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Steve Stoute is the founder and CEO of the music distributor UnitedMasters and the creative agency Translation. He returns to the podcast to talk about what his companies have been building towards in the past few years. He also weighs in on the trends he is seeing with independent artists and record labels—including legacy infrastructures, cryptocurrencies, and direct fan communication.
Tune in and get up-to-date on what’s happening in the music scene!
[03:32] The biggest shift in the creator economy
[10:10] On artists owning IPs and what production companies should be doing
[14:15] Technology advances benefit the rights holder
[18:15] About UnitedMasters’ world-class technical team and its partnerships
[25:42] How UnitedMasters and Translation push the cultural edge while giving artists the opportunity to become small businesses
[31:30] The opportunities in text marketing platforms and CRM tools
[46:30] Why gamers and adult performers have found success through platforms like Twitch and OnlyFans
Guest: Steve Stoute, @SteveStoute
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Dan: Hey, welcome to the Trapital Podcast. I’m your host and the founder of Trapital, Dan Runcie.
Today’s podcast guest is a returning guest that always brings it, Steve Stoute, who is the founder and CEO of both UnitedMasters and Translation.
UnitedMasters is a music distribution service that helps artists release music independently and on their own terms and Translation is an advertising agency which has worked on some of the biggest ads and marketing campaigns that we know of, such as the Chris Paul Cliff Paul State Farm commercial.
On this chat, we talked a lot about UnitedMasters and what Steve has been building towards the past few years. One of the biggest things have been the partnerships that UnitedMasters has made with different companies to help its artists maximize their platform.
He’s done different deals with Twitch and TikTok, but they’ve also done things with ESPN, NBA, Apple, their Cash App as well. There’s so many and I think it speaks to the opportunities that a lot of independent artists now have and where he sees the vision for that and where it’s going.
We also talked about what is it gonna look like in the future. There’s so much movement happening in the music industry right now with NFTs, with tokens, cryptocurrency, all huge opportunities, especially for independent artists so we dig into that and what that could look like.
And there’s also the direct fan communication piece. I think this is so fundamental to any artist, regardless of whether you’re signed to a major label or not, and what that boils down to, at the end of the day, is artists having some type of customer relationship management, some type of CRM tool or platform and what Steve and I both think the vision is there.
This is a really fun conversation. It’s always good to talk to Steve, whether it’s on wax or off wax, we can always have a good chat and a good critical lens in terms of where things are right now with the industry but where things are heading to.
I hope you enjoyed it as much as I did. Here’s my conversation with Steve Stoute.
Dan: All right, so we got Steve Stoute back on the podcast, one of the few returning guests that we have, and, Stoute, I gotta give you credit because when you first launched UnitedMasters, I feel like people weren’t even talking about this term “creator economy,” “creator wave,” or any of that, and now this is all that we hear about.
And I gotta imagine that’s been an exciting time for you because, like a lot of things, you’ve been ahead of the curve on this and now you can see what it’s been like.
What has it been like from your perspective while this broader movement is happening?
Stoute: Thank you for that. I feel the same way about you, you know? When you started this podcast and writing about just how hip hop and the relationship between hip hop and businesses and how well they work together and how hip hop has sort of seen some of these demand and supply curves before mainstream America businesses did is something that you’ve — I give you a lot of credit for. But for me, what’s exciting is that, finally, the artists have an opportunity now, I believe, to realize their dreams and break the chains of being stuck to the infrastructure, legacy infrastructures that’s caused so many problems for so many years, in my opinion, where artists die broke, artists aren’t allowed to do certain things or can’t make decisions because they don’t own shit. And Master P spoke about this, Damon Dash spoke about this, but there was so much money in the industry back then, it sounded cool but when there’s so much money, it’s hard to move the industry to say maybe they’re not eccentric, maybe they’re right.
And, you know, it’s not my original idea. UnitedMasters isn’t my original idea. UnitedMasters is a manifestation of ideas that Master P had, Sam Cooke had, Damon Dash had, Jay-Z discussed.
