fbpx

Can New Superstars Ever Surpass Current Superstars?

Share on facebook
Share on twitter
Share on linkedin
Share on email
2197807471

Listen to this episode:

Powered by RedCircle

This episode memo was brought to you by Steed.

It’s almost that time of the year. Taxes are a critical part of your business. But in creative sectors, the standard cookie-cutter approach won’t work. You need a solution for your unique needs as a founder, exec, artist, talent, investor, and the multiple hats you wear. You can lose countless earnings without the right strategy.

Steed offers customized tax planning to maximize your savings. Their network connects you with 600+ tax strategists who understand complex law and regulations. With Steed, you can track your finances, access important documents, and give you more time to focus on your creative career. The company has worked with executives from UnitedMasters, Spotify, and some of our listeners already use Steed too.

Due to high demand, Steed’s waitlist is now 1,600+ strong. But Trapital members can skip the list and get a free consultation to see how much you can save. Schedule your free consultation with Steed here.

This is the last Trapital episode of the year. We answered a crucial question for the soul of the business: Can today’s new stars ever surpass the existing superstars?

To break it all down, I was joined by Tati Cirisano from MIDiA Research. You can listen here or read a few highlights below!

Which young artists have the best shot?

This episode’s topic kicked off with a text exchange. I shared this tweet with Tati about how Dua Lipa’s song “Houdini” dropped in the charts after its initial release. It’s a good song that Dua did a bunch of press for, but the moment came and went. It was like a viral video that everyone in the group chat saw once or twice, said how much they liked it, but moved on to the next thing soon after.

In a prior era, Dua Lipa would have been the biggest artist in the world after Future Nostalgia and “Cold Heart” with Elton John. But today, she’s a hit-to-hit star. Dua is one of a dozen big stars who are commercially successful. Still, the current fragmented landscape makes it nearly impossible for them to be as big as the superstars who came decades before them, like Taylor SwiftBeyonceDrake, or Adele.

Some of these younger stars have better shots than others. Bad Bunny is arguably already there. The Puerto Rican rapper is Spotify’s most-streamed artist of the year four times in a row. Artists like Bad Bunny, Burna Boy, and Karol G reach global audiences that are far less saturated than the US and UK. Unfortunately, the streams from those markets don’t pay nearly as well as the streams from regions where streaming service subscriptions cost more money. Latin music generates $1.10 around 1,000 streams compared to 3-4x higher for other genres.

But the current landscape makes it even tougher for the newer US and UK acts to reach that same level. Billie EilishDoja CatMorgan WallenSZA, and Olivia Rodrigo are all major stars, but this year they competed for attention in a year that was dominated by (relatively) older superstars who have been hitmakers longer than some of them were born. It’s music’s version of LeBron James and Tom Brady dominating competition that’s closer in age to their children.

This dynamic is even stronger given the growing demand for superstar tours. It takes time for an artist to build a fanbase that warrants a global stadium tour in the biggest venues in the world. It’s a much longer timeline than getting billions of streams.

Several of the stars we discussed plan to upgrade to stadium-level tours soon, which is great. But even if they sell out, it takes several tours to get to the frenzy we saw from Taylor Swift and Beyonce this past year (and likely will for years to come).

You can listen to the full episode here or read below for more highlights.

How this shifts industry economics

It’s in a company’s best interest to attract and retain the current superstars on their roster, even for artist-friendly terms. The proven stars have leverage since most newer stars can’t reach the proven star’s level. Proven stars are a finite resource. It’s not because the newer stars aren’t less talented. Many of them are more talented than the proven stars if we’re keeping it real. But today is a different era.

But how favorable is too favorable? In 2022, former Warner Music Group CEO Stephen Cooper shared skeptical thoughts on Taylor Swift’s licensing and distribution deal with Republic Records and Universal Music Group.

“[Taylor Swift] got a monster check and she got a very, very skinny distribution charge. We don’t do those deals; there’s not, from our perspective, the right side of economics. We don’t chase big names to get a little bit of revenue and not make any money.”

The logic is easy to follow. The major record labels have supplier power because of their valuable back catalogs. If they no longer own those assets moving forward, then that power erodes over time.

For Taylor Swift though, it’s hard to call her commercial success “a little bit of revenue.” She had five of the top eleven best-selling albums of 2023! Would a major record label rather receive a skinny distribution charge from the estimated $400 million value of Swift’s music released since 2019 (and count her sales toward their year-end market share) or own the masters of some viral TikTok sensation who’s lucky if they recoup their $4 million advance?

Plus, newer stars are signing artist-friendly deals too. Olivia Rodrigo reportedly maintains control of her masters in her current deal with Geffen Records.

In the same talk, Cooper did say that Warner (at the time), had reduced its financial dependency on superstars. The term “superstar” can be subjective, but sentiment makes sense especially since advances are getting larger and talent acquisition costs are rising.

It’s unrealistic to expect a new star to be as big as Taylor Swift. But can a new star be as big as Doja Cat? And if so, how much is that worth paying for since a lot has changed since her career took off? That’s a more realistic conversation.

The grand slam hits may be harder to come by, but the homerun hits are still out there.

The mighty indie model

In Hollywood, the A24 model is praised and beloved. Its quirky movies have a brand, an audience, and budgets that align with expected outcomes. They don’t make Marvel Cinematic Universe-levels of box office revenue (but to be fair, even MCU movies haven’t made MCU money in a while).

Music has several models like this. EMPIRE and Create Music Group both have their lane and serve it well, whether through individual releases, short-term deals, or online creator-centric resources. These are businesses built for the modern, digital-first, fragmented era of music. They can break through in a crowded landscape. Companies like AWAL and The Orchard are the in-house versions of these. They sit under the major labels but can tap into their resources when needed.

Every industry has its version of this. Music is arguably the most challenging since there’s more “noise” than ever, but there are also more success stories from both artists and companies. Several of them were ahead of the curve and built viable businesses in the long tails and areas that the majors and superstars were less focused on.

If you enjoyed the highlights, listen to the rest of the episode for more on:

– similarities in gaming with Grand Theft Auto 6’s $1B+ budget
– where artists like Lizzo, Cardi B, and Post Malone stack up

Listen to the episode here.

 

 

Dan Runcie

Dan Runcie

Founder of Trapital

Share this episode:

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Listen and follow to the Trapital Podcast:

"The stuff that Trapital puts out is fantastic. Really interesting insights into the industry, artists trends, and market trends."
Mike Weissman
Former CEO, SoundCloud
“You tell the true stories. Not just the end product, but how you get to the end product. Your point of view on it is dope.”
Steve Stoute
CEO, UnitedMasters and Translation

Subscribe to the Trapital Podcast

More from Trapital

Get updates on new Trapital episodes, upcoming guests, listener Q&As, and more.