Inside the Business of Beatmaking

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Before Abe Batshon started BeatStars in 2008, a handful of superproducers had a quasi-monopoly on selling beats, charging hundreds of thousands of dollars per song. Top producers still get paid today, but the concept has become more antiquated with platforms like BeatStars democratizing beat-making. Creators can sell instrumentals — either under an exclusive license or not — to artists around the globe for a fraction of the previous cost. With $200 million paid out to creators to date, BeatStars has reset the entire economics of beats.

Abe started BeatStars without any VC funding during the Great Recession. This was also pre-steaming, when the music industry was in its dark days. Bootstrapping the company, BeatStars would redefine the music landscape along with other DIY distribution platforms such as SoundCloud and YouTube. Abe’s goal from the get-go was to break the relationship-driven nature of creating music and open opportunities for creators around the globe.

Fourteen years later, it’s safe to say Abe has created more opportunities and then some. Famously, Lil Nas X bought the beat for viral sensation “Old Town Road” on BeatStars for $30. BeatStars’ producers have also been featured on songs released by Drake and Ariana Grande and ads for adidas, the NBA, and many more. BeatStars’ fingerprints are all over media, not just the independents but the majors too.

Here’s all the noteworthy moments during our conversation:

[3:27] Recognizing BeatStars instrumentals online

[6:18] Starting BeatStars amid 2008 music landscape

[7:28] Receiving pushback when BeatStars began

[10:02] What finally changed for producers

[12:20] Resetting economics of beats

[16:25] Typical earnings for BeatStars creators

[20:36] Music syncs in mainstream media

[23:44] BeatStars growth trajectory

[28:20] More competitors in the marketplace

[31:22] VC money’s impact in the music industry

[36:03] BeatStars cap table

[39:30] Roadmap for the future

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Host: Dan Runcie, @RuncieDan, trapital.co

Guests: Abe Batshon, @AbeBatshon

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TRANSCRIPTION

[00:00:00] Abe Batshon: for us, it’s never been about the money. It’s always been about these young people all over the world and old people, creators from everywhere. Like, can we liberate the idea of songs? Can we help push people to be more experimental with their words and their messages and their art and something that’s so personal for them. I don’t see any of these like venture-backed companies or big invested-type of companies actually having a genuine approach to how they treat or deal with their community. So I’m really not worried about it. I definitely keep them in mind in terms of continuing our fight to liberate music.

[00:00:57] Dan Runcie: Today’s episode is a topic I’ve been wanting to dive into for a minute and this is about the business of buying and selling beats. It’s a fascinating marketplace that has shifted considerably over the past few decades. So I wanted to bring on an expert himself to chat about it. Abe Batshon, who is the founder and CEO of BeatStars, which is a marketplace for buying and selling beats. He joined me on this topic, and we took a trip down memory lane. We went back to the 2000s, we talked about what it was like. You remember when Timbaland was bragging about getting half a mill for his beats and Neptunes had 40% of the songs on the radio? As great as it was for them, there really wasn’t a lot for the other producers and other people that were trying to come up, so BeatStars came up in this post-YouTube era to make it possible for having this marketplace. And Abe talks about what it was like back then and just given some of the challenges that existed with the music industry, searching for its own business model at the dark days of piracy and trying to navigate that. But then also with the early days of the streaming era and how that has lifted his business. In the past two years, BeatStars has made more money than it made in the past 12 years before that, and it’s on track to have another one of its biggest years yet now. So we talk about what that journey’s been like, what led to that, and how this marketplace and how this business has evolved. When Abe was starting this, people laughed at him because they thought it was crazy what he was trying to do. Today, there are plenty of investors with bigger pockets that are trying to come in and eat his lunch. So we talked about what that looks like and why he still thinks that BeatStars is well positioned there. We also talk more broadly about the amount of VC money that’s come into music tech, and how he looks at that, and what it looks like for other opportunities. If you’re as fascinated about this topic as I am, you’ll love this conversation. Abe kept it real and it was great to talk to him. Here’s our chat.

[00:02:55] Dan Runcie: All right. Today we have Abe Batshon who is the CEO and founder of BeatStars. One of the premier places to buy and sell beats and wanted to have him on so we could have a conversation about this entire process, this landscape, and right before we recorded, Abe, you were just telling me about how you were listening to a different podcast. And you could hear when you hear that BeatStars beats on a podcast, Trapital podcast, of course, mine came from there. How do you know that the beat for sure came from BeatStars as opposed to somewhere else?

[00:03:27] Abe Batshon: Well, yeah, I’m a dude. I listen to so much music on the platform. Like, I process everything so much and I kind of, I don’t know if it’s photographic memory in terms of when you hear something, I just retain that information around that piece of music forever. Like, I know when I’ve heard something. Yeah, so, yes, I’ll randomly, like, you know, turn on the TV or turn on the radio or turn on, you know, TikTok or turn on SoundCloud or turn on anywhere. And I’m like, holy shit. Or Spotify, you know? And I’m listening to, like, some of the trending viral songs or the top Billboard songs. I’m like, yeah, I know those beats. I know those beats. I’ve heard those before. Yeah.

