the $900 million plan

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Hey! Now that things are opening back up, I'm reminded of how much cheaper being "outside" once was. For years, millennial lifestyles were subsidized by gig economy startups (and their VCs) who prioritized growth at all costs.

Now, subsidies have dried up and prices are closer to market rates. I recently took an Uber to SFO airport. For what I paid I should have booked a damn limo.

But soon enough, being "inside" will cost more too. All of our subscriptions for music and video streaming services are priced below market rate. Once these companies flex their pricing power, we're gonna pay more than we ever did for those digital cable bundles!

For next Monday's memo 6/21, I'll send you my essay on the big three major record labels—Universal, Sony, and Warner. This is a breakdown of the industry and which label is best positioned for the future. If you know someone who should read it, send them this link and I'll send it to them too.

Today's memo covers Saweetie's rise and business ventures, hip-hop's potential with evergreen catalog sales, and Live Nation opening new venues.

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Saweetie's plan to build a $900m empire

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The 27-year-old has a spot on hip-hop's All-Quarantine team. Her debut album Pretty Bitch Music drops later this year and she's been planting the seeds to grow her platform.

A product of social media. Saweetie is the definition of a modern-day creator. She has her Icy University YouTube series, platinum-selling singles, tons of brand partnerships for days, a gaming collective, and a fashion and beauty line for her Icy Girls fanbase.

Saweetie has more in common with Issa Rae than she does with Nicki Minaj and most other rappers. In most of her content, she wears the products she sells. It's her version of her content and commerce flywheel.​

In the past few months, Saweetie got plenty of coverage in big media outlets: Complex, W, The Ringer, REVOLT, Billboard, Harpers Bazaar, Forbes, AP, and more. Her team has put in work to elevate her brand to the main stage. It makes sense. This is her moment (hopefully one of many) and she should maximize it.

Focus matters. In her W interview, Saweetie said she wants to build a $900 million empire. She averaged the money between all the women she admires like Rihanna and Kylie Jenner. $900 million was the number.

Right now, Saweetie's various businesses help her monetize "Saweetie, Inc." which can easily lead to a high eight-figure or low nine-figure net worth.

But $900 million is a different beast. That requires ownership (or investment) in a breakout product that becomes bigger than the person. Here are a few that are on their way or will get there soon:

• Rihanna - Fenty Beauty and Savage X Fenty
• Kylie - Kylie Cosmetics
• Kanye West - Yeezy

In an interview with Complex, Saweetie said that her music career hasn't developed as quickly because of how hands-on she is with her content and other ventures. The same may soon be true with her business ventures.

She's still experimenting, which makes sense at the moment. But her $900 million is more likely to come from one big skyscraper idea than it will from several shopping plazas.

Read more about Saweetie in Complex.

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are hip-hop catalogs the next evergreen?

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I was recently interviewed in a great article by Alaister Moughan in Synchtank about whether hip-hop catalogs will eventually get sold for nine-figure amounts like Bob Dylan, Paul Simon, and others. I shared my high-level perspective, but I've thought about it more and have a few more points to share.

Hip-hop catalogs may be undervalued. According to the piece, Tupac Shakur's music has been streamed almost twice as much as Bob Dylan's since 2015. Similarly, MRC's data shows that hip-hop is streamed twice as much as Rock music.

For overall music demand (including album purchases), hip-hop's total volume of all music is 50% higher than Rock. If we assumed this tracks for Dylan and Tupac too, then Pac's catalog could be worth 50% more than Dylan's $300 sale, and be sold for $450 million.

But I doubt Tupac's catalog would net $300 million. Two months ago, eOne wanted $600 million for Death Row Records catalog, but I'm sure it got a number much lower than that. Hip-hop catalogs often have 10-12x multiples. It's still high, but nowhere near as high as the multiples Hipgnosis and others pay for classic rock catalogs.

The hip-hop generation. This is a generation that grew up on hip-hop. People love music that reminds them of the time they were coming of age (which is why Dylan is so popular with a certain type of baby boomers). And since people now live longer than ever, they're going to listen to this music longer than ever.

Millennials and Gen Z will soon be the old folks at the cookout listening to Usher's "Lovers & Friends" the same way our parents did with Frankie Beverly & Maze "Before I Let Go."

The songs that came out from the mid-90s to mid-2010s will be especially popular. It's a bit ironic since most of those years were dark days for the music industry. But this may soon be the most overlooked era.

As Moughan pointed out, some investors may undervalue the hip-hop opportunity because of their own music interests. They identify more with Paul Simon than Paul Wall. But that's on them. Another group of investors will recognize the opportunity.

Read more about hip-hop's evergreen catalog opportunity in the Synchtank article.

Live Nation gets ready for outside to open up

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In the past few weeks, Live Nation announced plans to open three new venues:

• The Terminal: 5,000-capacity in Houston
• History: 3,500 in Toronto with Drake
• Performance Venue: 6,000 in Los Angeles

These venues emerge as demand for live events is higher, but supply is lower since the pandemic forced many independent venues to shut down.

In December, the SBA launched the $16B Shuttered Music Venues Operators Grant, but it took six months for funds to be distributed to just 31 of the 13,000+ applicants. In January, Billboard listed 85 music venues in the U.S. that have shut down since the pandemic started, and more have likely shut down since.

Both Live Nation and AEG have made the right call to step in and meet demand with new venues. But it's still bittersweet to think about the smaller businesses that didn't make it.

The next level up. Major promoters already control most 10,000+ capacity arenas, amphitheaters, and stadiums. Very few of those have shut down since they are owned or co-operated by the major promoters. But smaller music halls, ballrooms, and auditoriums were next up.

This venue size is perfect for rising stars to reach their audience, or smaller acts to perform for a smaller audience. Personally, this is my favorite venue size: big enough to feel the energy, small enough to feel intimate.

Read more about the struggle for indie music venues in Rolling Stone.​

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Coming soon

Essay - big three major record labels. Next Monday!

Trapital Podcast - Leron Rogers, an entertainment attorney who represents Rick Ross, Kanye West, Rod Wave, NLE Choppa, and many more. Friday!