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Hip Hop Expert Discusses State of the Music Industry

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Ari Herstand
Ari Herstand is a Los Angeles based musician, the founder and CEO of Ari’s Take and the author of How to Make It in the New Music Business.
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Hip Hop Expert Discusses State of the Music Industry

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Our guest this week on the New Music Business is the founder of Trapital, Dan Runcie. The podcast and research group have been featured in the Wall Street Journal, New York Times, BBC World News, NPR, Axios, CNBC, and much more. Each week, Trapital shares insights on trends that matter for the artists, entrepreneurs, and investors who use the research to make decisions that will help their businesses grow.

03:04 Welcome
04:00 Innovations happening within the hip hop community
09:24 New licensing deals major labels are offering
18:55 Misconception of building a career off vanity metrics
28:56 TikTok-inspired record deals
39:26 Major vs. indie resources and connections
44:28 Artist discovery outside of Spotify playlists and release strategies
49:04 Final question

Edited and mixed by Maxton Hunter
Music by Brassroots District
Produced by the team at Ari’s Take

Enrollment for Ari’s Take Academy closes October 20th! Use code NMB for 10% off on any of our 8 music business courses.

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Ari: Dan Runcie, welcome to the show!

Dan. Ari, thank you for having me!

Ari: Rarely, if ever, Do I actually get a, a podcast host on the show, and of course you got all the gear and you got a nice looking microphone in front of you. And, um, you know, it’s kind of like a, a, a host to host journalist to journalist, uh, you know, just music business lover, shina, all of it in the world. I feel like we’ve been, we’ve been, you know, swimming in the same circles for a while and I’m, I’m so glad that we finally get to connect this way and I’m excited for our convers.

Dan: Likewise. Yeah. had a great perspective on this space. Obviously you’re speaking from your own experience as a musician yourself, that’s resonating with folks, and I know, you know, than anyone running the media side and and distributions a whole nother job itself that we can on. So, yeah.

Ari: Yeah. So, um, you know, I’m excited to talk to you about, I mean, your insight in just kind. Uh, where the industry is at currently, sp specifically in kind of, uh, the, the hip hop community and, uh, because, you know, uh, in hip hop, you know, the hip hop community has been innovators. I mean, since the beginning of the genre and, but even more so in the business side, um, there have been, you know, risks taken and path. Paved that have traditionally kind of, uh, not been necessarily the way that it’s always been done, and I think the whole industry always kind of looks toward. Um, well, whether they, whether they’re choosing to look towards it or are forced to look towards hiphop and, and kind of taking the cues, um, from the innovators. Um, I’m curious on your perspective of kind of where we’re at now as an industry, but specifically kind of what have you been seeing as of the last year or two in the hip hop community? Uh, when it comes to the business and where are the innovations happening right now and what is exciting you right now?

Dan: Yeah, there’s a few things I’ve noticed, especially the past couple years. It’s been great because we’ve seen so many artists who wanna break out either on their own, doing their own things, and that doesn’t necessarily mean independent of a record That just means they wanna. Pursue their own business interests. And think that optionality that the industry offers, whether that’s you can build your business around you to either off your music more creative ways, or use your music as a platform to make money elsewhere, there’s more options ever to do that. So we’ve seen hop artists embrace several things. At the height of the pandemic, we definitely saw more artists getting involved with crypto and Web three and NFTs and seeing what that looked like. We have a bit of a dip there, but that one of things we saw in past few years. We’re also seeing a lot of artists bounce back with. Festivals and bounce back with their own performances. So it’s been very interesting to see how a lot of these artists that were great at getting capturing a lot of attention through social media or streaming, how does that translate when actually trying to sell tickets And Right. Some of them are, Some them have pleasantly surprised by what they’ve seen, but others, been bit of hard awakening where they realize that people that following you on platforms aren’t necessarily ones who followers of your music. And I think the one thing that ties in with too is tikTok, and that’s been one of the biggest levers for the industry past year and a half, thinking specifically about the growth of the influence of that platform. So much of the music popular there is hip hop music that’s driving this. So when we think about all that influence, how that all taps in making sure that artists still have the right metrics that they’re using to understand. Who their followers are, who their fans are, and how that translates to running a business and with customers that they can go back to and serve time and time again.

