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Why Saudi Arabia Will Invest More in Music

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Fireworks in Riyadh (via Shutterstock)

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Saudi Arabia’s sovereign wealth fund has made its presence known in sports, from LIV Golf, deals with soccer’s biggest stars, the acquisition of Newcastle United, and many more deals. We’ve also seen its investments in tech and gaming, like Uber, Activision Blizzard, and Nintendo.

But the nation’s moves in music have been quieter. In April 2020, The Public Investment Fund (PIF) bought a 5% stake in Live Nation. This August, SRMG Ventures made a $5 million investment in Anghami, the Arab-based music streaming service.

Now that the pandemic is behind us and live entertainment revenue has hit record-breaking levels, these investments may soon ramp up.

In entertainment, the fund has targeted areas with big-name stars attached to fragmented organizations ripe for disruption.

Golf was a perfect case study. LIV Golf lured away popular golfers like Brooks Koepka and Dustin Johnson from the PGA Tour—a league often criticized for having too few tournaments where its elite golfers all show up. LIV aimed to address this with more tournaments and money than golfers experienced on the PGA Tour. This was the first domino to fall in a series of events that led to the LIV-PGA merger in June 2023.

Music isn’t quite like golf, but there are similarities. The major record labels own valuable back catalogs, and the major live event promoters and ticketing companies have exclusive deals with large venues and superstars, making those areas harder to disrupt. Minority investments make more sense there. But the rest of the industry is more fragmented. There’s opportunity in live entertainment, especially with music festivals.

Festivals feature the superstar artists who attract fans. The events make money from the same revenue sources as live sports, including tickets, sponsors, concession, and broadcast deals. Yet the ownership for festivals is less consolidated. The major live events promoters own some of the tentpole franchise festivals in the U.S., but many of the others are standalone businesses. New festivals have steep upfront costs, and often takes a few years to reach profitability (and many don’t last long enough to get there).

There are two main ways that PIF could go about this. The fund can launch more of its own music festivals, potentially in Riyadh or elsewhere in the Middle East. Saudi Arabian’s Soundstorm music festival, which started in 2019, already attracts more than triple the crowd that attends Glastonbury. More festivals at this level will likely pop up.

With the luxury of capital, a new festival can operate like a well-funded startup with years of runway. That won’t guarantee success, but it buys the festival time. It can also acquire or invest in existing music festivals across the world.

Saudi Arabia may also push for major artists to set up short-term residencies in the region. The broader goal is for the nation to improve its global standing. Becoming a “destination” is part of that goal.

We might be far away from an American superstar performer having a 15-show residency in Saudi Arabia, but I won’t be surprised if it happens eventually.

You can listen to the full episode here where we also discuss:
– why the ‘song of the summer’ is no more
– the decline of the pop star
– new trends with podcaster and creators

Listen to the episode here or watch below:

Transcript
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Dan Runcie: [00:00:00] Once you get past the festivals that are owned by the largest companies in the world, it is a quite fragmented landscape where you have this event that people want to be able to see, but sometimes the economics don’t work out. Could there be a strategic investment that’s made from one of these Saudi Arabian investment firms?

Dan Runcie: I wouldn’t be too surprised by that. Hey, welcome to Trapital. I’m your host, Dan Runcie. This is your place to gain insights on the business that shapes music, media, and culture. We dive deep into the companies and moguls who start the trends that shape the rest of the business world. Today, we took a break from the standard deep dive episode.

Dan Runcie: I wanted to hit you with a few things that are more timely, four topics that have been on my mind recently. The first… Saudi Arabia and its investment in entertainment, sports and tech and specifically what that looks like in music. We’ve heard the big sports deals. We’ve heard some of the tech deals too, but what will this start to look like in music?

Dan Runcie: I have a few predictions and I talked more about those [00:01:00] in this episode. The second is the song of the summer. All of the platforms have released their lists, but the song of the summer means a completely different thing than it meant when I was growing up. A lot of this deals with platforms and different incentives in the shifting and evolution of music that constantly changes every year.

Dan Runcie: So I talked a bit about that. Which is then tied into the third topic, which is this nebulous ongoing topic, the decline of the pop star. There have been think pieces written about this every year for as long as I can remember. And they’ve only heightened more as well in the era of streaming and Tik TOK.

Dan Runcie: So I talk about that and how those things are connected and some of the things that don’t get brought up enough when this is being discussed. And I also talk about a fourth topic, which is around creators, platforms, and why creators, whether it’s artists. Instagrammers, influencers, podcasters, and others continue to succeed, even though the underlying platforms can sometimes have some struggle.

Dan Runcie: Hope you enjoy this one, let me know what you [00:02:00] think. Today we’re going to switch things up. We’re going to talk about four topics that have been on my mind recently. It’s a solo episode, haven’t done one of these in a while, so I’m excited. First topic, let’s talk about Saudi Arabia. And we’re going to talk about Saudi Arabia’s investments in sports and entertainment.

