Music Looks Different
Host Alex Ragir is joined by music marketing dealmaker Jesse K and Insta-famous news veteran Mosheh Oinounou to talk about the Music industry's creator revolution, influencer journalists, and more...
Do you like music? In this episode, we dive into the business behind the fascinating innovations happening in the music industry…
I’m joined again with my panel of friends:
Jesse Kirshbaum, CEO of Nue Agency and CMO of Dreamstage, Executive Producer of #CRWN hip hop podcast, and publisher of Beats and Bytes music business newsletter.
Mosheh Oinounou, IMO the best news account on Instagram (@mosheh), and former exec producer for CBS News, Bloomberg TV, Fox News. Now he’s prez of Mo Digital.
Have someone you think should be on the podcast or any topics you’d like us to cover? Simply reply to this email.
In today’s episode, we cover:
Nas’ game-changing deal to sell his future royalties to his latest songs
How 2021 proved how the music industry is leading digital innovation
The two Mr. Smiths (one from Buzzfeed/NYT and the other from Bloomberg) launching their new global media venture
Influencer Journalists and the new Media Company Formula
NYTimes buying The Athletic for $550M.
Below is a transcript of this episode:
Welcome to the Media Jungle. I'm your host, Alex Ragir. We have a great show for you today. Our rockstar panel is none other than Jesse K— long-time friend, music marketing deal-maker, started out as an A&R for artists like, or talent manager, for artists like Pusha T and J Cole before pivoting to Nue Agency in New York City. And now the CMO of digital events companies, DreamStage.
And of course, Mosheh Oinounou is here. The smartest newsman on Instagram, former executive producer for CBS News, Bloomberg TV, you name it. And now president of Mo Digital.
Music Looks Different.
Before musicians would sell CDs, hope to get on radio or MTV, now they need to become an influencer.
Do you think the Beatles had to worry about content strategy?
You gotta be on Tik TOK, did Addison Rae dance to your song? How much content are you creating? How do you engage your audience? It's exhausting!
Last year, an artist named Grimes sold an NFT for $6 million. Who is that?
In 2006, artists were selling ringtones…
How much would a Beyonce NFT go for if Grimes made $6 million? Nas is using an NFT to sell the future royalties of his newest album.
So the album is like a stock and the fans are investors? But it actually makes sense: You probably know more about your favorite artists than The Bored Ape Yacht Club.
Streaming revenue is booming. Warner & Universal music stocks are soaring and there's money falling from the NF-Trees.
So now artists need an audio engineer AND a crypto engineer, a manager, AND a social media manager and agent AND an investment banker. It feels like we're not in Kansas City.
Welcome to the Media Jungle.
The first topic is Nas is selling 50% of the future royalties of his next two songs. He's going to do this on a new music investment platform called Royal. It was founded by EDM DJ 3Lau and raised $55 million in November with a lot of artists investing– Chainsmokers, Nas, Logic, Disclosure, and venture capital from Andreessen Horowitz.
So how does it work? For one of the songs, $99 will get you 0.0133% of the future royalties. For $499 you get 0.0658% . Or for $9,999, you get 1.5789% and you get VIP concert tickets, signed vinyls, and other perks. Is this a good investment musically.com calculated that the song would need 34 million [00:03:00] streams before the NFT investors would make a profit. That actually gives a strong incentive for them to promote the album.
Either way, albums are the new stocks and Nas is having an IPO.
You want in? Let us know what you think.
Jesse, this sounds super complicated. It sounds like an investment banker thought this up, but what do you think this really means for the artists and what does it mean for the fans?
This is the early innings of Web3. This is what the future is. This is a chance for the creators to be the CEOs of their brand, to talk directly to their fans and let their fans not only say I love this artist but to put support them in a meaningful way and share in the upside. That's a big premise of what Web3 is. This is an NFT to the next level because you can actually see the utility and you can watch and listen to this song and play it for everybody and say, I own a piece of that. It's not a JPEG. [00:04:00] This is the evolution of the music business.
It makes more sense. But like if it stacked, like, does that mean that private equity and hedge funds are just going to buy up, like Drake's next album?
It's going to have to be about finding and developing new artists. This is a case study. Nas is allowing music that won a Grammy last year to now be purchased by fans and allowing all of these perks and incentives so that if you're there first, you become a collector, and then you can retrade it. But right now already venture firms are buying into publishing, and this is a chance for the fan community to get involved and to support artists, grassroots, and be a part of their story and their success.
It's funny. You could see like a billion. It's going to be like, Hey babe, uh, I bought you Rihanna's album. Like it's just for you.
