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Why Triller and Verzuz Teamed Up

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Timbaland and Swizz Beatz meeting up in person for the first time since starting Verzuz! (via @therealswizzbeatz)

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:

Last week, the short-form video streaming platform acquired the music livestream series for an undisclosed amount. Founders Swizz Beatz, Timbaland, and all 43 Verzuz participants are now shareholders in Triller.

First, a shoutout. Before we break down the deal, let’s give Swizz and Timbaland their roses. Twelve months ago, Verzuz did not exist. When stay-at-home orders were in full effect, the hip-hop superproducers kicked it off, got their friends to follow up, and it grew from there. When we look back at the businesses born out of the pandemic, don’t forget Verzuz!

The best part of the deal is that all 43 Verzuz participants got equity in Triller. We are used to seeing Jay Z invest in startups, but did we ever think DMX would be on the cap table of a pre-IPO startup? The Yonkers rapper has been through hell and back. It’s great to see him have the same opportunity as the rappers who were once his peers. Swizz Beatz has talked about financially supporting hip-hop’s founders who never got the money that today’s artists now get. He wouldn’t have done this Triller deal unless all the Verzuz participants had a seat at the table, and that’s admirable.

The fight for attention. It’s clear why both companies wanted this deal.

Triller competes for attention, like most consumer tech platforms. It gets attention by featuring content that’s more engaging than other options. The last time it did that was November’s boxing match with Mike Tyson vs Roy Jones Jr, the infamous undercard fight between Nate Robinson and Jake Paul, and Snoop Dogg’s hilarious commentary.

That “versus” format has worked well. The audience overlap was strong between those Triller fights and the Verzuz matchups. If Triller can bring that audience in more often, it has the potential to dominate Twitter with each event and gain all the earned media that comes with it. That’s a win.

For Verzuz, this is an opportunity to bring the whole team along for the ride. Once the sponsorship money came and Apple Music’s partnership expanded its reach, Verzuz grew and its acquisition offers grew too. It entertained many deals, but Swizz told Billboard that Triller was the only company willing to bring everyone on board. The Verzuz participants have joined a group of shareholders that’s already deep with hip-hop artists.

Sure, Verzuz could have held out longer. But would it have had another timely opportunity to get everyone paid with a unicorn like Triller, and while Verzuz is still hot? There’s no guarantee. Timing is everything, and this was an opportunity to sell high.

Will Triller Verzuz succeed?

Both Triller and Verzuz have some challenges. Triller trails TikTok in active users, but Triller has been accused of inflating its numbers. Triller is also in an ongoing licensing dispute with Universal Music Group. In a recent statement, the company said “Triller has no use for a licensing deal with UMG.” Listen, I get the urge to push back on the major labels and their power. But Triller’s not some unsigned artist on their own tip. It’s a tech company that reminds the industry of an ongoing pattern of music tech startups asking for forgiveness, not permission, when streaming music.

Triller’s best-case scenario is to be “Lyft,” a formidable competitor to TikTok’s “Uber,” but even that’s a big task.

Verzuz peak? Meanwhile, Verzuz is in a precarious spot for two reasons. First, Verzuz demand will likely drop when we reach herd immunity from COVID-19 and outside is fully opened. Verzuz viewership will take a hit, especially in the first 12 months when its audience is out and making up for the quarantine. Triller better strike a deal with the nightclubs in Tulum to stream these matchups!

Second, even though Verzuz has a “brand,” viewership is matchup dependent. Gucci Mane vs Jeezy had 6x the concurrent viewers of E-40 vs Too Short. The Verzuz NFL Pro Bowl skills matchups came and went with no buzz.

How many top-caliber matchups are left? The worst-case scenario is that Verzuz becomes hip-hop and R&B’s NBA dunk contest. Fans would love the superstars to participate, but they won’t because they have little to gain. And the remaining talent can only draw in audiences on rare occasions.

How to fix it. First, Triller and UMG should hug it out and settle this dispute. A long-term global licensing deal with major record labels and publishing companies would make Triller’s future in music a lot easier.

Second, Triller should brand itself as the platform owned by creatives. It has all the 43 Verzuz participants, plus The Weeknd, Kendrick Lamar, Lil’ Wayne, T.I, Young Thug, Snoop, and Tyga. There’s been so much discussion lately about how Black users and entertainers are growth engines for so many platforms, but rarely get any upside. From Twitter, Clubhouse, TikTok, the list goes on.

Triller should lean into these ownership debates and remind folks that it’s the only platform with 50+ Black artists on its cap table. If Triller can get The Weeknd and Kendrick Lamar to do exclusive livestreams or incorporate Triller in their future projects, that would be huge.

Third, Triller Verzuz should try to own the space for all nostalgic matchups in entertainment. For instance, last May’s golf matchup with Tiger Woods, Peyton Manning, Phil Mickelson, and Tom Brady was the most-watched golf telecast in cable history. Phil Mickelson is as off-brand as it gets for Verzuz, but there are other options.

Instead of these low-rating NFL Pro Bowl matchups, what about a skills competition between Randy Moss and Terrell Owens? Or a 1-on-1 basketball tournament with all the rappers who post their basketball highlights on Instagram and swear they could get a 10-day NBA contract: Quavo vs J. Cole. The Game vs Chris Brown. Or maybe they move into music video directors and do a matchup with legends like Hype Williams and Dave Meyers. The opportunities aren’t endless, but there are good ones out there.

Congrats again to Swizz Beatz and Timbaland for what they made happen in a year. It will be interesting to see where Triller Verzuz is a year from now.

new podcast: Micah Johnson

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If you wanna level up on NFTs, this podcast was made just for you, trust me.

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Coming soon from Trapital

– Collab with Polina Marinova Pompliano: in next week’s memo I am featuring a guest post from Polina who runs The Profile, a great publication that gives you lessons from the most successful people in business and entertainment. She has a great one coming for you on one of most successful people in the music industry. To get a sneak peak of her work, you should sign up for her newsletter here!

Dan Runcie

Dan Runcie

Founder of Trapital

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