[00:04:04] Dan Runcie: Do you feel like there’s a distinct brand or sound that has BeatStars sound that you can pick up on almost in the same way that well-known and established producer has that sound like you could hear a track and be like, oh, that’s a Neptunes track even if I’d never heard it before, do you feel like that’s the case for a BeatStars beats?

[00:04:21] Abe Batshon: Good question. You know, maybe eight years ago, nine years ago, yeah, I could have, you know, been like, okay, that’s definitely an influence from the marketplace, from the sound, from the platform, but today with the amount of variety and just so many different genres, and sub-genres and styles of music that’s getting uploaded to BeatStars, it’s impossible to just define it to one, sound anymore, but maybe 10 years ago, for sure. Yeah, not now, not now.

[00:04:49] Dan Runcie: Yeah. That makes sense from the timeframe perspective ’cause I could imagine, especially in the early days, there are artists you have that are likely championing the service. And if they’re bringing on others that want to have that artist-type beat there, then there’s going to be a lot of that similarity. But over time, especially with where you are now, over 200 million paid out to artists on this platform that just speaks to the reach that you have and everything that you’ve been able to do from it.

[00:05:16] Abe Batshon: Yeah, man. so fulfilling, so fulfilling to just like know that’s the kind of impact the technology and platform is making for, you know, for creators’ lives. I’m definitely not satisfied with that number at all. But it’s a great, great motivational indicator for me to keep going for the team, to keep pushing. But, you know, our aspirations are a lot bigger than that for sure.

[00:05:37] Dan Runcie: Yeah. Let’s actually go back a bit because I think that could be a way to have the arc of where this is going. Of course, you started this company in 2008, but in the 2000s, it was such a different landscape for producers, beat makers. And I look at that era as being quite top-heavy, right? If you were one of the super producers. If you were Timbaland, if you were Pharrell, if you were Kanye, then you almost had a, you know, quasi-monopoly in a particular area of just what you could charge, what you could do. But for everyone else that wasn’t a superstar, it was a much more challenging landscape, I could assume. Can you speak to what it was like that time frame?

[00:06:18] Abe Batshon: Oh, so challenging then. So challenging, you know, I was working at INgrooves prior to me starting up BeatStars and, you know, I’d work with a bunch of artists, and labels and I’d get to know, like, the producers behind some of the work that’s being released. And even for those top-heavy guys that I was talking to, they started definitely feeling a shift in how operationally the record labels were approaching licensing of beats and the development of an artist. You know, I think I just saw a recent article. I forget which publication, oh, maybe Billboard just the other day about how everyone’s a distributor now. All the majors are just, you know, they’re distributors. Each one of their kind of like sub-companies under the parent companies are all, you know, competing with each other, actually as distribution companies, and it’s creating like a healthy competition of distribution. And so, you know, that wasn’t the case back then, man. You know, back in the day, like, the major record labels weren’t operating from a DIY, you know, distribution mindset of like mass distribution, mass releases of content. That wasn’t the mindset. So, yeah, it was a much more controlled environment with which producers actually were contributing to, you know, these songs or these albums that were, you know, the majority of what we were listening to back in 2008. And I think you know, what changed at all was, was the emergence of probably YouTube, right? The emergence of YouTube, and SoundCloud, and, you know, and BeatStars, right? And the accessibility and the ability to now reach a broader and global audience of collaborators and music creators. And we were kind of laughed at. We were kind of laughed at in the beginning, you know, everything different that goes against a grain, that goes against a traditional way of how things are done, there’s always going to be some resistance to that model or any resistance to those ideas. And it used to bother me back in the day and I used to get some of these super producers, you know, some of them would send me like dirty messages, like you’re fucking up the game. You’re saturating, you’re devaluing our art. And I didn’t see it that way. You know, I didn’t see it that way. I was seeing it as a new opportunity to create more and broader reach of intellectual property for the independent creator that can actually sustain themselves in a world where it’s controlled by a few different organizations, you know.

[00:08:36] Dan Runcie: Definitely. Thinking about those artists themselves. I’m thinking back to that time, there was that stat, maybe it was in 2002 or 2003, where they said that 43% of the songs on the radio were Neptune songs. And I think you could have said the same about Timbaland. You could have said the same about Max Martin or any of these people that are just on the radio so much, but you come in with this platform that very much speaks to where we were in the music industry and where things were with technology with hip-hop specifically. This is the blog era, it’s really starting to pick up. You’re starting to see more of that DIY distribution from the artist side. SoundCloud was just launched and even Spotify was still in the early days, but streaming still didn’t take off the way it did. And I can imagine that some of the pushback or some of their response you got was from people feeling that you were likely ahead of the curve, and because of that, there were still several years before things really took off in streaming. So it was probably interesting just to see the landscape evolve. And then as you had success, you saw other competitors come in and other folks see the landscape and you’re like, well, you know, I’ve been trying to tell you all, this is what the vision has been since the 2000s. But back then, the industry was just in such a place of people were still trying to push CDs. Like people were still trying to fight piracy. And like, when you think about that, I’m not surprised at all that you had faced some of that pushback you did.