Many artists have had these type of statements and, you know, I believe that I was early in formulating a system by bringing together the technology to get it done. I mean, you know how much time I spent in Silicon Valley.
The relationships with the artists because I’ve earned their trust and belief that I understand, you know, what they need and having the advertising and creative services company attached to that has also been a tremendous advantage for us.
So, I didn’t see it earlier than anybody else, but I certainly believe I was first in putting all of those things together so there’s a scalable solution for independence.
Dan: That point you made about the money I think is important, especially now with the opportunity because I know one of the things you’ve often talked about is just how fame itself is separating from so many of these things that it used to be aligned with, and I think money is another one of those, right?
You can make your bag and you can make the money that you want without reaching those highest levels of fame and I think now, with all the tools that are there, the music industry allows you to do that.
So it’s really kind of this thing, at least in my eyes, if you’re signing with a major, if you want something different, there’s something that may not be financially related or something that you may want that’s different than that, and I think that’s one of the things that stuck out to me in some type of way. Obviously, they’re still correlated but there is a little bit of a difference there.
Stoute: And the question?
Dan: Well, I mean, I’m saying it less than so much as like a question but more just as a statement, as a follow-up to what you’re saying because I think that, from the money perspective, you can now have the ability to do everything you want, whether it is putting out your music, growing your following, growing your audience, and you can do that, and I think in the past, it was just so much harder to do that. It wasn’t impossible, as you mentioned. Folks like Sam Cooke or Master P have been doing that, so I think what you’ve highlighted is more so, yeah, the technology and the speed that we have now makes it easier to do this. So, I guess, with that and thinking from your perspective, at least from my view —
Stoute: I get it —
Stoute: So, fundamentally, the biggest shift has been the record companies owned distribution and, by default, what that means is you have to go to a record company in order to find an audience.
You need a record company to then find who the people who love, like, or have an opinion of you at scale. They controlled MTV, they controlled radio, they controlled the outlets that amplified that opportunity for your music to shine, to get heard.
And they no longer have that control. Now, an artist finds an audience before they find a record company. A writer, a writer, that’s what Substack is about, a writer finds an audience before they find a publication to publish it.
These shifts are what has driven the creator economy, where now, all I need is the tools to amplify, I may need a micro loan, I may need promotion, but I certainly don’t need to give up my intellectual property in exchange for your access to an audience. Those days are gone.
And that’s been the biggest shift and whoever’s not aligned to that shift is gonna get run over by it. Record companies will always be good for the most part because, at the end of the day, they could be owners of the catalog that they essentially took because technology wasn’t there for many artists at that time.
So, a lot of artists, thousands, hundreds of thousands, millions have signed their rights away early to record companies and they may never get them back. Or will never get them back.
You know, for every Anita Baker great story is, you know, thousands of stories of guys who’ve tried and failed. And to get it back when you’re at your peak, when you can promote it and you have the wisdom and the energy to do it, is almost non-existent.
So, they’ll be sitting on that catalog and mining it and, you know, that’s what they did and they’ll always be remembered on the other side of right when history recalls this.
And then you’ll see this new generation, this generation that Prince would be so proud of if he was alive to watch it today, that he certainly spearheaded where you don’t need them, they need you, and you should own your rights and be able to transfer it to your family and your family’s family. It should be an heirloom.
The rights, the IP, the authors of these songs, the authors of these stories, it should be something that they should carry with them forever. And if they decide to sell it to a publishing company or whatever down the line for, you know, a high multiple, that is a much more beneficial outcome than selling it early in your career for peanuts and then allowing them to rent your rights back to you.
Dan: Right. And with that, do you think that there is a ceiling in terms of how high an artist that wants to own their IP, own their intellectual property, own all of their assets can go? Like if that artist wants to perform at the Super Bowl or be a pop star on that level, what are your thoughts on that?
