new. I feel like the Ima piano folks are gonna come at me for that. But,whether it's Amapiano, right? or Asake who really brought a new sound for folks.

[00:32:59] So I think he's been able to do that really well. I think it was really intentional of his team. We've gotten to see, and not to compare Burna Boy to Ice Spice, but as consumers, I think so often, we see folks, do really well as a result of a breakout hit and have these expectations of them that don't necessarily correlate.

[00:33:23] And it's actually been really great to watch an artist like Ice Spice or even a Little Nas X kind of come into their own when it comes to their performance and stage play overall. Whereas with him, I think he really got to build that methodically and, and over time, get comfortable on stage, see what works, what doesn't work, figure out the kinks of working with the band.

[00:33:44] And so he's really, really been able to perfect and invest in his live show, which we're seeing dividends on now, while also maintaining just the consistency of new music and relevancy, which is quite d 

[00:33:57] Dan Runcie: Yeah, I think the Ice Spice is interesting because I was talking to someone about this a couple days ago and she had just put out her project, and I think it may be sold around like 15,000 units. And that of course sparked some discussion. And the thing is, it's hard to even frame something like that as a negative because six months ago, most of you didn't even know who this was, if we're 

[00:34:23] So we have the nature of the internet being able to help someone skyrocket into a different level. Almost overnight, and then just realizing that her team, everyone else has to catch up. It's a very different situation, like where Burna Boy is showing you that, yeah, it takes time to get to this point.

[00:34:42] I mean, if he starts really releasing music, you know, early 2010s. By 2017, still doing small venues in New York. And then it really until, you know, a couple years later where you're being able to hit that. If you even get to that point, it's so hard. And I do think that live performances in the honest you command is one of the few things that can't quote unquote blow up overnight and it's, if anything is the more humbling thing that we see. I think streams can be somewhat humbling to some extent, as you've seen, but even that can be misleading. So it does at least ring true, and I think for me, I'd spoke about this earlier, but the thing about his career that I think is the best move for him was just continuing to position himself as the lead and not necessarily, you know, following the latest trend just to hop on it. Although I think he was smart about things, but not just trying to attach himself. I think he still had the brand there and it took longer than some may have, you know, wanted, or maybe even he saw himself, especially, I can only imagine, you know, it's 2015, you're doing this for a few years, things still bubbling.

[00:35:53] So I do think that worked to his advantage cuz now it's really only a handful of artists globally that can say they're in that position. And then really his whole continent, you know, of the big three is at least the one that has the most exposure and platform in base right now.

[00:36:09] Denisha Kuhlor: What did you think of? I feel his choice to embrace Artis from the west like his last two or three really, his last maybe three albums, you see like a really conscientious approach, whether he's had everyone from YG to Keilani, had Diddy executive produce an album, and that felt really intentional to reach, listenership or an audience from the westlike you said, it's probably tricky like if that went wrong, it could have really went wrong but in his case it seemed to go right, but I'm curious what you thought that. 

[00:36:43] Dan Runcie: Yeah. I think part of the reason why it worked is like, I feel like he picked artists that felt somewhat aligned with like what he was doing too like I, at least from what I read, I think the YG track may have potentially would've involved Nipsey, but you know, Nipsey had passed, so like that didn't work.

[00:36:58] It's not as if he was just hopping on, you know, who is the hot single that like needs someone or like, you know, the Drake or whoever else. And not that I think with Drake is an issue, but because obviously is done and then Bad Bunny's continue to grow. But I feel like because he's like picking certain artists and maybe not every pick I necessarily, you know, thought was like his best music, but there seemed to be a ality with people that like lined up with him where it's like, okay, I've listened to enough why G'S music over the years?

[00:37:28] I could see why someone like Burna Boy would want to do music with him, right? So I feel like for me, that piece of it did line up and I know that if you're trying to grow there, there's some inevitable push of who can I align myself with that isn't just trying to do the generic pop thing. Like I don't think I would ever hear him beyond a Maroon Five song, which I do feel kind of becomes like a bit of a rite of passage for a lot of, Western hop artists.

[00:37:57] But I'd be very surprised if I ever saw Burna Boy.

[00:38:01] Denisha Kuhlor: Yeah. No, that makes sense. That makes sense. 

[00:38:03] Dan Runcie: Yeah. the other thing that I think this conversation taps into is just the broader growth and the broader expansion of record labels and infrastructure in Africa from what the music industry to do and how Burna Boy's been able to help. In many ways, not just, I don't wanna say necessarily lead that because I think he's did a lot of this without the infrastructure.

[00:38:26] If anything, the infrastructure has kind of started to come as a result of what he's done. But I've also heard a few rumblings from different folks that some of the investments of certain record labels, some of the majors having offices there, there's been questions about how they're seeing what's viable, what makes sense now because some of the artists that blew up, they don't have those artists on those labels, so now they're trying to find the next person and they're realizing that really hard to do that.

[00:38:55] Denisha Kuhlor: Yeah. You know what's interesting, and I thought a lot about this is I feel like most artists on the continent don't necessarily need help on the continent. So much to our point of thinking about like Coachella, that was so surprising to Burna Boy because he was a huge star within Africa.

[00:39:11] and when you look at the labels, he's engaged, for like a more global expansion. The thing I think he's been very clear of and his mother and the rest of his team is that like they've got Africa covered. And so I do think that could be part of the reason why maybe some of these labels are struggling because in a way it probably makes sense or the hunches to put more money or investment into what's already working, which is within Africa. When in reality I think it, it forces you to start to iterate and experiment on what's gonna resonate in terms of an artist, fans, an artist who has fans abroad, or them starting to build their broad audience.

[00:39:53] And while an African audience it probably validates a lot of things, right? Maybe stage, presence, charisma, ability to connect, that the music is global or can reach people like it, that change or that shift. now being in the states or being in Europe is also quite different as well.

[00:40:11] Denisha Kuhlor: And I think it forces labels to take a true A and R approach, whether it comes to everything from media training, Interacting, there's cultural differences. And so, I think it's going to lead way to maybe a new type of executive. it's something I thought a lot about music programs like the Music Business Academy,in Africa.

[00:40:33] That's done really, really amazing work. I continue to be really, really impressed with the folks at Maven. And what their talent is doing, I think, for the African music ecosystem. But, with that being said, I think that the ecosystem is still getting to the point. where it's maturing, but also maturing in a way where folks can capitalize not only on the talent from the ecosystem, within Africa, but there being true connections, going both ways, because that's ultimately where the label will be able to recognize their power.

[00:41:05] But for an artist that is already successful in some ways already getting Booked for shows. You look at, you know, where Tua Savage was by the time she got signed, or a DeVito by the time, he got signed abroad, they're already huge stars, which in some ways is different than what labels are used to signing in the States.

[00:41:27] They, you know, would either find an artist and before invest the development in them or find an artist who's had maybe success digitally, but are working with them, on some of their more physical initiatives. So, I think it's interesting, but I also think it's a bit of a, different framework or thinking that some of these labels need to do in terms of the true maturity of the talent at the time they're being signed in some cases.

[00:41:52] Dan Runcie: Yeah. When I heard rumblings that some of these record label offices that had recently started in Nigeria or elsewhere in Africa, that they were starting to question some of the future and the growth and things, I honestly wasn't that surprised because if you look at the way the record labels work in the US and at least currently they're working cause.

[00:42:16] you have the Drake's and you have the Taylor's and the Adele's and Beyonces, and you've given them more favorable deals. But knowing that even if they more favorable deal, whatever share you get of that is still gonna make up for more than everything else. And that's gonna help your strategy in so many other ways.

[00:42:33] Versus you're starting from scratch in a landscape where it's already harder to like develop someone from the ground up. And you're starting that without the Burna Boy without DeVito or without them, and now you're trying to find that person and you're trying to, you know, still do the investment. It's tough to get there because it took these folks so many years to get to that point.

[00:42:55] So if you didn't start like a 10 year time horizon and you're have a bit of that, you know, more of a standard, okay, what has this person done for me lately? Do we keep this artist? Do we drop them? It isn't going to work in the same way. And we saw some of those same challenges, not even to this level happen.

[00:43:12] 20 years ago when there were so many artists from Jamaica that were starting to blow up when reggae and reggae Fusion was really starting to be the wave when Sean Paul was doing his thing, and we didn't even get to that point where they were even trying to start the record label. There were issues with visas Yeah. Yes, and all. 

[00:43:31] Denisha Kuhlor: It doesn't just transfer. That's, you know, that's such a great point. Like I think in some ways people expect the success in the continent to like transfer almost smoothly when in reality a new type of work is just beginning. And that's the type of work that, you know, when you think about the office, the big office is looking for, right?

[00:43:51] Because that's gonna produce quantitatively what they wanna see. and so in a way it can feel discouraging because you're like, wow, I have this artist, they've done this, this, and this. They're getting booked for shows here. Now we're going to Europe and we can't do a 500 person venue, but we just did a 5,001.

[00:44:06] Dan Runcie: Yeah, it's gonna be fascinating to see how this develops, but before we close things out though, let's say five years from now, 2028, where's Burna Boy in his career, right? At that point, what is he doing?

[00:44:18] Denisha Kuhlor: Yeah, I really, you know, I call it like a bit of the Jay-Z effect, but in some ways I see that for him, one clearly has an ear, not only for like developing talent, but also emerging talent, from, you know, a feature to Bnxn who assigned onto his label, but ended up not staying ended to, ask to leave the label, which I think is very interesting.

[00:44:40] So I kind of wanna see if he focuses or hones more on also like developing talent innately his sister's also the creative director for his brand. I think too, we'll also will also see him play a role where he does a lot of fun things around fan engagements. he talked about in an interview that he's performed at so many venues and gotten to travel the world. And so he wants to take a really exciting approach in like performing on a train or kind of doing all these other like, cool fan experiences. So hopefully will he'll start to experiment with that as well.

[00:45:20] Denisha Kuhlor: And it'd be interesting, but I think he might have the potential to be a really high touring artist for a long time. We see some artists that are just like, they can go on tour. It feels whenever they want, regardless of whether they have new music or not. And to some extent, I think that he just might be an artist that can command that.

[00:45:42] and this has, you know, everybody's talking about, everybody's talking about catalogs nowadays, but as you think about how digitally Native Africa is, how young the population is. I'll be curious to see if he gets an offer he can't refuse. on the catalog side, there's more and more, places invest in content within Africa.

[00:46:02] Denisha Kuhlor: It's only gonna increase, syncs the power of nostalgia as well. . Well, my hunch would be that he wouldn't sell, it wouldn't surprise me if we also saw him really structuring his business or his brand in, a way, that commands a high catalog price as well. 

[00:46:19] Dan Runcie: Yeah, when you're one of the biggest ones in this like wave and you're really reaching the height that others haven't reached before, you do have a bit of that advantage, right? Are able to this rise in a number of ways. So it's gonna be fascinating. I'm excited feel like at a minimum, what headline in Glastonbury feels like an inevitable thing, just given with things.

[00:46:39] So yeah, I am eager to see how this all plays out. And who knows, maybe he'll be at Coachella again, and maybe he'll have the headline spot and at that point there's nowhere else to, you know, complain. Maybe we'll just have Burna Boy hyphen the African Giant and that'll be what's on the poster,

[00:46:56] Denisha Kuhlor: Yes, I can literally see like just the African giants. I think that would be just such a moment, in the funniest way, like very reminiscent of Jay-Z, Jay-Z at Glastonbury, no. Yeah, it would be cool to see that all come full circle.

[00:47:10] Dan Runcie: Definitely. Well, Denisha, this was awesome. Thanks again for making the time and making this happen

[00:47:16] Denisha Kuhlor: Thanks so much for having me.

[00:47:17] Dan Runcie: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how capital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, go ahead.

[00:47:38] 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.

In music, web3 hype may have cooled over the last year but there are still builders in the space making moves, like trac’s founder, Cardin Campbell. Trac is one of our sponsors for Trapital, and it was great to have Cardin on to discuss how music tech startups see the big picture and are approaching this. trac is a music distribution service, but it wants to bridge web2 and web3 together in a way most distribution services aren’t.

Cardin sees an opportunity to digitize how royalty payments are made without disrupting the Web2 experiences on Apple Music and Spotify. That can remain, while blockchain technology adds a layer to bring an artist’s superfans around for the journey.

