the steal of a lifetime

​read in browser​

Hey there. This is the second to last Trapital Memo of 2020. Next week, I'll send you a short highlights edition with some of your favorite stories.

Next Wednesday 12/30 5pm ET, I'm hosting a 2021 Prep talk with DJ, marketer, and investor Mick Batyske. We'll talk about leveraging personal brands into investments and deals. If you're interested, click here and I'll send you a note once the sign-up page is live.

This week's memo breaks down Young Money's masters sale, Troy Carter and the record label business model, and Roc Nation's new book publishing imprint, Roc Lit.

was this forwarded to you? sign up here.​

Why Lil' Wayne would sell Young Money's masters for $100 million

According to a lawsuit from Lil' Wayne's former manager Ronald E. Sweeney, the 38-year-old rapper sold Young Money's masters (which includes Wayne, Drake, and Nicki Minaj) to Universal Music Group for $100 million.

I intentionally held off covering this last week. It sounded like another misreported celebrity headline that people got too excited about. Like, "Beyonce made $300 million from Uber's IPO" or "Blac Chyna made $20 million per month from OnlyFans." I was waiting for the fact-checkers, but they never came. Instead, we got legal proceedings that further validate it.

$100 million is a steal. The problem isn't the sale. Many musicians have sold both publishing and masters in 2020 for reasons I previously wrote about. The problem is the $100 million.

In November, Scooter Braun sold Taylor Swift's masters from her first six albums for a reported $300 million. That figure is more reflective of the current market. Taylor Swift's total records sold to date is over 200 million. It's an imperfect stat for masters valuation, but let's use it as a proxy.

Meanwhile, Drake has sold 170 million, Lil' Wayne 120 million, and Nicki Minaj 100 million. That's over 390 million for Young Money's biggest stars. The label's total is likely over 400 million when including Tyga's hits like "Rack City" and "Faded."

In an open market deal, Lil' Wayne could have gotten way more than $100 million for his own masters—let alone this deal that includes the highest-selling female and male rappers of all time. But this deal didn't happen in the open market. It happened with Universal Music Group, his record label that he's had ongoing legal issues with for years.

A distressed asset? The lawsuit revealed that Young Money is still in litigation with Aspire Music Group, Universal Music Group, and Cash Money over Drake's unpaid profits. It's no surprise. Cash Money is notorious for shady practices. Its clients have had to lawyer up to get paid. It's an unfortunate part of the business model.

But litigation can be expensive when Wayne, according to the Sweeney lawsuit, is out here paying his lawyers 40% contingency fees!

Lil' Wayne may be in an asset-rich, cash-poor situation. He made a recent endorsement that some assumed was for money. One way to solve this problem is to sell assets and get some cash. This masters sale could help settle the lawsuit. UMG already has Drake signed to its label, so this sale could have solved several problems.

This is why this $100 million sale can't be valued as a retail sale. It not even trade-in value, it's salvage value. It bought Lil' Wayne some liquidity and peace of mind. Meanwhile, UMG will reap the rewards for years from one of the most valuable assets in hip-hop.

It's ironic. In 1998, Cash Money pulled off a landmark $30 million distribution deal with Universal. It's often considered the deal of a lifetime in hip-hop. Now in 2020, UMG acquired the most valuable parts of that deal right back, and then some. It's now the steal of a lifetime.

Read more about the Young Money masters sale in the lawsuit from Sweeney.

Troy Carter and the future of the industry

Music exec and veteran Troy Carter was recently interviewed by Music Business Worldwide. He believes once a signed artist proves their a success, the model should change. Here's a quote:

"The music industry has to change the business model; it’s as simple as that. New artists are becoming smarter and smarter, and we can’t be greedy...

"So you might start off on a traditional record deal where the label gets 83% and the artist gets a 17% royalty. But if that artist becomes Roddy Ricch or whoever, [when the label has] made a significant profit, then maybe the economics flip, and that artist receives 75%, and the label gets 25%. Because now you’re de-risked; you’ve made a profit, and you have a consistent amount of revenue flowing in from [those] projects..."

Carter's not wrong. There should be more options for proven artists to renegotiate or buy back ownership of masters and publishing. This happens now in unique situations (like Jay Z or Rihanna) but it won't happen on a larger scale until there's a bigger threat to the major record label system.

No true threat. Independence is often considered that threat. It's a viable alternative, but not yet a threat at the highest level. More artists than ever have succeeded on their own terms through services like DistroKid, UnitedMasters, and Stem. But as Carter himself said last year, "Taylor Swift doesn't want to be on TuneCore. No offense."

The industry's business model won't change until artists without major record label backing can replicate the global superstardom that Travis Scott has hit since Astroworld. Chance the Rapper made it far, but nowhere close to this Cactus Jack run.

How disruption works. Look at Netflix, Apple, Amazon, Airbnb, and any other firm that shook up its industry. The change didn't happen by disrupting the long tail. It happened by disrupting the head. In music, the long tail has been disrupted, but the verdict is still out on the head.

That disruption could come from one of the distribution services mentioned or a new entrant. It's not impossible, but the industry is not there yet.

Roc Nation announces Roc Lit 101 book publishing imprint

According to Variety, this joint venture with Random House will launch in summer 2021 with books from CC Sabathia, Danyel Smith, Lil' Uzi Vert, Meek Mill, Fat Joe, Yo Gotti, and more.

Multimedia expansion. More artists have expanded their content strategy across media. Visual albums, documentaries, and podcasts have been the wave, and books aren't far behind. Dozens of artists have written memoirs, novels, autobiographies, and even comic books. It's perfect timing.

Content and IP ownership. An artist's 2021 book is the source material for that 2023 Amazon docu-series. Those IP and derivative rights can be quite lucrative.

The future deals? I won't be surprised if Roc Nation and others sign artists to multimedia deals including albums, podcasts, books etc. It would be like "360 multimedia content deals." Many artists will reject the notion in this ownership-minded era. But others may welcome the convenience, even if it comes at a cost.

​

Share Trapital
​Enjoying Trapital? Help spread the word! I'm trying to hit some year-old goals and would love your help.
​
Share your referral link with a friend via text, email, social media, or copy and paste the link below:
​​https://trapital.co/share?rh_subscriber=sub_55ef6f9e54​

​

Trapital Players of the Week: E-40 and Too Short

I'm an east coast guy, but I've lived in the Bay Area for the past six years. Saturday's Verzuz battle was special. I appreciate what these two legends have brought to hip-hop. This Verzuz didn't get watched as much as others, but it was still a dope moment. Long live the hyphy movement.

Coming soon from Trapital

• Essay on TikTok - Coming soon, trust me. It will be your Christmas gift!
• 2021 Prep with Mick Batyske - Wed 12/30, 5pm ET! Click here to get more info soon.

​