Stoute: No, I don’t think the — I think the ceiling keeps getting removed, like Tobe Nwigwe is in the Beyoncé campaign for her Adidas line and that’s promotion for him like everywhere around the world. Snoh Aalegra is — she owns her rights, right? Again, going through, getting that promotion and that endorsement from a global superstar like Beyoncé.
The more and more things like that happen, the more exposure these artists get, it’s just a moment in time before they get to the Super Bowl, they don’t even — and by the way, Jay-Z is picking the artist for the Super Bowl now. The whole thing is changing, right?
So, 10 years ago, when — forget 10 years ago, 5 years ago, he was writing raps shitting on Roger Goodell. Five years later, he’s picking the Super Bowl acts.
Independent artists won’t even be known as independent artists anymore. They’re just gonna be a song and an artist that you love. They’re not gonna care what label they’re on. Nobody cares what label anybody’s on anyway. Those days are over.
My other 16-year-old daughter, she doesn’t like Young Thug because he’s on 300. She doesn’t like — she doesn’t care. She doesn’t even know. It’s not like when I was growing up, “Oh, you’re on Def Jam, you’re on Bad Boy, you’re on Death Row. Oh, you’re signed to this, you’re signed…”
That was almost the label was the endorsement. The label doesn’t have that power anymore. In fact, the label is nothing more than a service provider, a bank loan, so to speak, that is the most expensive bank loan that has ever been provided.
Dan: What are your thoughts on some of the labels like QC, for instance? Because I feel like there’s something a little different about, you know, what they’ve been able to do. For folks listening, I’m referring to Quality Control Music.
Because things that are a little different from what they’ve been able to do as opposed to some of the more legacy labels that we may have grown up with.
Stoute: I think QC and there are other — there are production companies that are finding artists early and providing value to that artist in an early stage in their career.
My issue is, if there is an issue and I’m not pointing to QC directly, is that production companies can’t just be the tool that the labels use to then get those same rights.
So, it’s like, you know, back in the days, the gangsters, the mafia couldn’t sell drugs in Harlem so what they did was they enlisted black street guys to then poison the people in Harlem with the drugs and the black street guys were cool with it as long as they got 50 percent of the profits.
It’s like you don’t wanna be on that side of history either. You wanna be able to — if you’re gonna find the acts early and you’re gonna provide these acts a career, then y’all both should go into the label and both should take advantage of the fact that they can’t do it without you guys.
So I think the artist should absolutely still retain their rights, even in those production deals. Production companies are valuable so long as the production companies aren’t extended arms of the labels to do their dirty work.
Dan: I hear you on that. I hear you on that. And, yeah, and I think part of this too that resonates, you recently had a conversation with Russ who many people listening know is one of the more vocal and successful independent hip hop artists that we’ve seen, and I think it’s one of these things is he brought up this point about how, if you’re signing to a label, if you’re going that route, you’re more likely to wanna do some of the things that are associated with either the machine or the fame, right?
So you’re getting nominated and performing and winning Grammy Awards or some of these award shows, right? You’re getting some of these major festival headlines and stuff like that.
And I have to imagine that even over time, that piece of it will also start to shift, no different than the Super Bowl example that you had mentioned. We may not necessarily see it now, at least at this particular moment, but I do think that just given the way things are going, that will start to shift and I assume you probably agree with that sentiment too just given what you’ve seen.
Stoute: That’s a lower barrier of the shift. I mean, yeah, of course, that’s gonna shift. Look, these independent artists are gonna have their own festivals. The walls are coming down, Dan.
You know, there’s a line, “Change will never be this fast and it will never be this slow again.” That’s how fast these things are shifting. And there’s nothing more you can do about it but get with it and build, as an entrepreneur, build into that speed as quick as we’re talking about, “Hey, be independent,” now you’re talking about NFTs, now you’re talking about blockchain, now you’re talking about crypto. I’m looking at Tory Lanez, and let’s put any of the Megan Stallion shit aside or whatever the court case, I’m not interested in talking about that, I know nothing about that.