I mean, w that's what Martin Shkreli did with Wu Tang's album a while back, and then a DAO bought the [00:05:00] entire album and now is only going to be listened to by the people in that DAO. And it's shared for special events. And this is what Web3 is all about. It's about making the fans into shared participants on the upside.
One, one statistic that I found notable and probably explains why some of these artists are trying or need to innovate is that in 2019 and 2020, 90% of music streams went to the top 1% of artists. And I don't know if NAS falls into that group, but I found that pretty stunning that 99% of the artists are sharing in the 10% of streams. Where, where are artists right now, Jesse, when it comes to making up for the revenue they once had in the CD era?
Well, that was always the case, right? It was always a hits business driven by the top. It's hard for the long tail of artists to make revenue. During the pandemic though, where live touring was [00:06:00] on hold, 75% of an artist’s traditional income was all of a sudden put on pause with no clear visibility on how it would come back. So they did have to innovate and we did see new revenue streams coming in from more brand partnerships than ever.
And the NFT space kind of saving the day. So I think that this can help if you're a community activist. And you're an artist that really cares about your fans and wants to build deeper relations. This is an opportunity to create middle-class and working-class artists that can be supported by a thousand true fans, 10,000 true fans.
You can have a huge amount of fans. There was no way that you can really support an artist except to go to their concert. Now you have ways to support them or participate in their growth.
Direct with no middlemen, all that. If you're going to a show that you buying a ticket through ticket master, it's going to a promoter, how much really trickles to an artist, the same thing with buying an album.
But if you're buying an NFT or if [00:07:00] you're supporting an artist direct in this fashion, You are directly connected to the artist. And this wasn't created by an investment banker. This was created by an artist DJ that really understands the NFT market and the crypto world and comes at it from a financially savvy place, but it was creating what he believes and what I think is the definitely be a future opportunity for fans and artists to connect in a deeper way.
You find interesting is that there's a natural evolution here that Patreon, was founded by a band. They're like, listen, even when we get a million, couple million views on YouTube, we're still making, you know, a small trickle of income.
And so music folks got together and created Patreon. And obviously, that's used by a whole variety of creators outside the music industry, but, you know, and, and I do think that they have found that the fan base wants to support once they get these folks alive. You know, using their song at a TikTok post or an Instagram, as long as you make them a fraction of a cent.
One [00:08:00] interesting question I have though, is that if I buy a portion of Nas’ album, am I know buying a security that I'm going to have to pay capital gains tax on. At some point when I sell it, I'm interested in, in terms of how this will end up getting regulated, because you're basically, as Alex said earlier, you're buying a share of a company, or in this case, a creator.
Absolutely. This is a full-on asset. This is treated like the NFTs. This is treated like crypto. This is treated like a stock. This is treated like buying. And this could make you a lot of money, maybe not this not particular Nas project, but you will find the next big artist. And if you have conviction and you bet early, and that song ends up becoming a hit, it's a very lucrative endeavor.
So it can be a lot of fun to be a fan right now, but you definitely have. Uh, have your accountant aware of these investments. And this is a whole crypto world is a complicated accounting space. So is the music side. So there's going to need to be new specialists that step up.
I like it because it'll kill all the arguments where people are [00:09:00] like, Kendrick's the best, Drake's the best. There'll be like, put your money where your mouth is, who are you buying?
That's right. And if thank you to support her from day one, you can really show that if you're the fan that's early on this artist, you will know because there will be proof of purchase.
Yeah, I'd say it's, it's like saying I bought Apple stock at $10 or whatever.
You're like, I bought that song when it was worth this much and now it's worth that much.
I like it more than a lot of the things we've seen in a lot of the crypto space because you actually can understand what it is. It's more understandable. It's more kind of logical,
Music, once again, is leading the trend. And that's like what we see in the digital revolution. It was the first to be decimated by Napster and the digital revolution and now it's already because it's so relevant because it resonates with everybody because it's the universal language, music again is leading the trends in digital.
Yeah. And it's leading it back up. That's where that's a great segue to the next segment about the creator economy in the music industry, artists starting their own labels. As we [00:10:00] mentioned. They figured out how to make money with streaming music looks a lot different these days. Jesse, maybe you can kind of go through, how music looked when you started out, like over a decade ago.Now how it's kind of evolved into an actual place that there's an actual strong business model.
The CDs were right when I came into the music business was a very lucrative time for the record labels. They were selling these CDs that cost maybe a dollar to make by the tens of thousands. And it was just a lot of money coming into the record labels. That has totally changed.
