Trapital - content to commerce

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content to commerce

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Hey! I’m sending this newsletter out from a quick weekend trip up the coast in California. Our daughter met my parents and cousins this weekend which is great. She’s already two months old! Other parents keep telling me “the days are long, but the years are short,” and now I get it.

This week’s newsletter is about the content to commerce its potential works in music. I think about this all the time, especially when I’m looking at startups to invest in. So this is a great opportunity to share perspectives and opportunities on the space. Let’s jump in!

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music’s best strategy for content-to-commerce

Hip-hop’s most iconic brands have always had their content and commerce in lock but to an extent.

Look at Roc-a-Fella Records. It had its record label, a film division that produced feature-length movies people loved, and a number of documentaries. And any time its artists and execs appeared on TV, they made a statement.

On the commerce side, Rocawear was everywhere. The apparel brand was a staple of early 2000s fashion. Even the jewelry kiosks at my local mall sold knockoff Rocawear chains! Most of its peer brands had struggled to stay afloat for various reasons, but Rocawear was acquired for an impressive $204 million in 2007.

That acquisition sparks two thoughts. First, imagine how much more Rocawear could have sold for at its early 2000s peak. Second, if the clothing brand alone was sold for over $200 million, imagine how much the entire Roc would have been valued at.

Despite its massive cultural influence though, The Roc didn’t have access to the underlying data that makes those deals valuable. It couldn’t target the person who bought a Diplomatic Immunity Vol. 1 CD and pitch them a Rocawear-branded pink mink coat so they could walk around like Cam’Ron.

But back then, digital marketing wasn’t what it is today. In the early 2000s, magazine subscriptions were still seen as the ultimate direct-to-consumer play. More importantly though, even artists who own their masters rarely had the ability to use their content as their own distribution channel. Sure, artists could shout out Rocawear in songs or wear it in music videos, but that’s still indirect.

Today, digital streaming providers control most of that data in music. They do share it with the big three record labels (to an extent) given the nature of their agreements, but they aren’t sharing it as freely with independent artists and companies.

the flywheel in motion

The power of content-to-commerce is the ability to use the data to monetize both the content itself (through advertising or subscriptions) and use the content as a distribution channel to sell other products and services.

Recently, the most effective content to commerce companies has been podcast networks, email newsletters, film production, or paid membership models that create community. In May 2021, I did a full breakdown on Will and Jada Pinkett Smith’s Westbrook Inc’s and its moves. A few months later, it sold a minority stake in the company to Candle Media, which valued it at roughly $600 million. The brand may have taken a hit from Will’s Academy Awards incident, but I bet that’s temporary.

Another example is Barstool Sports. I may not be the target demo for most of their content, but it’s hard to ignore how well it executes the playbook. The massive podcast network is a king and queenmaker for its talent, a lucrative channel for advertising, and a distribution channel for both its gambling services and Barstool’s own merchandise. Barstool has been fully acquired by Penn Entertainment and has spent over $550 million to make that happen.

The culture’s next brand to pull this off may not make music or be associated with a record label at all. I really like what Rashad Bilal and Troy Millings have built with Earn Your Leisure. Financial literacy has been a great platform to build a highly engaged audience through socials and its podcast. It’s done more in-person events too with Invest Fest. Their Assets Over Liabilities merch is dope. I’m excited to see where they take the company from here.

both can be true for music

One of the content-to-commerce challenges in music is that the industry will always be compared to the days when the “content” was lucrative enough to be the commerce itself. So there will be resistance to the notion of relying on non-music product sales to make the big money.

But I believe that both can be true. Music rights are lucrative, especially for those who own the underlying content. And even if the data access is more limited, these record labels with powerful brands can create other non-music media channels where they can own their data. The record labels that want to show their own documentaries can tell their stories through their own podcasts, whether it’s fully owned or partnered with an existing network that allows that to happen.

The right team with the right strategy can successfully monetize its own channel. It’s already happening here and there. Those are the companies I’m most excited to back in the future.

money moves

• Shazam turns 20 and Apple shared some interesting stats​
• Roar of live music drowns out stadium income from sports​
• TikTok rolls out text-to-image AI generator​
• BMI lays off 10% of its workforce​

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coming soon from Trapital

Podcast: TikTok’s takeover plans. I’m going to have a conversation about TikTok’s takeover plans with Denisha Kuhlor. Stay tuned!

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