What I do know is that Tory is now an independent artist. Tory is running around happy and laughing and selling NFTs. Tory’s releasing music quickly. Tory clearly has creative control.
If I’m an artist signed to a label, and this man’s walking around saying, “I made $3 million in three minutes,” or whatever he’s doing, how do you think that artist must feel? They don’t own their music to sell it as an NFT. They can’t even participate in certain values that technology continues to unlock.
The one thing I know that history has told us is that whether it’s the vinyl to the 8-track, the 8-track to the cassette, the cassette to the CD, CD to streaming, technology has always changed and shifted a format that has benefited the rights holder.
Either in volume of sales, access to more people, accessibility, the owner of the IP has benefited from technical advances. And now, you have NFTs, now you have contracts in the blockchains, now you have crypto payments. If you are not the rights holder, those conversations aren’t even for you.
How do you feel being stuck in a label because they gave you a million dollars to force one song and now that’s gonna determine the fact that you can’t participate in all of this unlocked value that technology is providing?
The second key here is artists don’t need — it’s good to have a manager. Artists need chief technology officers. They don’t need a guy managing them telling them, “No, NFTs are fake, it’s not real, I’ll look into it.”
No. You need a tech platform right by your side helping you extract all the value that’s being created daily. That’s what you need. And the information to help make that decision.
Now, I’m not saying get rid of managers at all, I’m saying that the chief technology or the platform is more important than the manager right now because the platforms and technology is changing so quickly that if you’re not on it, you will miss the boat and miss out on that value. That is the statement that I’m making.
Dan: Let’s talk a little bit more about this technology piece and the platform piece because I think you brought up NFTs and token and crypto and I think all of that is this movement that we’re at now and even the example you brought up with Tory Lanez is a testament to that.
And I know, to date, UnitedMasters, at least when things started, you were primarily focused on the music distribution aspect as it looks to streaming.
I’m curious for you as, you know, you’re also running a business where you’re needing to pay attention to change things as well. What is UnitedMasters’ partnership and relationship or I guess facilitation of NFTs and crypto and things on the blockchain? What does that look like?
Stoute: Oh, it’s gonna be marvelous. And I’m gonna get — I mean, it’s gonna be marvelous and there’s gonna be, you know, announcements and partnerships and activity before the end of the year.
Our responsibility, we have the privilege and responsibility at UnitedMasters by having a best-in-class, world-class technical team and the services that we provide that we will continue to move the needle in technology to help all of the artists on our platform continue to prosper and partake in the advances in technology on their behalf.
We have big announcements coming out around NFTs and the blockchain, smart contracts. You know, we made some statements earlier, in the last couple months, about split payments. We were late on split payments, I admit that. But now we also have real time payments, which I’m glad we’re doing now.
But advancing all of the capabilities in order to stay as flexible as needed to make sure our artists are getting a frictionless experience to keep creating what they do well, which is make music, make art, and make the world a better place. That’s how I look at.
So we’re gonna continue to do that and that’s our responsibility. So, everything that you talked about, and things yet to come that we’re all still waiting for, we’ll find that over time, we will stay in front of that to make sure that artists on UnitedMasters have the tech edge. That’s our job.
Dan: And I feel like the partnerships piece has been key for you overall because, especially the ones with Switch and TikTok stuck out and there’s a few things.
One, it’s you giving your artists an opportunity to have a bigger platform with everything that they’re doing and you’re tapping into all of the things that they themselves need to be doing within their ecosystem so I think it does make it easier for them.
And I’m curious, how do you evaluate and prioritize all of those? Because I’m sure there are a number of them that come, you mentioned that, you know, you felt like you all were a little bit late on split payments, but it’s not like you’re not making other deals at the time. I feel like every few months, there’s a new type of partnership that comes through.
How do you determine, how do you prioritize everything? Because I’m sure there’s just so much that you could dive into at the same time.