In this episode, we discussed web3 music — what was overhyped, what has lasting value, and where things go from here. Here’s what you can expect: 

[2:57] Finding a wedge in web3 music 

[5:17] What people get wrong about web3 and ownership

[9:25] SEC challenges with NFT royalties  

[12:04] Most music fans don’t want to invest in artists

[15:31] Where web3 and web2 meet in music

[19:13] Building trac’s platform 

[21:37] Benefit of artists “windowing” music releases

[25:59] How trac sets itself apart

[32:15] Artists “moving on” after reaching success 

[34:54] What’s most exciting in web3 right now

[36:22] Biggest friction points to web3

[41:05] Projecting trac’s revenue mix between web2 and web3

[44:38] How to follow trac’s process

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Cardin Campbell, @iamcardin

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Cardin Campbell: Success means, you know, you as an artist can make a living doing your art, and whatever the national average is in terms of salary per year, we want every artist on track at that level to get to that level of freedom and beyond.

[00:00:17] yeah, we're building for that success story. and then some that's like the bare minimum for us. But yeah, we hope to create, you know, the next superstar. Not create, but we hope to help support the next superstar by giving them the tools to make the business side and, you know, management side of their catalog super easy.

[00:00:35] Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I'm your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from the executives in music, media, entertainment, and more. Who are taking hip hop culture to the next level. 

[00:01:03] Dan Runcie Guest Intro: Today's episode is all about where Web two and Web three meet each other in the music industry. It has been a rollercoaster past couple of years in terms of NFTs Web three Crypto and how all of it makes sense for artists, musicians, record labels, and more to help make sense of where we are and where things are going.

[00:01:21] I sat down with Cardin Campbell, who is the founder of Trac is on a mission to empower artists to reach their fans more closely than ever, whether that's by distributing their music directly to the digital streaming providers or through NFTs so that their most passionate fans can get early access and a small ownership stake in their music moving forward.

[00:01:42] Trac is also one of sponsors, so it was great to be able to talk with them about their solutions more deeply and how they're serving artists. In this conversation. We also talked about some of the other challenges that happened with music distribution, such as when you have those superstar artists, how do you keep them on board?

[00:02:02] We also talked about broader trends in web three, where things are going, what some companies are getting right, wrong, and more really great conversation. I like the way Cardin sees things. I hope you enjoy it as much as I did. Here's my chat with Cardin Campbell.

[00:02:17] Dan Runcie: 

[00:02:17] All right. Today we got a full conversation on deck. We're gonna talk about where Web two, when Web three, meet each other with someone that is living and breathing this every day, Cardin Campbell, founder of Trac. Welcome.

[00:02:29] Cardin Campbell: Thank you, thank you, thank you. Good to 

[00:02:30] be here.

[00:02:31] Dan Runcie: Yeah, definitely. I feel like you and I have had a few conversations about this, and the industry's been in such a fascinating place right now. You look at the past year and a half with Web three, crypto NFTs. It's been a rollercoaster in terms of where the industry is, where people stand, where companies stand, and where they're focusing on.

[00:02:51] How do you feel like we are right now? What's your macro take on where the industry is right now with regards to web three?

[00:02:57] Cardin Campbell: I think the industry's in an interesting place. I think we're still trying to find that wedge of where web three or this concept of Web three, you know, aids music in any way. You know, I think a lot of people, are trying to think of it like this separate space and you know, this place where you can sell more of stuff and generate more revenue for the industry.

[00:03:19] And I think that can happen, but I don't think it's going to happen in a way that we've been approaching it to date, you know, but yeah, I think we're still trying to find out which ultimately is where we currently are.

[00:03:30] Dan Runcie: Yeah, I think one of the challenges was that there were so many cool and nifty ideas that people had about what something could look like, but at the end of the day, you needed to have a real functional aspect that would add value in a way that you are either making something easier for the consumer or you are making it more unique in a way.

[00:03:49] And I feel like a lot of the things that are being pushed, were more focused on, oh, here's this cool, almost wonky idea of what something could look like as opposed to, boom, here's a fundamental shift change into how things were and how things could be moving forward.

[00:04:04] Cardin Campbell: Yeah. 

[00:04:05] Yeah. It's really like, you know, the classic case of entrepreneurship and startup, right? It's like you try to find a problem to solve and then solve that problem, whereas with web three, there's so many cool things you could do. And people were just like building cool things and then trying to find a problem, you know, later.

[00:04:24] Right. So I think that's why we're still trying to find our wedge in the whole space, but because it's just been a case of, "Oh, we can do this and do that and like, wouldn't this be nice?" You know, but not really centralizing, you know, the focus on problems to solve, right? And then solving them.

[00:04:39] Yeah.

[00:04:40] Dan Runcie: And as you look back on it yourself, as someone that's been following the industry to to a deep extent yourself, do you feel like there are parts where you yourself are like, huh, maybe I had overstated where I thought this was gonna go? Because I think that each of us probably bought into some of the height and potential to at least some extent.

[00:04:57] Cardin Campbell: Yeah, 

[00:04:57] so I still feel like we have, we've got it right to a degree, and I'll explain, right, so a lot of people approach Web three music in this like way of thinking of it like it's another medium, you know, for people to consume music, to buy it, like it's a collectible and I think that's the wrong approach.

[00:05:17] That's just my personal feeling. I've always thought that, and probably will always think that until I'm convinced otherwise, right? Because you can't really treat it like a new medium. When Spotify and Apple, you know, has the fan experience, you know, being the best it's ever been, like I feel like discovery has been solved, do you know what I mean? Like the algorithms and all the things that they provide to help you discover new music and just have access to all the songs, right? There is the best it's ever been. So companies that's been approaching it where they're thinking, oh, web three, we can generate NFTs out of songs and sell them.

[00:05:56] I don't know that that's it. like, I hope I'm wrong cause it feels like an opportunity, right? To generate more revenue for the industry but I don't think that that's it because we've seen iTunes come and go, right? they were selling a digital file that was the MP3 for a dollar and that was cool for its time.

[00:06:12] But then we shipped to streaming, they bought beats and turned into Apple Music and, right? Like it shifted. So I don't think that that's it. And I think that's where a lot, you know, the focus has been, and I think that's where people are getting it wrong. Because it's not, another, you know, medium, so to speak.

[00:06:29] Dan Runcie: That's a good point because I do think that part of the reason that streaming took off, and a lot of this was in conflict of what Steve Jobs himself thought. He of course, is one of the big proponents of iTunes, and I think for its time, iTunes especially, when did it launch 2003? I believe that was the answer at the time.

[00:06:48] You could buy your favorite song for 99 cents or a $1.29, whatever it was at the time. But after a while, consumers really didn't wanna do that. And I feel like one of the reasons why Spotify worked, granted, I know that the company has had its own ups and downs over the years, but one of the reasons why I think Spotify works is because it met consumers where they were at. People wanted to have access that at the time mattered more than ownership. So some of these things that are going back more to ownership, like whether it's companies or models that you're referencing, it brings us back to that. And it's not that people don't wanna own things.

[00:07:22] They clearly do. You see the boom of vinyls and other things. It's just not ownership in the way that we may have thought, or that some of these companies may have.

[00:07:31] Cardin Campbell: Yeah. And when you think about it from an ownership standpoint, like you don't technically own the MP3 when you bought it from iTunes, and when you're selling a .wav file or an MP3 as an NFT, which is the same thing, you don't technically own it, you're own like access to it. Like

[00:07:47] Dan Runcie: Your copy of it.

[00:07:48] Cardin Campbell: Yeah. Your copy of it. Exactly. Exactly. So, you know, I just don't think that's the right approach. Now, I think the mistake people are making in Web three in particular is trying to mirror what we've seen happen with PFP NFTs, right? Like they, you know, collect them and it has this, you know, extreme high value from the doodles, you know, crypto punks and bored apes and all that, they're trying to mirror that. But fine art or the representation of art as NFTs in web three is a different thing than collecting music, right? Like you can't collect the mp3 like you, I mean, I guess you can, like we did with CDs and vinyl, but I think that's dead.

[00:08:30] and I think that's where we're trying to like force something to be what It's not, right? Music is valuable when millions of people listen to it and love it, whereas fine art, it's like a one of one thing and that's where the value comes from, you know, I think the more apples to apples comparison with music and fine art is the actual royalty now that's the product of music and then we have two of them.

[00:08:53] So music is just way more nuanced and more dynamic than fine art is. And I think, you know, those companies that are approaching it from the, let's collect the mp3 or the .wav file or sell it as this thing, you know, to consume it like another medium. I think that's all wrong. And like I said, I hope I'm wrong because I support anybody in the space trying to build a better tomorrow for music creators and the artists right, to make more money.

[00:09:18] but I just don't think that's necessary. I do think the royalty side is it, but the SEC makes it complicated.

[00:09:25] Dan Runcie: Let's talk more about this because when I think of the whole one of one thing, of course the physical example, you think about that Wutang album, the Once Upon a Time in Shaolin, that was essentially a one of one, and I know that that's traded hands a few different times more recently as last year, but I guess if we're thinking about it from your lens, you're saying that that isn't necessarily the product since obviously it can be copied and replicated in the same way that you and I could have a replica of the Mona Lisa, in our house, the real value is the actual recording itself, so you feel like the royalty, or at least that piece is the piece to focus on.

[00:10:02] Cardin Campbell: Yeah. That's where the value is. Like when we see all these companies buying catalog, you know, they're buying the royalties, right? Whether the publishing side or the masters, right? Like that's where the money is, that's where the value is, that's the asset, right? sure you can replicate that thing in the, you know, the Wutang example, and I think Nipsey Hussle mighta did something too at one point in time, selling his album for a thousand bucks.

[00:10:25] But that to me is a, a marketing thing. That's like a part of an album rollout. And if you have the cache like Wutang had and Nipsey had, you can do those things, right? But when you think about doing this at scale. Where every artist can, you know, benefit and, embrace this new model or approach, that's when it starts to break down.

[00:10:45] And that's when you know, it's like, that's not it, that's not the answer.

[00:10:48] Dan Runcie: You mentioned SEC part of it before. And I think we've seen a few different challenges from some companies that have tried to do creative things where fans could either buy a NFT or that could get them some fractional ownership of the music moving forward. And that what that actually looks like.

[00:11:05] There are companies such as SongVest and others that have gone through the securitization process. How do you view that aspect and how do you feel like that aspect of the ownership or what you may see on royalty exchange or one of those types of platforms. 

[00:11:20] Cardin Campbell: So, I think of it, in two ways. So I love it because fractionalizing, the actual asset is a beautiful thing, right? the SEC though, I think, I could be wrong, but I think from what I've been hearing and reading, the SEC thinks of it as a security. The minute it's fractionalized and then you have to go through the whole regulatory process and it just kills the flexibility you can have, it kills the scalability you can have with it If it's on the blockchain and it doesn't have to go to this regulatory, you can like BS. So that's one side, on the other side, you know, we now have a different audience that we're like selling these things too, because, the casual fan is not the audience as much as we think it is.

[00:12:04] Like there's a Venn diagram that exists, right? That says, yep, we have some fans that are investors, but truly who we're targeting our, we're talking about investors of music, people who value catalog and wants to own it. And yeah, that's just a different beast.

[00:12:18] And that's why we haven't seen it like really take off. Like we would think, in my opinion, because we haven't like really targeted the fans just yet. And find something that they would value just as much as the consumption of the music,

[00:12:32] Dan Runcie: So two questions for you on that. Let's start with the actual fans themselves and some of the misreading that I think people had on whether or not the average fan would wanna invest in or own a piece of a stake in the fan, the artist's music. Why do you think that there was an overstate or an over assumption of how much the fan would be interested in there?

[00:12:56] Cuz that was a pretty popular point for sometime

[00:12:59] Cardin Campbell: right. 

[00:13:00] I don't know. I think, you know, it sounds cool. It sounds like, oh wow. Like if you know, we have billions of people in the world that love music. I think the last time I checked, I think six plus billion people listen to music every day. So when you think about like the total accessible market, you're like, oh shit, that's a huge market.