Ari: Yes, I’ve been taking furious notes because you just touched on like five points that if we were doing like a presentation, you just kind of like gave us our assertions and our headers and like all the different points that I wanna be talking about. Um, but that was great. You talked on so many things. I mean specifically, you know, with. Uh, well with NFTs, when you, when you initially mentioned, you know, artists finding more creative ways to monetize their brand, of course that, that, you know, exploded early 2021. We saw, you know, Snoop I think has been like a leader, uh, in his own right, but he’s a celebrity and, you know, he has innovated and done so many drops and made quick. Cool. 10 20 million. Who knows how much it has been on as NFT drops, but there’s also been, um, you know, artists at every other level. Um, I’m curious when it comes to, in the independent community, like you, you alluded to, you’re saying that not every artist, uh, by getting creative, um, with, with their, um, business pursuits, it doesn’t mean that they’re necessarily avoiding the labels. I’m curious. Where, what is the perception right now? What is kind of, Are you seeing more artists that are wanting to follow in kind of the independent chance the rapper model and stay independent, maintain independence, and grow completely independent of a major label? Has pendulum now, you know, eight years later, swung 10 years later, swung back the other way and they, they’re clamoring at the deals once again. Because now deals have, um, you know, because the industry shifted, the power has, um, fallen a lot back into the artist’s hands. Um, and so you are seeing more favorable deals. We’ve, talked on the show a lot about the li new licensing deals that majors are offering. 50, 50 splits the whole thing. Um, where, what are you seeing right now? Are, are you seeing that, uh, artists are trying to maintain into minutes or jumping at the deals everywhere in between? Do you have any examples? Love to hear it.

Dan: I think we’ve seen a few different things, and I think the biggest way that I’ve seen this play out is that if we look at just a distribution of the artists and how much music that is being put onto these platforms, we see the stats, Spotify essentially every few years. You feel like there’s a 50% increase in terms of the number of tracks that are uploaded to Right. This platform per. Whether people are listening to most of those tracks is another story, but it’s trending that way in general. But the thing is, whenever this happens, whenever you give people more options, they do tend to go back to the hits and they do tend to trend back to what they know. And with that, that does give power to artists that are in major label deals and those who already are familiar. I was recently talking with, um, Tati Ciano from Media Research about this and how there’s certain artists who are really popular before the streaming era and got popular in the tail in the early days of it, thinking about your DRA or Taylor Swifts that had been able to reach levels that are very hard for newer artists to reach. That said, there’s so many of them that have folks like Bad Bunny and others have definitely continued to grow, grow, but I do think that it’s become a bit tougher for them. So when I think we look at record label deals, we’re seeing a few things. One, A lot of the established artists, once they have enough leverage, they are re-upping their deals and they are getting ownership of their masters and getting ownership of their rights moving forward. Mm-hmm. then you’ve seen this with a lot of the Republic record deals. You look at Drake’s most recent deal that he had, Taylor Swift’s deal that she had where she. You know, famously a few years ago was in a bit of a bidding war, and then she ended up going with herself and you even see a newer artist like Olivia Rodrigo, who has a licensing deal where she ultimately does get to own her work in the future. That said, that’s a bit more of a unique case because to the point you mentioned earlier, yes, there are many more tools where artists do have the ability to grow and build career on their own. But it has created this interesting thing where now if you wanna be someone signs with the label, they’re ultimately hoping that you on yourself can get from zero to four or zero to 60 on your own, and that you’re trying to sign with them to get to. A hundred, and I think this is where the optionality comes because do you necessarily wanna get to a hundred? I think that’s the power of the way the industry is right now. Not every artist needs to do that to necessarily be successful. I think there’s plenty of ways to define success without needing that. And even though I think a rise like what Chancellor Rapper had a few years ago is probably even harder to replicate now. There’s plenty of people who. Are successful artists in their own right who don’t necessarily even need to reach those levels. So I still think that it’s a great time for artists who are very clear about what their intentions are, what their goals are, and even if they may not have a lot of the vanity metrics of how many Instagram followers they have. Are they performing at award shows? Are they, you know, getting late night interviews and things like that? They still have their basin. They’re still able to leverage the power of the internet in these platforms. The ones that work in their favor, of course, to be able to reach people. So I do think that there’s still a good amount of. Artists who are staying independent that want to, but I think we also see others that, you know, if the major label calls, they’re not going to not pick up the phone. Right.