Stoute: You’re right. And thank you for saying that for me. I couldn’t say that. While we were working on, you know, moving technology forward in other areas, there may be things that we’ve missed, but we certainly haven’t missed the mission, which is to provide the ultimate value to our artists and a platform and move the industry forward.
We have — the TikTok partnership has been great. The NBA partnership has been fantastic. ESPN, again, another great partnership. Twitch has been amazing partners with SelectCon and other ideas that we are coming out with.
Again, announcements, and not just announcement but action. Later this year, I feel like a lot of people have announcements and then it just disappeared — they get announcement, just — you know, announcements are becoming a meme.
But we’ve developed great partnerships. And there’s a woman I brought on the executive team, Sally Shin. She heads up all of our partnerships so she works directly with the TikTok team and the Twitch team and now, you know, the biggest one of all, no disrespect to all of our great partnerships, but Apple, they invested in our company and we have a great partnership. And not only do we work well with Apple on the UnitedMasters side, we’re also the creative energy behind Beats by Dre.
So we’re working with Apple from a partnership perspective on the creative side and on the technical side. So, like these partnerships, I think, are very, very important. And, by the way, I think the Apple partnership said that let’s not look at independent music anymore as a cottage industry. We’re behind.
We believe in this much more than just something that will result in five people living in a minivan trying to go on a tour to hustle some money. This could be a lucrative business that will be an alternative to signing to a label that, over time, could be just as lucrative, if not more, and, of course, own your shit.
Dan: Can you talk a little bit more about the Apple partnership? Because I remember when that news came out, $50 million, which is great and impressive in a lot of ways, and it sounds like it’s been something that can continue to change the game for you all.
What are some of the things that you’ll be focusing or what are some of the things that you’ll be able to do differently now specifically because of Apple? I know we talked about a number of things, but is there anything specific that’s been tied to that funding?
Stoute: No. I mean, the funding is to keep doing what we’re doing. I mean, we’ve, you know, it hasn’t been like — it’s not a situation where we — you know, they’re not altering or asked us to do anything different than we have been doing.
It’s about doing more of what we do, to be honest with you, and because of the partnership, I think, partnerships create the opportunity for better relationships, because you speak more often, and better relationships leads to more opportunities, because people like doing business with people they like doing business with.
So the partnership leads to that kind of symbiotic synergy, but as it relates to a change of course or anything like that, no. This was, “We like what you’re doing, here goes some fuel to do more of what you’re doing at scale.”
So as we start to roll out our ambitions to go global, which we will, having a partnership like that is very helpful.
Apple means the same thing in South America as it means in India, as it means in China and Japan and Africa, and everybody who’s in those markets who have gotten a chance to go over there early and build their little business, they should hear our footsteps because we’re coming.
Dan: And is there anything differently that you’re doing in some of these different countries as you’re growing internationally? Because at least from like what I’ve seen, more so from a customer acquisition perspective, UnitedMasters has done a good job of marketing its artists and then, therefore, establishing a brand for itself, that then attracts new artists, and I’m sure, roughly speaking, that is the global strategy as well, but what are some of those unique differences that may be there for, let’s say, artists in Africa or artists in, you know, Latin America as opposed to some of the artists that you’ve been able to attract to date that have been in the US?
Stoute: Well, I don’t wanna — I can’t get into all of that right now, Dan, as much as I like you and I like reading all of your blogs and listen to your podcast, you know, I’m tempted to give up, you know, some of the family secrets, but the one thing I realized in this industry is that most people have no ideas, and because they have no ideas, when I say something, they tend to like copy it so I’ve started to say less.
My bigger point is that we are going international and — look, I look at most of these companies in general and I knew this from the time I started UnitedMasters that anyone that was doing it, we weren’t first, there were other companies that were doing it but they were in our utilities.
Like Con Edison in New York is a utility, the lights, PSEG, the lighting companies, they’re utilities, you know? You use it as a service. I always wanted to build, what if Def Jam, the music company, had been an advertising agency? How great would that have been? The artwork, the storytelling.