[00:13:18] Cardin Campbell: And if we can fractionize this one asset and sell it to a bunch of people, And then they can sell it to amongst themselves. Your head explodes right at the the potential scale of this thing. but with the regulatory, you know, stuff and then the fact that fans aren't really investors, it's kind of like "womp womp", right?

[00:13:36] It's like that's when you realize it's like not as sexy as it sounds, in theory, on paper.

[00:13:41] Yeah, the analogy that I've always used with it is, I think if you look at the popularity of something like, Apple and the iPhone and all their products. So many people have the Apple phones themselves, but that doesn't mean that all those people necessarily have Apple stock in that way. There's a person that's gonna be the retail investor in Apple stock than the person that is still going to buy a MacBook, a iPhone, an iPad, and everything else that they have, AirPods, you name I think there was an overestimation there. And then I think additionally just with the psychology of how a fan thinks it interacts with music. I think sometimes this is part of the challenge with confusing things with sports because I think that people looked at the popularity of fantasy football and just gambling and how gambling has exploded.

[00:14:28] The monetization in sports in general, and I know that several music executives have asked me like, what could this look like? And I know that there's startups that have tried to do more of the fantasy sports for music, but. It's a different fan base and it's a different type of experience and product. And what a lot of these fans are into, at least from if they wanna have something beyond just the $9.99 per month that they pay for Spotify, they don't wanna collect a vinyl, they wanna have some piece of merch, they wanna go to a concert.

[00:14:58] They want things that don't necessarily always lead to actual like cash value that they could trade in, in the long term, but they want something that means something to them.

[00:15:09] Yeah, they want something that shows how much of a fan they are of that particular band or artist. And yeah, like, you know, in a nutshell, fans aren't investors, and investors and fans aren't gamers. Like, in the fantasy football example, like three different customer base right there, three different audience, three different personas. T here's a Venn diagram, like I said, but by and large, they're three different people.

[00:15:31] Dan Runcie: Definitely. And I think one of the other things too that you touched on earlier was just where web two and where web three meet each other because I think that a lot of the early web three excitement was around. People pointing out some of the challenges that exist for the digital streaming providers and the payouts that they give to artists, and seeing Web three as a solution to that to put more inherent value on music.

[00:15:54] Cardin Campbell: And I think a lot of those things sound good. But I do think that the more actual reality, as you've said both here and even in past conversations you've had is where the two of these meet each other. And from your perspective, what do you think the best approach is, or some of the best things you've seen look like where you do see Web two and Web three meet each other in music to actually provide value for fans?

[00:16:18] Right. So I guess let's define what Web three means by starting with Web one, right? So, the definition that I've used, you know, with people is web, one is read, web two is read, write, web three is read, write and own, right? And what I encourage people to do is not think of them as three separate spaces.

[00:16:40] They're actually a stack, a capability stack, let's call it, right? That, you know, you had one capability in web one. We can read things like a magazine, which is why it's called a webpage, cuz it's like a page of a magazine we read, right? As you know, the error we're in now where you can post things on social and leave comments and write all kinds of things on the web.

[00:17:02] and web three is read, write, own. I think it's just another capability that we now have, and I think stacking it in that way is where the value is. You still want to give people the experience and the, you know, the UX of web two, but the invisible, immutable experience that the blockchain also has and provides.

[00:17:24] Cardin Campbell: So I think when you think about web three music, the way we're approaching it is, yeah, let's give them user experience in web two, but let's also write their royalties and their ownership on the blockchain. So it's immutable, it's saved forever. No one, can take it away from them, which solves a problem that exists in the industry today. Because a lot of the industry still on pen and paper, it's not very digitized just yet. So I think Web Three gives us an opportunity to digitize the music industry in ways that we've never been able to do it before beyond just a PDF or whatever, right? It's like, yes, these are real assets. We can put them on the blockchain and keep them there.

[00:17:59] And I think, you know, if we think about it from that perspective, the blockchain and Web three music is more of a B2B play between the creators and the rights holders themselves. And it makes it really scalable to send, exchange and trade these royalties, in a space that is immutable and no one can change it.

[00:18:19] No one can, take it away. Cause we've heard Snoop say, you know, man, the first couple of albums at death row, I wrote, what's the publishing check? I never saw a publishing. I wrote 70% of the Chronic and I wrote, that would never happen in this new era with the way we're approaching web three music, it's like, hey, let's publish your work and write itinto the blockchain. You own it, it's in your wallet. No one can take it away, Right? And if, we can streamline that and make that a standard, I think we would solve a lot of problems. and then once everybody has their stuff in their wallet. Yeah, there can be a space where we, in web two, give them the ability to trade it with each other, sell it amongst each other, sell it to a hypnosis or whomever.

[00:19:04] But it's all immutable. that's my thoughts.

[00:19:07] Dan Runcie: And then with that, where are you right now at Trac with making that a reality for artists?

[00:19:13] Cardin Campbell: So, it's a reality already for us. Like we built the tech, right? It's now about getting the artists that have valuable assets to use it in a way that's meaningful, right? And the challenge is at what point do you make that right to the block chain? Is it in the studio at the creation process?

[00:19:34] I don't think so. Is it at the point of distribution, which is why we launched distribution, right? Because I believe that's where the cutoff is from the creative process to the business of music. So we're betting on that being the right space and right place for it. So yeah, we built the Tech Stack, we built the product.

[00:19:51] We're now going after the artist that can, you know, evangelize the solutions and, make it meaningful, basical.

[00:19:57] Dan Runcie: And then are there any artists that you can share or any examples from, oh yeah, this is an artist that's doing what we're envision 

[00:20:03] Cardin Campbell: Yeah, we have some, you know, up and coming artists that's like really, really growing. Like one artist on our platform, his name is MRG, he is like killing it. He started with us from the very beginning with barely no, you know, monthly Spotify listeners to now he has over 400 thousands. And we're, you know, we're in talks with, you know, major label artists that, that are no longer on major label deals that we want to use the platform and, you know, like, make this thing a reality. So it's really about like putting it together. Bringing it together, in a meaningful way. It would be nice if we can like, make this thing scale to all distributors, Right? 

[00:20:40] But the problem is, you know, it's also attached to payments, right? So we have to like really showcase this and make it, you know, big first. I think before we can like, yeah, like scale it to everybody else, but ultimately we would love to do that and be the central solution for it all.

[00:20:58] Dan Runcie: Yeah, I feel like with these things, especially in a space like distribution, one or two success stories with those normally help get the eyeballs and they see, oh, okay, this person did it. No different than any the headlines we see, you see what, whether it's the Chainsmokers or you see what BL or some of these other artists have done, and then that generates the attention there.

[00:21:17] Cardin Campbell: for sure. For sure.

[00:21:18] Dan Runcie: Yeah. And then thinking about that specifically, I know something else that you've touched on with this is just the idea of how artists can use windowing, specifically astatic, to be able to use both web two and web three, and being able to meet and serve their audience where they're at. How do you see that factoring in.

[00:21:37] Cardin Campbell: Yeah, so the reason why we thought of like doing it this way is, another problem to solve in the industry besides, you know, getting assets written to the blockchain so that they're immutable and people own their stuff and no one can take it from them. That's one thing.

[00:21:51] Another problem in the industry is that artists typically don't know who their fans are. they just don't, They're consumed so much by all the DSPs and even social platforms, but they don't really know who their fans are. and, and we've seen, you know, platforms like community and, you know, come, come up and, try to give, you know, artists, that ownership of their fan base.

[00:22:12] But so I think the way we're approaching it is if we can give an artist the opportunity to, give away an NFT to their fan base, like it's an early listen to an album or a single, so long as they pre-shave the song on Spotify and that pre save will unlock the NFT and give them access to listen to it early.

[00:22:33] That then gives us an opportunity to share that fan to the artist and build a community for them. And what I also do another benefit. It trains the Spotify algorithm to say, oh, we have a bunch of pre-safe, that means this song must be good, or this album must be good. It automatically gets added to the algorithm, the algorithmic playlist on Spotify.

[00:22:54] So it's like this nice, you know, recursive flywheel effect if we can, you know, apply that using NFTs. Right. you know, and you technically can do it without NFTs, but we feel like the NFT can then now have another lifebeyond that, so if the artist is doing a show somewhere and that person who did the precinct just show happened to be there and bought a ticket in that entity could be a backstage pass or something.

[00:23:18] So it just unlocks the opportunity, multiple different opportunities. the way we think about it, way we're gonna approach it. But yeah, windowing, is I think a necessary thing. we've seen the platforms try it without success. I think the success can be realized at the aggregator level because we're not dependent on any of them.

[00:23:37] Right? And the artists can, you know, own the fan and give them an experience that none of the individual DSPs can, you know? So that's kinda how we're thinking about, and.

[00:23:48] Dan Runcie: Speaking of windowing, you may have just saw the news that Snoop Dogg is re-releasing Death Row Records, but he's giving TikTok a one week exclusivity through their sound on service before putting it on streaming. And that was interesting because at least to my knowledge, I had yet to see an artist or at least you know, a former major label artist do anything like that.

[00:24:08] So 

[00:24:09] Cardin Campbell: Yeah, we've seen, you know, the Carters do it right with title, but I don't think it's been successful. Just, windowing at the platform level that is. but yeah, I've I haven't heard that, but that's interesting to see him do it.

[00:24:20] Dan Runcie: So with this, you're saying that, of course, this isn't at the platform level, but they're saying whatever digital student provider that you used, you can pre-shave this song. You get exclusive access to listen to it on the provider of your choice, whichever one that you're already subscribed to.

[00:24:35] Cardin Campbell: We're gonna give them a space to listen to it. At the artist level on Trac, on our platform. Like we spin up a page for them to listen outside of the platforms early. That's what the NFT gives you. It's like a token into that listening experience. And then once the release date hits, you get that notification from your stream platform of choice that, Hey, the release is here and you can go listen, you know, as much as you want.

[00:24:59] Dan Runcie: Got it. And as you all were thinking through it, even just, channeling back to the earlier part of this conversation when you were thinking through, okay, a lot of the NFT things didn't exactly work out in the same way. There seems to be some type of consumer disconnect in terms of what they may have valued and what they didn't.

[00:25:15] What was the value add for this one, this idea that was like, "yeah, you know what? I think a consumer would be interested in this particular type of NFT that we'd be offering here.

[00:25:25] Cardin Campbell: Yeah, the benefit is you know, for both the artists and the fan for the family, get to listen to the song or the album early and for the artist, they get that pre say, which trains the algorithm to, you know, add it to playlists in the future. so that's the benefit for both personas in this case.

[00:25:43] Dan Runcie: Got it. That makes sense. And then for you all specifically, I know I mentioned sound on earlier, there's a number of music distribution services out there, and you talked to different artists and I think a lot of them can sometimes feel like they can be a bit commoditized in terms of the roles that they have.

[00:25:59] Cardin Campbell: But how do you feel like Trac stands out in that regard? And what are some of the things you've done to help Trac stand out so it isn't seen as just another.

[00:26:07] Another. Yeah. So when we thought about the space music tech, we thought web three first, but we're like, we want to be in a position to help artists maximize their earning potential, so monetizationwas the central thing for us. And with that in mind, we thought another problem in the industry is, you know, the, payments and speed of payments.

[00:26:30] So when we launched the platform, we lost distribution. We said, why wait two, three months to get your money? We're gonna pay you out weekly. We saw it went viral for us. It was like, holy shit. Who would've thought that this would happen. But you know, when you think about entrepreneurship, like I said, when you're solving a problem, you know, it tends to go viral.

[00:26:49] So that's our differentiator. we want to be known as the platform that gets you your money fast. And with distribution, we unlock a bunch of other value around like, to where it feels like. we don't wanna be known as just a distributor, necessarily. So even though that's where we started, but yeah, we get you your money fast and we unlock value at the point of distribution is what we say.

[00:27:13] So the minute you, you know, release your music, we also take your cover art and put it on merch. We get you syncs, like it just unlocks value around without you having to do anything else. It's literally one action. Value creation

[00:27:27] is our value prop.

[00:27:29] Dan Runcie: and this is the value prop you're pushing to artists, artist managers specifically. He's definitely the target that you're trying to reach there. And how would you say that's been on the customer acquisition side? What does that look like for you and what are the most effective ways that Trac

 is used to be able to get artists and their managers on board?