[00:10:02] Abe Batshon: Yeah. I’m trying to kind of go back to those days in hip-hop, you know, everyone was the plug for certain things. Everyone was the plug for certain things. And you had to go through this person or this company in order to achieve some of the, like, artistry goals that you have as an artist, you know? And there was a determined route that you had to go, you know. There was a determined route that you had to go and you had to go through certain gatekeepers in order to, you know, achieve success. And it just bothered me from a human level. You know, it bothered me from a human level that we’re not allowed to experiment and develop art, you know. Closed environments, the outcome of those. Like you said, how many more Neptunes hits can we have continued to listen to? Nothing against the Neptunes, I fucking love those guys, right? They’re amazing, they’re geniuses. But even them, they would tell you that, yeah, that kind of monopoly was probably unhealthy for music, for artists all over the world. You know, I’m sure they will tell you that that opportunity was, you know, scarce, you know, opportunity was scarce. And yeah, it was relationship-driven industry, you know, so it was a different time, different time. And I think my goal was to just completely break it.

[00:11:16] Dan Runcie: Thinking about that time too. You had the people that were the top producers at those times, and they could charge handover fist for a beat. I mean, there’s the line where, you know, Timbaland’s like, I’m getting half a mill for a beat. And if I’m thinking about just from the competitive dynamic, what happened there, you did have this very top-heavy landscape. And in some ways they’re telling you, Hey, you know, you’re fucking up our money. And in some ways you are, but not necessarily in a bad way because you’re letting everyone else that couldn’t eat at all at least get something, right? So when you now introduce this marketplace and no, you don’t necessarily have to pay half a million for a Timbaland beat to get on the radio. You could pay under a thousand dollars, a few hundred dollars to have one of the biggest songs of the summer on your music, and being able to do that lifts it up for everyone else. So I think whether it’s your Timbaland’s or your Mike Will, other folks could still get, you know, six figures or a lot of money, but I don’t know if they’re getting that 2006 or those 2003 checks that they were for the type of beats they did.

[00:12:20] Abe Batshon: But, Dan, superstars are superstars in terms of creation, right, in terms of music production. Even on BeatStars, right, even on BeatStars, maybe, yeah, there’s some producers on a platform that don’t have that type of name recognition in a game of only a handful of producers. It’s kind of different now to gain that kind of name recognition, but there are superstars on BeatStars. There are superstars that are generating half a million dollars in cumulative earnings in licensing revenue from one beat on BeatStars. So those days of like earning hundreds of thousands of dollars on one track is still happening on the platform. It’s just happening in a different model. It’s happening in a non-exclusive model where thousands of recording artists are, you know, licensing that same production and have the rights to create another master version of that production. But at the end of the day, that producer generated hundreds of thousands of dollars just from that one piece of content that lives as a catalog item in their store. Yeah. And I’m hearing like huge songs now on the radio that those beats are still available, non-exclusively on the platform, they’re still available. So producers are becoming less and less willing to let go of their intellectual property exclusively because there’s just so much backend earnings and recurring revenue, business building and, you know, forecasting of earnings for themselves, that it doesn’t make sense now for them to kind of give up the rights to just one rights holder anymore. So now it’s super competitive and it’s gotten to a point where I think competition is healthy in song making like, Hey, here’s the beat, $20. By the way, some of these beats, a lot of these beats that live on BeatStars, if they existed back in those 2000s, when it was the heyday of license revenue of 200,000 a beat or 500,000 a beat from Timbaland. Like, these beats are competing with those beats or even beyond them, right, ’cause these kids are pumping out content like crazy, right? They’re bending this software in terms of DAW, the accessibility to digital VSTs, and effects, and processing, and sound libraries and, like, their ability to, like, craft, you know, sonically, like, amazing, amazing records that penetrate every market around the world. Like, it’s much easier now. Back then it was harder. But, yeah, I think the earnings potential is still there on BeatStars. You know, I think it’s still there. It still exists and that’s why we’re still seeing producers that have had tons of success, you know, licensing to major recording artists still maintaining and developing and building their online presence on BeatStars. Like, it’s still a major income stream from them to the point where they can’t neglect it. And they can’t completely immerse themselves in the traditional way of like, you know, music licensing within the industry. It’s cool to see. It’s cool to see a balance. You got to have both. You got to have both today.

[00:15:07] Dan Runcie: Oh, yeah. And I’m glad you brought that point up ’cause that’s an important distinction ’cause, of course, we’re talking before about the upfront money that the super producers were getting in the 2000s, but people were rarely talking about the totality of it, and what it looks like. And that’s what you’re talking about here and being able to measure it in totality makes so much more sense because, with the way it currently is now, with an artist releases something on BeatStars, there’s so many ways that they can generate money from that, whether that’s, especially if it’s non-exclusive, as you mentioned, people can pay for it directly. Anyone that is then using that beat, you could earn revenue directly, you know, from anything that’s there, depending on the arrangement. But then I think you have this additional benefit where people, especially with TikTok and all these other platforms, they want to be able to remix and make their own versions of songs and being able to do that and how that can compound on each other. That’s what makes the platforms like this successful. And maybe it would be helpful to hear you mentioned that, you know, there are superstars on the platform that are making and exceeding a lot of those, you know, revenue totals that we had seen before. What does a typical breakdown of that look like in terms of how much of that comes from upfront sales of people purchasing versus how much of it is the recurring and maybe ballpark? We don’t need anything too exact, but maybe to give an idea.

