Trapital - the trends that last

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the trends that last

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Hey! This Wednesday will be five years since I started Trapital (and four years since I’ve been doing it full time). This was the first essay I sent out to around 140 people. These have come a long way! I’m glad that Trapital continues to add value for the people taking music, entertainment, and culture to the next level. Can’t wait for the next five years.

Today’s memo is about zero-interest rate phenomena in music. The past year has been a reckoning on trends that seemed like the future but have came back down to earth. A few years ago, when interest rates were close to 0%, pandemic lockdowns were in full effect, and Clubhouse was booming, there were a lot of things that have came and went.

Most of these discussions have focused on the broader tech industry, but let’s dig into how those shape the music industry.

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which music trends have outlived the pandemic?

It seemed like yesterday that Clubhouse was full of packed rooms and well-known speakers debating about the music industry. Some shared some insightful takes, others openly admitted to payola (with no shame!) That was the beauty of the moment. But it was one that came and went along with several other short-lived trends.

The entire tech industry has come back down to earth after several years of low-interest rates and quarantine lockdown-inspired trends, like SPACs and meme stocks. The same happened in music. Now that the dust has settled, let’s look back on what came and went, what the verdict is still out on, and what’s here for the long haul.

the music industry’s zero-interest rate phenomena

I reread several industry topics from 2018 to 2021 to determine the trend or deal that was the height of the frenzy. There are many contenders, but Trapital’s winner is when Universal Music Group announced a new music group with NFT characters from Bored Ape Yacht Club.

It’s the type of headline that made perfect sense in November 2021, when the price of Ethereum and Bitcoin both peaked. For decades, people have criticized the music industry for not innovating enough. This was an attempt to lead the charge. But now that some Bored Apes have declined over 95% in value, the heyday is long gone.

Here are other contenders.

Travis Scott’s Fortnite Event. Astronomical had over 12 million concurrent viewers and nearly 28 million unique visitors. The results were fantastic, but this event was the perfect combination of several timely factors:

• A superstar artist at the height of his popularity
• A gaming audience profile that was aligned with the superstar artist’s fanbase
• The beginning of quarantine lockdowns in the early days of the COVID-19 pandemic

It justified the expensive lift. Epic Games and Fortnite have done very few events to this level since. Other platforms have tried their own. For every success like Lil’ Nas X and Roblox, several others have struggled.

We’ll still see artists immersed in digital environments, but not at this scale.

The text marketing takeover. When Community launched in 2019, many of its A-List celebrity users seemed ready to switch from Instagram to SMS altogether. But as I wrote in What Creators Got Wrong About Text Marketing, phone numbers are a much more personal form of communication. There needs to be intent captured in the initial conversation for it to drive results.

This strategy has been much more effective for artists like SuperPhone founder Ryan Leslie. He and others used it with the specific goal of selling a product. Some of the biggest clients for Community, SuperPhone, and others are enterprise accounts that share order updates with customers.

The Pump Plan. This was a ten-step plan from record labels to turn a local rapper into a meme by doing controversial, fuckboy antics. That was the grand plan behind moments like Lil Pump’s song “Fuck J. Cole,” which led to a sit-down conversation between Lil Pump and J. Cole that now seems ridiculous that it even happened.

We still see sensationalism in artist growth tactics today, but it’s less effective. When is the last time you had a conversation about Tekashi 6ix9ine? That man was a zero-interest rate phenomenon.

where the verdict is still out

There were other concepts and initiatives that had similar momentum in this era. That momentum may not be what it once was, but the core principles are still there behind each of the following examples.

DEI initiatives that lead to real change. After George Floyd’s murder, the music industry responded with #TheShowMustBePaused. Hundreds of millions of dollars were committed to social justice and there was a promise to elevate more Black executives.

Since then, Def Jam announced Tunji Balogun as its new Chairman and CEO, and Sylvia Rhone has maintained a diverse staff at Epic Records. But we also saw Motown Records get folded back under Capitol Music Group just two years after Ethiopia Habtemariam was named Motown president and had a direct line to Universal Music Group CEO Lucian Grainge. Ethiopia has since left the position. Her tenure may not have been perfect, but since she still relied on Capitol for radio and other services, the ongoing power struggle and recent layoffs are a sign that she likely wasn’t set up for success to begin with.