Dan Runcie: First, for some context, as you probably know, if you’re listening to this podcast, we’ve seen Saudi Arabia’s investment specifically from its sovereign wealth fund, the public investment fund, investing all over the global sports landscape. We’ve seen them involved with the merger between PGA and live for golf.

Dan Runcie: We’ve seen them give massive amounts of money to some of the biggest. Football stars in the world like Neymar, Cristiano Ronaldo, Lionel Messi, primarily as an influencer, to be clear, not even to directly play for the team. They’ve acquired majority stakes in, uh, football teams like Newcastle United.

Dan Runcie: They’ve also been involved with MMA as well, such [00:03:00] as the professional fighters league. They’ve gotten involved with boxing. They’ve hosted several prize boxing matches, and there’s talks about them getting more involved with tennis. A lot of this has been put under the umbrella of something called sports watching, where People feel that this is an opportunity for Saudi Arabia to improve its public standing and get in the good wishes of other countries to help some of its other benefits and entertainment and culture has been one of the ways that that some people believe that that’s been effective whether or not that has worked or hasn’t worked is still to be determined but it’s definitely attracted a tremendous amount of attention just for some figures.

Dan Runcie: Saudi Arabia has invested over 6 billion in various sports deals since 2021. That’s more than four times the amount that it did in the six previous years before that. And a lot of that money comes from this public investment fund that I talked about. Which is now worth, which is now has assets under the management of over [00:04:00] 700 billion.

Dan Runcie: So we’ve seen this across the sports landscape, and we’ve also seen this in other areas too, like tech and entertainment, this fund and Saudi Arabian investment companies more broadly also have stakes in companies like take two interactive electronic arts, Activision, Blizzard, Magic Leap, Nintendo. Uber, and we’ve also seen them make investments in things like having their own film festival, such as the Red Sea Film Festival, where they have a listers that have been attending these.

Dan Runcie: They’ve also made other investments across the entertainment landscape and tech landscape as well. But the one place that we haven’t heard as much from recently is music. And if we think about it, music has a lot of the aspects that have attracted. The Saudi Arabian investors specifically from PIF to be interested in other areas.

Dan Runcie: They look for areas that have big stars and big names that people gravitate towards, but the underlying [00:05:00] infrastructures are a bit more fragmented. So there’s a bit more room to have investors take over whether it’s a, whether it’s through a minority stake or it’s through a broader M and a deal in a way that would be much harder to do with, let’s say an NFL team.

Dan Runcie: That’s why golf and tennis in MMA and some of these other sports have been involved. There was a number of discussions for them being involved with the deal with Endeavor and WWE. That was one of the potential places they were looking. So we’ve seen those things happen. And one of the reasons that Music could be particularly attractive because look at how popular the biggest artists in the world are, and we’ve already seen some involvement on things that some of these superstar artists have done in Saudi Arabia.

Dan Runcie: It was earlier this year in 2023 that Beyonce had performed that concert at that Atlantis Hotel in Dubai. Many people had responded with some backlash about that, but that’s backlash. It hasn’t necessarily stuck with Beyonce, at least from what [00:06:00] we’ve seen. Renaissance tour may likely be one of the highest grossing tours we’ve ever seen.

Dan Runcie: And we’ve also seen other artists to perform in the region, whether it’s Travis Scott or Justin Bieber. Robbie Williams had performed at Qatar for the 2022 World Cup, but it’s ironic to think about because it wasn’t that long ago in 2019 when Nicki Minaj had responded to pushback and backlash from the Human Rights Foundation about a potential concert that she was going to do in the area.

Dan Runcie: And she actually went ahead and cancelled the concert. But a lot has changed as we’ve seen since 2019. But here’s where I think things get interesting. Music has already been a big investment area and focus for Saudi Arabia and this PIF. Back in April, 2020, they purchased a 5.7% stake in live nation entertainment.

Dan Runcie: You look back at April, 2020, that is some perfect timing because if you [00:07:00] just look at the stock price, that’s when live nation stock price was probably at close to or being near its Relative low for the moment, I believe it was trading around 33 or 35 at the time, at the time of this recording now in September, 2023, that stock price is now 80 or somewhere around there.

Dan Runcie: And they’ve also done deals with Angami, which is, or not the PIF specifically, but SRMG ventures, which also is from the region. They. Made a investment in angami, which is the music streaming service that is based in saudi arabia That’s focused in the middle east and northern africa. So there definitely has been some investment there They also have made moves with cacao entertainment, which is a newer company That’s focused in a few different multimedia things based primarily In Korea, but the part where I think that they’re going to invest in music, I think they’re going, I think we’ll see more deals in a few places.

Dan Runcie: The first place is music festivals. We’ve already seen some of this where there have been some music festivals and conferences that have happened [00:08:00] in Saudi Arabia, but I do think that this is a bigger opportunity. Why? It’s an event that does bring tens of thousands and sometimes hundreds of thousands of people together to see their favorite artists.

Dan Runcie: And once you get past the festivals that are owned by the largest companies in the world, it is a quite fragmented. Landscape where you have this event that people want to be able to see, but sometimes the economics don’t work out. So once you get past the events that are owned by Golden Voice, which is owned by AEG, or the festivals like Lollapalooza and others, which are under Live Nation, or the ones by SFX or others.