[00:16:25] Abe Batshon: Yeah. So I guess we can only attribute the upfront micro licensing revenue on BeatStars, right? That $200 million, that micro licensing. But if we wanted to get very, very technical, we can talk about the earnings that were actually, you know, generated from those, you know, derivative works, those songs that were made from those beats. And if you calculate the earnings from the millions of songs that are created on the platform every year that get distributed to DSPs and DIY distributors, you’re talking probably billions of dollars of earnings, music copyright earnings from, all of these non-exclusive licenses, cumulatively. So I wish there was a way to calculate all that, but it’s hard to like quantify that. But I think today, from a platform earnings potential on BeatStars. I think the average seller producer on the platform generates over a thousand dollars a year, you know, which, Hey, a thousand bucks is, you know, not the craziest amount, but if you compare that to the average earnings of artists on these DSPs or some of these, some of these other ways of earning revenue from music. I don’t want to poke too many holes at platforms that are, you know, kind of not building their businesses and products with the music creators in mind. I wish they would. I wish they would, but we’re not going to get too deep into that. But I think I’m proud.

[00:17:53] Dan Runcie: I was going to say there’s somewhat listening right now that is backing into the math of how many streams does it take to get a thousand dollars a year?

[00:18:01] Abe Batshon: Right. Exactly. Yeah, I think if we were to calculate the stream versus earning ratio on BeatStars, yeah, our million streams are definitely generating a shit ton more, shit-ton more than what you would earn, you know. But again, it’s a different concept, different way of consumption. Things are happening differently than compared to, you know, the more bigger consumer products that are out there, which, you know, we’re going to keep up with them at some point though, I think, and that’s one of our goals is to build a more consumer-friendly product that actually is not just niche to artists and music producers. So we’re excited about what the future of what we can do for our creators, yeah.

[00:18:41] Dan Runcie: Can we talk a little bit more about that? What would that consumer side look like? ‘Cause I think as you mentioned, a lot of the creators themselves are the ones that are using the platform, getting the most out of it, but what would the more creator side focus look like?

[00:18:56] Abe Batshon: Like a more creator-focused platform that evolves, what the evolution of what BeatStars could be? Yeah, I mean, you know, we are already starting to do it. We’re already starting to do it in terms of adding publishing administration, global publishing administration, and partnership with Sony Music Publishing and giving our creators the ability to go and collect on, you know, all their royalties worldwide. I think is a big one from all of these copyrights that are made on the platform that they still have ownership and rights to. You know, we don’t take ownership of anything on the platform. Our creators right now keep a hundred percent of all their sales on the platform. They maintain all of their ownership. They dictate and decide what their license terms look like. We’re just a technology layer just facilitating this collaboration. And I think, we’ll definitely get into a lot more, a lot more businesses that are complimentary to music licensing. So we do allow our creators to sell sound kits and samples as well, too. And I think we’re, you know, we’re going to build a more sophisticated product around that. Major companies are already licensing for syncs already off of the platform indirectly, even though that’s kind of not the primary function on the platform. That’s something that, you know, we’re exploring and, and going to expand on as well ’cause just another revenue stream opportunity, you know.

[00:20:12] Dan Runcie: I was going to ask you about syncs next because I feel like that is so current and top of mind, especially the explosion of video streaming right now in all those projects. And so many people see the benefit of having a good sync. And I think we’re having these conversations before, but ever since the Kate Bush song on Stranger Things, those conversations have happened so many more times, more frequently than I’ve at least heard before then.

[00:20:36] Abe Batshon: For sure. For sure. Yeah. We used to have a, man, like eight years ago, we did have a sync license and I don’t know why we took it away. We just kind of wanted to laser focus on just the non-exclusive licensing of artists and producers. But yeah, we’re already seeing our music and Netflix documentaries. We’re already seeing our music, you know, synced on movies, TV shows, independent, films, commercials for Adidas and Madden video games. We’re seeing our content already being used in that way. You know, it makes sense to develop a product that’s, you know, tailored for that community for sure.

[00:21:06] Dan Runcie: Has any of the explosion of music rights buying and selling, has any of that changed and shaped your business in any way? Because I know that there are super producers themselves that have sold theirs, whether Tableland or Darkchild having done deals themselves. Has any of that shifted anything or have you seen any result of that in your business or any of the transactions that are being made there?

[00:21:31] Abe Batshon: Yeah, so I’m not too aware of too many producers on the platform that have kind of sold their rights away or anything like that. It hasn’t happened on the platform, but I’m sure, I’m sure there’s been, you know, those investor, kind of like investor copyright types that are out there acquiring rights of music, whether it’s, you know, from the producer’s side of things. But I’m sure they get approached all the time. I just, I don’t know of any, like, specific creator producer on the platform that’s done it yet. But I’m sure, like, a lot of people are having those conversations with them for sure.