Ari: Yeah, yeah. You mentioned, uh, vanity metrics and, and you also, uh, discussed earlier, do streams, um, and followers result in ticket sales? And I think, you know what, there’s been kind of this, um, I’ve been studying what the live music landscape is looking like now. Post pandemic. Uh, I think we can officially say post pandemic now, um, not post covid, but post pandemic. Um, and you know, it was kind of this mad scramble where we thought that people were going to flood back into the clubs and the theaters and the arenas and everywhere because they were. Um, they were so desperate for live music again, uh, I think the reality has shown that that’s not actually the case. I think it’s a combination of, um, new buyer habits, uh, fan customer habits that they kind of sunk into during the pandemic. Um, you know, they. Don’t feel the need to go out as much. Um, and that some of them are just not really inclined to go out as much as they used to go out. And they’ve found routines at home, which results in lower ticket sales, especially for these mid-level artists. Um, and I’ve been left and right of these Spotify darlings, these, you know, artists that have tens of millions, if not hundreds of millions of streams and monthly listeners on Spotify. Can’t sell 40 tickets at any stop on their tour. That is not a good look for the industry, uh, when there’s that massive discrepancy between these metrics, these, these numbers on the internet to hard ticket sales. And I feel like that is almost. Um, it’s this divide between internet artists and real life artists and this divide between what is, uh, achievable in, you know, online and then how can you translate that. But I feel like the onus is also, uh, there’s a responsibility. And I think Spotify is realizing this. There’s, and Instagram and, and all the platforms that are, that are basically building their platforms off of the work of creators and artists. There’s some kind of responsibility to help the artists wi, uh, and creators build a career that they have now. Um, they have now helped the platforms grow so much, you know, and so Spotify is launching new tools every day to help artists and it, it, you know, help reach ’em, save from the one thing that we really need, which is let me message all of my followers right now and tell ’em about my tour. They don’t do that, and I grilled them when they were on the show. Why aren’t they doing that? Bands in town does that. It’s one click. It’s literally. Message. All of my fans in Minneapolis, boom, bands in town sends it out. Thank you bands in town. Why doesn’t Spotify let me do that? That’s insane and annoying and frustrating because like, how are we supposed to get in touch with all of our fans and followers? But we’ve seen this time and time again. Facebook convinced us, you know, 10 years ago, 12, 15 years ago, Build up Facebook pages of all our fans. We did that and then Facebook rips the rug out and it’s like, Oh, guess what? Now if you wanna reach any of them, you have to pay us. And like every platform is kind of like that because we forget at the end of the day, you know, you rent your fans to social media, you own them if you get their. Email addresses or their phone numbers. There’s a big difference there. And it’s same with Spotify. It’s like, yes, we’re so obsessed, uh, with streaming numbers as an industry and we, you know, everybody’s first check is like, Oh, how many monthly listeners you got on Spotify? How many streams you got? All that stuff. And then, Oh, we’ll go check out Instagram followers. But does that translate to real lifelong fans? Does that translate to, um, you know, tickets sold, People that are gonna support you for life, they’re gonna like, you know, spend. The true fans concept, are they gonna spend at least a hundred dollars a year on you for the rest of your career? Oftentimes, no. But then on the flip side, it actually, we see it the other way. We’re seeing artists that are selling out tours, selling out clubs, theaters, whole shows, and their in, their numbers are seemingly negligible. And so like I, I often. Always encourage people to check yourself when you’re judging somebody based on their vanity metrics, on their numbers, and really go to their show. Look around at the fans, see how many people are in there. Like I could name a hundred artists who you would probably scoff at their numbers on Spotify or Instagram, but they’re selling out their shows now. What would you rather have is the question? Is this like, do you want ticket buying fans or do you want. Do you want the vanity metrics? Do you want, you know, your Instagram looking cool or your Spotify. Now granted with Spotify you get paid for those stream. So yeah, that, that, that’s money and that that helps as well. Um, so I’m curious though, you know, are you seeing kind of in the conversation. Of the people that you’re talking to specifically in the hiphop community, um, you know, have those goals and intense intentions shifted? Like you mentioned, not everybody needs to get to a hundred. Maybe living at 60 is cool. That’s a healthy career. I mean, you know, there’s artist right now that. I mean, shit, who would not wanna be an artist? A mid-level artist that can maybe sell 1500 tickets wherever they go. That is a solid living. That is a serious fan base. But maybe you’re only looking at a hundred thousand monthly listeners. Maybe you’re looking at 50,000 monthly listeners. Maybe you’re looking at 50,000 Instagram followers topped out, you know, and it’s like, where, Where’s the conversation right now? Have goals and intentions shifted? Have people woken up to the fact that vanity metrics aren’t, you’re not gonna build a career on vanity metrics? I’m curious your thoughts on all all.