Dan Runcie: It does become quite a fragmented landscape. So could there be a strategic investment that’s made from one of these Saudi Arabian investment firms? I wouldn’t be too surprised by that. Another place that I think you may see some investment activity could be in some of these back catalog acquisitions and some of these moves that we’ve seen here.

Dan Runcie: We’ve already seen this investment landscape cool off a little bit [00:09:00] in recent year in re in recent years, but we’re still seeing deals happen to, I think 2023 was a pretty active space, especially for a lot of hip hop artists. But think about the dynamic. It’s a very unregulated landscape where. The price is essentially whatever the company is willing to pay.

Dan Runcie: And we’ve seen different companies have different strategies in terms of how they go about buying and selling different catalogs. What they’re willing to do, whether they want to buy and hold, whether they want to try to maximize the asset. So could this be an opportunity to further the graces by owning one of the most valuable catalogs in the world, especially for some of these big ticket artists where the number of buyers for those catalogs are pretty slim.

Dan Runcie: Think about it. Some of these, uh, some of these music investment firms, sure they may have a hundred to $200 million, but if we’re talking about a 500 million or a billion dollar catalog deal, especially with some of these legendary artists, there’s only a few firms out there that can do it. And for the most part, those firms are the major record labels [00:10:00] themselves.

Dan Runcie: Unless, a outside entity like PIF or one of these sovereign wealth funds wanted to get involved. That could be something interesting to see. I also think we’ll see more artists start to do more activity in the area as well. We’ve already seen Beyonce. We’ve already seen a few other, we’ve already seen a few other artists, but this may take some time, but I wouldn’t be surprised if you start seeing residencies and things like that happening in this region.

Dan Runcie: This may sound a bit extreme now because An artist having their own standalone concert there to some people may seem like a bit of a turnoff or a bit of a IRL situation, but they’ve already had Beyonce over there. You’ve already had some of these A list artists there. And if any, if there’s anything that we’ve learned over the past few years, There has been a breakup of residencies and the aspect of having an artist set up shop and perform set at a particular location and having people come to see that artist [00:11:00] is not as uncommon as a thing of what people used to, as what we may have seen before.

Dan Runcie: Look at what we saw this past year with Beyonce and Taylor Swift. People were willing to. Make international vacations and take destination trips to see their favorite artists perform on these stages. That’s where music is heading. And if a company or not a company, but if a fund like PIF and some of the other investors in the space are willing and interested to make that type of investment, uh, pay the amount of guarantees upfront to then bring in and truly try to make, whether it’s Riyadh or some of the other cities in this area to be a true hub, I wouldn’t be surprised if you see that.

Dan Runcie: And the other area that I do think is similar to this, that I think we’ll see some activity is some of these music festivals themselves. You’ve already seen companies like rolling loud, which have expanded and their whole model is trying to have a bit of that Starbucks mentality to music festivals. How can they have it pop up like different franchises in different areas.

Dan Runcie: We’ve seen them all [00:12:00] over. North America, you’ve seen them in different parts of Europe and even Asia, Middle East and Northern Africa is a big opportunity for them. And I know they already partnered with Travis Scott on that Saudi Arabian Grand Prix event that he had performed at, but I wouldn’t be surprised if you saw a Rolling Loud Saudi Arabia event specifically in the future.

Dan Runcie: And similarly to how Live Nation was a target company for PIF and Saudi Arabia investment more broadly. You may see whether it’s some of the other events promoters, or some of the other companies involved in live entertainment. I think live entertainment is a much more attractive asset itself than purely music rights would be.

Dan Runcie: I know I mentioned the catalog piece earlier, but I do think that that’s the opportunity there. It’s a bit tougher to get in to the events promotion business itself. So that’s why I think them making the strategic investment they did in one of the large events promoter companies may be lined up [00:13:00] with their focus there, but pay attention to some of these smaller opportunities that may come through, especially if there’s opportunities to have a majority stake and provide some of these with the financial funding that they would likely welcome.

Dan Runcie: The next topic I want to talk about is the song of the summer. Or as many publications have recently referred to it, the songs of the summer. I was looking through some articles recently and Spotify, TikTok, Billboard, and I’m sure others had a list of their songs of the summer. And each of them were segmented in different areas where some of them had A US list versus a global list.

Dan Runcie: Some of them just had one list, but they were all a top 10. And many of them had different songs at the top 10 as well. And there’s a few ways to look at this because some of this reflects a lot of where things are right now. Music is quite fragmented and your reality of what music is, is going to be shifted dramatically by.

Dan Runcie: The platforms that you [00:14:00] use on a regular basis, what you consider to be being outside or doing particular things or activities where you are more likely to hear music in a certain type of way, especially when it comes to newer music. So your definition and my definition of song of the summer are quite different, but that’s a big difference from where things were when we were growing up so much so that this term is completely lost its meaning.

