up in smoke

Hey! My streak of correctly predicting the Super Bowl halftime performer is over. I called J. Lo. I called The Weeknd. But this year I predicted Ariana Grande. I got it wrong but I'm not complaining.

We got Dr. Dre, Snoop Dogg, Kendrick Lamar, Mary J. Blige, and Eminem! It's a west coast hip-hop inspired show in Inglewood, CA. All we need is a surprise appearance by Ice Cube and we can call it an Up In Smoke Tour reunion. This is the first halftime show lineup that had no chance of happening without Roc Nation's NFL partnership.

Can you imagine the conversations that Jay Z had to make this happen? I thought back to when Snoop Dogg performed at University of Kansas' basketball night and school officials complained because Snoop had pole dancers at the event. In response, Snoop said, "When you pay for Snoop Dogg, you gonna get Snoop Dogg." Jay had to have told NFL Commissioner Roger Goodell "Nah, it's not gonna be like that, I talked to Snoop."

Congrats to the Roc Nation team for making this happen. Can't wait.

This week's Trapital memo covers my interview with Steve Stoute, RIFF, TikTok's move in NFTs, and more.

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new podcast: Steve Stoute

On this week's Trapital Podcast, UnitedMasters and Translation founder and CEO Steve Stoute joined to talk about the platform he's building for independent artists, his partnerships with other entertainment companies, why artists need a CTO, the best CRM tools for artists, and more.

Tap into the Trapital Podcast here.

hip-hop record labels invest in Riff

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Two weeks ago, music tech company Riff raised a $4 million investment round that included Quality Control Music, Top Dawg Entertainment, and EMPIRE. The social app is part-Clubhouse, part-Instagram Live, part-streaming, and part-community building.

Culture on the cap table. First, it's dope to see independent hip-hop labels on cap tables like this. Hip-hop and Black culture content drives so much growth on social networks. This is an opportunity to capture the upside, just like major records labels do with the startups they invest in. According to Music Business Worldwide, Riff's team is 75% women and people of color, which is also great to see.

A crowded opportunity. Quality Control COO Coach K said that Riff is creating a new category called "culture media." The combination of its features is unique, but it's still a competitive landscape. There have been so many new livestream apps in recent years that it's hard to keep track. And many social networks are introducing live audio, Clubhouse competitor.

Riff's differentiation is its combination of features, especially livestreaming and live audio. But most popular social networks focused on one feature, grew an audience, then expanded to new products once they achieved product-market fit with that first feature.

This may be a challenge for Riff, but its investors can help with growth. Each of these hip-hop labels can urge their artists to use Riff to engage with fans. For instance, what if Quality Control asked Lil' Baby to do an exclusive event on Riff leading up to his next album? He could say, "I'm deciding which song to make my lead single. Which of these 3 should I pick?"

These labels have plenty of popular artists who can help boost acquire more users in a competitive landscape.

Check out Riff's website to learn more.

TikTok launches NFT collections

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Last week, TikTok took out a full New York Times ad to announce its upcoming NFT collection led by Lil' Nas X, Grimes, Gary Vaynerchuk, and more. The social network—which just crossed 1 billion monthly active users— will let fans "own the moments that broke the internet."

The diamonds in the rough. TikTok's entrance into NFTs makes sense. There's so much content created and consumed on its app, and fans remember the most memorable ones.

For instance, last week many folks celebrated the one-year anniversary posts of TikToker Nathan Apodaca's viral post of him vibing to Fleetwood Mac "Dreams" on his skateboard. If those creators can sell those NFTs and capture most of the proceeds (as TikTok has claimed), that's a win.

To be clear, most TikTok videos aren't good. Most will never go viral. But there's so much content created that TikTok has a high likelihood of creating moments that are perfect for NFTs.

The longevity of TikTok content. The most memorable TikToks aren't necessarily created by active creators. Some people may have just gotten lucky, then moved on to something else. Plus, the app is so focused on constant creation. TikTok's value prop isn't a single piece of content. Its value prop is an endless stream of entertaining content that holds your attention.

This may be a challenge for some creators. NFTs are often seen as an alternative asset class that can appreciate in value over time. That value prop is clear for a product like NBA Top Shot. If I buy a Ja Morant highlight, it's a bet on his career upside. But my NBA Top Shot opportunities are limited to the Memphis Grizzlies star and 449 other NBA players. The market is concentrated.

Meanwhile, TikTok NFTs is a much wilder marketplace. Folks like Lil' Nas X, Gary Vee, or Grimes have already crossed a proven and consistent threshold. It's more of a gamble for less-proven creators. But for better or worse, that uncertainty may yield the biggest upside opportunities.

Read more in TikTok's press release.

Fans and influencers bankrolling artists directly

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In September, I hosted a room in Foster where we brainstormed topics for future Trapital stories. One topic we discussed was influencers and fans bankrolling their favorite artists directly.

It's a timely topic given the growth of artist independence, monetization platforms, and the Web 3.0 era of the internet (especially with NFTs, tokens, and blockchain-related opportunities).

Creators using their platform. What if middleweight boxer Canelo Alvarez invested in a Mexican hip-hop artist who will perform alongside him as he enters the ring for his next prize fight?

What if LeBron James starts a record label and features that artist's music in any upcoming SpringHill Entertainment projects?

One of the best examples of this is Issa Rae launching Raedio record label to create music featured on Insecure and other Hoorae media content. It wasn't just an investment. This was vertical integration.

These opportunities were possible before, but it's more popular in the age of influencers, creators, and social networks. Most rising artists want money and growth. Many superstar-level creators and influencers want investment opportunities so they can continue to level up. It's a win-win.

But at the same time, more fans want to bankroll their favorite artists too. They may not have a celebrity's reach, but would still love to show the same level of support. Musicians the highest consumer surplus of any entertainers. That's because their content is the cheapest to consume.

"Preferred stock" vs. "common stock." For artists interested in this path, the ideal balance is to offer two tiers of investment—a preferred level for the folks with influence and money, and a common level for the non-influencer fans. This could be as simple as crowdfunding a "common" level investment, then signing contracts with the name investors. It can also be achieved with tools like indify, which let investors back artists.

But an ideal place for this is on the blockchain. Artists can create a token and offer buyers two different levels. The most expensive ownership tier is only for strategic investors with an influencer-based value-add to offer the artist. The least expensive tokens can be more passive, but still reward the day-one fans for being part of the community.

Many artists have already launched their own tokens that can enable this. For instance, rock band Portugal, The Man launched its $PTM coin in December 2020. It launched at less than a dollar, peaked at $62.31 in May, and is now trading at $18.64. Here's a chart of its performance:

As HubSpot's Dmitry Shamis said in our Foster room, the concept of artist/influencers is similar to the Renaissance era. If an influential figure loved someone's work, they would feature it prominently in their house, church, or similar public venue.

This is the digital version of that. We're still in the early days, but it's an exciting opportunity for those who want to try a more unique path.

Thanks again to everyone who joined the Foster room! It was a lot of fun. Really enjoyed it.

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Coming soon

Trapital Podcast: Mike Weissman, CEO of SoundCloud. We talked about SoundCloud's strategy with artists and creators, the future of the music indsutry, and more. Drops on Friday!