[00:27:47] Cardin Campbell: So product-led growth is interesting, right? Because it's like it scales and you don't need a bunch of people to acquire people, just do some digital ads. People come the products, you know, converts them. Oh, happy day. While that's great. You don't typically, you know, at a high clip that is, find your target audience and you definitely have to then shift to more of a sales led approach to acquire that target audience. So we are building out, you know, a team of Biz dev folks there are as to go after our target audience with, you know, the value propositions we just talked about earlier to bring on, you know, folks we feel like is our core managers and artists at a certain caliber.

[00:28:32] Dan Runcie: Okay. And what is that caliber? How would you define that?

[00:28:35] Cardin Campbell: We define it as an artist with 250,000 monthly Spotify listeners. That's our core.

[00:28:40] Dan Runcie: Okay, nice. And then with that, is it also, I guess a vision in the artist's mind of, okay, if I'm at 250K now this is where I wanna get to, or this is where I can get to, like with Trac’s help.

[00:28:54] Cardin Campbell: Yeah. that's how we want to, you know, position the brand. It's like, Hey, when you're at this point, we want to get you to that next level, that next level being success for us. Well, firstly, I guess I gotta define what success means for us. Success means, you know, you as an artist can make a living doing your art, and whatever the national average is in terms of salary per year, we want every artist on Trac at that level to get to that level of freedom and beyond.

[00:29:25] yeah, we're building for that success story. and then some that's like the bare minimum for us. But yeah, we hope to create, you know, the next superstar. Not create, but we hope to help support the next superstar by giving them the tools to make the business side and, you know, management side of their catalog super easy.

[00:29:43] Dan Runcie: Yeah, and one of the benefits that I think I often see with distribution services that stand out is that there's so much discussion right now about independence, ownership, and artists wanting to have more rights that they can stay the course, and they can do that with the service that can grow with them.

[00:29:57] And I do think that after a while, The power laws do tend to take over to some extent where, of course I understand the goal is to make sure that everyone can reach at least some minimum viable level. But inevitably there will be a handful of stars that do end up having the outsize returns, hopefully, on a lot of these platforms.

[00:30:17] But then it also becomes the flip side of that challenge, which is keeping those people happy because they start getting offers from elsewhere about other things. How has that piece fit?

[00:30:27] Cardin Campbell: Yeah. So on one side, you know, people say, don't worry about it. Right? Like, there's nothing wrong with helping an artist, grow and then graduate, let's say, right? I don't want to think of that as like the standard or the norm. because I think, yeah, like, that feels like failure to me, right?

[00:30:49] Like if you support an artist and they get to a certain level and they go take a big check that feels like we didn't do our job well, of educating them on. why that may not be the best move. Right. like getting a big check doesn't really mean it's a success, right. So yeah.

[00:31:07] We're, we're, we're trying to find the right medium. is really me, like trying to find acceptance in, saying, yeah, you know what, it's okay if they move on to a label or, or, or somewhere else and take a big check. Yeah, I don't wanna accept that right now.

[00:31:20] I feel like we need to get them to a certain level and, and make sure that they are educated enough to stay there, you know, and that, that's not only education, but maybe helping them build a team that can support them, you know, as much as they need, you know, as they grow.

[00:31:35] Because that's really where I think the drop off is, it's like they feel like, oh, the label will do everything for me, but they don't realize your team outside the label is just as important, if not more important than the label themselves. You know? Cause we've seen a time and time again where you're forgotten, you know, even though you're a signed artist, like Frank Ocean is a perfect example, Right? So yeah, I think the market share is also shifting. So much so that, the role of the label will eventually change. That's my prediction and we're betting that we can establish a relationship with the labels that is different from the one that exists today.

[00:32:13] At least that's what I'm imagining will happen.

[00:32:15] Dan Runcie: Yeah, this is an interesting topic because I feel that on one hand, there is something to be said for, as you mentioned it yourself, artists moving on from one thing to the other. People are always switching things or sometimes people are trying things differently. They may go to something else like we've seen that a few with how artists may do deals with empire or label like that they do on album and then they choose to do something else on their own.

[00:32:39] And it's interesting because I do think that on a lot of the music distribution services, you do technically have the ability to earn as much as you want and continue to maintain ownership and move forward with all the things which is great. The other side, some of the checks that artists do get, and I'm not even saying I advocate for this, some of those checks, it's different when there's $50 million in front of you and that's what the label's giving you. It changes the conversation. 

[00:33:07] Cardin Campbell: sure, for sure. Yeah, yeah, yeah, for sure. being, you know, a web three company like, and that that's possible in web three. We're hoping to do some things in defi that can challenge that, like, challenge that like greatly, you So yeah, like can't really talk about too much because it's not baked yet.

[00:33:24] But yeah, like we're planning to, you know, combat that somehow, you Um, yeah, I, cause I don't feel like graduating them to a, you know, a state or a place where the problem exists is, is the right thing, even though the check is, you know, is lovely, right? It's like, is, is it really lovely?

[00:33:42] You know? Yeah. I don't 

[00:33:44] Dan Runcie: And I guess with this, and of course I think we're talking qualitatively, but on a quantitative side, how does this impact churn or any of the more specific benchmarks that you may be evaluating things.

[00:33:56] Cardin Campbell: we, yeah, we, we we're not there in our maturity yet to really. Factor that Um, but it's an interesting question. Interesting mental model to, to, to play with for yeah, I mean it's, it's, it could be a good acquisition strategy to say, Hey, look, Trac got all these artists signed to all these major label labels.

[00:34:17] So we have like a big funnel of people coming in, but then a smaller funnel of people going out like, yeah, I don't know if that's, that's not the definition of success. . So I, I try not to like, embrace it too much, you know? Yeah. I, I, I, I really hope to solve the problems in the, in the music in, in, in, in every way.

[00:34:40] It's a, it's a tough, tall order, but I'm an entrepreneur. I can't help it.

[00:34:46] Dan Runcie: What excites you most about this space right now? I know we've talked about a number of things, but what excites you most? Right.

[00:34:54] Cardin Campbell: what excites me most is the digitization of the, the business of Um, the immutability of the, the, the assets and making payments,um, work at scale, right? Like, I think waiting two, three months is BS to me. Like it doesn't need to um, that long. I think with the blockchain and with money now being uh, on the.

[00:35:20] And trust being like almost solved on the internet with, with web three. I think there's so many opportunities there. So that's where my heart is and that's where we're trying to build, but it's just tough with regulations and tough with user adoption and, you know, all these complicated technologies and whatnot.

[00:35:39] So that's why we, you know, we think of the capability stack as I, as I talked about it. It's, it's, it's just another layer. We shouldn't be inundating. artists and fans and people with wallets and all these weird and wonderful things, like it should just be seamless. So yeah, that's where my heart is. That's what keeps me up at night.

[00:35:57] That's what, you know, brings me joy in thinking um, yeah, I, I, I can't wait for five years to roll off and we're like, oh shit. Cardin was right. Like, look at, look at what we built. You know, like, yeah. That's, that's what excites me.

[00:36:10] Dan Runcie: you talked about wallets and maybe some of the confusion that fans may have with things, and from that I can pull out some of the friction that has existed with. Web three experiences more broadly. 

[00:36:22] Can you speak about that piece of it? Cuz we haven't touched on that, but I do feel like that's been part of the barrier for some of the web three adoption as well in that the people that are web three enthusiasts, that was no barrier for them.

[00:36:33] They were already native, but some of that Venn diagram of who is a hardcore fan versus who is a web three enthusiast. Those things didn't necessarily always interact in the same way. If they did, then great, that's your demo. But I think that at least historically up until this point, a lot of the companies and a lot of the things they've been launching attracted more of the enthusiasts than they did some of the super fans.

[00:36:57] And I think the friction of the wallets and meta masks and some of those things that you needed to be able to fully tap in. Played a factor.

[00:37:07] Cardin Campbell: big, it's a big barrier of entry for the masses. Um, and I think, you know, over time the more investments that go into the infrastructure side of web three to make it more seamless. and, and like I said, a part of the, the value stack the, capability we're seamlessly, I think that's where the beauty is, which is why we built all of our web three stuff on Um, not only were they an investor, we, we believe in how they wanna approach it because it's the same, you know? I, I, I think about it in, in the same way. Yeah. Like, no one wants to have to go get this other tool just to interact with the internet, right? We've already invented the browser.

[00:37:47] That's it, right? Like, that should be the standard thing and it should just be Um, So yeah, that's how, that's how we think about it.

[00:37:54] Dan Runcie: It's interesting because I agree with you. I think it should be seamless. I've also heard this ongoing debate from a few other folks within the Web three community about, they feel like there's pushback on this notion of things that are in web three need to seem like they're less crypto or seem like they're less web three.

[00:38:11] And then that's how you get people bought in because of some of that stigma, and I don't think that the stigma necessarily was as much about the actual function as much as it was people, you know, kind of pointing and laughing at a hype. It's almost brings me back to the.com bubble in a lot of ways because yeah, people, some people may have laughed at the internet at the time and there were laughable things that people were trying to do like, you know, delivering ice cream cones to people and pets.com and stuff like that. But what we are now in is this world where everything relies on it. And I think that is the most bullish perspective on web three more broadly. And I do think that still exists and will exist. I think that we just had to get past a lot of that.

[00:38:56] And if anything, this post pandemic wave of things coming back to reality and the 97% drop in NFT volume that you'd seen from that Bloomberg report. That's all a sign that, okay, there's no more million dollar pet rocks. That was the wave, and we are now unto hopefully bringing the real businesses to come to fruition.

[00:39:18] Cardin Campbell: Yeah, we, gotta solve problems. that's the bottom line. We gotta solve problems. It's technology at the end of the day that we can use to do that, solve a problem,and you know, just as we don't think of companies as not being a web company like, you know, I think that's just what we gotta think of it as.

[00:39:38] Like, you're a web company, whether it's web one, two, or three, doesn't matter, like you're just, you are a company that embraces the internet, whether that's web three or web two. Like, I think that the technicals shouldn't matter. Like no one, you know, says, oh, you know, I went to amazon.com and ordered something and, you know, it was written to a no SQL DB and like no one cares. Like what's underneath is like irrelevant, you know? So that's how seamless it has to be, to really like break through, solve problems and give people immutability and, and trust and native currencies on the internet to make it like truly, truly seamless. We'll get there, you know, we just need to get through, like you said, this Pet Rocks movement and soft start solving some problems, which is what we're doing and what we're working on. it's a marathon, not a race, you know, not a sprint. So, yeah.

[00:40:29] Dan Runcie: Agree. I think we'll get there too. And would you think maybe more than the short term, let's look at in the next year from now, if things with what you're building with Trac play out the way that you think it will. If you look at the business model you have, where on the distribution side you do take a cut of any of the revenue that comes in from the songs that you distribute.

[00:40:46] And then I assume on the web three side of things, you would also take a small percentage of any of the transactions that come through on that side. Where do you project that your revenue mix will most likely come from when you compare the web two side of things, when you compare the web three side of things.

[00:41:05] Cardin Campbell: Yeah. Music has always been a transactional business, right? it's always been , you know, we add value here and, you know, we take a percentage of whatever revenue is generated from that relationship, you know, experience. So I think that's gonna always be the case. Even like when you look at companies like Shopify, on the surface, you might think, oh, there, there's a subscription, you know, business model.

[00:41:31] Yes it is, but 70% of their revenue is transaction, less than 30% actually is subscription. So I think that's gonna be the typical mix with any company in our space. Whether there's a subscription at, you know, attached to, you know, an artist's plan or whatever. and if we take a percentage, we just approach it differently than most where we take a percentage where we add-value.

[00:41:54] So, you know, back to what I was saying earlier, when we launched with Speedy payouts and get your money, you know, week after the stream happened versus two months, that's when we take a percentage versus some companies say, we're gonna take 20% just to deliver your song to Spotify. That's bullshit to me.

[00:42:09] You know? So, yeah, it's gonna be a mix of, you know, different, you know, streams of revenue, some subscription, because you need a pay wall just to make sure you're, dealing with serious people. That's the subscription side, but I think the majority of it's gonna be from the revenues generated from that relationship being established, and if we can add, you know, a little bit more service to our mix, to help an artist even grow even more, that's another example of adding value to why aren't you taking a percentage?