As a well-respected exec said to me recently, there’s a sad irony that the industry celebrated Smokey Robinson and Stevie Wonder at the MusiCares fundraiser before the 2023 Grammys, while the label they helped build, Motown, slowly got dissolved.

Verzuz. In the dark days of the pandemic, Verzuz kept us going. From Jill Scott and Erykah Badu’s sisterhood vibes to Jadakiss’ performance masterclass, we saw it all.

It’s been a while since a big-time Verzuz matchup, but that was inevitable. Once the brand money came in and expectations grew, it became tougher to land the big stars. There are only so many great matchups out there left. Plus, the instability at Verzuz’ parent company, Triller, likely didn’t help.

But if a marquee Verzuz event happens, people will still show up like a hyped-up boxing match that happens a year or two later than desired.

The perfect time for Floyd Mayweather to fight Manny Pacquaio would have been in 2009. Both fighters were still undefeated and in their prime. Their eventual fight in 2015 was a few years late, but it still set a record at the time as the highest-grossing event in pay-per-view history. Verzuz is the same. If Verzuz could ever get Usher on board with the right matchup, people will tune in.

NFTs. It’s tough to bucket NFTs in a single category since there are so many use cases. I’m still bullish on NFTs as collectibles or tools that grant VIP access. Those solutions may not need to live on the blockchain necessarily, but there’s a market for them. The heightened demand for vinyls says more about fans’ overall desire for collectibles, memorabilia, and merch, whether it’s physical or digital.

But I’m more skeptical of NFTs as investments that generate returns for consumers. NFTs expected to create future profits for owners must be registered as securities. Artists like 3LAU (March 2021), Nas (January 2022) did quite well by selling future royalties, but there have been less similar deals since then. Both consumers and regulators tightened up. With the right filings in place with the SEC, there’s still a future.

the trends in music that are here to stay

Music rights sales and acquisitions. Since 2019, we’ve seen several waves of catalog deals. The first deals were for legacy rock and roll catalogs. The pitch was that music was a non-correlated asset that can withstand economic downturns. These deals became even more attractive when the stock market dropped in the early days of the pandemic.

But as Hipgnosis struggled to raise additional funding due to lower-than-expected returns from catalog revenue, people questioned whether these deals would reach the same valuations as before.

Some artists have struggled to get acquisitions as high as 30x multiples on revenue that they could have earned in a zero-interest-rate environment. But deals are still happening, and some assets like Michael Jackson’s rights are rumored to be in that range.

TikTok and short-form video. TikTok may no longer be in its rapid growth phase of 2020, but that may be a good thing. It forces artists to focus on users more likely to be their real fans, which increases the likelihood of intent—whether that’s someone who streams their music, attends their concerts, or helps them spread the word.

Short-form video is where so much music discovery happens. This next phase is when we leave the mindset of coming up with a “TikTok dance” and think more broadly about what a vertical video can look like.

High prices for live entertainment. Sure, there are plenty of inefficiencies about how concert tickets are sold and how events are promoted. The need to book venues far in advance makes it hard to match supply and demand. It’s even harder when artists can blow up (or fall off) overnight in the social media era.

It’s not like the airline industry, where each company has thousands of reference points to determine the exact price and frequency of the JFK to LAX market. In music though, Dua Lipa may only come to a city once during the Future Nostalgia tour era. They have one chance. Artists either leave money on the table, or sing to some empty seats.

But these problems speak to the high demand for concerts. There’s no replacement for seeing your favorite artist in person—not even in the metaverse. The major event’s promoters have seen record profits, and that’s not changing anytime soon.

At the height of the pandemic and low-interest rates, even the most tapped in people struggled to keep up with the next big thing. There were so many trends to keep up with, and no one wanted to fall behind.

Even though a lot of those trends didn’t pan out, there’s excitement still there to stay tapped in. Lately, the big wave is AI. In six months, there may be something else. It’s an exciting position to be in. Let’s hope the industry can be the one that disrupts and not the place that gets disrupted.

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money moves

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• Universal’s push for higher streaming payouts​
• a practical guide for artists using ChatGPT​

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