[00:22:03] Dan Runcie: Yeah, ’cause I know the artists’ side, artists get reached out to all the time now about this whether it’s from the main investment firms that we know, or even some that in my experience don’t really do much in music, but have reached out because they’ll reach out to me to see if I can reach out to these artists, right? And I got to imagine that in some ways, not only are they looking for the artists themselves, they’re looking okay, where are these artists? Where are the catalogs that they own? So it’s fascinating to see, I assume that it’s likely a conversation that, especially given the way your business is, I know you said that a thousand dollars is the average payout annually that artists or that the beat makers and producers get on the platform, but I’m sure that it is quite top-heavy itself where, you know, there are the few that are just bringing in so much, and I’m sure that they’re probably hearing some of those conversations every now and then.

[00:22:54] Abe Batshon: For sure. For sure. Yeah. I’m sure it’s happening a hundred percent.

[00:22:58] Dan Runcie: Yeah. One of the things that I had seen, especially with BeatStars, we talked about how growth you’ve had recently, and, I believe this was at July 2020, you had $85 million in payouts that you had done to beat makers specifically at that point since you had launched a platform in 2008, and then you had recently announced a few months back here now in 2022, that you had had $200 million. So quite a big jump, it’s almost double in less than a two-year span. One, it would be great to hear what that was like and also, what are the steps that happened or what are the things that you all had done that helped you, you know, double everything that you had done the past decade-plus in the past two years?

[00:23:44] Abe Batshon: Yeah. I mean, our growth trajectory, even the years prior were a hundred percent year over year as well, too. So we were already kind of pre-pandemic move, like, that was our growth trajectory prior as well. It just took us a long time. It just took us a long time. We did it the slow and steady way. And the last two years, I would say, for sure the pandemic put a priority, yeah, I guess I guess people started questioning their existence, man. You know, like we started questioning our existence and we’re like, am I not going to explore my art, you know? Like, I know I was doing it. I was making more music during the pandemic. And I would, you know, meet a lot of our creators and I and I would hear their stories and like, I started singing during the pandemic, or I started making beats more seriously, I’m home and I needed an outlet to kind of license and sell them. And so I think the pandemic definitely kind of accelerated the priority or like top of mind of creators to take it more seriously or to kind of, you know, explore more serious options for monetizing their music. So it’s been a blessing to kind of see the platform and marketplace grow globally all over the world, and yeah, the marketplace is still booming and still going crazy. And I think, you know, we’ll achieve over 70 million this year for sure. That’s kind of our projection, could be more. So yeah, the licensing activity is continuing to go great. I’m excited. I’m excited about the future, man.

[00:25:06] Dan Runcie: That’s good to hear because I am not surprised to hear the growth in the pandemic. I think there’s so many things we can look back on the past two and a half years where especially something like this, where the art of doing it is something that people could do at home. So many people that are creating products, or creating services, or music, or medium putting out into the world, so much of that picked up and there was so much that was successful. And I think we saw that with the way the stocks went and the way everything was. So you had this run from March 2020 pretty much up until let’s say November 2021, when everything was booming, right? The past six months, we saw certain things come back down to earth a bit. And I think there were a lot of the pandemic stocks and a lot of the companies, even the ones in the music industry that had had sky-high valuations, coming back down to earth a little bit, but at least for you all, I’m getting the impression that that hasn’t necessarily impacted you from that perspective, given I think you have a different business model than a lot of the companies that had, you know, challenges there, but how the past three to six months been specifically?

[00:26:10] Abe Batshon: Yeah, I think our growth has kind of leveled off a little bit. We’re kind of, you know, I guess, the normalization of things are happening for sure. And we’re having to work harder to like retain our subscribers and users. It’s just shifting our approach and adjusting and pivoting to more accessible business models for this time and this moment in our history. I mean, it’s for sure a recession. It’s happening globally. It’s impacting a lot of people’s lives and we need to make sure that we kind of still factor that in mind and create products that are are still useful and accessible and functional for anyone with any economic status that they’re in, you know, because it breaks my soul if someone can’t afford a BeatStars subscription and can’t explore their art and can’t develop themselves and meet those goals because of this current space that we’re in right now. So we’re definitely pivoting and adjusting and thinking about new and better accessible business models that can cater to anyone with any kind of economic status. So, we’re definitely adjusting things though.

[00:27:11] Dan Runcie: I could imagine. I do think though that these things aren’t permanent and, of course, we’ll see things pick up, again it’s just a matter of the timing there specifically. I do feel like for you all, it’s interesting because the future of where this all is heading right now, you, as you mentioned, I think that you were a bit ahead of the curve. So, you know, growth in the early days may not have been as fast, but now we’re in this place where people saw the success you have, people see the potential of where things going and now more companies are starting to launch their own beat marketplaces and ones that we’re establishing other places. Have you seen that impact, what you’ve seen in your businesses? Because I know that, at least from other people I talked to that are in streaming of the DSPs, they’ve talked about how we’ve switched from this herbivore market where everyone’s just capturing people that are generally wanting subscriptions to now they’re in this carnivore mode of competing with each other. Have you seen any of that where you feel like the people who are beat makers now, it’s not so much capturing new ones. It’s essentially positioning yourselves from the competitors who have come after you.