Dan Runcie: If each of these publications and outlets and music distribution platforms has their own song of the summer, then what does that actually mean? Maybe this is me coming from someone who’s a bit nostalgic for certain aspects of monoculture, but this isn’t a participation trophy. Of course, there could always be nominees and there can be different people that get highlighted, but There’s usually a winner, and of course, there can be different ways to crown champions, but there’s usually a winner.

Dan Runcie: So let’s go back, when I think about songs of the [00:15:00] summer, these are some of the ones that come to mind for me in the 21st century, just to keep things a bit tight and grounded here. Go back to 2001. What was the song of the summer then? It was I’m Real, with J. Lo and Ja Rule. You go to the next year, 2002.

Dan Runcie: What was the song of the summer then? It was Nelly, Hot in Her. What was 2003? 2003. It was Beyonce. Crazy in Love. What was 2007 Rihanna umbrella. The list goes on. There was usually some song that had a bit of that ethos of what it meant to be a song in the summer, and these didn’t just end in the two thousands.

Dan Runcie: To be clear, it carried on to the next decade. I look back to 2013 and blurred lines with Robin, thick and Pharrell. That was a song of the summer and even as recent as 2017 with Despacito, that also was. Capturing what I think of when I think about a song of the summer. Think about a few things. I think about a song that comes out around that early springtime, maybe towards the end of winter, and it [00:16:00] is clearly geared to get you in the mood for what’s coming ahead.

Dan Runcie: It’s already starting to get some early radio play, and then by the time Memorial Day weekend comes along, this song is already dominating airwaves and soundtrack. There is a aspect to it that feels like summer. The music video is normally set in summer. It feels like you’re in that moment and whether it’s the dog days of summer, things like that, that’s what that song usually is about.

Dan Runcie: That’s a big difference to where things are now, because it’s not that a song can’t carry through and have that same trajectory, but there’s just so many definitions of what that can be. Take, for instance, This past year, one of the biggest songs of this summer, quote unquote, was Taylor Swift’s song, Cruel Summer, a song that came out four years ago or almost four years ago when it came out with her 2019 album, Lover.

Dan Runcie: You look at a song like Morgan Wallen’s Last Night, it’s Which did register on the top of a few of these charts, specifically, it was at the [00:17:00] top of Spotify for its most listened to song in the U S and it was also at the top of billboards list as well, but it was definitely a song where if you didn’t listen or pay attention or tap into Morgan Wallen’s music, and there’s many reasons why you may not want to tap into Morgan Wallen’s music.

Dan Runcie: You’re not going to be exposed to that song in that particular way. Another example of a song that is blown up in the summer is Miguel’s Sure Thing. This is a song that came out in 2012 that just now became viral from TikTok as well. And even something as recent as Lil Nas X’s Old Town Road. Some might believe that that’s the true last song in the summer, but even that falls a bit into this interesting in between area because that was a song that had came out the year before in 2018.

Dan Runcie: And it was because of all the controversy that Lil Nas X had leaned into and the meme and making it really become a thing. He had all these remixes week after week. [00:18:00] True, it carried on, but it was never created with this intention for this to be a song that dominates the summer in the same way that the others did as well.

Dan Runcie: And to be clear, it’s not to be a purist for a particular area. I know that there were certain stories about a lot of those songs of the summer as well, especially some of the rumors about JLo and, um, uh, JLo and Ja Rule’s I’m Real and some of the payola. That was surrounding that song’s promotion, especially on radio play.

Dan Runcie: I get it, but it’s more so calling out where things are. And I think it says a lot about this era. I think we’re past that moment in time, but it’s interesting because all culture. Isn’t like this music if anything is the more fragmented aspect because you could say people could say the same may be true about tv shows and movies and entertainment but look at an event like barbenheimer this past year in movies people think that for you For the narrative for the first couple of months was, oh, people aren’t going back to the theaters and people stop caring about superheroes.

Dan Runcie: What do we [00:19:00] do? And boom, you have a three hour biopic from Christopher Nolan. That is well on its way to making at least 800 million worldwide. And you have this Barbie movie that’s well on its way to making 2 billion worldwide. So entertainment can still have these moments and Okay. To some extent, maybe Morgan Wallens last night was the closest you got to it in music, but it still can feel a bit fragmented, where even me, someone that follows this stuff for a living, I’m a bit embarrassed to say, but the song that showed up for TikTok for the number one song of the summer, it was Mae Stevens, um, If We Ever Broke Up, I had to Google the song on Spotify, and that’s when I had heard about it just now in preparation for this for the first time, and this is me, someone that’s normally tapped in, maybe because I’m not on TikTok all day, every day, didn’t pop up in my feed, but still, it’s, it says a lot about where things are, and I think in some ways the fragmentation can be good [00:20:00] and healthy in some ways, but I think it stems to it.

Dan Runcie: Similar topic, which is actually the third thing that I want to talk about, which is the pop star decline this year. There’s been a series of articles that have been coming out about the decline of the pop star, the decline of model culture, and these articles aren’t new. They’ve been coming around and popping up here and there, especially as the streaming era gained traction, and especially as social media started to gain traction as well.