This is a very diversified industry now where you've got streaming money. You've got touring money. You've got brand partnerships, you've got tech innovations. You've got investments. Artists are really more than ever the creators or the CEOs of their own brand and the [00:11:00] fans are their influencers. The fans are the ones that are out there spreading the message on their behalf and even investing in their projects in ways that they couldn't traditionally in the past.
I love this chart from Chartr. It starts tracking where the industry was going. You saw the CDs dominating it for 20 years, then you saw, it just had nothing. You had ringtones and downloads, and then now streaming looks like it actually is a sustainable model: streaming.
Now streaming is where vinyl was in 1983, in terms of revenue. They still haven't hit the 20 billion mountain that they've hit in 2000.
And what's wild is that is having this nostalgic moment. And vinyl sales are up. Music is doing really, really well. It's a healthy business again. And when I started my career, it was not, it was on a downward swing. And now all of a sudden it's firing on all cylinders.
Obviously, the touring side is having its trouble. But [00:12:00] 60,000 new songs a day are coming out on Spotify and even more on YouTube, which means it's really hard to digest all of the music coming out every week on these streaming platforms, like most content places. So it's a lot of content coming at you.
There's a lot of music being created, but there's also a lot of shit. Yeah, filling the streaming platforms.
And in the end, looking at 2021, which was a huge, uh, uh, moment for music, how do you kind of see that year and the year moving forward, Jessie.
And because of the pandemic music has changed music forever and has opened up the eyes to Web3 and NFT. And companies like Royal. And it has given birth to the live stream era like we've never seen before and more and more artists are going to include live stream in their overarching strategy.
As well as the fact that dynamics are shifting in the music business, where now artists are getting better deals from record labels or demanding better deals from record labels or the understanding that they need to own their masters. The predatory practices of the past are not going to fly in the future and that's going to create a lot more opportunity and upside for artists.
And it will help the relationship between artists and labels be continuously more and more healthy.
They're getting choked up. You were about to cry, its so good.
I'm so excited to see that this is a change.
It's so interesting, Alex, cause you brought up the example of the Beatles in your introduction. The Beatles to their credit started their own record label Apple back then because they felt they were being burned by the record label. So music has had half a century now of innovation, but to the credit of the Beatles who then, put James Taylor's album out first with their record label and found there was an opportunity for them to make more money. So we can go far back and, you know, got a 20th-century music history to find that musicians have really been on the forefront of innovation when it comes to, how to best distribute and, and also, uh, make money, generate revenue off their music.
That’s actually a great segue to the next segment.
Influencers are everything.
It's not just musicians and celebrities, journalists are influencers. Now the new Media Company Formula is a big business guy and a star influencer journalist, multiplied by some cheap money. Interest rates and record stock prices mean there's a lot of money to play with last week. Ben Smith, former editor in chief of Buzzfeed, and Justin Smith, the CEO of Bloomberg Media said they're starting a “new kind of global news media company that serves unbiased journalism to a truly global audience.”
Sounds a lot like VICE, Bloomberg, or in the 80s, CNN, but when money is cheap and you have the formula, there's nothing to lose.
Mosh, I'd love to hear your take on this. You know, this comes after a lot of other media companies were founded by these new influencer journalists. You have Puck News, The Information, Axios, Punchbowl News, everyone's jumping ship from the big networks. You left CBS News. How do you see this playing out?
Interesting to kind of see this see where this unfolds. Uh, into, because right now the details are very scant. I don't, if you guys saw the New Yorker interview with Ben Smith on this, but they tried to get him to give any details whatsoever and he gave no details on coverage areas, size, format, cadence, size, anything whatsoever as to what this will be besides a venture that'll serve 200 million English speaking college-educated readers. Now, what we do know is there's a problem in the media, right? Consumers are looking for unbiased news. So they're hitting the key points. It will be interesting though, to see kind of where they find their niche.
Um, I think if you look at the most recent last couple of years, a lot of what you've seen in the news industry is picking a handful of creators/ reporters and putting them together in some sort of confederation, or commonwealth, and then letting them do their thing, that's the premise of Puck. That's what Punchbowl did. THey tried to pick a handful of superstars, giving you “bullet point news”. And so that'll be interesting as kind of, as the modern consumer consumes things, how are they going to cater to that?
Because I don't think the world needs another, our former home Bloomberg, they do a good job of being Bloomberg. You don't need another Bloomberg. You don't need the other New York Times. So how do they do all of that? You know, you two smart guys, Mr. And Mr. Smith, right? And you would have said in a previous era, you would say, one of them runs Bloomberg. The other one is the New York Times media columnist. It’s job you can have for life. Why would you leave those jobs?
But at the same time, You know, it takes you back to the scene of Social Network where, uh, I'm now totally sewing on his name, says to a young Zuckerberg, why be a millionaire when you could be a billionaire?
