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memo 007: ye-combinator?

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by Dan Runcie

Every Monday, Trapital's free weekly memo will give you insights on the latest moves in the business of hip-hop. Join 10K+ readers who stay ahead of all the trends:

Hey! Hope you had a great weekend. Finally got some better air quality in the Bay Area, but it might be temporary.

This newsletter is approaching 6,000 subscribers. My goal is to reach 10,000 by the end of December. It’s an aggressive goal, but I think we can get there. If you enjoy this memo, join the email list for the people taking hip-hop to the next level:

This Trapital memo is your weekly breakdown on what matters most in the business of hip-hop. There’s a breakdown on Kanye West’s record label dreams, Warner Music’s acquisition of HipHopDX, Rihanna’s continued partnership with Amazon, and Sotheby’s hip-hop auction.

By the way… this week is when the NFL normally announces the Super Bowl halftime show performer. I think it’s gonna be The Weeknd. Last year I correctly predicted J Lo, so let’s see if I get it right this time.

Kanye West wants what already exists

Universal Music Group CEO Lucian Grainge and Kanye West (via Billboard)

The 43-year-old artist shared his gripes with the music industry and his goal to create the “Y-Combinator for music.”

Ah, those documents. One by one, tweet by tweet, the Kanye posted 114 pages to his numerous record label deals with Universal Music Group. His goal was to bring transparency to the nature of these contracts. In the process, we got a glimpse of Kanye’s extravagant spending. If there’s an album budget to max out, Kanye will exceed it.

Keep in mind, Kanye didn’t share any of his publishing contracts, which famously said he could never retire. His lawsuit with EMI was settled out of court in January.

Ye-Combinator. Ye recently praised startup accelerator Y-Combinator and wants the same for the music industry. He wasn’t accurate in his description of YC, and much of what he asked for already exists, but Kanye’s on a mission.

Yesterday he tweeted out seven guidelines for both recording and publishing deals. His desired terms include; artists to lease masters and sound recordings for a set period with 80/20 artist/company splits, plain language contracts, no loans, access to data portals, and more.

Ye-C W21 batch coming soon?! Not so fast. There are two main challenges with Kanye’s plan. First, if Kanye wants to truly disrupt the system, the most impactful change will come from the outside. In contrast, Y-Combinator is dependent on the venture capital ecosystem.

Several services already offer what Kanye has laid out. But most of their users haven’t reached the peak of the music industry without signing away some ownership of their masters, publishing, or sound recordings. Sure, Chance the Rapper had a moment in 2016, but I’m talking about artists that have reached Taylor Swift-Drake-Beyonce-Adele levels.

Unless “Ye-C” can offer that, it won’t be anything new. Maybe as a start, Kanye can adopt these terms for the artists he signs to his own label, G.O.O.D. Music.

Read more about Kanye’s UMG contracts in Complex.

Warner Music acquires another hip-hop media company

Last week, Warner Music acquired HipHopDX to continue its media acquisition push.

The quest for content. HipHopDX is a staple in hip-hop journalism. The value prop for Warner is similar to what I wrote last month when Warner Music acquired the Daquan Instagram account:

Daquan is one of the largest [Instagram] meme accounts that reflects hip-hop and Black culture. If @daquan posts a meme, gets 300K likes, references an up-and-coming unsigned artist, and all the commenters quote the artist, then that helps A&Rs measure popularity. These social media posts can also validate the reception of artists already signed on Warner’s labels.

Similarly, HipHopDX’s data from its articles offers insights to track current and prospective Warner artists. Warner has promised that DX will continue to operate without intervention.

Bargaining power against Spotify? The major labels compete with each other, but they also compete against their business partners—the digital streaming providers. Spotify and its competitors have tons of data on its users thanks to their growing audio libraries. The major record labels want their own unique audience insights, which a music publication can offer. Otherwise, the labels may lose some of their bargaining power against Spotify.

Read more about Warner Music’s HipHopDX acquisition in Music Business Worldwide.

Savage x Fenty fashion show returns

 

Normani (center) and others at last year’s Savage x Fenty show.

Rihanna announced that the second annual Savage x Fenty fashion show will hit Amazon Prime Video on October 2.

Run it back. This year’s show will feature Travis Scott, Ella Mai, Lizzo, and more. It’s another opportunity for Amazon and Rihanna to come together. The company already distributes Fenty Beauty and Savage x Fenty products. Prime Video will also be home to Rihanna’s $25M documentary, which comes out next summer.

The data. In last year’s essay Why Rihanna Partnered With Amazon, I broke down the tradeoffs of releasing her video content on Amazon instead of Netflix. While Netflix’s distribution is much better than most, Amazon’s integration with ecommerce is major. Viewers of the fashion show can be targeted with ads to purchase Fenty items. And when the documentary drops next summer, these customers can be the first to know.

What about the album though? At this point, Rihanna fans who are waiting on ‘R9’ might be waiting a bit longer. This album is slowly becoming this generation’s Detox, and Rihanna ain’t bothered one bit.

Similar to Detox, the long-awaited Dr. Dre album was put on hold for several reasons, but Dr. Dre was building Beats by Dre. The company eventually sold to Apple for $3.2 billion. If the Rihanna Navy has to wait a bit longer for their album, at least it’s for good reason.

Read more about why Rihanna partnered with Amazon here.

Who gets to “auction the culture”?

Last week, the fine arts company hosted its first-ever hip-hop auction to a tepid response.

Sotheby’s hip-hop auction came and went. Biggie’s iconic crown—which initially cost $6—was sold for almost $600,000. While other items, virtual wine tasting with Big Daddy Kane, did not sell.

A peculiar situation. As hip-hop’s influence continues to grow, it will attract those who once dismissed its potential. Most cultural shifts require a change of heart from former haters.

That said, it’s still ok to feel some type of way about this! Sotheby’s would have steered clear from anything related to gangsta rap, but now it’s a market opportunity. And now they can make a ton of money off it.

There’s a big opportunity for the artists who own these artifacts to become the curators themselves. I’m intrigued by the future of rapper-led experiences, like T.I.’s Trap Music Museum. Hip-hop has great potential in Instagram-ready exhibits like this. But Sotheby’s shows that there is room for the higher-end experiences too.

Read more about the “blatant hypocrisy” of this auction in Pitchfork.

Trapital Player of the Week: Travis Scott

The Travis Scott Meal has caused shortages at McDonald’s restaurants. Remember, this wasn’t a new item on the menu. Anyone could have ordered a quarter pounder with bacon and lettuce. Travis Scott is one of the most marketable celebrities. If NPD Group does another celebrity marketability index, Travis Scott would be high on that list. But it’s also a testament to the affordability of the $6 meal, which is called out in this great thread.

Coming soon from Trapital…

Netflix essay. My next essay drops later this week. I’m gonna switch things up and email it out directly via this email list. Stay tuned!

Webinar. Thursday’s webinar with Marcus Collins was great! Thank you all who attended. As promised, I will post the video and audio soon. Make sure you’re subscribed to the Trapital podcast and the YouTube channel to check it out.

Share Trapital!

My goal is to reach 10,000 subscribers on this list by the end of December. I’m currently approaching 6,000. It’s an aggressive goal, but I think we can get there.

Please send this link to someone who would love to learn more about the business of hip-hop:

https://trapital.co

Correction 9/21: The first version of this memo incorrectly said “Warner has promised that DX will continue to operate with intervention” under the Warner-HipHopDX section. It’s been corrected to say “without intervention.

Dan Runcie

Dan Runcie

Founder of Trapital

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