If Interscope would have been an advertising agency, how great would that have been? The artists, the cultural edge and everything that they stood for.
When I built Translation, our marketing services company, which is our sister company to UnitedMasters, it’s pretty much recognized around the world that we’re the best creative agency out there that understands culture by a long shot. There’s nothing to talk about. We win every — there’s nothing to discuss.
I wanted to build the music company, the independent music company, that had the vibe and the energy that Def Jam and Interscope had in its heyday. That’s the ambition, so that the creative that we put out on the advertising side and the marketing side, and then what the brand UnitedMasters stands for, owning your rights, your freedom, and being irrational about that. It’s like this is where we stand, period. Either you’re with us or you’re not with us. With Interscope, you don’t have Snoop Dogg, Dr. Dre, Eminem, Marilyn Manson, Limp Bizkit, No Doubt, these artists are all in that place because they went to a place that said, “We fuck with artists that are moving the culture. We fuck with artists that are on the cultural edge.”
Def Jam, I can name the roster, the same thing, it’s the same ambition. And they were irrational about ever homogenizing that belief because of a wider business opportunity. That’s us. I’m taking that same and I’m gonna round Russell Simmons, I’m gonna round Jimmy Iovine, the guys who built those companies and I know exactly what it takes.
You can’t fuck around and get caught up in what everybody else is doing and then all of a sudden stop moving your philosophy because the mainstream, there’s success coming from anywhere else. You may — like that’s not what we’re doing.
So, the combination of creative that pushes the cultural edge and building a music distribution company that has all the services that makes it frictionless for the artists, that gives them the opportunity to grow and prosper and be small businesses and own their shit and know that they have a partner behind them that support that, that’s the company I’m building. So, yeah, if that’s a secret, then somebody should copy it.
Dan: See, that’s what I was gonna ask you, because I think that the execution of so many of these things is real and, in many ways, that’s the more valuable part and I think that’s the harder part to copy.
And, of course, I think that there are other, calling them “competitors” may be a strong word because I don’t think there’s anyone doing exactly what you’re doing, but other music distributors that may hear some of these insights,
but even if they heard it, I don’t necessarily think that they could execute it the same way because it isn’t necessarily on brand, at least that’s kind of have been my impression of things.
Stoute: A lot of these guys, whatever, they wanna really be major labels. They wanna be, you know, the fifth major or — I have no desire in any of that. I think brands and artists have a lot in common.
Brands want to buy into cultural currency. Artists create cultural currency. We are the marketplace that facilitates that.
Dan: Right. Yeah, and I think for you all, like one of the things that did stick out to me, you know, we’re talking about different opportunities here, is what would it look like for UnitedMasters specifically to get involved or support artists directly on the direct one-to-one communication aspect of fans.
We had talked about Substack before and I think, in a lot of ways, you and Substack do have similar type of business models, at least in terms of the fees that you may charge people and then what they may earn on top of that from a revenue perspective.
Stoute: Full disclosure, I’m an investor in Substack. I believe in everything that they’re doing and the fact that we’re both funded by Andreessen Horowitz, who are both investors in our company, there’s a lot of intelligence that you get from having that kind of access.
Again, partnerships, access, people do business with, who they wanna do business with, rinse and repeat.
Dan: And, with that, I would expect to see, you know, what, like anyone that is that sort of level, I’m sure they all have email lists, but it’s like, boom, if you are UnitedMasters artists, let’s get you set up on Substack. You get your email address, you can collect your direct fan communication, or even, you know, what — I don’t think Andreessen Horowitz has invested in any of the text marketing platforms, I might be wrong, but what that can look like, right? Like I was curious about like that piece of it, because I think the marketing piece is great, but I was always curious about that too.
Stoute: The text marketing — I love the idea. I think that, you know, there was SuperPhone and then Community, I mean, and they both, you know, use Twilio as a backend, you know.
