another one

Hey! If you get a chance, check out Billie Eilish's new interview on British Vogue. It's a good one. Since Billie became mainstream, many media outlets used her baggy clothes style to paint her as a "good pop star," and positioned her against other women who wore revealing clothes.

That take is problematic and Billie was never with it. Her new look and upcoming album release is her response to that, and it's great to see.

This week's Trapital memo covers DJ Khaled's strategy with his compilation albums, Twitch's business model and pitch to artists, and lessons learned from Jay Z's LIT Method investment.

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new pod: Brandon Pankey, APEX + Live Nation

Live Nation Urban’s VP of Business Development and Operations, Brandon Pankey, came on the Trapital Podcast to talk about the post-pandemic return of live music. He recently launched APEX, a music-centric video on-demand service to be the home for projects like the next Power, Friday, A Star is Born, and more.

Tap in on Spotify, Apple, watch YouTube, or listen on other platforms.​

DJ Khaled's album strategy with his albums

On Friday, DJ Khaled released his 12th album 'Khaled Khaled.' It's full of big-name features and heavily produced tracks. His rollouts are well-planned promo runs leading up to the main event. He's a hype man at heart. But as the industry has evolved, Khaled's gameplan has to adapt.

Khaled had his mainstream breakout before streaming took off. From 2006 to 2010, we got top-tier tracks like "Holla At Me," "We Takin' Over," and "All I Do Is Win." The Khaled posse cut mattered. He gave artists a platform they couldn't easily replicate at the time and got the best from them as a result.

"We the best" in the streaming era? The streaming and social media eras have disrupted the power of middlemen, which hurt Khaled's process in two ways.

First, artists can more easily recreate what Khaled offers. Any artist can make a song at home, buy a beat on a marketplace for $250, upload the track to the streaming providers, and make money. If they want a feature, they can DM the artist and get it done quickly. They save their best bars for their solo projects. When Khaled and others ask for collabs, they are more likely to give forgettable verse, which limits the impact of a Khaled project.

Second, Khaled is now competing with all the other business interests open to artists. Fifteen years ago, Khaled could get Akon, Lil' Wayne, Birdman, T.I., Rick Ross, and Fat Joe all together in-person on a track. Music was how most of them made money, and Khaled offered them all the best opportunities to make money.

More competition than ever. But now? Good luck. On Khaled Khaled, he still has big names like Post Malone, Meg Thee Stallion, Lil' Baby, and DaBaby on the same track. But they probably weren't all together in person. The Khaled verse was one of many tasks on their calendars that day. It was probably scheduled in between a new apparel partnership meeting and a tech startup that wants the rapper on their cap table. They may not hear the other artists' verses until the final version is dropped.

But Khaled understands this more than anyone. He's made more money at this stage in his career than he ever did in his late 2000s run.

Khaled's albums have become hip-hop's NBA All-Star Game. All the big stars come together for the widely marketed event. This album is expected to top the charts this week (no Tyler, The Creator to compete against this time!) But if everyone gives a fraction of the effort, it won't match the ratings of a game with true consequence.

Read DJ Khaled's new feature in XXL Magazine.

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Twitch's 'Rockonomics' pitch to artists

Last week, Spotify's former chief economist Will Page published a new study called Twitch's Rockonomics which claims that artists make 3-15x more on Twitch than streaming providers. Bold claim! It's not untrue, but the reality is more complicated than that.

Twitch is a complement, not a replacement. Artists use Twitch to livestream content to their fans. Those artists can monetize on Twitch by charging monthly subscriptions (for $5, $10, or $25), earn digital tokens called Bits, or generate ad revenue.

The report positions Twitch as a lucrative complement to streaming, especially for an artist's superfans. Kevin Kelly's 1,000 True Fans post is mentioned often. In many cases, artists can earn much more total from Twitch than they do on all streaming providers combined.

But it's fairer to compare Twitch to products that also target superfans. Patreon is a better comparison. On both platforms, artists monetize superfans by charging monthly rates for exclusive content. Similarly, live performances are a superfan product. There is likely a high overlap with Twitch subscribers.

Unfortunately, those comparisons won't generate the same headlines! These reports are both PR tools and pitches to future users. For better or worse, it's much more effective to position this report as a response to the narrative that artists make no money on streaming.

The "pitch report" trend. In the past few months, several streaming companies have released or commissioned reports to show creators why their platform is the best to monetize on. Here are examples from Spotify, Apple Music, SoundCloud. Each report is numbers-driven, full of case studies, and takes a few liberties in how they stack up against their peers.

The "creator economy" space is heating up. Companies big and small want to ride the wave. Companies like Clubhouse, Patreon, and Splice have recently gotten more funding and higher valuations as a result. Platforms are competing for the attention of both audiences and content creators.

Not for the superstars. All these platforms want to attract successful "middle of the pack" artists. Not the superstars, but the next few levels below. But they'll be most successful if they focus on owning a lane. They can use the same strategies the artists use themselves to separate from the pack.

Read more about Twitch's strategy in the Rockonomics report.

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Lessons from Jay Z LIT Method Investment

Last week, Jay Z's Marcy Venture Partners invested in fitness company LIT Method, which focuses on low impact training. LIT and Jay Z both have partnerships with Puma, where Jay Z is head of basketball operations. It's another example of Jay Z's teaming up with companies that strengthen his interests elsewhere.

The cell phone partnerships. In 2017, Jay Z sold 33% of Tidal to Sprint for $200 million. The deal included a $75M budget to fund exclusive Tidal content. That "exclusive Tidal content" became Jay's 4:44, which dropped five months later. Sprint has vested interest to maximize the success of 4:44. He turned the album into a B2B product.

Jay has done other albums partnerships where he was compensated for exclusivity, like Samsung and Magna Carta Holy Grail. But Sprint is unique because the buyer had equity in a company that Jay was the primary owner and, arguably, one of its most popular content creator.

There's an opportunity for more moves like this in music, even at the non-superstar level.

The decentralized wave. Washington Post's VP of commercial technology Jarrod Dicker wrote a thoughtful essay on how media company operators can shift to a decentralized ownership model. He envisions a world where creators, operators, and consumers can all coexist as co-owners in collectives that are part of the same journey and contribute to it in different ways.

For artists building careers, NFTs have become a model for consumer ownership. But selling one-off NFTs is not a strategy.

A strategy example is if an artist's EP is released everywhere, but ownership in the EP is sold through NFTs. Casual fans can still access the songs on any digital streaming provider, but superfans would now pay a premium, which grants them a share in the song's revenue—both direct and derivative. It's a form of crowdfunding that's more tied to the end product than a typical Kickstarter campaign would be.

Read more about this model with Dicker's essay Why Subscribe When You Can Invest?​

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Coming soon from Trapital

Podcast - Trapital Mailbag! Have any questions about anything in the business of hip-hop? Reply to this email with your question! I'll answer the best questions on this week's podcast!

Essay - I'm writing about the strategy for the big three record labels—Universal, Sony, and Warner—and which one is best positioned for the next decade. Coming soon!