[00:28:20] Abe Batshon: Yeah, I’m definitely, you know, definitely aware of the competitors, and a lot of these guys were admirers of what we’ve done. And you know, I know them personally. It’s flattering, you know. It’s flattering to see in terms of people being inspired by the things that I create and build and what we do here as a company as well too. And it’s part of being in a capitalistic society that we’re in, you know. Monkey see monkey do, you know. I feel like it’s increased our kind of our competitive spirits here at the company to want to be more innovative. I think it’s a blessing that there’s other folks trying to come into our space. For me, I’ve been doing this for almost 15 years, right? So it’s, I need a kick in the ass in terms of where I want to go in my career and the aspirations where I want to see BeatStars. I mean, we’ve always been driven and always been the hardest working and most caring community that you’ll ever see in terms of the music producers. But yeah, I just use it as a competitive chip to keep moving and pushing and pushing for our creators to provide even more fair and useful products for them. I haven’t seen a shift in like our business or anything like that because of the competitors, you know. It may take a while for that to happen. If they do something super unique or whatever it is that they’re doing, but I haven’t seen anything that’s like, exciting from an innovation standpoint. It’s just monkey see monkey do, copycats.

[00:29:38] Dan Runcie: Yeah. That was going to be my next question, you see, if are there new things that you’re seeing the competitors do that make you say, oh, that’s interesting, right? ‘Cause that would definitely validate the ass-kicking or the bit of the push there. It reminds you of that sports analogy, right? Like how. Michael Jordan had to go create these demons out of thin air because there was really no one at this level, and anytime someone tried to say, oh, Jordan or Drexler, he just like squash it that immediately. So you all having that, yeah.

[00:30:04] Abe Batshon: I’ve always had that. You know, I’m a sports guy, huge sports guy, played sports my whole life, too. And so I definitely was competing with myself in terms of wanting to be better and extract more capacity of myself and see myself and my team’s dreams continue to grow. But yeah, I just use those as just another factor into, and I’m not to say anyone’s intentions are bad or anyone’s intentions are good, but it’s a little suspect. It’s a little suspect. It’s a little bit, I don’t know, what’s the word, but it feels ingenuine. It feels like a land grab. It feels like a money game. And for us, it’s never been about the money. It’s always been about these young people all over the world and old people, creators from everywhere. Like, can we liberate the idea of songs? Can we help push people to be more experimental with their words and their messages and their art and something that’s so personal for them. I don’t see any of these like venture-  companies or big invested type of companies actually having a genuine approach to how they treat or deal with their community. So I’m really not worried about it. I definitely keep them in mind in terms of continuing our fight to liberate music.

[00:31:13] Dan Runcie: How do you feel in general about the amount of VC money that has entered music and music tech and the platforms and companies that have been launched?

[00:31:22] Abe Batshon: Dude, where was this money when I was in, like, Silicon Valley? You know, I mean, I’m from the East Bay, Hayward, California. And you know, Silicon Valley was just right down the street. And when I was building BeatStars, man, I couldn’t even get a meeting with these guys. Like, I created 12 of the most amazing decks throughout my career that no one ever actually saw. Like, I couldn’t sell anyone on the concept of investing into music. But like I understand that at that time, the music industry was going through a huge transitional moment. Like, everyone was really scared about the future of music. So it was pretty disastrous in terms of where music was at that time, and if I wasn’t an investor, I probably wouldn’t have invested in me either. But I never even got an opportunity to even you know, meet investors or pitch the ideas of BeatStars. We had to bootstrap this thing the whole way. And our creators invested in us, our customers did, we built this thing together with them. We just continue to reinvest every little penny that we made back into the platform. And so I think it made the journey a lot more satisfying, but it’s exciting that there’s much more investment and people willing to believe and other entrepreneurs and their ideas. I think it’s cool. It pushes all of us, you know, pushes our creative boundaries and it’s cool to see money flow. And I I’m happy that, you know, other entrepreneurs are not going to have to struggle the way that I did for 13, 14 years before I was, you know, able to kind of like sustain ourselves. So it’s like, but you know, we kind of always figured out ways to sustain ourselves build organically, which has been beautiful. And we’ve been profitable since day one and we just continue to run lean, you know, and just not be wasteful and just, yeah. So it’s exciting. I don’t know where it’s going to go. I mean, I don’t know where a lot of the money is actually flowing in music tech, really. You probably know more than me, Dan. I don’t pay attention to a lot of that stuff.

[00:33:06] Dan Runcie: You’re too busy building to track this stuff.

[00:33:08] Abe Batshon: I’m busy, man.

[00:33:09] Dan Runcie: That’s my job.

[00:33:11] Abe Batshon: Busy, dude, too busy.

[00:33:12] Dan Runcie: Yeah. With that though, do you get more interest or offers from any of these tech companies now, because I’ve started to hear from a lot of the companies that rose up the same timeframe that you did that. Now, when all this money pours in, now they’re getting the attention, too, and the interest, too, from these investors that wouldn’t have paid attention before, but now it’s much less about the initial investment. Now they’re trying to either acquire and now they’re trying to do a joint venture, do these things. What have those conversations been like?