Dan Runcie: A lot of it. Highlight some of the big changes that happen where it wasn’t that long ago where artists could blow up today in 2023 by 2025. They’re the biggest artists in the world. They have the biggest hits that are playing everywhere. And then a couple years later, they are. And I think there’s a few reasons for this, the reason that this was the way, there’s a lot of people who are doing big things that no one else could dream of.

Dan Runcie: And their name is at the same level as some of the legends we have. And that’s not necessarily what has happened. If anything, it’s kind of the [00:21:00] opposite where some of the artists that have grown and had success, sure, they’ve been able to reach some status, but if anyone’s really reaping the benefits, it’s the people that have already been powerful and famous and established in the industry.

Dan Runcie: And I think there’s a few reasons for this. The reason that this was the way A couple of years ago was for two reasons, one, because of the control that record labels and more broadly the music industry had on what we heard and what we listened to and how that was distributed. And that matters for two reasons.

Dan Runcie: First, the record labels were Incentivize to continue to try to push new music. And part of that is because they were selling music primarily through stores and retailers where inventory was a finite resource. There’s only so many CDs that you could have available to purchase in Walmart. There’s only so many CDs that you could have available to purchase at.[00:22:00]

Dan Runcie: Tower records, strawberries, Sam Goody elsewhere. So when you have that type of dynamic, you’re incentivized to put the products out that people are going to be most likely to purchase. And even though some of that back catalog and some of those hits may be popular, you still want to hang on to some of them.

Dan Runcie: You’re incentivized to push and use your marketing dollars towards the next hot thing. And because of that, That’s what led to a lot of the product, the product and the promotion and the investment in music videos and the investment in radio and things like that, that we saw from songs that were able to blow up and grow, and the artists that benefited from that heavy churn.

Dan Runcie: I mean, let’s think back to even as early as the two thousands, where by 2003, Eminem and 50 cent are two of the biggest rappers in the world, and four years before that. 50 Cent was largely unknown outside of the New York hip hop circles of people that were [00:23:00] really tapped in with power of a dollar and even Eminem before the, um, before he released My Name Is and the Slim Shady LP was still relatively unknown before that.

Dan Runcie: So things are just so different now where it’s much harder to break out and it’s much harder for new artists to be able to have that same type of reach. Another aspect of this, and this is where I think things shifted as well. I mentioned the aspect of limited inventory with, Being able to sell CDs at whether it’s your Sam Goody or Tower Records or whatever the retailer is now because that outlet is pretty much gone and doesn’t exist in the same ways.

Dan Runcie: The outlet now has an infinite resource of Inventory because all this music exists available on the cloud, but you have access to it through all of these digital streaming providers. This is a huge shift in this implication. I don’t think it’s talked about enough because now that [00:24:00] it’s no cheaper to have a song from the 1990s or the early two thousands, as it is to have a song that just came out.

Dan Runcie: The streaming services were incentivized to push and give you more of what you already listen to. Think about the last time that you opened up your music streaming platform and you actively said, Oh, huh, let me go listen to what’s new. And what’s, what’s going on right now. Maybe if you’re in the industry, it’s part of your job to tap into this stuff, but think about your friends that aren’t in the industry.

Dan Runcie: They’re more likely to open it up and listen to who they’ve already liked and who they already enjoy. And that provides power to the people who are already famous and already established. Look at the two of the artists that have had the most commercially successful year, this year in 2023, Taylor Swift and Beyonce.

Dan Runcie: Ironically, these are two artists that resisted to have their music available on Spotify. Taylor Swift wrote that very public letter about why she wasn’t [00:25:00] going to do it. This and why she believed that art was worth pay being paid for. Beyonce had had that line in the 2018 album. Everything is love where she said if I gave two fucks about Spotify, Lemonade would be on there.

Dan Runcie: The lyric isn’t exactly that. I know I butchered it a bit there, but it’s something along those lines. But if we fast forward to where things are today. They are two of the artists that have benefited tremendously from this because as it’s become harder to break new artists and give new artists new oxygen, these are the artists that people are willing to see and go and it’s still harder for anyone new to really be able to break through.

Dan Runcie: And with that, I want to show two examples of artists that I think were probably the last to really benefit from the way things were before streaming. And this is a thing we’ve talked about on several topics on this podcast. Tati Sirisano and I have talked about on a few podcasts as well. But the artists that blew up [00:26:00] before streaming had a much easier time reaching the heights of music.

Dan Runcie: Let’s look at their career trajectories. Of two artists that had breakout years in 2008, Katy Perry and Lady Gaga. Katy Perry drops I Kissed a Girl and I Liked It, arguably a song of the summer for 2008. And Lady Gaga drops Just Dance, which blows up that fall. So you have the two of those artists that are doing their thing.

Dan Runcie: They have this big hit, 2010 comes along, two years later now, just two years later, and it’s inescapable. You can’t go anywhere without hearing Lady Gaga’s The Fame album or hearing Bad Romance. You can’t hear anywhere, you can’t go anywhere without hearing Katy Perry’s Teenage Dream and The Fade. Five number one singles that came from that album.