[00:42:38] But yeah, I think the transactional revenue's gonna be the lion share of where the revenue comes from.

[00:42:42] That's what I was 

[00:42:43] Dan Runcie: gonna ask about next because I know that if we take that Shopify example further, they have their white club or their white glove enterprise offering for the clients that they hope that they can keep, that don't go create their own website or create their own stack, right? And tie back to what we said earlier, that would be.

[00:43:00] I assume how you all would try to make sure you keep those superstar potential artists on Trac opposed to doing their thing.

[00:43:08] Yeah. Yeah. we we're building out a concierge team as we speak. we just hired a sales guide that, that can help those clients, those artists and artists teams, you know, achieve goals that they might have and really have a more intimate relationship with them. So one might say, oh, that's a label.

[00:43:25] Like we think of it like any other business that, you know, sells a software license that gives you an account manager. that's how we think of it. So it's like Salesforce, you pay them a million dollars for software, guess what? They're gonna make sure you have a success manager to make sure that you achieve your goals, that you can renew every year, every year.

[00:43:45] So that's kind of how we're approaching the business for that top tier in hopes that they don't go graduate as they say to some label. But if money is the carrot that pulls them away, like I said, we're hoping to solve some of that problem, with some defi Web three shit too, you know?

[00:44:00] And I think if that's what things come to, then those are good problems to have, as I always say.

[00:44:05] Yeah, absolutely. Good problems to have. Yeah. Definitely. Well Cardin, this is great. Appreciate the breakdown on everything related to Trac where things are moving forward, and just good to hear where you see things moving with the industry.

[00:44:17] I think a lot of companies are trying to see where things sit and what you're building as a reminder that you don't have to pick between one, find a way to integrate it into your business model and potentially do both of them. So before we let you go, what's the best way for whether it's an artist, manager, or for anyone else that's listening that's in the space to follow along with what Trac is doing?

[00:44:38] Cardin Campbell: They can go to Trac.co or go to our social, Trac.co I think everywhere. and follow along, you know, all the things we're talking about. You know, we're, gonna be doing a lot more on the content side as well to just to educate the artist and, you know, talk about the problems that exist and how we are the wedge or the solution for those problems.

[00:44:55] So yeah, I think our website and our socials. Would be a great place to start. and then yeah, we can take it from there.

[00:45:02] Dan Runcie: Good stuff. Cardin, thanks again, and it's always great to have a fellow Jamaican on too, so appreciate you

[00:45:13] Dan Runcie Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat. Post it in your Slack groups. Wherever you and your people talk, spread the word. That's how Trapital continues to grow and continues to reach the right people. And while you're at it, if you use Apple Podcast, go ahead.

[00:45:34] 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. 

The Techstars Music accelerator just announced its 7th cohort. As the program’s Managing Director Bob Moczydlowsky told me on this episode, they don’t invest in music companies. They invest in companies solving problems for the global music business. 

There are 10 companies that involve music in some way, including — education, web3, and even wedding celebrations. 

Each startup gets a $120,000 check from Techstars and hands-on development for 90 days. Past portfolio companies include Community, Endel, and Splash among many others. According to Bob, the program has returned a 3X multiple on invested capital since starting in 2017. Companies that went through the accelerator have gone on to raise an additional $250 million in capital after the accelerator.

Here’s what we hit on:

[0:00] How the accelerator has evolved 

[7:56] Investment areas that have underperformed 

[9:02] Is there a ceiling on music innovation? 

[12:38] Minor-league scouting, major-league swinging

[17:07] Repeating motif of investments

[18:11] 2023 accelerator cohort is “weirdest class ever”

[28:49] The case for remote teams

[31:44] The surge in capital from outside music industry

[37:46] Music is less sensitive to macroeconomic conditions

[40:39] Return on music accelerator vs. other Techstars programs 

[43:32] Techstars LP’s becoming more experimental 

[48:01] Hip-hop business mentors wanted

Listen: Apple Podcasts | Spotify | SoundCloud | Stitcher | Overcast | Amazon | Google Podcasts | Pocket Casts | RSS

Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Bob Moczydlowsky, @bobmoz

This episode is brought to you by Amuse. Learn more about how its new program Music Insights can help your artist career: https://www.amuse.io/en/insights

Enjoy this podcast? Rate and review the podcast here! ratethispodcast.com/trapital

Trapital is home for the business of music, media and culture. Learn more by reading Trapital’s free memo.

TRANSCRIPT

[00:00:00] Bob Moczydlowsky: We have to invest in something that isn't fashionable but looks like it's before it's time, might even look a little crazy. And that's the where we can add a ton of value. And then it's our job to help to look back three years later and go, oh yeah, there it is but of course we saw that all along.

[00:00:13] Like, same thing with generative media. We've been making generative media in investments since the very first year of the program and about half of them are really interesting, valuable companies now. And it took a long time for the red, the market to sort of catch up to that. and then, you know, ironically, my problem is as a small check investor just at the moment where I know that space really well and I can be really helpful and we have a good portfolio there and a community of people to connect new founders too. Now that the category is hot, we can’t afford it anymore.

[00:01:07] Dan Runcie's Guest Intro: Today's guest is the one and only Bob Moczydlowsky, but if you're in the space in the industry, you probably know him as Bob Moz. He is the managing director of the Techstars Music Accelerator, and he recently announced the seventh cohort that they have for the accelerator, which includes a few companies here, let me just read the names here.

[00:01:26] Baton Media, Beeper, Confetti, 5ive Mics, Haven, Highly Liquid, Homeroom, Obey Me, Royalty, and Seed. So Bob and I talked about what went into these companies, what are some common themes that went into this cohort and how this cohort has changed over time. This is now the seventh year that Bob has been running this accelerator.

[00:01:48] So he's gone through the bull market of startup investing. The growth of streaming and how each of those things have impacted. So what are some of the trends that have been the most lucrative for him? How he's evaluated on his returns, how his LP mix has been shaped and shifted over time, and some general trends and some common misconceptions that people hear and think about when it comes to investing in music companies and companies that are trying to solve problems in music.

[00:02:16] Great episode, especially for the founders, investors and builders out there. Hope you.

[00:02:22] Dan Runcie:

[00:02:22] All right. Today we have Bob Moz, who is the managing director for Techstars Music Accelerator. Bob, first time on the podcast.

[00:02:31] Bob Moczydlowsky: Thank you very much for having me. I am a, longtime listener. I'm kind of thrilled to be a guest. It's very cool.

[00:02:37] Dan Runcie: Yeah, and I think it's great to talk to you right now because you have the new cohort for Techstars Music Accelerator now, but you've actually been doing this now since 2017, and I think that. It's been interesting to just to see how much has changed in your role, but more broadly with music. You had this bull run, you had streamings rapid growth, and I'm sure with that, there's been so many different evolutions of how this cohort and how the companies have shaped over time.

[00:03:06] What's been your read on that? How has the accelerator evolved over time?

[00:03:11] Bob Moczydlowsky: Oh man, that is a gigantic question right out of the gate. so when we started the program in 2017, part of the thesis was. and it is still sort of the dirty secret of Techstars music. Like, we're not really here to invest in music companies or music tech startups. We're here to invest in startups that solve problems for the global music business.

[00:03:31] So we wanted to be five to seven years ahead of, where new revenue streams would be. New audience interactions would be. we wanted to be really, really out there on ways kids could express themselves and, and or make new music or how rights holders would monetize that music and I would say that heading into our seventh class, like any, you know, venture fund, we made a bunch of mistakes.

[00:03:54] we are happy to have some really valuable companies in the portfolio that are changing the way the music business works, like Splash and Endel, and community. And so the winds have come from the places we didn't expect, with maybe the exception of generative media. We can talk about that a a little more.

[00:04:11] Bob Moczydlowsky: We were into that from the beginning and we've, remained into it though I can no longer afford any of those deals because that's kind of a popular category. So I think I'm kind of out of those deals now. But in general, like the wins came from places we didn't expect and the defeats came in places we thought were gonna be great spots, right?

[00:04:28] So what we have learned is that you really have to focus on the quality of the team. You really have to focus on the opportunity and how that company can capture value in the market. And then you have to be patient, and just, and remember that one email, you know, with a yes on it. One phone call with a yes changes the fortunes of companies.

[00:04:48] Pre-seed, seed stage, you know, one feature, one good, dev sprint, where you actually really, you know, solve a problem for your users, changes the trajectory of the whole company. So, I would say that we have, put ourselves in a position now where we ha like our thesis is defensible, our portfolio value is real, and we have an incredible list of people who have come through the program and touched it in some way that.

[00:05:12] make a lot of really important decisions in the music business. So mostly it's just, I feel old when you say that, and I just feel super grateful that we get to do.

[00:05:20] Dan Runcie: Well, you said a few things there that I wanna dive into about the wins and the losses being opposite from what you may have expected on either side, and I think that's a thing I've heard from other investors and VCs, but specifically with this accelerator, are there certain trends that stuck out for things that you thought would've been a big bet but didn't end up turning out?

[00:05:43] Bob Moczydlowsky: Well, know, we were really excited about adaptive music and it's changing and matching your biometrics and pairing that with fitness that hasn't really come to fruition yet. . I'm optimistic it still might, but it hasn't so far. we were super optimistic that the using DSP streams to make mixes would allow, DJs to create and express themselves and create new content and repurpose music, and that wouldn't be considered a derivative work.

[00:06:08] And you could give full credit stream back to the rights owner, and that would be a way to deepen engagement and maybe add a couple of bucks to the monthly subscription fee of a larger DSP. That hasn't happened really, you know what I mean? or come to fruition. it has taken longer, than we've expected for someone to make a hit song using generative media and AI, though, you know, it sort of perpetually feels like it's right around the corner.

[00:06:33] but I think in that category, you know, I think we were just wrong people were gonna use generative media and AI to make songs. and instead they were going to use it to become artists and play games. and so we've learned a lot there where, what the thing we actually learned, and I say "we", but what I really mean is the splash team.

[00:06:50] Bob Moczydlowsky: And Steven and Angus, I'm a passenger in that, right? So I say "we" a lot, but those guys do all the work. you know, what they realized was that kids don't wanna make songs. Like no kid is going out there looking for an AI to make a song. they're looking for an AI to help them do

[00:07:05] several of the things that it require that are required to be an artist and grow a following and have people pay attention to you and express yourself. And they went and built a whole game around, okay, well then here's all the parts you need to DJ set. Here's the ability to perform in front of people.

[00:07:20] Here's a framework under which those performances are judged. And that became a wildly popular game. And so it turns out that like in the gaming world, you might use an AI to control both sides of the copyright, to give the player the freedom to do whatever they want with the music. but you also need a venue and you need an avatar, and you need a crowd.

[00:07:38] And there's a bunch of pieces where it's the song or the music is just one part of that. so that's been a massive, massive learning. and then the last one I would say, is that we continue to make investments around this and we will continue to do it, but the pace at. royalty flow and auto software automation for routing payments from consumption of music.

[00:07:56] The rate at which that has changed and adapted to be automated and look, I'm not naive. I know there's a bunch of competing interests and reasons, you know a bunch of players who benefit from it being slow and manual. but I think that's an inevitable area that has to get automated over time, and it hasn't happened as fast as I would expect it to.

[00:08:14] we we're kind of bumping up against the ceiling of growth for revenue from recorded music until we start automating those payouts and have better database ownership and better understanding of who owns what on a track. And the idea of like, you know, one publisher opting out or, securing their payment information to sort of give them leverage.

[00:08:33] Bob Moczydlowsky: Like, yes, that optimizes price for any one license or copyright, but it doesn't, grow the, it doesn't swell the tide. And so I think we're hitting this point where if we really want astronomical growth, we're gonna have to start automating that process too.

[00:08:47] Dan Runcie: Yeah.

[00:08:48] Bob Moczydlowsky: I remain optimistic. I'll keep trying on that one, but I haven't yet, mined any gold there,

[00:08:52] Dan Runcie: touching on something that I've heard other investors talk about too, where it does feel like there is this ceiling of how much innovation, how much growth can truly happen, and you hear that mostly about music tech specifically, just because some investors feel that. The incumbents just have so much power and control over the wake.