Dan: Yeah, we’re starting to see that conversation happen more because we’re starting to see more and more of that right? You would have artists that would use metrics like first week album sales as a benchmark against each other, but even that isn’t necessarily the best measure of. Who is going to these concerts or who’s doing these things. In terms of the live performance piece, which is the first thing that you mentioned, I think I’ve seen a few trends there because the top line numbers we’ve seen is that Live nations just had record revenue and that music is back. Right. And while I think that’s true, as we both know, for the top artists like the weekends, you know, selling out arenas and or, or stadiums. At this point, it’s the mid-level artists who are the ones that we’re talking about that are much more affected by this. And I think this is important because we also saw this recent. This is from, um, Steve Cooper, the outgoing CEO from Warner, who had said that the label is less dependent on superstars than it was in the past. And I think that there’s some nuance there because someone could take that and think that that means that, oh, well it’s the time for the mid-level artist, but it’s not quite that, What that means more so is that the definition of superstar is just changing a bit where. let’s say 30 years ago, it could be Michael Jackson, Queen or whoever, or Madonna and you know, the biggest artist of the eighties, Prince and others. But now there’s probably 20 people who you could say, across all genres who are at those loves on a global perspective. So those folks are still superstar selling out arenas than doing all those things, but they’re just not at that like beetle mania level that the industry was used to having. Before.