Dan Runcie: You fast forward to 2012 as the social media platforms are growing. These are the two of the most followed people in the world. If you go back and look, go back to 2012. I’m pretty sure if you look at those lists, it’s Katy Perry. It’s Lady Gaga. [00:27:00] It’s Barack Obama, and maybe Justin Bieber, the most followed people on Twitter or some of those other platforms.

Dan Runcie: And then you go to 2015 and 2016, and these artists are performing. at the Super Bowl halftime show. Katy Perry had her show in 2015 and I believe Gaga’s was a year or two after that. And that’s all something that happens in less than a decade. And that seems so far away because that could not happen now.

Dan Runcie: And It’s interesting because even artists that have broken out and had big moments, whether it’s artists more recently, like Olivia Rodrigo or Billie Eilish, if you put them in the music industry arc from even just five, 10 years before that, Olivia Rodrigo would have already been the biggest artist in the world right now.

Dan Runcie: Just thinking about the way that music promotion worked and all those things, but it doesn’t work that same type of way. And then you have artists that I think [00:28:00] almost got stuck in the middle of these two generations of someone like Ariana Grande, who I think has had a pretty big and successful career, but I don’t think she was ever undisputedly the biggest artist in the world.

Dan Runcie: So it’s very interesting how a lot of this has shifted. The one caveat to this is that I think that once you get outside of artists from North America and the UK and parts of Western Europe. I do think some of the, some of that monocultural impact, it still happened there, not forever, but now, and that’s why I think that artists like Bad Bunny and Burnaboy, almost in a similar type of way, I’ve been able to reach some of those heights where Bad Bunny was bagging groceries not too long ago, I think it was back in 2015 or 2016, and now he’s one of the biggest artists of the world, one of the most streamed last year, and Burnaboy, I think, He’s been on his journey a bit longer, dating back to, I think, 2013 was his first project that he released, but he’s now doing his thing.

Dan Runcie: And I was [00:29:00] having a conversation with a few folks at, at, at, at dinner recently, and someone had brought up, they said, look at what Burnaboy just did. He just sold out MetLife Stadium in the U. S. Or not MetLife Stadium, I’m sorry. Um, Citi Field, uh, where the Mets play in Queens. He sold out there. And he asked how many American artists could do that.

Dan Runcie: And once you got past the legacy artists and groups and rock bands and artists like that, like artists that are contemporary now, that list was pretty slim. And it was a really interesting discussion to have amongst, um, amongst the table, but that’s where things are right now. It’s a very different lane for The pop stars, and there has been a decline.

Dan Runcie: We’ve talked about this as well with will page and others on the podcast where he’s commented about. Dua Lipa being the last big star that has come from Europe and how she broke out in 2017, and it’s now been six years from then, and we haven’t seen anyone quite that big do that. Maybe it could be May [00:30:00] Stevens, the person that, according to TikTok, had the song of the summer.

Dan Runcie: We’ll see. It’s still early, but it’ll be fascinating to see how this trend continues to develop over time. The other reason that I want to mention that plays a factor in the decline of the pop star is the less control, as I mentioned, that the record labels have now to be able to push certain things, because it was easier to push things when you could control distribution that’s being sold at the major retailers, but we’re seeing this now where, how does the record label determine and have influence over these algorithms?

Dan Runcie: It’s quite tough. We’ve seen some of this happen now where there clearly are agreements in place with the major record labels and the digital streaming providers with regards to what type of songs or what type of catalogs owned by particular record labels will get preference in the algorithm. And even the early days of when editorial playlists like Rap Caviar and others had more [00:31:00] influence, how many of those songs were.

Dan Runcie: Under a major record label, those things even now are even harder to push and suggest now that there are certain things in place where we see these trade offs happen quite often, where would a digital service provider be willing to take more of a cut if they’re willing to give more favorable play to songs from a major record label, those things happen.

Dan Runcie: And that’s how they were able to do some of that with the streaming services. But if we go one level. Top of funnel and go to tick tock where so much music discovery happens on these short form platforms. It is much harder to be able to predict and determine where the wind is going to blow there. And when there’s less control, there’s more incentive to give that air and give that oxygen to The people that already have it, especially the artists who are on top.

Dan Runcie: And that’s why, yes, as brilliant and ingenious as a lot of the moves that Taylor Swift and Beyonce have done over the years, there are industry dynamics [00:32:00] that heighten their ability to have success with the particular strategies that them and their teams have been able to execute. The last topic that I want to talk about is a bit of a nebulous one, but walk, walk with me with this one.

Dan Runcie: I want to talk about podcasting and creators and has how it relates to platforms, because I think this is important for a lot of the founders and investors out there. And a lot of the artists that are building and operating in these spaces. There’s been a lot of talk over the past couple of years about.

