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Hey! Last week I was in Nashville for the TMRE conference. I did a fireside keynote chat with Master P. We talked all about how corporate America can better partner with hip-hop culture. It was a really fun conversation. I'll share the audio and video soon!

Also, welcome to everyone who signed up after reading my interview in Morning Brew! Trapital's weekly memo keeps you ahead of the latest trends in the business of hip-hop and more. I send it out every Monday.

The week's memo cover a few topics:

• Tidal's big changes to attract independent artists
• our sponsor Mighty Networks' new Engagement Drop​
• Royal raises $55 million to give fans ownership
• RIP Young Dolph

Let's get into it.

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Trapital Podcast: Steven Galanis, Cameo (2020)

This week's podcast is a rerun from a popular 2020 episode with Steven Galanis, Cameo's co-founder and CEO. We talk about how Cameo, the marketplace for personalized video shoutouts, found product-market fit. It focused on people who were more famous than they were rich.

This episode is relevant to a lot of founders and investors in the creator economy, so check it out if you haven't already.

Tap into the Trapital Podcast here.

Tidal's big bet on independent artists

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Last week, Tidal made its first big announcement since Square acquired the company earlier this year. Here's what's coming soon:

• a free subscription tier (ad-supported)
• high-fidelity sound (HIFI) for its $10/mo tier
• direct artist payouts - 10% of the subscriber revenue (at $20/mo tier) goes to each listeners' most-streamed artist each month
• fan-centered royalties (each subscriber's revenue goes directly to the artists that they listen to)

This is the start of Tidal's plan to build an artist-centric platform, primarily for independent artists. It wants to give artists resources through Cash App Studios, help them release music through Tidal, and give their fans more ways to reward them (e.g. direct artist payouts, fan-centered royalties, or tips on Twitter). That's the Square-Twitter-creator flywheel in motion.

Here's what I wrote last month when Cash App Studios was announced:

These changes didn't happen yet, but it's still early! It's trending in that direction though

The creator economy's influence on music. Tidal's biggest move is its fan-centered royalties. It follows SoundCloud, which launched a similar initiative back in March. Since artists are paid out at the individual level, streams are not aggregated overall. As a result, artists with smaller but passionate fanbases should earn more revenue. Digital streaming providers like SoundCloud, Tidal, and Audiomack are focused on bridging the gap between artists and fans, so this model is in their wheelhouse.

The direct artist payout can offer a nice Patreon-style bump from the biggest supporters, especially if Tidal lets the artists know who those fans are.

But what if Jay Z himself became one of the biggest beneficiaries of direct artist payouts?? A lot of people have kept Tidal subscriptions to support him as a Black business leader and an artist they love. The program was obviously not designed to pad Hov's pockets, but I won't be surprised if The Carters get an unintentional bump from this!

Future acquisitions? I expect Square and Tidal to enable tipping, crowdfunding, merchandise selling, and an NFT marketplace. That's a lot to do at once though, so I bet Square makes more big acquisitions in the music tech and creator space.

​Spotify's Q3 earnings call is a reminder of how impactful its acquisitions of Megaphone and Anchor have been in podcasting, where Spotify is now #1 in the U.S. If Square wants to be the #1 artist-centric platform, it needs a few more eight and nine-figure investments to accelerate that timeline. Both Cash App and Square's Seller business are doing well, so the company has the money to invest.

Why the other streaming services won't follow. Despite's Tidal and SoundCloud's royalty payment shift, I highly doubt we will ever see fan-centered royalties from Spotify, Apple, and Amazon.

Their primary stakeholders are the major record labels. The majors thrive on the consistency of the aggregated streaming model. The aggregated revenue is less volatile and more favorable to the biggest artists in the world and the record label's back catalog of music, which together account for a majority of streams. The majors wouldn't want to risk losing revenue from customers who log into their paid accounts once or twice per month and only listen to a handful of tracks from a lesser-known artist.