[00:09:12] Things currently are done with the systems that, whether it's tams or astronomical growth can be somewhat limited compared to what you may see in other industries.

[00:09:21] Bob Moczydlowsky: That's right. that's part of why I say we invest in companies solving problems for music and not music companies, is that it is a really complicated process to license music and use that. and so you think about the, act of primary listening or primary consumption, you know, some of the big platform companies use that as a loss leader.

[00:09:37] You know, Spotify's a pure play streamer, but they had diversified into audio and it took them enormous scale to make that those economics work. those are great businesses. It's cool, you know, think of me as a minor league talent scout. I'm not, you know, my checks are small. I go to work to help make those companies valuable.

[00:09:53] That's a level of the game that, I can't play, I don't have the kind of capital to make investments replace current big competing companies to Spotify. I'm better off make investing in companies that have an opportunity because of the way Spotify changes the landscape or the way Amazon changes the landscape.

[00:10:09] Now all of a sudden there's a new opportunity because people's consumption habits are different. That's where I'm gonna invest. I'm not gonna invest in the primary piece. And then the secondary part of that is like a lot of the way music copyright works, and we could talk about this as you dig into web three stuff if you want to.

[00:10:25] but a lot of that stuff is coded in the law and it's coded in the law across multiple territories around the world. You can't just disrupt the way payments work for music. That's not how it works. . Like there are rules and laws that make that stuff be what it is. and so in some cases the, those laws are holding back growth for the rights holders and in some cases they're protecting value for them.

[00:10:45] and startups that pretend that, that's not true, like they're kind of lying to themselves, you know, and they're, there's a couple of those every year. I wish someone would write a really definitive blog post about how to stay out of that. it is what it is. like that's not our domain.

[00:10:59] Dan Runcie: Yeah. I think too, just thinking about, you mentioned something as well, just in terms of you being in the minor league position, that's not your job necessarily to make the swings for the majors, but I also have to imagine too that whether it's you or even some of your LPs, would love to be able to double down and invest some of the prorata that you may have in some of these follow on rounds.

[00:11:20] Bob Moczydlowsky: Oh yeah, don't get me wrong, my job is to swing for the majors, right? but my job is to find a company that could be a billion dollar company where, you know, a couple a hundred grand and the support of the program and mentorship can put it on a path to succeed. Like if a company needs 10 million dollars to start, I just don't have that kind of capital.

[00:11:40] I'm not the right profile of investor for that company. So it's not that I'm not trying to get gigantic companies, right? Like when we wrote the first check in to Endel people thought we were crazy. They were like, what are you doing? How is the personalized soundscape for helping you focus, relax, or go to sleep?

[00:11:55] How is that gonna be a billion dollar company? And now you're in a situation where there's, you know, millions of dollars in annual revenue, hundreds of thousands of subscribers, interesting revenue coming out of the DSPs. Incredible partnerships with artists. No one at this point now in music, would argue that functional music is going to be eight to 10, maybe 12% of total consumption of music.

[00:12:20] And that Endel isn't the premium brand and the most valuable company in that space, that's sort of a foregone conclusion. That wasn't the case when we wrote that check. That's what I mean about sort of minor league, right? It's like, it's not that the companies aren't major league companies, of course they are.

[00:12:37] It's just that we have to invest in something that isn't fashionable but looks like it's before it's time, might even look a little crazy. And that's the where we can add a ton of value. And then it's our job to help to look back three years later and go, oh yeah, there it is but of course we saw that all along.

[00:12:52] Like, same thing with generative media. We've been making generative media in investments since the very first year of the program and about half of them are really interesting, valuable companies now. And it took a long time for the red, the market to sort of catch up to that. and then, you know, ironically, my problem is as a small check investor just at the moment where I know that space really well and I can be really helpful and we have a good portfolio there and a community of people to connect new founders too.

[00:13:19] Now that category is hot and we can't afford those deals anymore.

[00:13:23] Dan Runcie: And I'm sure.

[00:13:24] Bob Moczydlowsky: so that's what I mean, like it's not that we're trying to have small companies, we're trying to have

[00:13:27] Dan Runcie: Right. No, that makes sense. And I would imagine too, Whether it's your investors or others, they would love for you to be able to, oh, could you still get in these deals? Or could you still be able to do the follow on investments in whether it's an end or, or some of the generative companies?

[00:13:42] Bob Moczydlowsky: That's right. so the companies that have come through our program in total have gone out and raised another additional 250 million dollars after taking our initial capital, Right? so the capital we've deployed through the program is now, let me see, 7.4 million dollars after this current class.

[00:13:58] It'll be 7.4 million of, checks all sort of at that 120K, you know, Techstars, accelerator deal. You know, like they're all the same. All of our deployments are Post program now 250 million plus, it's like 254 million, something like that. And change has come into those companies after the program, of which about 16 million of it has come from the member companies.

[00:14:20] So that's Sony Warner's, Peloton, Hyde, Concord Monarch, Quality Control, Right hand, Bill Silva. All of those companies sort of collectively have put another 16 million dollars in post program, into those companies. So they're, active strategic investors and angel investors into those companies. the number I don't have that I should to tell you, is like also the individual, the number, the numbers, right?

[00:14:44] So executives from those companies as angels, or, executives or mentors who are not from the members, but are just independent and come and visit and help in the program. They also write, you know, 25K, 50K, 100K angel checks into companies. That number's a little harder for us to capture. cuz it's sort of personal money and not, corporate money, but, everybody around the program is definitely taking prorata and in, participating in those rounds as the companies grow grow for sure

[00:15:07] Dan Runcie: That makes sense. And I feel like those examples hit at the flip side of that earlier question of, at the time people probably didn't think that those were the areas that may have lined up with the initial thesis on paper, but they ended up being some of the most successful ones you had.

[00:15:23] Bob Moczydlowsky: it is a continuing, like delightful and hilarious, like repeating, you know, motif through the whole program. Right. no one liked Splash when it came in. It was called Pop Gun at the time. No one liked that, right? That's a 70 million dollar company now and the number one music related Roblox game.

[00:15:40] The company shimmer came in and was sort of like stuck mid-C ground, had a huge pivot and became community, right? That was, who could have predicted that? Endel, everybody hated, didn't believe it was real. Hey, these crazy Russian guys. This isn't science back. this doesn't work.

[00:15:55] This is the placebo effect. you , know, that's a 75 million dollar company. even just recently, like last year as recently as last year, having all of this history in the program, we get all the members together to screen new companies coming in and decide who we're gonna invest in.

[00:16:07] last December, the lowest ranked company in that screening was Circle Labs. Run by Anushk Mittal makes sentient NPCs sort of, and chat bot, right? A year ahead of chatGPT a year ahead of, in world, right? In those companies trying to like personalities into video game characters. you know, and during the program he went from sort of like two or 3000 users to 25,000 users.

[00:16:31] Bob Moczydlowsky: By the end of the summer he had 40,000 users. They're making these creators, you know, they're making these characters independent creators are, they're in multiple Discord servers. They're chatting with people all day. They have Twitter accounts, that becomes a competitive round, that light speed leads last fall, no one thought that was a company.

[00:16:48] Everybody thought that was crazy, not gonna be a thing. Now that's a, you know, $20 million plus company just you know, less than a year later, right? So it just is a thing that like can keeps repeating and repeating over time. and the reminder to us as investors and, especially at this pre-seed stage is it's okay if it's wild, right?

[00:17:08] There are gonna be things that are wild that are gonna fail, but only the wild different ones have a chance to actually move into that open space in that green field and be a huge company from seemingly nowhere, right? And that's our job. Our job is to experiment with that stuff and bring the whole music business around, in an ecosystem to participate and argue about it and be wrong together and disagree.

[00:17:29] And, you know, it's sort of my job to provide that safe space for those conversations to.

[00:17:34] Dan Runcie: Right, and I feel like you've talked about this a little bit, and even in past conversations about how the definition of a Techstars Accelerator company, or Techstars Music Company is part of that. It continues to evolve as you've seen different cohorts, but at least for this current cohort right now, you have a few, three companies in here.

[00:17:56] You have a few music companies, even one involved with wedding celebrations as well.

[00:18:01] Bob Moczydlowsky: Yeah, we do. It's the weirdest class ever, in the best way. Like I'm actually really curious. So you've seen it almost before anybody else has. and you know, it'll be public by the time people are hearing this podcast, but it's not public right now. Like, where do you wanna start?

[00:18:15] Like, it's an interesting list. there's probably a couple companies on there you've heard of before and seen, , I'm actually like, I'm happy to talk about any of them and I'm just as fascinated and curious to hear where you wanna start and what you, saw when

[00:18:27] Dan Runcie: Yeah. So we gotta start with Confetti. We gotta start with the wedding planning there and looking at the website, this wasn't a company that was on my radar before, but that's why I love stuff like this. You know, you're able to have unique access to things and it points out, and for me it stuck out.

[00:18:43] There's an experiential aspect. We all know how many people would love to be able to see and attend and experienced weddings and can't normally do so, but they're integrating brands. They're integrating music and culture in different ways and I think that's a unique thing. And yes, of course you could always throw a Zoom link.

[00:19:02] I've attended Zoom weddings before, especially during the pandemic, but I think there's something different here. And that one, let's start there. That one stuck out to me.

[00:19:10] Bob Moczydlowsky: Yeah. It's the most polarizing company, within our sort of internal community coming into the program. Andrew, the CEO knows this, like you've mentioned all the things like people wanna attend remotely. People might watch and buy a ticket to an influencer wedding. As weird as that sounds like it's totally believable thing that could happen.

[00:19:26] but I also think like there are, ways to organize media and everybody's at these events with a phone in their hand the entire time. like, you know, you're dressed up, you're in your suit, you're in your cocktail dress, whatever it. The only thing you need besides yourself and a fancy outfit at a wedding is your phone.

[00:19:42] Bob Moczydlowsky: You're taking pictures, you're making video, you're sharing things. So the concept of can we provide and experience people who are not there, can we generate and organize content with people who are there? Can we do virtual gifting and tipping or challenges and organize some of that stuff, especially as that pertains to the big moments in a wedding, which also, let's be honest, revolve around music in a lot of ways.

[00:20:04] I mean, it's very few weddings you've been to that don't involve music in as a core key ingredient in different places. this is a thing where there's enormous number of these events that happen over time. There's enormous potential in organizing this already existing behavior. and this is a good, it's a good hack as a venture investor if the behavior already exists and the company is gonna capture value by organizing it.

[00:20:27] that's a good opportunity as opposed to like, oh, we have to create some behavior and convince people to do this action. We have to change the user behavior before the company works. Those are companies that just have a much steeper hill to climb. And so this company comes to us with some traction.

[00:20:43] They've done some influencer weddings, they've got kind of a cool philosophy around it. We're gonna run a bunch of experiments and see if we can turn this into a

[00:20:50] Dan Runcie: So what does the business model look like

[00:20:52] Bob Moczydlowsky: for them?

[00:20:52] Come along for the ride, like, if right now it is a share of ticketing for the influencer stuff, right?

[00:20:57] and that's kind of marketing if you think about it. Like how do I get people comfortable with, how do I participate in a wedding remotely? but we actually think the much larger opportunity is just in people moving cash around during the wedding, gifting, buying things for each other, participating or having the account to organize the media.

[00:21:14] So there's several different revenue streams inside of that, and we're gonna experiment with like, what makes people happiest and they'll do sort of at volume. but right now the virtual gifting thing is a real thing. And it's easy

[00:21:24] Bob Moczydlowsky: for a bunch of

[00:21:25] people. Like, you don't have to bring the gift with you.

[00:21:27] you know, you're not just sending, like, who wants to just buy something off an Amazon registry link that's boring. Like, let's instead, you know, put a bunch of money on at the moment and, you know, run up a cool tab for people to go have a good honeymoon with during the reception itself. Totally believable.

[00:21:41] Dan Runcie:

No, I think there's something there, especially even with brand opportunities too. Just think about the number of brands that want exposure. Think about anytime you see a wedding and even just a way to like share that information in a way that's more clear. I know friends get weddings, literally, they'll reshare the Instagram story of every friend that was at the wedding, and it's like, all right, you know, happy for your nuptials and everything, but I'm not gonna sit here and tap through a hundred Instagram stories. Like, no, I'm not gonna do it. But if there's some type of interesting thing that's somewhat in between some, you know, $10,000 videographer, you know, montage that they put together and something that could be done here, I think there's something cool to be able to potentially tap into there.