Ari: Right. And, and I think maybe to go along with his quote, what, what I think a lot of the major labels are looking at right now is it’s not necessarily that they need the superstars to keep, uh, the label profitable and successful. Uh, it doesn’t need to be artists to them. As we’ve been seeing catalog acquisitions have we, as we’ve been. Uh, labels snap up songs, just individual songs. Granted, they’re signing the artist, but they’re only signing it for the viral TikTok hit. Honestly, they don’t care about the development of the artist. The artist doesn’t know that. I wish they would, but like what you’re saying, because previously, historically, you know, the, the major label failure rate was 98%, meaning it’s like they sign a hundred acts and 98 of them this. Are not gonna recoup the cost of their advance to get a, you know, a second album. Um, and they’re gonna get dropped. Now, it’s interesting that it’s not really to the label about, which are, my acts are gonna be profitable because whether they build a, a touring business or not. Is really of no concern to the major labels if they don’t have, if they’re not participating in touring revenue, if they’re, if they haven’t signed a 360 deal, which we’re fortunately seen less and less of if the label’s not participating in touring, they don’t care about touring. So whether they, whether the artists become successful or not, they don’t care about, they wanna make sure that their money at the end of the year is in the black and the way that they do. Is they get enough hits and the way that they get hits, it’s not necessarily as much anymore about the artists that are the superstars that are pumping out consistent hits like Drake or The Weekend or Michael Jackson. Uh, it’s, it’s now. They’re, they’re just, That’s why 2020 was the year of TikTok signee. It was like, you know, 60% of every artist that got signed to a major label in 2020, and I think even 2021 was a TikTok hit. And it’s like, I mean, I, I wish, like every artist wants to think that they, that they’ve made it when they get the major label deal, we’re gonna, Vox I think did a really good piece on, um, they, they interviewed me for this, uh, and, and spoke to a lot of great people about this, of what happens to songs after they go viral on TikTok. And they actually followed up with a lot of the songs that, know, went viral in 2019 and 2020 and like, where are they now? And what has happened now? But we’re gonna look back in five to 10 years from now. We’re gonna look back at this era and be like, wow. It’s like the one hit wonders we know from the nineties, you know, it’s like there’s gonna be the one hit wonders of the TikTok. It’s like, oh yeah, that song trended on TikTok for two and a half weeks. They got a major label deal, they got a million bucks, and then they flushed it all in three years. , you know, And they don’t have a career to speak of. Yeah. So, Yeah.

Dan: Um, yeah, it’s, it’s, it’s so fascinating because it, it also makes me think of this other point that you mentioned on just the power that the platforms have and how the platforms are more incentivized to have them as the star and not necessarily the artist. Yeah. And I think this is something that we’ve seen happen more and more. If you’re someone that uses TikTok on a regular basis, this is how the app has been designed. That four you page is meant passive scrolling and who that post is from is in a much smaller font than anything else. Right? Right. We were done with the days where you. Instagram would have that banner top who did a post. Of course it still has that, but if we were thinking about how stories is the main way that people are consuming content on these platforms, it’s the video itself, right? You see this video, you go to the next one, and Instagram is essentially done. The same thing with Reels. So this is now just tapping into this way where the platforms understand that they are the place, they are the destination. So it’s harder for the artists themselves to really be able to build that deeper connection. So that’s where it becomes even more likely that the people that are liking and engaging on each thing may not actually know as much about you. As you know, someone else that could be on a particularly different platform. So it’s kind of this thing where as much as a lot of the mega platforms do have a lot of the power, and I think part of the reason they’ve grown is because they’ve made themselves a destination and they’ve done it that way. A lot of the other platforms that are a bit more built towards trying to cater to artists and having them connect. Fans more deeply. They aren’t as big as a lot of the other platforms are. I’m thinking about platforms like a, Audio Mack or like a Tidal, or even a SoundCloud. They’ve all had initiatives in place to be able to connect artists with fans or to be, whether it’s u o your fan powered or use eccentric royalties or Audio Mack has their badges and these things are great, but I do think that these things hit more of. the audiences. for a lot of the artists that we’re talking about, which is great, but maybe that’s part of where that separation is, right? If you’re an artist that does look like for you on one of those platforms, and maybe it’s more about what your audience can have there and who cares what the stats look like for your monthly listeners on Apple Music or so, or or Spotify or something like.

