a Hollywood story

Hey! So I watched the Floyd Mayweather - Logan Paul fight last night. Not gonna act like I'm above it. But it made me realize that even if I became a billionaire, my instinct will still be to text my friends and ask if anyone has a link to watch the fight. Maybe I'll grow out of it someday, but today's not that day.

In more serious news, big moves for Universal Music Group this week. It will sell a 10% stake in its business for $4 billion to a SPAC run by Bill Ackman. I won't break this down today. I'll cover it in my upcoming essay on the major record labels because it fights right in.

This week's memo covers my interview with Cinematic Music Group CEO Jonnyshipes, ASAP Rocky's partnership with Klarna, Drake's cannabis struggles, and the shelf life of streaming.

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new pod: Jonnyshipes, Cinematic Music Group

I had a great chat on the Trapital Podcast with Cinematic Music Group founder and CEO Jonnyshipes, who was just named to Billboard's Indie Power Players list for the second straight year. We talked about him working with Nipsey Hussle, Smoke DZA, Big K.R.I.T. We also talked about how Cinematic expanded into management and content, how Shipes teamed up with comedian Druski, and much more.

Listen on Spotify, Apple, or watch on YouTube.

ASAP Rocky's B2B Partnership with Klarna

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Rihanna's boyfriend is the latest investor and collaborator in Klarna, a Swedish fintech company valued at $31 billion. It's an ironic moment for Rocky and another sign of B2B companies partnering with hip-hop.

Flipping the script. In July 2019, ASAP was detained in a Swedish prison for a month after a post-concert incident. It cost him millions in revenue and even more emotionally. Many of Rocky's friends vowed never to do business in Sweden again. But now, Rocky's an investor in Europe's most valuable startup. He will also curate fashion experiences in Klarna's app.

On June 13, Rocky will share his story in a new documentary Stockholm Syndrome that will debut at the Tribeca Film Festival. I hope they add in a new section to cover this investment too. This is the type of story made for a Hollywood screenplay.

Klarna's business. Klarna makes it easier for online merchants to offer customers layaway options. Customers can buy now, pay later, and Klarna charges merchants 3-7% transaction fees. If you've seen more online businesses offering options to "pay in 4 installments," they're likely using Klarna. According to Forbes, it's used by over 250,000 merchants and made $1.2 billion in revenue in 2020.

More B2B and hip-hop partnerships. B2B hip-hop partnerships are an underserved opportunity for several reasons. First, B2B employees like hip-hop too! Enterprise sales is high-touch. B2B clients (and their clients) listen to the same stuff B2C clients do.

Second, artists themselves are businesses. They use tons of software and programs to run numerous ventures. It makes them relatable influencers. For instance, Rocky sells merch to his fans, so he can speak to Klarna's value prop. And third, many B2B companies sell to B2Cs. Artists can be brand partners for platforms, which helps attract more B2C clients since they (and their end-consumer) identify with hip-hop.

The B2C deals are obvious. But B2B deals are still a white space.

Read more about Rocky and Klarna in Forbes.

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Drake's 'More Life' cannabis now has Less Life

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Last week, Drake's cannabis joint venture fell through. Canopy Growth has divested Drake's More Life, which led to a $10 million write-off. It fell through for two reasons—a struggling company and a misaligned brand.

A turnaround that never happened. When Drake teamed up with Canopy Growth in 2019, the company was struggling. It had net losses of nearly $1 billion. It launched a wide range of THC-infused beverages and edibles to right the ship. It has recently launched partnerships with Snoop Dogg, Martha Stewart, Seth Rogen, and Drake.

When the deal was signed, I was bullish on Drake's opportunity to help an underdog brand. But I was off. Way off.

Was there ever a strategy? In August 2020, ten months into the More Life JV, Canopy Growth CEO David Klein told BNN Bloomberg that "it wasn't progressing as originally intended and still working on the details to determine where it goes." Later in the interview, he said "More Life was pretty far down the list of things to get to."

It sounds like More Life got put on a performance improvement plan before getting pushed out of the company. It's an unusual spot for Drake, who's been the priority in most business relationships. He's rarely been put in that "not important, not urgent" bucket.

An off-brand mismatch. Drake may still be rap's top act, but he can't sell everything. When I think of Drake's brand, I don't think of weed. I think of him drinking champagne I can't pronounce, chillin' on a boat, and wearing some all-white Air Force 1s.

I can't think of a time I've seen Drake smoke up, and I'm not alone. There have been articles written about this topic!

The best brand-artist partnerships are for products that fans believe the artist would rep even if there was no money involved. Drake has plenty of those partnerships, like Nike, Sprite, and the Toronto Raptors.

Cannabis ain't one of those. Drake still owns the remaining 60% of More Life, but it makes more sense for him to sell it off or partner with a friend who is a stronger fit.

Read more about cannabis M&A in BBN Bloomberg.

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Streaming's microwave era: Shorter shelf life

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The shelf life of new music feels shorter than ever. Music streaming is a lot like video streaming. Shows like The Queen's Gambit and Mare of Easttown capture our attention for the length of a news cycle, then we moved on.

Similarly, three weeks ago everyone talked about J. Cole's The Off-Season, but the moment has now passed even though the album and rollout were praised. The only people who still have The Off-Season in regular rotation are Cole's day-ones.

Some believe that this is a quality issue, but it's less about quality, and more about control.

The shift in control. It wasn't like this in the 2000s. Albums like Get Rich or Die Tryin' or Tha Carter III stayed in car CD players for over a year. They got played at parties and clubs all the time. And six months after those albums dropped, artists still release new music videos and remixes from those albums.

When fans owned music, more value was placed on each CD. Also, more mainstream listening was controlled by gatekeepers like radio, TV, and nightclub DJs. They extended the life of certain records.

If you're someone who still buys albums today, listens to the radio often, still goes out to clubs, and doesn't do much streaming, then this may not seem like much of a shift. But if you haven't left your house all year and listen to most of your music on streaming, then you can relate.

Just content marketing? The business model for streaming is also a factor. Most artists need tons of streams to earn meaningful revenue. New music is an opportunity for artists to earn more money through tours, festivals, and merch. And for digital streaming providers, new music attracts subscribers who become users of more lucrative revenue streams. This is the music industry's version of content marketing.

That said, I don't think Kendrick Lamar or Rapsody look at their albums like content marketing opportunities. But they release their music on platforms run by companies that do look at their music as a means to bring in more subscribers.

Read more: What Does Longevity Look Like in Hip-Hop?​

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Coming soon: my essay on the big three major record labels. Next week!