[00:33:48] Abe Batshon: It’s definitely getting aggressive for sure. And I think because of where we are right now, economically, you know, investors feel like they can come in and get a good deal right now for all these startups or companies that have existed even prior to the pandemic that are still thriving through it as well. I’m seeing a lot of acquisitions happen, a lot of private equity stuff happening. And it’s interesting. It’s interesting. We don’t need the money, Dan, in terms of like where we are financially. We’re, you know, we’re self sustaining. We’ve got a ton of money in the bank and we have our investment plan internally to kind of finish our, you know, not finish, but continue our roadmap of all the things that we dream of wanting to do and build within our goals at BeatStars. So, thank God I’m healthy. I’m feeling good. I’m in remission. I I battled cancer the last couple years during the pandemic. And you know, that was a shaky moment for me during that time. It was really up and down. I didn’t know where my future was and still kind of in it, but I’m thankfully feeling really well and just energized and I’m enjoying independence, I’m enjoying independence. And I really feel that we’re in a good spot to kind of push through this kind of down moment of the economy and head down and focus on our creators while everyone is just focusing on profit and revenue. And we’re going to do the opposite and just build something that’s going to be a utility for people for many years to come, hopefully.

[00:35:07] Dan Runcie: Yeah, definitely, I mean.

[00:35:08] Abe Batshon: They’re coming though. They’re throwing checks. They’re, you know, they’re throwing checks at us. They’re making offers, but, yeah, we’re just not ready right now. We’re just not ready.

[00:35:15] Dan Runcie: Yeah. And like you said, you have the vision for this and the amount that you’ve poured into it, the amount that you’ve gone through, as you mentioned, especially in recent years, like all that comes through with the story, and I think that is what connects with both the artists and what connects with anyone that may be interested from a business perspective. And I think you do have the control, the autonomy to make those shots when you want to, and that’s the power of bootstrapping, right? We all know the trade-offs where, yeah, it can take time as you very well know. But if you’re able to get through the other side, the autonomy you have. You could make decisions like you don’t have to have, you know, the investors reading it out of your deck or anything else are trying to wonder why you’re not pumping more Facebook and Google ads to go do this or that, right? Like, you’re able to do the things on your terms and to clarify, is the ownership a hundred percent you for the company or?

[00:36:03] Abe Batshon: No, it’s not a hundred percent me. Some employees have ownership in the company. We did take a minor, a very small, minor investment from Sony music publishing when we did our joint venture together. They’ve been great partners. They’ve been awesome. And they’ve been helping us kind of strategize and scale our publishing business, which I believe in the last 16 months, we’ve had 26 Billboard 100 hits that are from our BeatStars publishing roster of creators. One of our producers has two songs on Beyoncé’s new album. And I know we had Megan Thee Stallion’s new single, Pressurelicious, with one of our producers, I believe, it was HitKidd with Future. So it’s like, it’s so cool to see that our business is touching so many different parts of the music business. It’s not just the independent creator like we’re powering songs, even for the major, major superstar artists, which is awesome to see. So yeah, I’m excited about the future, man. I think we’re just getting started, Dan.

[00:36:53] Dan Runcie: Yeah. and it’s always fascinating to hear how companies like yours think about the compensation and things like that for employees because with a lot of the other competitors or even others in the space, especially with the amount of money that support and people are getting, you know, equity in these companies and they are getting them because if they’re VC backed, then they have an exit in the mindset and you aren’t coming from that perspective. So it’s always interesting to hear, okay, what are the other things you’re doing? So, yeah, it sounds like you’re still doing equity, I know.

[00:37:22] Abe Batshon: Oh, I forgot to mention like there’s 400 creators as well. 400 creators that invested in BeatStars when we partnered with Indiegogo back in 2016 to be one of their, actually their initial kind of equity crowdfunding launch partners. And it wasn’t because we needed funds or needed money at that time. We did it because I loved the fact that our creators can actually, like, buy ownership into the company, and I can like, continue serving them, man. I can continue feeling like, you know, I have to make sure I’m reporting to these people because these are the people that keep me grounded. These are the people that keep me focused on, you know, how we impact all the other creators’ lives. So yeah, we have 400 other creators from the platform that invested like $150,000 total during that campaign. So it was pretty cool to know that they’re also on our ownership structure.

[00:38:11] Dan Runcie: That’s great to see them on the cap table. That’s great. I’d like to close this conversation out.

[00:38:16] Abe Batshon: Hopefully, make some money at some point.

[00:38:19] Dan Runcie: Well, I mean, that depends how some of these conversations go with these, you know, companies breathing down your back.

[00:38:23] Abe Batshon: Exactly.

[00:38:24] Dan Runcie: So we’ll see.

[00:38:25] Abe Batshon: For sure.

