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Hey! I’ve been thinking a lot about this weekend’s NBA Slam Dunk Contest. What the hell was that?! This event has fallen off harder than the TV ratings for the Grammys.

Ironically, the challenges for the Slam Dunk contest and Grammys aren’t unrelated. Consumers have more options than ever for entertainment. If they aren’t watching those same programs, artists and athletes feel less pressure to participate. Also, pro athletes and artists have more options than ever to entertain consumers—especially in ways that don’t risk injury like an unusual dunk attempt. As entertainment options have improved, the baseline to capture attention is higher.

The dunk contest somehow had Ja Morant, LeBron James, Aaron Gordon, and Zion Williamson as its participants, its fate could change at least for one year. But we know that’s not happening.

This week’s Trapital Memo is about the artist whose Netflix documentary, relationship drama, and products have all encompassed a never-ending cycle of content—Kanye West. This memo is specifically about the Stem Player. I may cover the Jeen-Yuhs documentary at a later date, but I won’t be covering the relationship drama. That’s not why you read Trapital! So let’s dive in.

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New pod: Bun B

The Trill OG from Port Arthur, TX came through to talk about his journey into Web3. We talked about how he got involved, his relationship with Cryptopunk rapper SpottieWifi, what UGK’s NFT strategy would have looked like and a whole lot more.

Bun and I also talked about his comparison in the NFL. Loved having him on. Great convo.

Kanye West’s stem player strategy

Ye’s decision to release Donda 2 exclusively through his Stem Player is the latest move from a star artist who wants to go direct to consumer. Kanye has self-reported that the stem player has made over $1 million in revenue since his announcement. He says he’s creating 3,000 players per day.​

The numbers are strong. Going direct-to-consumer can be a beautiful thing for artists, especially in the streaming era. But the strategy works best when the artist’s mentality and overall goals are in sync.

connecting artists and fans

In Kanye’s Instagram post announcing Donda’s exclusivity, he referenced the “oppressive system” where artists earn just 12% of the money that the music industry makes. His desire to “take control and build your own” reminds me of Nipsey Hussle’s vision for his Marathon Clothing Store to be modeled after Apple.

From Forbes:​

Nipsey’s approach was tight-knit and in sync. He wasn’t a superstar, but that wasn’t his goal. His vertically integrated approach made perfect sense for the artist who wanted to super-serve his base.

Kanye’s different. He reached the superstar level (and very much wanted to get there). And unlike Nipsey, Ye thrives on the mass media coverage he creates. Every Instagram post that generates headlines was designed to do so. But Ye does have a lot of passionate fans who will buy almost anything he puts out. His Yeezy sales and Donda listening parties are examples of this.

But the tradeoff of releasing music DTC and not through the streaming services is that it limits distribution. That’s less important for artists like Nipsey who followed the 1,000 True Fans mentality. But there’s tension in that dream for someone like Ye, who tried to go head-to-head against Drake for first-week album sales less than six months ago.

The DTC approach in music

Every few years, there’s a new push from artists and the industry to embrace independence through either hardware or software. From Neil Young’s short-lived Pono, to Ryan Leslie’s SuperPhone, to distribution services like UnitedMasters and TuneCore, to NFTs and Web3 platforms for artists. These DTC-inspired options worked best for artists who care more about super-serving their niche than achieving worldwide ubiquity.

That felt true for Nipsey. It feels true for Ryan Leslie. It feels true for Russ, Chance The Rapper, 3LAU, and others. But they are exceptions, not the norm.

For most artists at Kanye’s level though, music generates more money as a marketing tool for concert ticket sales than it does from streaming revenue alone. Most artists would love to earn more from their art, but they welcome the additional revenue that streaming has enabled.

Kanye’s stem player allows him to earn more from his music—not unlike vinyl sales or other physical releases. But it also helps him segment fans at the bottom of his funnel. Many of those fans have already bought Yeezys, concert tickets to his album listening parties, merch, and other products.

But if this product sits at the bottom of Ye’s funnel, it limits distribution and impact for Donda 2 as a streaming product*.* That’s a tradeoff that many DTC-minded independent artists are willing to make. Time will tell how long Kanye will do the same.

The windowing release

Ye can try to get the best of both worlds by windowing his music release for Donda 2. After a set amount of time, he can release it onto the major streaming players. Some of the most memorable albums that weren’t available on Spotify have all made their way there—whether it’s Lemonade, 25, The Chronic, The Blueprint, or 1989.

Kanye West’s business strategy often has a natural tension between his artistic dreams and business objectives. He is self-confident but still wants external validation. He didn’t want Yeezus to rely on radio play, but still felt some type of way when Drake’s songs topped the charts and his didn’t. And now, he wants the allure of a DTC music release with the attention that comes from widely accessible music.

His stem player may be a success. If every Kanye stan buys a stem player because they want his music 30 days before the rest of the world, that’s a win. But it will takes a dedicated strategy from Donda, Inc.

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coming soon from Trapital

Podcast: Kevin Shivers, Partner at WME. Kevin’s a music touring agent at WME who reps Tyler The Creator, Summer Walker, and many more. We talk about music touring strategy, Black execs in music, and a whole lot more. Episode drops on Friday!

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