This is why it's harder to lump all digital streaming providers together. Music streaming may feel somewhat commoditized, but that may change as each company leans into its specific focus area whether it's podcasting (Spotify), be the "top of funnel" for other products the company offers (Apple and Amazon), or a bridge between artists and fans (Tidal, Audiomack, SoundCloud).

Read more about Tidal's changes in Variety.

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Go live with your audience, all in one place

Many artists, entertainers, and creators use multiple services to run their businesses. But that means their members need to hop from service to service to connect with the whole community. It takes more work for the members, which can hold creators back from growing a valuable audience they can rely on.

That's why Mighty Networks has just launched The Engagement Drop! As a creator on Mighty Networks, you can now start a live stream, host group chats, post videos, and more. Mighty Network users can also host events, start courses, and create content to serve their community. You can now have spontaneity and structure all in one place.

The best part is, there are no algorithms between you and your audience. You will have full access to reach and connect with your Mighty Network on your terms.

Want to get started? Learn more at The Engagement Drop.​

Royal raises $55 million to give fans ownership

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A new NFT marketplace Royal has raised a $55 million Series A round led by Andreessen Horowitz. Other investors include Nas, The Chainsmokers, Kygo, CAA, Coinbase Ventures, and others.

Royal's value prop checks all the boxes for the web3 enthusiasts. On Royal, artists can share ownership of their music with fans by issuing NFTs as a limited digital asset. Those NFTs may eventually include invites to events, community access, VIP experiences, merch, and more.

To test it out, Royal co-founder and artist 3LAU gave 1 token to each of the top 333 Royal users based on how many users they have referred. Collectively, the NFTs represented 50% of the ownership of the streaming royalties for 3LAU's new single "Worst Case." The secondary sales of the tokens have given the new single an implied $6 million valuation, and over $8,000 in value for each token released to fans.

3LAU's test run is impressive, but 3LAU is also the co-founder of Royal, and 3LAU's audience that's already tapped into NFTs given his prior success. The future artists who use this platform may be better benchmarks.

Do all fans want ownership? Royal's best value-prop is the opportunity for artists to identify and serve their earliest fans. But will the users of Royal be an artist's true "day-one fans" or just the "day-one fans who are active retail investors"?

The fan ownership opportunity is all the buzz, but the web3 echo chambers can overstate the interest that most casual fans have in owning (or managing) music rights. Every artist has a subset of fans who would love to get in on the upside, and platforms like Royal can make that happen. But artists should have realistic expectations on what percentage of their fans are interested in that, regardless of how easy it may be.

Plus, fan having more control over an artist's rights and IP may require regulations that have yet to be explored.

Artist-investors like Nas and The Chainsmokers will likely use Royal the same way they plan to use Audius. It's an opportunity to experiment on a new platform and invest in the companies with potential. But they still release music on the major digital streaming providers in partnership with the major record labels.

It's a complement, but not (yet) a replacement.

Read more about 3LAU's Royal token on Medium.

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Young Dolph. 1985 - 2021

On Wednesday, Adolph Robert Thortnon Jr was shot and killed in his hometown in Memphis, TN. He was shot outside of a local bakery he had just supported on social media. He was 36 years old.

Dolph was an inspiration for a lot of artists breaking out on their own. He may not have been a Billboard chart-topper but he owned his assets and moved on his terms.

His death reminds me of the quote from Lil' Boosie. "Most rappers die in their own city. That's a fact. You have haters who was in school with you, and they mad because they was in that third-grade class with you, but they don't have the same hustle as you... They hate you for your success."

Dolph wasn't scared to run his mouth. He had his haters. But no one should die that young and it's still a shame.

If you're less familiar with who he is, check out this short GQ video 10 Things Young Dolph Can't Live Without.​

Coming soon from Trapital

Interview with Master P! It won't be this Friday, but it's coming soon. Here's a photo of us from the event.

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