And I think that's the same thing going through the heads of journalists. Why am I sitting here being a report for somebody else when I could run my own media?
And the money's so cheap that it's like if you get the the formula of the star reporter with the business guy, you could raise a good amount of money if you want to do it.
But the other piece, a lot of people are just jumping ship to go on Substack and there's that whole kind of trend. Uh, last week we saw, even in the video journalism side, we've had Johnny Harris go to Bright Trip and Cleo Abrams last week from Vox. Uh, she's going solo. That sort of is a little different. That's just kind of like, I'm going to create my own thing to live out my passion.
Influencers are the new creators. Their fans and their community are the new influencers and they can spread the message. And it's a really exciting time because you can watch them create in real-time. And there are so many tools for influencers like Substack, like Patreon, like all of these other organizations, so that it's really conducive to create more and more of these, CEOs or creators or media hubs, and the platforms are very encouraging of it. They want more and more content. So it's become this kind of like feedback loop of more and more creators or more and more influencers turning into creators and their fans galvanizing the message and more and more tools to support it.
Or in this case, the viewers and the readers are a key components here when it comes to news because of the distrust they have for major organizations. So one of the reasons you see this trend line happening is because the creators, the journalists see that. Their audience that having that name a brand under them, doesn't have the cachet it once did. .
In fact, in some cases serves as an impediment to growing your audience and being independent people now, trust individuals, they trust influencers. And the news media is no stranger to that. And so you're going to see more and more, but you're also seeing, Alex, a divide between who's successful on Substack and those new platforms.
And then folks who are going independent, and not quite making it there. So you'll see, eventually, we'll be talking in about nine months about the trend of certain individuals going back to institutions, those who weren't able to make it. Um, it'll be interesting to kind of see how this plays out. You see, you saw like, Ezra Klein do that, there's also like most of these people are almost opinion columnists too. It's not like it's, they're the ones breaking the big news.
When I was a journalist, at Bloomberg, it was like, That was all I was doing. I couldn't do anything else except try to find and find the information to do the story, to hold power accountable. But like, I can't really see that doing that if you also have to be your own COO and your own like a salesperson.
There are limitations to what you can do when you decide to not just be a reporter anymore but run your own media company.
And I think that's probably the challenge that musicians are having to, to the previous conversation. You know, you now need to be competitive on TikTok and YouTube and Instagram and Spotify strategy, and figure out your crypto strategy. And so it does require a larger team, but you know, a larger reward, uh, you know, ideally it's an investment for a larger reward in the end.
Last week, the New York times agreed to acquire a subscription sports site. The athletic in a deal valued at $550 million. So New York Times Sports. Make sense. New York Times says this purchase will get it to its goal of 10 million subscribers by 2025. Mosh, what do you think about this?
I think it's so interesting because The Athletic has been held up as a successful model, for creating a new media organization. I know that there are some investors recently who expressed frustration that The Athletics sold at this level, that in their most recent fundraise, they actually raised at a $500 million valuation.
So there were folks internally are like, you know, you could have become a billion-dollar company. Who were like, you guys sold prematurely at the same time. You could say that the folks who started the Apple. Also can see the road of media is littered with folks who didn't take a good deal when they had it, either.
So you're always kind of managing, is this the best we're going to do? What are the risks associated with it? I do think that The New York Times, as it continues to, double down on a subscription strategy given where the state of digital advertising is, this is a smart move for them.
And this builds a really big niche for them when it comes to sports. And I think the way that The Athletic has approached subscriptions, which is like, no matter where you live, you might like the following football team in England, in the premier league, you might like a hockey team in New York, and you might like a college sports team in LA, and we can give you a unique combination of coverage related to your specific interests, which really broke the model that existed in the beginning of sports coverage, which is you get your local newspaper, and our assumption is if you live in Chicago, you like all the Chicago sports teams.
So The Athletic really turned it on its head. So I think having that DNA with New York Times is a huge plus for New York Times. The question is how does the New York Times not do what many media companies do, which is ruin acquisitions. How they continue to let the athletic innovate and grow in a way that it should.
Yeah. And, and, and it, for the New York Times, it's really a lot easier to sell ads on sports than on news. So it's definitely a way that they can leverage their relationships there.
Next week, though, we'll be focusing on the crypto Web3 NFTs, all of that. If you have any ideas, questions about the. Send me an email DM, leave a comment below.
You can find Jessie K at the Beats and Bytes newsletter. It's a great one. I've been breeding it for years.
You can also follow @Mosheh, with an H, on Instagram.
Jesse, Mosh, Thanks so much for joining.
And thanks for watching.