[00:22:21] So excited for that one. The other one, come meet them.

[00:22:25] Dan Runcie: I know. Yeah. The other one that stuck out to me is Five Mics. So Ace Patterson, "Call Me Ace". He's been a guest on this podcast before. Him and I are friends, and I remember him telling me about this startup that he is playing as a while, and I think that he has, interesting landscape into the industry from both his work in consulting, working in big tech, working at YouTube.

[00:22:49] So he understands how that piece of it works, but then he's an artist himself, so just tapping into the collectibles opportunity, and I feel like so many people have been talking about that hip hop gaming collectible intersection, so I feel like there's something there.

[00:23:03] Bob Moczydlowsky: Yeah, I mean, well, so we should tell people what it is, so anybody listening, the picture is very simple. Imagine a card game like Magic: The Gathering or horror stone that is started around hip hop. And so instead of playing my or versus your Wizard, I'm playing Snoop versus, you know, Chief Keith, I don't know, like I don't know if it requires name and likeness.

[00:23:21] I don't know. Like the whole thing could happen. It could be Snoop Lion versus Murder Was The Case, Snoop, right? There's a bunch of different ways you could think about the organization of the characters. They could even be. Made up characters just in a fantasy hip hop world, if you don't, you know, need name and likeness, right?

[00:23:36] but the concept of those cards as digital collectibles, not physical printed things, you can store them, right? You can tokenize them, you can play them back and forth. if that game is fun and can entertain you, that's a real opportunity in a very cool and interesting way. And so I think, you know, I think Ace and Adam, are really talented guys who needed a shot, they needed shelter to actually like get this idea off the whiteboard and into practical reality.

[00:24:01] Bob Moczydlowsky: And part of the reason our program exists is to take really talented people who need that and need a little capital and need a little shelter to really like, feel like they gave that thing the full effort it deserves. and that's an idea that deserves real effort. Like that's a great concept. And if done correctly, I think we all could believe that could be played by millions of kids around the world.

[00:24:21] No problem.

[00:24:21] Dan Runcie: The other companies that stuck out to me from the list, there was a large focus I felt on community. There were a number of the startups that are either tapping into it, in some way, trying to bring music fans together, bring collaboration with other folks together.

[00:24:32] Bob Moczydlowsky: A hundred percent a theme for this year's process. Yep. Like very intentional. we talked a lot about what's happening around our own behavior, and the way we are all kind of interacting with each other. And it's like, I don't know if I need to have millions of followers.

[00:24:46] Like that's not a community. I need to have, you know, hundreds of people or thousands of people that are really like-minded that really teach me things and move me together. And, and so, the future being a massive niches is a thing we've all been talking about for a very long time.

[00:24:59] And there's a lot of evidence happening right now that these things are starting to become really lucrative, really valuable to people, and are becoming places rather than just online destinations. so we got a couple of companies that, touch this sphere, One called Homeroom, founder named RJ Ruggles.

[00:25:15] the Lazy investor way to describe this company is it's Google Analytics for your online communities. it's the, console you use to monitor Discord, Slack, other community-based environments where your community manager has to report metrics back to the business. Are we getting people out of the community into the transactional purchase funnel?

[00:25:33] Bob Moczydlowsky: Do we have people leaving the community because the commentary is toxic they're getting harassed? How do we monitor and what are the standard metrics by which we operate as community managers, like that's pretty loosely defined these days. and we think we can build a piece of software that defines that for people and then also helps them do better at it.

[00:25:51] and then in that same world, there's a company called Highly Liquid, run by Izzy Howell. If you imagine if you build a new fashion brand, and the buzzword of the day is a fi digital brand, right? Where you have digital and physical products.

[00:26:03] Bob Moczydlowsky: You have physical experiences, online community. So if you took a company like Supreme and we're gonna start at today, not everything would be skate decks and t-shirts. but you'd have collaborations. You would have some products in person and in her mind, Highly Liquid is targeted at women who care about online and tech communities, her first, product drop is actually a pair of panties. It's like a lingerie product. The second product will be in a totally different sort of category. but the idea that there's sort of a, what's the company, mischief.

[00:26:32] She references a lot that does like crazy online campaigns with artists and gets, like, creates trouble online and gets people to follow. If you combine that with sort of an ongoing community that was about female empowerment, about being active online in a, cool community, had a little bit of your favorite R-rated sex comedy jokes and attitude about it, that's a really interesting brand.

[00:26:51] That could exist in lots of different channels. and so we're excited about that and you could see how a company like that would need a company like Homeroom, as part of its core, you know, control center for running the, business. Right. on the other side of that is this company, Seed,the founders come out of a small town in Puerto Rico.

[00:27:07] They're living in Florida now. They've built an online music community slash school for learning about the music business. Entirely in Spanish and targeted exclusively to Spanish speaking markets. So they're not trying to like have multiple languages and everything's in English, like very specifically Spanish language, Spanish language contracts, dynamics and explaining the way the business works from the perspective of someone who sees Bad Bunny or sees Shakira and aspires to be in that world.

[00:27:37] and that company is doing gangbusters business already. and could be, I think the definitive brand for how music business expands in Spanish speaking, territories, right? Again, driven by a combination of school and curriculum, but also community and professional development, and a place where you can go and talk to people and develop your career and make like sort of lifelong contacts.

[00:28:00] Bob Moczydlowsky: As opposed to something like LinkedIn where it's like, oh, everybody's on LinkedIn. So there's not really any real community there, right? yes, you need that because you need the publicly available place where you're, you could be found professionally, but in your industry, in your category, in your specific vertical, you need much more interaction.

[00:28:16] So, we're headed that way with sort of, with some of those companies. So I'm glad you noticed like this. It's not an accident that all that stuff's

[00:28:22] Dan Runcie: Yeah, and I'm sure too with this cohort, this is a hybrid cohort. With that, we're talking a little bit before we record it, but you're gonna have a week in la, you'll have a week in Atlanta. There'll be a lot of remote time, and I think that reflects a lot of the trends we've seen over. The past few years, and even how Techstars has run, because you started out where the teams were all in LA, at least for the duration, working outta the office during the pandemic.

[00:28:49] Everything's remote. Now it's hybrid, which I think does reflect a lot of this that we've seen. and I know that the focus of teams and the people that are building these is so important, especially in early stage startups. How is your evaluation of teams? And that piece of it evolved with knowing that even the startups themselves may not be directly working in the same place.

[00:29:11] Like the founders themselves may not be directly in the same location.

[00:29:14] Bob Moczydlowsky: Yeah, I think the idea that you have to run your startup in a specific room with everybody all together, or you have to be in a specific geography like, the trend was that that wasn't true pre covid, but Covid just wiped it off the, board. You know, like we, we've had companies in the past, like investor, like go to see investors and the investors is like, oh, like everything about this deal except that your company's located in Europe or your company's located in Australia or whatever, so we're gonna pass because of your location.

[00:29:44] I haven't heard that in years, you know what I mean? Like we're in a new world now where people can be multiple places at once in a really weird but true way. Like, one of the teams coming in, Baton is working on organizing all of the pre-release, like work in progress music.

[00:29:59] And their teams are all over the place. They've got guys in, they have a guy in Dubai, they've got a team in Italy, they've got Americans, they have people in New York, they're gonna be with us here in LA. We have a team, working on online virtual nightclubs, specifically targeting African teens.

[00:30:15] They're based in South Africa and London. They're gonna be with us in LA and New York and probably raise capital in the US and build a product targeted towards, you know, teens in Africa. So the idea that these things are geographically focused, or your thesis could be geographically focused, I think is actually a detriment if you're operating that way.

[00:30:32] and so we've resort of rearranged the way the program works to try to add a maximum amount of value for Serendipity. Be together in the office, talk about hard things, have accountability, do an all hands, meet each other, share contacts, and then break apart and go back remote and focus on shipping product.

[00:30:50] Bob Moczydlowsky: And you can do really great mentor meetings in, you know, 20, 30 minute sessions via Zoom and get access to amazing people because they don't have to come to the office to have that meeting. and so if as long as you're balancing the hard conversations and the development and the team organization in those in-person weeks.

[00:31:08] And then you're breaking apart to go actually focus and accomplish stuff. I think you end up with the best of both worlds. So we've always had an international program by thesis design. Half our investments are outside of the United States because we think that's where most of the future revenue opportunities are and growth is gonna be.

[00:31:25] So the hybrid model just makes this whole thing, you know, easier for us and allows us to actually, you know, have European portfolio companies that are just as important to us and accessible to us as Americans.

[00:31:36] Dan Runcie: Definitely, especially in this industry, with any company that's trying to improve problems for music, it's most likely gonna come from places outside of the us so that makes a lot of sense. The other shift that I've seen over the past couple years, especially in music, is the increasing amount of non-music or non-music people that have a big checks or they're trying to get involved in some way, usually at later stage rounds.

[00:32:03] And in your case, those could be the folks that are marking up some of your companies that you've already made investments in, do you feel like that has shifted what the success likelihood or the type of companies that may get follow on investing in that, that you're then looking at your end of obviously trying to fund those companies out to be most likely to exit and how that may have shifted the portfolio companies or just the likelihood of success one way or another for companies solving problems in.

[00:32:32] Bob Moczydlowsky: Hmm. Yeah, I would say it's like, so it kind of depends like, the companies that are related to music, there are a lot of people coming into music who have bought catalog or who have, who have bought music related assets, who now wanna help further that ecosystem. and we have a company in this year coming into this year's class called Royalty that's working on, like, the analogy I would use for that company is, a company that was very boring, that wasn't very sexy, called Athena Health that automated the medical billing process.

[00:32:58] Like it was too hard for doctor's offices and clinics to submit their procedures to the insurance company. Insurance company reject it cuz it didn't have some special code on it. They have to go refile it and try to get paid to qualify. Right. That model looks a lot like, royalty registration and making sure you're collecting money from copyright assets around the world.

[00:33:16] And so you see people funding companies like that and like entertainment intelligence, although I guess entertainment intelligence in the program a couple years ago. We sort of co-own that as a program with Concord and secretly Canadian, and it's used by Monarch and secretly, and Hopeless Records and a bunch of other folks, to do data warehousing and trend analysis, right? It's the ability to watch what's happening to your streaming data and then react to tiny signals in that data. So, for example, you have a catalog track that you haven't done primary marketing on or 15 years starts to get a little traction on TikTok. You now need to call your rep the DSP and get that thing onto a playlist or you need to call your music supervisors and get that in somewhere, right? And so investment and capital and growth is happening for those companies. and they're so like that's the kind of company that the person who's coming to music because they bought some assets or they've had extra cash and they're developing, those are the kind of companies that we're seeing that kind of investment going to.

[00:34:15] and like I'm really excited about royalty this year because of that opportunity, right? There are people now who have gone and purchased these assets, who now need the way the music business operates to become more efficient and more streamlined so that they can get growth that justifies the multiple they paid for that catalog.

[00:34:30] Bob Moczydlowsky: If you bought a catalog at 20 x annual revenue, you need to make sure you're collecting every penny that's due to you, and you need to work on streamlining the way the business works to get more money in the future, right? So you get a faster payoff and better ROI on your deals. The companies that are most valuable for us, however, I still have to cajole, convince, arm twist network with, you know, grade A venture investors and show them those deals.

[00:34:56] And I almost have to leave out the fact that we operate in and around music on those deals, right? Like when Splash goes to COSLA or Endell goes to, true or, gogogo comics goes to BitCraft or Circle Labs goes to light speed music isn't part of the conversation at all in those cases. And we still have a stigma of music as a category is a smaller, not as interesting place to play for those investors and instead of convincing them that they're wrong and they should look, I have found that the way to be effective is just to show them the opportunity uniquely to that one company and let them judge that and forget how it relates to music altogether.

[00:35:38] Dan Runcie: That first point you mentioned I think is really interesting because if you're a company that has purchased a catalog, it would also be in your interest to make sure that those payments are being processed as efficiently as they should, or any other type of financial activity that could benefit your asset that you just spent 50, 60, a hundred million on could be even more beneficial.

