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Hey! In the next few weeks, I'm publishing my latest essay. I won't give too much away but it has to do with OutKast, Atlanta, Issa Rae, and a couple of people named Tyler. Look out for it later this month!

Today's memo covers my Trapital Podcast interview with UTA agent Mike G, Def Jam's new CEO, DistroKid's billion-dollar valuation, and LVMH's role in hip-hop.

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New pod: Mike G, music agent, UTA

Mike is a music agent at UTA. He was recently named to Billboard Hip-Hop / R&B Power Players list, and signed several big acts during the pandemic, like Lil' Wayne, Demi Lovato, Trippie Redd, and more. We broke down his touring strategy for both The Kid LAROI and Young Thug. Mike also talked about managing Chris Brown and helping him during his comeback years.

Tap in on Apple Podcasts, Spotify, or watch on YouTube.

On the Trapital Podcast, hip-hop's heavy hitters explore their ideas that helped them level up their game. Learn more here.​

Def Jam's future is with new CEO Tunji Balogun

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Last week, Universal Music Group announced that Def Jam Recordings' new CEO and Chairman will be Tunji Balogun, who currently serves as EVP A&R at RCA. Balogun will take over from interim chief Jeff Harleston on January 1, 2022.

Big move for UMG. In a January 2021 webinar, Cabbages' Gary Suarez and I did a deep dive on Def Jam's Past, Present, and Future.​

Here are the things Def Jam and UMG had to address:

• Improve upon Paul Rosenberg's tenure. Eminem's manager led Def Jam from January 2018 to February 2020. But Paul spent a lot of that time focused on Em, who dropped 2 albums, went on tour, and had a big rollout for Slim Shady LP's 20th anniversary. During Rosenberg's tenure, the label did not breed new stars, Def Jam's 2019 Rap Camp came and went, and it didn't lean into trends like drill. Def Jam needed a CEO whose main job is CEO of Def Jam.
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• Consider hip-hop's big names who wanted in. Ever since Jay Z served as Def Jam CEO from 2004 to 2007, hip-hop's big names have eyed the position. Former Murder Inc. CEO Irv Gotti once wanted it. DJ Khaled was rumored to have wanted it after he was named president of Def Jam South. Jeezy might have wanted it at one point, which may have led to his recent consultant role. And Griselda's Westside Gunn said he wanted it but believes he's overqualified.​
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• Elevate Black leaders. After George Floyd's murder, the major record labels committed to hire and promote Black execs. That's been the underlying focus for #TheShowMustBePaused and the Black Music Action Coalition. The last three Def Jam CEOs were white men. How would the label respond?
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• Build an identity. Def Jam was once synonymous with New York hip-hop. It was a whole vibe. Outside of music, Def Jam was still known for dope apparel and memorable video games. But since the 2000s, each CEO has taken a different turn. In the past few years, its biggest acts have been Kanye West, Justin Bieber, and Logic. Will Def Jam prioritize revenue-generating acts (regardless of genre), or focus on a particular sound?

Tunji checks several boxes. First, Def Jam will be his full-time job. He's risen through the major record labels ranks at RCA, Interscope, and Warner. In 2018, Balogun did launch Keep Cool, an LA-based record label under RCA. But that's nowhere near the commitment of, you know, managing Eminem.

Balogun also worked as an A&R helping big R&B acts like H.E.R., SZA, Wizkid, Khalid, and worked closely with Top Dawg Entertainment. He has a track record and proven ability to attract new stars to the label, which Def Jam has struggled with.

The Nigerian-born exec's hire is also a true elevation, not a lateral move from someone who was already a label head. This was an opportunity for someone who wasn't yet reached that level but was arguably overdue.

Plus, Def Jam found a way to include the rappers who still wanted in. It has Jeezy's advisory services and now has Snoop Dogg as an executive consultant. These fractional roles are perfect for influential artists who can't commit to running a label. Snoop is having too much fun with his sports commentary, and Jeezy is too busy building up that real estate portfolio.

Read more about Tunji Balogun becoming Def Jam CEO in Variety by Shirley Halperin.

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Why DistroKid is valued at $1.3 billion

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According to Bloomberg, the music distribution service raised money from Insights Partners and is now valued at $1.3 billion.

The music industry's long tail. According to Bloomberg, artists on DistroKid upload over 15,000 - 25,000 songs per day. If we assume all those songs are uploaded to Spotify, that's at least 25% of all music released to Spotify. With millions of users, the $19.99 per year distribution tool is the music industry's long tail.

When DistroKid launched in 2013, 250 songs were uploaded per day. In 2015 it hit 2000 per day. The hockey stick growth has taken off with the rise of the streaming era.

Focus on one thing. Most distribution services offer additional benefits for their top customers. They want to extract more value from power users and justify variable costs like customer support.

But DistroKid's growth and valuation speak to its focus on doing one thing well. Even its competitors give props! The service is quite limited on customer service, but it's a tradeoff that the company accepts. It's committed to its low-cost service that breaks the lowest of entry barriers.

DistroKid's business models work because it has massive scale. Its financials aren't public, but it's a business with moderate fixed costs and low marginal costs. With "millions" of customers paying at least $19.99 per year, it has $40+ million in annual recurring revenue.

Long tail models still need star success stories. DistroKid's homepage features testimonials from artists like Ludacris, Megan Davies, and 21 Savage's manager Kei Henderson. Technically, DistroKid earns the same revenue whether its customer is Ludacris or a hobbyist. But Luda's success attracts more hobbyists to the platform, and more artists like Luda, who then attract even more artists.

Both DistroKid and major labels need star success stories, but for slightly different reasons.

Increase the total addressable market. In a quote to Bloomberg, Kaplan said "DistroKid set out to make it as easy to release a song on streaming services as it is to post a photo on Instagram."

This is the push behind several successful tech companies of the past decade. Twitter made it easy for anyone to be a microblogger. Instagram did the same for photography. Shopify did it for online merchants. Tools like Anchor and Clubhouse have done the same for audio. The list goes on DistroKid has done the same for music.

Read more about DistroKid's valuation in Lucas Shaw's Bloomberg article.

Why LVMH is a Hip-Hop Company

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Last week, Beyonce and Jay Z were named brand ambassadors for Tiffany & Co, which was recently acquired by LVMH. Lately, most of the big announcements from LVMH have been folks who are connected to the culture in some way.

The luxury world leader has acquired a stake in Virgil Abloh's Off-White LLC. It bought 50% of Jay Z's Ace of Spades. A few months ago, Travis Scott collaborated with LVMH's Dior on its 2022 Men's collection. Plus, LVMH, backed Fenty Beauty and launched the unsuccessful Fenty Maison.

LVMH is a hip-hop company. The richest person in the world is a hip-hop fashion CEO. LVMH may not position itself that way, but now it's too reliant on the culture not to be.

I am eager to see how the dynamic shifts. European fashion houses looked down on the early 2000s hip-hop fashion brands like Enyce. Now hip-hop is the driving force behind European brands. But as artists see the value and the wealth that Arnault and other execs have attained, the dynamic will continue to evolve.

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Coming soon from Trapital

Podcast: 24KGoldn. I sat down with the chart-topping artist behind "Mood," "Valentino," and his debut album, El Dorado. This was the first in-person Trapital Podcast interview since pre-pandemic! Drops on Friday.

New essay: drops later this month. Stay tuned!