Dan Runcie: Spotify’s podcasting strategy. We all understand why Spotify made the big investment they did in podcasting. The margins are better. It gave them an opportunity to release and have content that was much, they had much more control over. And it also expanded their vision and scope beyond just being at the surface or whim of what the record labels may say or influence them to do.

Dan Runcie: If you don’t have much leverage beyond that, then it can be [00:33:00] quite tough. And we’re seeing these battles continue to play out there. But one of the things that I think has been lost in some of the critiques about Spotify’s podcasting strategies is that some of its struggles have been. Grown to be perceived as struggles for podcasting overall.

Dan Runcie: Now let’s be clear. Spotify did make some missteps with this podcasting strategy. There was too much money that was floating to Celebrities and big name public figures that weren’t truly established as podcasters, whether it was The money that went to Meghan Markle or the Obamas or Kardashians or Amy Schumer or others that were a bit more celebrity driven from some of the strategy that we had seen that was early from in Spotify’s push there.

Dan Runcie: But there’s also been successful deals that have come through and deals that made sense economically, whether it was the Alex Cooper, call her daddy deals or the Joe Rogan deals, or even in the [00:34:00] early days, the Joe button deals, who I do believe got an unfair shake and. Was one of the early testing grounds for what did become a much more lucrative business for Spotify itself.

Dan Runcie: And I make that distinction because that part of the business still works out quite well, and there’s still value there. And that’s why I do think that podcasting is still a valuable asset, even if. Spotify itself maybe had made, not maybe even if Spotify did make some missteps along its execution of particular elements of it.

Dan Runcie: This is still a bullish space. It still attracts a number of listeners who are, do tend to have money and are willing to spend on podcasting. And even despite podcasting’s inefficiencies, where a lot of what was coming from Apple podcasts and others was essentially a RSS feed where the data just wasn’t the best Spotify.

Dan Runcie: Helps address that. This was something that I was talking [00:35:00] about back in some of the pieces I’d written in Trapital all back in 2019, where look at the data, the Spotify can tell you, they can tell you when someone stops a track, when someone starts a track, do they get to this bridge? Do they get to that part?

Dan Runcie: And all of these things, they can do the same thing in podcasting. So. Think about how valuable that data is for advertisers. Think about how valuable that data is for podcasters themselves, anyone that is trying to sell this. And the more that you can invest in, have that as a robust asset, that’s how you continue to attract attention away from others that are focusing on this area.

Dan Runcie: And. That’s something that hasn’t quite happened because I do think that there clearly was some correction that needed to happen with Spotify’s strategy overall, but I still think there’s a huge opportunity there because with that, even despite some of the negative press, they still became the number one, go to destination for podcasts.

Dan Runcie: And I think this is something I’ve seen. I’ve talked with other friends that are podcasters. And one of the things we [00:36:00] see is that. A lot of the existing base of listeners for our shows are based in the U S but when we share links or attribution for any to anything for our podcasts, most of those new listeners are coming in from Spotify.

Dan Runcie: I don’t want to say most, but the largest source of them larger than Apple podcasts or every anything else. So that worked. So when you think about that, I do think that there’s an opportunity here to continue to invest in this. And this is something that was mentioned in a smart thread. One of my friends, Adam Ryan, he runs this company called work week, and he had posted a thread about Spotify and some of the.

Dan Runcie: Untapped opportunity there. And he talks about how they can focus on becoming more of an audio service provider, being more the quote unquote, Facebook of audio and less of the Netflix of audio, which is something that I think they were trying to be bucketed into and how they could use. Newsletters as a way to be able to attract and bring that [00:37:00] audience in.

Dan Runcie: And he mentioned why they should be able to acquire or why they should think about acquiring a company. Like Substack or Beehive or ConvertKit as it means to gain distribution. Because as many folks that podcast know, newsletters are a great way to be able to help spread the word about podcasting because podcast discovery and growth for podcasting is quite difficult, but if you can work it and make it work, it ends up being quite effective.

Dan Runcie: And ironically, it’s funny that he mentioned email strategies and ConvertKit overall, because ConvertKit. Founder Nathan Barry had wrote a whole Twitter thread within the past year about how Spotify tried to acquire ConvertKit. He eventually turned it down and it’s a pretty insightful thread, not necessarily about the details of the Attempt from Spotify to acquire, convert, keep it more about some of his goals and thoughts around equity sharing, especially for a bootstrap business and how we handle that.

Dan Runcie: And both with that in my own [00:38:00] conversations with Nathan, it was really interesting to bring all the two of those things together. So I share that not just as a podcaster, but as someone that sees the broader landscape. Even though there’s certain aspects of Spotify strategy that didn’t necessarily work initially, and even though there’s a lot of podcasters.

Dan Runcie: And podcasts out there that start and don’t make it past three episodes or don’t have the consistency, the ones that do stick with it are are and can be quite valuable, especially if they’re able to get through that initial base that said, this is still a power log game and. There’s only a small percentage that will actually succeed and make it work.

Dan Runcie: And that brings me to the second part of this last topic here, which was something sparked from a recent article that the information I’d put out about creators overall and how they felt that the creator economy as a base of companies that are actively trying to raise [00:39:00] capital to help and enable creators to leverage their platforms to grow.