[00:35:59] So that piece, it made sense. And I think too, even the comparison to like Athena Health, right? How can you make a comp to some other industry where this thing did this and helped push things moving forward. I could definitely see that. I would like to imagine that the music conversation, maybe it would eventually shift at some point.

[00:36:17] I know that we often hear the comparison to gaming and how gaming's revenue continues to increase and I know a very different business model different in a lot of ways. So I still think that the big tams are out there, and I think because given. There's been so much investment activity, even from the major record labels or some of the indies.

[00:36:36] I know some of them are investors in your accelerator, or they have made big investments themselves or big bets like they want to be able to increase the overall pie. Just think that there's so much that is inherent with the complexity of the business and just some of the. Information that can be held tight, that can make some of it be a bit challenging.

[00:36:56] But if you do have that combination of someone that knows the space, someone that's willing to find efficiencies where it can be, I still think that there is big opportunity.

[00:37:06] Bob Moczydlowsky: I agree. Like If anything, there are more deals that I would like to do that I can't do. You know what I mean? Like, it's not like I'm like, oh, I didn't have enough deals to do. I think the next couple of years, there will be less cash. There will be less capital in the market.

[00:37:19] which will be good because there was sort of too much and prices were too high and there was too many and it was hard to sift through which founders are real and which ones weren't. but in these next couple of years, there is unbelievable opportunity based on sort of like the inertia of where the business is headed and whatever impact we get of macroeconomic downturn is gonna hit music less than it's gonna hit a bunch of other categories.

[00:37:42] And so the concept of music driving culture and culture driving everything else, and things starting in around music, and music, being willing to find these other revenue streams. music was at the forefront of the direct-to-consumer online shopping revolution. Music was at the beginning of the, how do I become, an entity that can have multiple brands and collaborations and have new consumer products driven by fandom.

[00:38:03] Music has been at the forefront of these movements over and over and over again, and the company doesn't have to position itself as a music company to benefit from working in and around music, right? Like that's the way we think about it. And I just think that's gonna be more and more true over the next several years.

[00:38:18] It's just gonna be, and the things that people wanna do in and around music, like go to events and go have experiences with their friends outside. are going to become even stronger. That demand is really high now, and we have a bunch of tools and platforms that allow people to do that at scale.

[00:38:37] That was never possible before, right? Like this company coming into this year's class, I think it's the last one maybe we haven't talked about. Haven, they have multiple brands, one called Floating and one called Ambient Church. Where they put on events that don't have artists on the top. They have sort of experience like, we're gonna go to the park and there's gonna be a sound bath, and we're going to like 40 people, no alcohol Sunday afternoon out in nature.

[00:39:00] Connect with each other, talk to each other, be mindful and relax and like de-stress from our overly technical scheduled lives. That company, you know, sold tens of thousands of tickets last year across their two brands. And they're connecting everybody with, you know, SMS community and membership belonging to a community that furthers those brands and those events.

[00:39:22] But the event itself is like unplugged, disconnected, like that's the level we're at now where the tools allow you to have sort of music style experiences that don't necessarily involve the legacy music business at all. There's no promoter there. There's no primary ticketer, you know, there's no tour merch, there's no back production company.

[00:39:43] There's not a huge rig and a negotiation like there's none of that stuff. It's just humans agreeing to go do something and enjoy some music and sound out in nature. But everything around it makes like you can have the entire rest of the company that looks like a really awesome modern promoter company because you can scale it horizontally into multiple cities.

[00:40:03] Through community, right? So these are the things where everybody says there's no more green space in and around music. It's a low limited category, there aren't big, huge opportunities for these companies to have a hundred, 200 million in annual revenue, a billion dollars in annual revenue.

[00:40:18] I just kind of chuckle cuz it's like the perfect, you know, like it's the perfect great garden bed to plant these seeds in. Like yes, they grow up to be trees in other forests, but they start there.

[00:40:28] Dan Runcie: And when you hear that pushback, do you have like stats that you can show or anything that like I'd be curious to hear what does the Techstar Music Accelerator returns or success look like compared to maybe other Techstar non-music accelerators like we.

[00:40:43] Bob Moczydlowsky: Yeah, so some of that's pretty proprietary. couple of the stats I'll give you just because I'd like you and I'll probably get in trouble, but it'll be okay. So our multiple on invested capital from the accelerator is a little over three. And, you know, we've deployed, like I said, that 7.4, you can do the math on that about what our positions are worth in those companies.

[00:41:02] The reason that is true is because, you know, the way an accelerator works is you, you know, there's gonna be a power law, right? You're gonna put 10 companies in, you're gonna work on them together. They're not all gonna end up being equal, but the things you learn from the ones that fail are gonna help you make better decisions on the next batch.

[00:41:19] Bob Moczydlowsky: And, so, you know, the last couple of years the market has been so, frothy, right? There's been so much cash looking for assets to the price of assets just went way up, right? Interest rates were effectively zero. If you had cash, you had to do something with it to get a return. You couldn't just put it away and get 3, 4, 5, 6% on it.

[00:41:37] There was no interest to be had. So that drives up asset prices, it drove up the stock market, it drove up private company valuations, drove up the prices of seed rounds and pre-seed rounds and everything, right? That is deflating quite a bit at the moment. So, in those two years where our deals stayed the same and we make the same sort of fixed term investments and there was, it got even more competitive for us to try to get into companies and invest in them.

[00:42:00] And great companies had their pick of investors, we decided to go the other way and go even earlier and even crazier because instead of competing for those really high, overly marked up deals, we're gonna help start some things. And yes, we're gonna have a high mortality rate, but if you grab a couple that work, the markups are so gigantic that you end up with a pretty good performance on your fund, right?

[00:42:22] So if you invest in a company, you know, at a 3 or 4 million dollar valuation, and the next round to capital for that company is in the twenties like, now you look like you know what you're doing and it's okay that a couple other ones like that seemed crazy, turned out to be crazy and went to zero, like the magic of venture capital is you can only lose your principle.

[00:42:42] Dan Runcie: Right. Yeah. Asymmetric upside for sure. Especially with,

[00:42:47] Bob Moczydlowsky: That's for sure. And so if you're thinking about deploying capital in the category, you kind of need to be promiscuous, right? You need to have a long-term horizon on it, and you need to be willing to think about it that way. And I think the way to do that is at the very earliest stages. Now to do that, you have to know how music works and you have to be able to get people on the phone, and you have to be able to argue about stuff, and you have to have the stomach for the crazy one, you know, going belly up six months after you wrote the check. but if you're willing to do those things, the amount of information you learn by doing that is sort of creates a, little flywheel around you making this better and better and better

[00:43:21] Dan Runcie: decisions.

[00:43:22] Right. And I think for you, at the end of the day, it's being able to get that buy-in from the LP base. And I'd be curious to hear from you, how has your LP base shifted over time? Are there any trends you've seen there? And does that say anything about what types of companies have been more or less interested in investing in the future of solving problems for music in the past five, six years

[00:43:44] Bob Moczydlowsky: Yeah. they've definitely gotten less conservative over time. More experimental, more willing to like try stuff. Like to the point even where like if you look at Warner from Warner's comments in, I think they maybe were in Music Ally or MBW a couple days ago, like late January, I think she even said publicly like, the era of conservatism is coming to an end.

[00:44:06] We need to start experimenting with the way our content is used to build these businesses. I can back her up, she's awesome by the way. Very thoughtful looks at it at a really good high level. I can back her up and then I've actually felt and seen people's behavior change against that rhetoric.

[00:44:22] when we first started the program, it was a lot of question about what are returns gonna look like? When are these companies gonna be valuable to us? When are we gonna get something out of this that's we can have, you know, financial ROI on and as the companies have evolved, as Endell became Endel and Splash became Splash and Community did its thing, and Gimme Radio is moving, you know, hundreds of thousands of dollars for catalog divisions, you know, in specific genres.

[00:44:47] Bob Moczydlowsky: When AI became, you know, the source of data warehousing and is helping people understand TikTok and Concord is the secretly Canadian are like, oh, we need to actually own a piece of that company, you know, when those things start to happen. Everybody looks at it and goes, oh, all right, like, we just need to water the garden.

[00:45:03] We don't necessarily need to be beating any one deal up on its ROI as long as the garden has flowers in it, right? L et's look at the whole thing. And so we have a very real feeling of, collegiality and team inside of the accelerator. you know, it's not like Warners and Sony don't compete. It's not like Concord and Sony don't compete, right? But when it comes to a company that is providing the service that could help them be more efficient. They are more likely to collaborate and share information with each other, because everybody benefits. And that posture now, you know, in 2023 where, you know, compared to 2017 radically different.

[00:45:39] Like when we were first putting the program together in 2017, I had major label business affairs lawyers, like giving me checklists around making sure we didn't have like, you know, anti-monopolist or collusion issues or antitrust issues with the way we shared information in the program. Now we have a screening committee where we look at sort of the top 25 companies each year, and everybody's in the room together sharing ideas and like trading deal flow, and like, oh, I think we really like this one.

[00:46:07] Do you guys like this? If we wrote a check, would you write a check? Like the conversation is so radically different and collaborative compared to where we started. That I can just say like the music business knows that to get growth, it needs to be more experimental, and it's not like it was doing the wrong thing from 2005 to 2012 or 2013 when your annual revenues are declining,

[00:46:33] like anybody, you lose your job, you have less revenue. You're gonna be more conservative with how you spend your cash and what you do it, and you're gonna be more protective about the revenue you do have, right? Like when you are making more money and you made your bonus and you got extra money you didn't plan for, you experiment and you try new things and like that.

[00:46:50] So the good news is I think we're in an era that's gonna stay, you know, pretty steady for a while and that experimentation and growth is gonna occur, and it's a delight to see, you know, public rhetoric from the heads of major labels, like backing up the behavior they're already exhibiting in the accelerator, right?

[00:47:07] Like, I think it's time for huge

[00:47:09] Dan Runcie: optimism.

[00:47:09] Well said. I think that they we're in this transition moment, so hopefully we'll see more of this. But Bob, this has been great. Before we let you go though, for folks that wanna stay in touch with what's happening with this cohort, with the accelerator, where should they go?

[00:47:23] Bob Moczydlowsky: Okay, so we actually are recruiting some new mentors for this year's program. we have some specific issues and people that we're interested in and we want them to come, particularly from, hip hop, right? We are constantly trying to build a deeper bench of mentors and angel investors from the hiphop community all the time.

[00:47:42] And so what I would tell people, if that's you and you're listening or you are active in that area, just email me. I'm Bob Moz, bobmoz@techstars.com. I'll send you a thing to submit on mentorship, and not everybody will make it through. Some people will have to say no to. But we'll read 'em and look at all of them, but there are specific things where we wanna e expand and deepen our community, that that's one of them.

[00:48:03] the other thing, would be is that if you are an investor thinking about deal flow here, you're looking at a company we're in, or you're looking at a company that we're not in, and we can be helpful to you to like, here's what we've seen, here's the comps companies, here's the competing company or Oh, you know, we made an investment like that.

[00:48:18] Bob Moczydlowsky: Here's all the places that fell apart. Be careful of these places. Also just, email me you know, I'm constantly talking to investors about their portfolio, not mine, and trying to like just be useful to them. because ultimately I want there to be more capital in the category, right? I want people to raise funds. I want them to invest in deals.

[00:48:36] there's not one thing I can think of where I would've a competitive posture about any of that stuff. and I would tell people who wanna be involved, like, drop your competitive pieces off out of your own actions and your own behavior. Just be a hundred percent collaborative.

[00:48:51] There's only a couple hundred people who are really serious and really active in this community worldwide. There's nothing to fight over. Like there's enough for everybody. and, you know, deals that I can't afford. That's okay, I'll still tell people I think they're cool deals and if you wanna be involved and see some of that stuff, like just email me and we have ways to plug people into our, community. It's hundreds of people. So, it's not like we're off in a closet running the accelerator with, 10 folks. It's a lot of people.

[00:49:16] Dan Runcie: That's awesome. That's awesome. Love to see it. Well, thanks Bob. This has been fun. Appreciate you.