Ari: Totally, and, and it’s, it’s interesting there, you making, it’s like I’m having this epiphany here of kind of how the major labels are looking at what their new intentions are, their new business model, I should say, in terms of not necessarily looking for the superstar as much as they need to, as much as like, let’s just get enough hits by singular. hits, and doesn’t need to be by the same artist. It’s not like we need to sign Drake that’s gonna be good for 15 hits over the next, you know, six years or whatever. Uh, they can just, Jay can just grab up any single. TikTok has a similar model. We don’t need the superstar creators. We don’t need those influencers that have the tens of millions of followers because it’s not necessarily as much on this platform on TikTok. About your followers, It’s about how do you keep people on the platform long enough? And TikTok is structured in a way that half the time on your for for you page, more than half the time, you’re not seeing content from people you follow. You’re just seeing content that TikTok thinks you’re gonna like. And so in one sense, you could say it’s democratized a little bit more, but on the other sense, it’s that. Artists are having, creators are having a tougher time building, a loyal following and an audience based on people who like their stuff because the, the user behavior on TikTok is now just, uh, trained. to scroll. It’s not necessarily as much about following someone that you like their content or you think you’re gonna dive deep into an artist and, and mind you, there is that too. And there’s a subset of the community, but that’s not how TikTok has been built. Like you said that, I mean, that’s a biggest difference I think between TikTok and Instagram. Instagram is for your followers, it was built on you build. A following, and your followers will see your content and your followers will only see the content from people that they follow. But TikTok is the complete opposite. And there’s this parallel right now with I think the major label business model with also the TikTok model, and it’s just like to be profitable and have a successful business. It’s not that they need the superstars anymore, it’s that. You know how well on TikTok model, how are you gonna keep people on platform? And they’ve realized that it doesn’t matter if you have five followers or 5 million followers, your content that you post may help. TikTok keeps somebody on the platform. That’s why we see somebody who just starts an account on TikTok and their second post gets a hundred thousand views cuz they’re like, You know what, we’re gonna test this out. And oh, good job. You just, you know, you posted something that is gonna keep our audience engaged. We don’t care about the number of followers you have.

Dan: And they got it down to a science just with being able to give you that initial dopamine rush. Right? It’s encouraging You see that you want more of it because we all know what it’s like to post platforms where you don’t get engagement. That’s how things drop off. They give you just enough in the early days to get you intrigued and then things do start to trickle off a bit there.

Ari: Yeah. Yeah. Oh, totally. I mean, like, you know, there, I, TikTok would never say this, but uh, there have been studies that have shown, you know, they prioritize people’s first few posts when they newly created TikTok account to get you hooked and then, They kind of taper that off and it’s, and now you’re cha it’s it, I mean, it’s like a drug and now you’re chasing that high again. It’s like, you know, it’s like you’re never gonna get that first high, or, or you’re gonna try, you keep trying to get that high again and it’s harder and harder and harder. Um, and doc’s built that way. I mean, all the platforms, you know. are built that way. Um, and you know, like you said before, uh, how kind of the late the majors, I mean, they’re having to restructure their business model because at this point they have about 65% of the market. That means 35% of the market. Our independent artists, indie labels, self-release artists, the majors have to innovate. They have to change their business model because they’re losing market share year over year. And that is terrifying to them. Now, you know, granted they’re all still profitable, uh, but it’s like, 20 years ago, they had, what, 95%, 92% of the market, you know, and now they’re at 65% because the Indies have come in and, you know, uh, the indie label stuff, release artists, all of that. So it’s still, they still have the infrastructure, they still have the money. They still have the resources to help launch an artist from 60 to a hundred. But like you, said, they’re not looking at the artists that are, are developing really. And it’s like, I think every artist needs to think about this if they do, well, one, if they’re looking for a deal, but more so two, if they are offered a deal, it’s like, okay, realistically, am I worth this deal? Like, let’s set your ego aside. Let’s just like look at the numbers here. It’s like, okay, you’re talented, cool, everyone’s talented. Like you’re not, It’s And like, unless you’re like, unless you are the next. Adele or Michael Jackson or whatever, it’s like, All right, let’s be real here. Uh, it’s not about talent. The label is not looking at talent here. They don’t look at talent. They’re looking at numbers. So are they signing you because you had one viral moment on TikTok, and are they just wanting that song or have you developed and built up an audience on your. own that is, is so undeniable, and they will follow you wherever you go, that you can go in with this clout and the label needs you more than you need the label. And then if you can go into those meetings with that, then you’re unstoppable. Then you can dictate the terms where I want a licensing. deal. I, you’re not owning my masters. We’re gonna do a 50 50 split, which the majors are doing now. They weren’t doing this five years ago, but they are doing it.

