Trapital - coming together

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coming together

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Hey! There’s a video going around about Drake speculating a “graceful exit.” Whatever he says, don’t believe him. Rappers don’t retire. Especially not Drake, who I truly believe loves making music. And especially not after that LeBron-sized contract he signed last year with Universal.

I wish I could place a bet on whether or not Drake retires. I would bet on him not retiring, then post the screenshot of my bet on Instagram like I’m Drake.

Today’s memo is about where web2 and web3 can come together. On this week’s Trapital Podcast, I had a great conversation with trac founder and CEO, Cardin Campbell.

trac is one of Trapital’s sponsors and I wanted to have this conversation because we tackled a big topic that is relevant to many of you: Now that the web3 frenzy had its bubble moment, what does the real application look like? Let’s dive in.

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where web2 and web3 meet

When web3 buzz was at its peak, many believed it would replace the entire music industry. The common talking point was to call out archaic and unfair aspects of the industry and how “web3 fixes this.” The critiques about the industry had validity, but upending the system was more of a rallying cry than a realistic outcome.

Cardin Campbell, trac founder and CEO, doesn’t share the “us vs them” beliefs. He wants web2 and web3 to coexist. trac wants to digitize how the industry pays out royalties between rights holders and creators through its music distribution service. Then, that information can be put on the blockchain with full transparency and quicker payments. This can solve the type of payment problems that Meek Mill and other artists often complain about.

This solution is B2B, not B2C. It’s between artists and right holders. It’s invisible to the listeners who will continue to stream music on their digital streaming provider (DSP) of choice. That’s what was missing from a lot of the prior web3 discussions. There was so much talk about wallets and rare investments, and fewer discussions about how they can improve legacy business functions.

the benefits of windowing music releases

The windowing tactic—to offer exclusivity to a specific audience for a set amount of time before a broader release—may have struggled at the platform level, but individual artists can still use it effectively.

Snoop Dogg released the Death Row Records albums he owns exclusively on TikTok before their broader re-release on all platforms.

trac wants to allow artists to do similar on the DSPs. Eventually, fans can pre-save a song on the DSP, unlock that as an NFT, which lives on trac, which gives them access to the music ahead of time.

For artists, the benefit is twofold. First, it helps them identify their most engaged fans. It’s much harder to do this based on social media or streaming numbers. Second, the pre-saves of the upcoming music can train the DSP’s algorithms to make playlists that may include other songs from that artist.

most fans don’t want to invest

One of the biggest talking points of NFTs was that fans can participate in the royalties. NFTs weren’t just pitched as collectibles, they were also pitched as securities. The belief is that fans would become investors and want equity in the artist’s career too.

But most fans don’t want to be investors. They want collectibles, sure, but buying securities changes the relationship.

The analogy I often use is Apple. Consumers may own an iPhone, iPad, AirPods, and MacBook, and plan to buy more in the future. But that doesn’t mean they want to own AAPL stock. Similarly, a Bruno Mars superfan may spend $40 on a 24K hat, but that doesn’t mean they want to buy $40 worth of his royalties. The consumer behavior differences are apples and oranges.

The one-of-one NFTs logic works a little bit better in art than music. That’s why a lot of artwork NFTs like Bored Apes and CryptoPunks took off, but music hasn’t had the same breakthroughs.

In music, customers have valued access over ownership. Spotify’s success speaks to this. The consumer has moved on from the $1 digital downloads on the iTunes stores. Web3 solutions should find ways to bring us forward, not take us back.

In this episode, Cardin and I talked more about:

• how trac sets itself apart in a crowded landscape of music distribution services
• SEC challenges with selling NFTs as securities
• how ownership fits into trac’s strategy

Listen to our full conversation here:

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​https://trapital.co/2023/02/23/where-web2-and-web3-music-meet-with-cardin-campbell/​

money moves

• I was a guest on Pop Pantheon talking about the state of streaming​
• If Michael Jackson’s estate earns $75M per year, what’s it worth?
• How Spotify’s new TikTok-like AI-driven feed may change its business​
• Why Beyonce’s Ivy Park has struggled​

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coming soon from Trapital

Podcast: A Burna Boy Breakdown. This was a case study style breakdown on the rise of Burna Boy with Stan’s Denisha Kuhlor. Drops next Thursday!