[00:38:26] Dan Runcie: But I like to close this conversation out of it and talk about focus because you talked a lot about creators and how you’re focused on serving them. We’re talking primarily about the people who are buying beats, the people that are selling beats, and anyone involved with that production or engineering process. But for you, I know what it’s like to build a company. I’m sure there’s been plenty of times where not just you or some of the people you’re working with are like, oh, what if you did this? What if we did that, right? But you’ve been able to stay focused on I’m sure, part of it was likely a function of you’re building as fast as you can. Given the fact that you’re bootstrapped, some of your focus is by design, but then on the other hand, now that things are starting to come in, you’re starting to see the success in reaping the rewards. I’m sure there’s likely some thoughts of maybe that thing that you had in the back of your mind for a few years, but now maybe it’s a little bit easier to do if you’re going to be, you know, hitting nine-figure payouts annually soon enough. What are some of those things, if there are, that you have on the roadmap for where things are going for other things you might be doing?

[00:39:30] Abe Batshon: Yeah, we definitely want to make some acquisitions for sure. We’re exploring some of that too. We’re exploring some potential acquisitions, and I think maybe we’ll do our first one by the beginning of 2023. Never know. So we’re definitely thinking about how can we acquire some technology or companies or communities that really would help elevate what we’re doing. So definitely, definitely thinking about that. We’re investing a ton in technology, man. We’re, I mean our engineering team, we’re probably, we’ll double by next year. I think we’re at like 40, 40 people on the engineering team now. So we have all of these cool projects that these engineering pods are working on and it’s exciting to see. So you’ll definitely start seeing a lot more innovation more frequently from BeatStars soon. We have spent, and it may look like focus, but really it’s been just kind of a restrain of our technology for the last four or five years. We’ve been rebuilding our whole tech stack, the back end, front end, the whole thing, because, you know, we were still using legacy platform from 2008 when it was just, you know, me and our founding members of the company, Joseph Aguilar, one of our engineers, you know, building it together and we’re just some kids, you know, just going crazy. We didn’t think that this thing was going to scale to millions and millions of creators all over the world. So we had to kind of pivot four years ago. And we’re about 95% done in terms of the full platform rebuild. And from a technology standpoint, we’re competing with some of the biggest music services in the world in terms of our tech stack. Now we’re prepared to really do some damage now and build on top of what we’re doing and optimize our offering and also get into some different verticals as well, too. So, yeah, it’s kind of like a new rebirth of BeatStars in a sense, a whole new team, a whole new technology stack, a whole new drive, and purpose. And we’re building out our executive team right now, too. It’s been just me in terms of executives. I was wearing all the hats, and I don’t know why I was doing that. And we just hired a Head of People, Sarah Simmons, who just joined us. We have our CTO, Nader Fares. We hired Damien Ritter as our President of Label.

[00:41:37] Dan Runcie: My guy, Dame.

[00:41:38] Abe Batshon: Yeah, man, Dame is legend and legend to me in terms of what he’s done on the independent record label front, you know, and what he’s been able to do, the dude’s one of the smartest guys I know. And I’m excited to have him lead the initial kind of kickoff of what a BeatStars record label can look like. Like, so many amazing artists have been discovered on BeatStars, even just from our competitions. You know, like we discovered Ali, Ali Gatie, won one of our song contests and he’s got billions of streams, you know, Joyner Lucas, and Anees. Anees is an independent artist right now that’s doing some amazing things, touring, you know, he’s got a hit song called Sun and Moon and just killing it on TikTok and just so cool, man, just so cool to see all of these amazing artists take and utilize the platform the best way and build careers. And, yeah, so it’s cool to see all these different things happen and finally bringing some like seasoned leadership to, you know, bounce things off of and build with and collaborate with. And I think I’ve come to a place in my career now. I feel like almost 15 years in, I can let go of some control and I think I’ve matured enough as an executive to now understand and articulate what the company needs and what we want in our dreams and now do it in a collaborative way with a bunch of amazing people that have the same kind of mission. So it’s exciting to see what this new phase of BeatStars goes into.

[00:42:55] Dan Runcie: Making moves. Love to hear it.

[00:42:57] Abe Batshon: Trying to, man.

[00:42:58] Dan Runcie: Hey, hey, that says that’s the journey. That’s the journey. Well, Abe, this has been great. Appreciate you for coming on, and before we let you go, we want to make sure that people that are listening know to find you, so where can they go to either follow you or to follow BeatStars if they want to tap in more?

[00:43:14] Abe Batshon: Thanks, Dan. Dude, I’m some big fan of yours, like I told you before the podcast. Congratulations. Amazing to follow your journey as well. Follow BeatStars at @BeatStars, B E A T S T A R S everywhere. My personal social media shut down everywhere for the last few months. I shut it down, but I’m going to bring it back, just @AbeBatshon and excited to hear the feedback from this episode from folks listening to it. Appreciate you having me on man.

[00:43:37] Dan Runcie: Of course, and best luck to you and best luck to you from health, most importantly, and with the business too.

[00:43:43] Abe Batshon: Thank you, sir.

[00:43:45] Dan Runcie: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat, post it in your Slack groups, wherever you and your people talk, spread the word. That’s how Trapital continues to grow and continues to reach the right people. And while you’re at it, if you use Apple podcast, go ahead, rate the podcast. Give it a high rating and leave a review. Tell people why you liked the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.