Dan: Right, Because I think it’s one of these things where the labels are seeing two trends happening where it’s one, these artists have more options than other, and whenever specifically, that’s why we’re seeing the percentage of revenue coming independent artists continue to grow and grow and grow. But then you’re also seeing the record labels themselves making more and more money from streaming, right? Yes. So on one hand, things are trending up and on one hand things are trending down. And I think that the overall. At least from people I’ve talked to and what I capture is that they hope that that revenue offsets, you know, that increase of revenue from streaming offsets the loss of not being able to capture, Thi not being able to capture revenue from the newer artists, or specifically what may hurt them even more is these. Current artists that want to re-up their deals and wanna do new, new deals. Because the way it is today, we look at the amount of catalog. Like even if you just named the current people, whether you are looking at your, your Drakes, your Taylor Swifts, or whoever, the amount of money that they’re gonna generate is a non, you know, Is is a non insignificant number. Like it’s, it’s still a fairly, you know, strong number. That number is continuing to decline. But I think that they want to be able to say, Okay, how can we at least get some piece of that pie knowing that we can’t capture all of it? Right. So I do think it puts a lot the independent artists in, especially the ones that have things set up in a pretty powerful position. Because if you’re at that point where you are hitting that 60% and you’ve developed yourself to that point, you should be able to run the numbers. You should be able to do all the trade offs to say, Okay, does this really help me get my goals? Yes. You know the things that it may get you going to that label. You may get that interview on the Breakfast Club. You may get a higher likelihood of performing at the Grammy’s, or your name might be a higher font at Coachella or whatever, but. Does that help you connect with the fans and does that help you with your ultimate goals of what you’re trying to do with your career? And I think that’s the ultimate question, and because oftentimes that can be in somewhat in contradiction to how other people perceive success. It can be a distinction there. I’ve read this article recently, I think it was in Billboard or somewhere, one of those outlets where they interviewed. eight successful independent artists. They didn’t say how much money they were making, but I captured that their catalogs are likely generating at least, you know, a couple hundred thousand dollars from the way the article was talking about what they were doing. And one of the things that they talked about that they didn’t necessarily feel like they had was whether it was respect or the same type of opportunities that their signed counterparts had. Even if the independent artists is making more money or bringing home more money than a lot of those signed artists. Yes. So. There’s a vanity aspect of that. There also is a, a real opportunities aspect of it well, where it can be harder to get features. It can be harder to get those things because the industry itself is basing itself on metrics that don’t necessarily tie into the ones that you, you know, not just intrinsically, but the ones that actually matter.