Dan Runcie: A lot of those companies have struggled, but a lot of creators themselves have continued to thrive and succeed. And this is something that may seem like a juxtaposition at first, but when I think about it myself, both, both as someone that has been able to be successful and not just build. A platform for myself would be able to build a business off of insights and things that I’ve shared about this particular industry, but seeing how others have done it, it makes perfect sense.

Dan Runcie: Because I think that a lot of the platforms that raised venture capital specifically to attract the creator economy. And a lot of those companies trying to attract a lot of musicians and music creators and folks like that. A lot of them struggled because they over promised on. What they could offer and they over promise because there was this belief, especially back in the 2018 2019 era that.

Dan Runcie: If you provide people the tools, then they can more easily [00:40:00] become the next most successful person that’s out there, whether that’s providing with someone with all the music distribution tools. And once you do that, you can enable tens of thousands of Chancellor rappers or providing someone with all the tools to write or be a YouTuber or have a newsletter or you or whatever it be, whatever it is, then you can become the next Mr.

Dan Runcie: Beast. You could become the next. Ben Thompson of Reister techery or the next Joe Rogan or any of these types of success stories. And that’s not how it works. Because I think what people underestimated was that all of those success stories are. More unicorn like examples than people like to admit it’s no different than someone, I don’t want to say you because I don’t know your particular situation, but it’s no different than the average college student dropping out of college and wanting to start a startup because they saw that Zuckerberg did it when, uh, back in, um, the early two thousands when he dropped out and started Facebook.

Dan Runcie: That is [00:41:00] a unicorn situation to be able to have that happen. The amount of people that have started to think that way or not started to think that way, the amount of people that have tried to do that, there’s a lot of situations where it doesn’t work. It also makes me think of some of those strategies and tactics that we’ve seen from some of the music companies out there that are trying to now attract more artists.

Dan Runcie: Cause I think one of the challenges that we saw for a little bit of time there was that. Even if a platform had the tools and the ability to help a artist, there was always a bit of a money gap because even if you have all the tools that could essentially help Drake reach the top of the charts. You don’t have four or five, 600 million, like universal music did to then give Drake to be able to fund him and make his dreams come true.

Dan Runcie: This reminds me of some of the music tech platforms out there as well that have been raising money to be able to attract more artists, because one of the things that we had heard from several of [00:42:00] the big artists in the world, and one of the trends we saw as well, is that a lot of the platforms may have the tools to be able to Allow someone like Drake to still release his music and be independent.

Dan Runcie: But as Troy Carter and others have said, you know, Taylor Swift, isn’t considering to release her music on tune core. That isn’t how it works. And when Drake is looking for a new deal. The one thing that these platforms don’t have is the four or five 600 million dollar advance to be able to give Drake that universal music and Republic Records was able to give him to be like, Hey, let’s continue to work together and we’ll license your stuff and you have the best resources in the world to help you do it.

Dan Runcie: But now we’re starting to see more of these platforms. Get those war chests and we have money specifically. We’ve seen the reports where whether it’s the tens of millions or hundreds of millions of dollars, they now have the ability to do it. And you’ve seen it come in practice where a company like United Masters is partnered with Brent Fiaz.

Dan Runcie: They’ve [00:43:00] partnered with Earthgang and other artists and other groups out there to be able to give them something that is a more bespoke offering, just given their platform, but artists that clearly. Could still, or maybe previously had relationships with major record labels. I think there still may be a gap in attracting someone like a Drake or a Taylor or Beyonce, but what about that next level down?

Dan Runcie: That could be really interesting. And I obviously mentioned United Masters, a few of those. It’ll be fascinating to see how that plays in, because if you’re any of these platforms, the more successful artists that you’re able to have on your roster and keep them engaged. That’s the more success that you’re going to have.

Dan Runcie: You’re running a business that in some way is underlyingly based on streaming revenue. And the more big stars you have that can generate that streaming revenue, the more successful that you’ll be in the long run. So those are the four topics we talked about Saudi investment. We talked about. The song of the summer, the pop star decline, and [00:44:00] this last topic about podcasters, creators.

Dan Runcie: So please let’s keep this conversation going. If you have any thoughts on any of these topics, reply, let’s keep this discussion going. These are topics I’ll continue to think about and will likely continue to evolve as well. And we’ll continue to see them go down these trends. So if you enjoy more episodes like this, please, we’ll continue to add them into the mix.

Dan Runcie: Not every time. But it’s good to mix things up once in a while. If you enjoyed this episode, please share it with a friend, send it to one or two people you think would really get value out of listening to this episode. And while you’re at it, if you could rate and review the show, that would be great.

Dan Runcie: Rate the podcast on Apple podcast, rate the podcast on Spotify, rate the podcast, wherever you listen to podcasts that helps make sure that the word gets out about Trapital and what we’re building here. Thanks again for listening. Talk to you next time.

Dan Runcie

Dan Runcie

Founder of Trapital

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