What I’m trying to sort out there, text is clearly the better, more personable communication tool. It has to start to feel way more personalized than it does right now. It still feels spammy.
I think that is the future. I think those companies are in the right place definitely but I think it feels spammy. So, I don’t feel like the person I subscribe to is really talking to me. Like it may say, “Hey, Steve,” but then it turns into like something that then turns spammy.
Dan: I hear that and —
Stoute: People feel that.
Stoute: But it doesn’t mean it’s wrong, it just means that, you know, you’re gonna get that —
Dan: Right. And that’s what makes me thinks this is the early days of it, right? Because I hear you on the spammy part. I think it can be very much this like they may use your name but it’s like —
Stoute: Is that a word, spammy? The act of spam —
Dan: Right, yeah, yeah, yeah.
Stoute: It’s a verb.
Dan: Right, yeah.
Dan: Yeah. I don’t know if it is a word but it should definitely be one. But I hear you on that, because I’ve signed up for a few of them and it would be like, yeah, they may say your name but it’s like, “Oh, here’s this discount code to go sign up for this,” and it’s like, all right, this isn’t a relationship, you’re just trying to get me to buy something.
Dan: And, I know that, yeah, it might be tough at scale. I know that Ryan Leslie has some good case studies from like what he’s done at SuperPhone, but, yeah, I’m curious to see what that looks like because I’m sure with some of your artists, obviously, just seeing what they’ve been able to do on Instagram, for instance, yeah, the opportunity is there and I think maybe we just need a few case studies that are — been the same case studies that we’ve seen so far from this movement. I don’t know.
Stoute: No, we have a long way to go. I mean, one-to-one communication is clearly — the one thing I knew early in this is that artists needed CRM tools.
You need the advantage, when everything went digital, I don’t care what aspect of e-commerce where you sit at, let’s go back 10 years ago at the beginning of e-commerce blowing up. I could sell you something in one store for $10 and there’d be another store five miles away that sold that same item for $7.50, but you having knowledge of that item at $7.50 was very difficult to find out, maybe somebody told you and then you had to drive that far to go get it when you can get it right here for $10.
And that was a marketplace advantage that retail had, that comparable pricing was hard. When e-commerce came in, comparable pricing became so easy for the customer that there were sites that basically took all the information and found the best price for you, and then it just, over time, became no one could fuck you on price, right? It’d be very hard to get fucked on price.
Okay. The brands have figured out, well, you know what, if we’re gonna sell it at a lower price, at a lower margin, that’s fine, but we’re gonna collect the information who bought it so that when we sell it the second and the third time, we don’t have any marketing costs.
So, yeah, we make less and less money per sale but we make more margin over time because it becomes easier to sell the second and third one, you don’t have any marketing costs associated with it.
Artists should have that same privilege. You bought my first single, you bought my first project, how come I don’t know who you are to sell you the second project, the third project, or sell you my merch, or sell you my ticket, or sell my NFT, bah, bah, bah, bah, bah.
The record companies did not build any engineering ecosystem to solve that problem nor is it in their best interest to do that. Because if the artists know who their fans are, they definitely won’t need a record company.
The independence, it is our responsibility to build CRM tools over time. I want Community to win. I want SuperPhone to win. I want anything that allows us to plug into a service, that allows, if you listen to this, you probably are gonna buy this, this, and this. Oh, and here comes the second single and the second project because we know you’re the superfan.
That’s the missing piece. And either it’s gonna get done to them or get done through us or someone like us, hopefully it’s us, because one-to- one communication is a critical tool that’s missing and it’s CRM tool, it’s a, you know, it’s a technical term that, you know, brands use but it’s basically customer service management.
Dan: I agree. I think that’s a good point —
Dan: — and I’m curious, from what you’ve seen, what is the best solution that some of the more successful independent artists are using right now? Like do they build their own thing through Salesforce or what have you seen?
