NLE Choppa's Move to Warner is a Win for UnitedMasters

In February, 16-year-old NLE Choppa made waves when he turned down numerous record label offers--one as high as $3 million-- to team up with independent music distributor UnitedMasters. The "Shotta Flow" rapper became the poster child for UnitedMasters' business model. Choppa and UnitedMasters CEO Steve Stoute spoke often about the importance of Choppa owning his music and their issues with the business model that most record labels have.

But this past week, NLE Choppa switched things up and partnered with one of the Big 3. From Warner Music Group:

Warner Records today announced that the company has partnered with NLE Choppa for the launch of his label, No Love Entertainment (NLE).  NLE Choppa will christen the venture with the release of brand new music (details forthcoming).

With poise, charisma and cleverness way beyond his years, 16-year-old NLE Choppa burst onto the scene and immediately grabbed our attention and captured our hearts.

Damn, someone put emotion into that last sentence! Choppa snatchin' hearts out here.

The move caught some folks off-guard, though. Based on Twitter chatter from the music industry, some have questioned UM's purpose if the service's flagship artist has already jumped ship after five months. UnitedMasters was positioned as an alternative to record labels, not necessarily a stepping stone.

This rationale misses the point, though. UnitedMasters is an open service that any aspiring artist can use. By design, this attracts a wide range of talents. Most of its roster probably won't make it, some will stay independent indefinitely, and others will move on to new opportunities. UM doesn't lock in any of its artists in, so churn is inevitable—especially for those who build leverage on the service.

From the beginning, NLE Choppa was open about his goals. He wanted his No Love Entertainment (NLE) company to become the next Young Money. Lil' Wayne's label is an imprint of Cash Money Records, which is distributed by Republic Records, which is owned by Universal. Cash Money's 1998 deal with Universal was a landmark move. Birdman retained ownership of his label's masters and had a majority profit-sharing agreement. That deal set the foundation for Cash Money's twenty-year run.

UM can't offer all that to NLE Choppa. But the service put Choppa in the position to make that possible. This past spring, the Memphis rapper went on a promo run to raise his awareness, released a docu-series, and got prominently featured in all the main hip-hop publications. These efforts helped build the rapper's clout.

The terms of the Warner deal are unknown. I assume Choppa maintains ownership of his masters (otherwise, what was the point??). He probably licensed Warner to use his masters for future work, while Choppa maintains long-term ownership.

Could Choppa have landed this Warner-JV without first partnering with UM? Maybe, but that doesn't matter now. The fact that he started with UM is a win for the distribution service. The UM 'alumni network' can be a testament to its work. UM may lose out on the 10% revenue share from Choppa's music, but it can earn more by effectively marketing how UM helped Choppa become a young executive.

Here's another way to look at it. If a retailer starts selling on Amazon, then moves off to build a successful direct-to-consumer company, Amazon has two ways to look at it. The cynic will view at it as a loss. But an optimist will spin its success as a way to highlight Amazon's role in making that possible.

That's the position UM is in. Let's see how it plays its hand.