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the house of combs

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Hey! Big news for Dr. Dre. He’s reportedly selling his music income streams and some assets in an estimated $200 million deal with Shamrock and Universal. These assets generate around $10 million annually, so a 20x multiple is legit given rising interest rates.

The last few years of Dr. Dre headlines have been quite the roller coaster of highs and lows: a messy and costly divorce, a brain aneurysm that he nearly died from, and an epic Super Bowl Halftime Show performance, and now this asset sale. All of those events impact how someone looks at their money, how they want it used when they’re gone, and when’s the best moment to make a move.

Today’s memo is about another hip-hop artist’s business, Diddy. On this week’s podcast we took a trip to the House of Combs to catch up with my guy, Tarik Brooks, who is president of Combs Enterprises. We talked about Diddy’s latest ventures in cannabis, synergies across the CE brands, celebrity investors, and more. Let’s dive in.

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can Diddy’s Ciroc playbook work with tequila and cannabis?

The majority of Diddy’s wealth stems from his 50-50 partnership with Diageo for Ciroc vodka. At its peak, Ciroc has sold 2 million cases per year. But Diddy also has major stakes in DeLeon tequila and the newly-acquired cannabis assets from Creso Labs and Columbia Care.

How much of that Ciroc playbook can be replicated with tequila and cannabis?

Tarik says DeLeon is the fastest-growing tequila in the United States. Tequila is a less mature liquor than vodka, but U.S. tequila sales may soon outpace vodka as the #1 spirits category. Tequila has different drinking occasions, which shifts the marketing and messaging. Ciroc ads were known for those modern day rat pack trips to Las Vegas, DeLeon’s ads have taken a more romantic vibe.

Cannabis is a more complex industry. Many Black business leaders want in to help reset the narrative. Historically, the criminalization of weed affects Black people disproportionately, but the legalization of weed has benefitted white business owners the most.

Several Black celebrities have struggled to build sustainable businesses in an industry that is highly regulated and known for grassroots movements. Drake’s cannabis line More Life is no more, Jay Z’s partnership with The Parent Company has just restructured to save costs, and several others have come and gone. Berner’s Cookies business is one of the few successful cannabis companies led by a hip-hop artist.

But Tarik doesn’t see Diddy as another celebrity investor in the space:

It will be interesting to see how Cresco Labs and Columbia Care fit in with the culture of REVOLT,Sean John, and other Combs Enterprises companies.

audience insights from diehard customers at REVOLT Summit

Each year, the REVOLT Summit in Atlanta brings the media company’s community together for an annual celebration of Black culture. It generates ticket revenue, sponsorships, and audience insights.

Tarik says that the summit is a testing ground for new concepts and ideas for all the consumer brands in the portfolio, which makes sense. If we created a sales funnel for CE, the REVOLT Summit would be at the bottom section for the die-hard fans. The Summit is a high-priced event that attracts the fans most likely to support and promote your products for them.

The right product can turn an audience like this into an informal street team where they tell their friends, who tell their friends, and so on. On the flip side, if the REVOLT Summit audience doesn’t enjoy a new product or idea, it’s safe to assume that others wouldn’t either.

Bad Boy for life

Diddy is sitting on one of hip-hop’s most-prized music catalogs, Bad Boy Records. He has gotten several offers during the catalog sales boom, but Tarik says they have turned them all down.

There are a few reasons why Diddy hasn’t sold. First, the CE portfolio gives the catalog an ecosystem to keep the assets relevant. For example, classic Biggie tracks can be leveraged in a spirit promotion or in REVOLT content. The music creates a halo effect across Diddy’s businesses.

Second, Puff isn’t pressed for money in the way that a legacy artist may be. His business makes money. He’s afforded the time to experiment with the catalog and see if new monetization opportunities arise.

And lastly, Diddy is getting back to music. Last year he launched Love Records under Motown. He just dropped a new single with PARTYNEXTDOOR to promote his upcoming album in early 2023. He would rather reap the rewards from the Bad Boy Records assets himself for the foreseeable future.

In this episode we covered a bunch of other topics:

• Did Puff’s rumored Twitter investment actually happen?
• Why Diddy’s Carolina Panthers purchase attempt didn’t happen?
• What’s next for Sean John?

Listen to our full conversation here:

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money moves

• ​TikTok reduces ad pricing to lure advertisers away from Meta and Twitter
• ​Dr. Dre sells $200M worth of music assets to Shamrock and UMG
• In 2022, 1 out of every 14 Latin music audio and video streams is from Bad Bunny’s Un Verano Sin Ti in Luminate Year End 2022 Report​

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coming soon from Trapital

Podcast: Streaming Insights and Trends from Ari Herstand. Ari and I talked about some new findings coming up in his new book, How To Make It in the New Music Business, 3rd edition. Comes out next Thursday!

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