Stoute: The best people that are doing it, I realize, are the girls who are, or the guys who’ve decided to use their talents stripping, showing their body. They’ve gone to OnlyFans and have allowed that level one step deeper.
I mean, using TikTok and Instagram allows you the opportunity to get scale, but then you can go to OnlyFans and get monetized superfans. The gaming business has done it, to its credit, incredibly well.
In fact, there’s a blog post that Chris Dixon put out about the gaming business and the music business, I can share it with you and send it to you if you don’t have it, and why two things that are very similar have grossly different outcomes because of the way they handle customers.
But strippers, dancers, adult performers have used Instagram for the match tool and then have had a place like OnlyFans for that direct one-on-one engagement to monetize superfans.
There is no version of that for music. So, if you’re a musician, nobody — you’re not — OnlyFans don’t care about you singing a song, it’s cool, but you are seeing the growth in Twitch.
You’ve seen the Twitch Rockonomics —
Stoute: If you have — okay. So you are seeing it happening at Twitch, but there’s more supply and demand then there’s enough surfaces to cover where you can monetize one on one with your superfans and this is — but this will be all sorted out very shortly. I believe that.
Dan: Yeah, I do too. And I think that’s a good point about the OnlyFans because I think what the platform enables is you have your monthly subscriptions and, with that, you can track all the things like LTV or churn rate or, you know, specific data on that person, and that’s really what we’re talking about underlyingly.
And I do think that if you’re an artist, yeah, especially if you’re an artist on Twitch, some of the people that are doing well, yeah, I think Will Page had mentioned this in that Rockonomics report that people that pay you religiously, you have that data by, you know, definition through the CRM platform.
The thing is, with music, just because I think with so many of the artists, they’re not necessarily selling subscription services. Most of the time, it’s these one-time purchases, like you’re buying that album once, you’re going to that concert once, and I do think the solution is there to be able to have the platform that can then have both the member data if you have some type of monthly subscription but also has the data from these one-time purchases too.
I don’t think we’re far away from that but I agree with you that we just haven’t gotten that piece of it yet. So it’s gonna be fascinating to see.
Stoute: It’s gonna be fascinating to see and, you know, I’ll be there. I’ll be there, It’s exciting. All of this is exciting. We’re going through a period in time where we’re seeing, you know, this renaissance around music and what it means and the way financial markets are looking at music and years of a drought are behind us.
We are now looking at an upward sort of tick in music and the meaning of it and the impact of it. And my job and our job is to create these artists, the opportunity, as I told Russ, we’re small businesses. Artists have to be small businesses.
And small businesses need all the tools to compete. They can’t be looked at as assets of a bigger business, they have to be small businesses that are run by independent leaders that are driving their outcome.
And that’s what UnitedMasters and that’s what I built the platform for, so, hopefully, the next time when we check in, I’m sure, because I love what you’re doing and proud of you and what you’re building, no problem being a second- or third-time returning guest because, you know, you definitely understand the business and you are respectful of it and understand everything that I’m saying and, you know, hopefully, the next time we have this conversation, we can pick up on where we are with NFTs and blockchain and what advances have we made in CRM tools and in the industry itself, and we should keep that conversation going and then to the next one, because that’s how we hold each other accountable for growth.
Dan: I agree. And I think even going back and listening to the conversation we had, I think you’re one of the last in-person guests I’d had before everything broke out with the pandemic and, you’re right, it’s been that evolution of conversation.
I don’t really think we were talking about NFTs or anything related to Web 3.0 at that point, you know? Wasn’t even in the mind at that point.
Stoute: No, sir.
Dan: Yeah, so, no, this is good stuff. Stoute, it’s always been a pleasure, man —
Stoute: Thank you, man.
Dan: — but before we let you go, man, anything else you wanna plug? I know you gave a bunch but anything else you wanna plug or let the audience know about?
Stoute: No, I have nothing to plug, man. Just keep tuning into Trapital to get your motherfucking mind out.
Dan: I appreciate you, man. Appreciate you.