Ari: Yeah, totally. And, and it’s, it’s, it’s the co-sign and, you know, there is still a lot of pull in the industry when x, y, z at Warner Records email comes in, or Capital Records or Sony or Columbia or, you know, Rock Nation or whatever. There, there are, um, There is still clout and even though, um, Spotify likes to pretend that the field is level when it comes to. Um, playlist pitching and stuff like that. The fact of the matter is, is a lot of labels have direct connections, have their personal phone numbers and emails of the playlist editors, and they get their emails returned and their phone calls answered, whereas independent artists and IND distributors and any labels don’t. And I, I just, uh, read this article. Um, it was in billboard, uh, Elias Light. Um, about radio. And when it comes to radio now, it’s not as influential, um, as it used to be. Of course, um, radio usually gets the party last, but when you’re trying to go mass scale and you’re trying to penetrate the charts, radio is still part of the conversation and it can. cost upwards of a hundred thousand dollars or more to run a radio campaign, uh, for, you know, hip hop r and b or Top 40 radio. Now on a AAA or a c hot AC or kind of, um, you know, more of a, um, an indie campaign, you’re still looking at 20, 30, $40,000. Where’s that money going? The what? what? This article, uh, illuminated what, where the, where it’s at right now is, it’s not Paola. Technically, because you’re not handing the radio DJ or the program manager a wad of cash or an envelope of cash like they used to do in the seventies and eighties. What it is now is there are radio promoters and they’re the middlemen. And the middlemen are the ones that are like, Oh yeah, it’s gonna cost $3,000 to add your song on this one station. If you pay me $3,000 cash, I’ll get your song added. If you don. You won’t, and it’s like, it’s pretty crazy that that’s how it goes right now. And so it’s like, unfortunately when there are still avenues like that, uh, pathways to, to the charts and it, that is a metric that people will talk about and can open more doors. There is this barrier of entry because it is required. A hundred thousand dollars to just have a shot at radio, um, and pop radio, hip hop, radio r and b, and if. Most indie labels or indie artists don’t have a hundred thousand dollars to just gamble on because it’s not a guarantee where the majors have so much money, they can do that and they can kind of gamble on that. So the playing field is not, still not quite level when it comes to a lot of these opportunities, whether it’s, you know, traditional radio or whether. Playlisting and it’s, you know, we, we’d like to think that because it has been democratized in the sense that anyone can create music from their bedroom. Anyone can upload music to Spotify. Anyone can, you know, run ads now and anyone can, can open a TikTok account and go viral on TikTok. Sure. And it does happen, and that is, you know, we are seeing market share being driven away from the majors into the indies. We are seeing independent artists succeed like this every day. Absolutely. But the majors are now sharpening their swords and their teeth to make sure that they maintain and they get, they claw back their, their market share, and they are doing everything in their power to keep the status quo where they have the connections, they have the resources and the access and the indies don’t.

Dan: Yeah, it’s, it’s so fascinating. I think a lot about how. An artist like Russ for instance, I don’t know if you saw that viral clip, but he had a song with Ed. She, and he was talking about how they spent $300,000 on the music video and he spent $700,000 on marketing. And a lot of people were like, Wait, you spent $700,000 on marketing and you already had a song with. One of the biggest stars in the world. And he’s like, Yes, because this is what is required to make it happen. And he’s someone that was previously signed to labels. He’s now doing it independently, but even at his level, that’s still a lot of money to be able to make and push that rec. And especially you’re trying to push that record now globally too, right? And that’s the biggest thing you often hear, right? A lot of people end up signing with major labels because they hear that, okay, they want their music to ring out in all parts of the world and other corners. And the major labels will always. Talk about how they do have the global distribution advantage, which over your average independent artist, they likely are able to pull some strings there. But even that’s getting more difficult now because a lot of these other countries are having their own stars and with the developed and stronger ecosystem that we’re seeing. In Africa, places in Latin America and Asia well. They don’t necessarily need to listen to the American based Right pop or rap stars nearly as much as they do because they have their own pop at rap stars that they have. Yeah. So even that’s getting more difficult. Right. I, I think that we saw this era, and this is one of the things we had happened in the past few years as well. We saw more and more of the independent distributors and more of the independent record labels as well, getting acquired by the major record labels. And it became one of these things where it was this, If you can’t beat him, join ’em ethos to it, because a lot of them. Literally had names like, you know, AWOL stood for artists without a label and they ended up being acquired by a major record label. And while, you know, maybe find to think about the acronym, you get the move a hundred percent. Because I think for them there was a level that they necessarily. Couldn’t go to, but that was in a slightly, that was a few years ago. Things are a little different now. We haven’t seen as many of those same acquisitions in the past few years. It’s cuz a lot of the big ones happened. There are a few big, you know, whales out there that I think majors are still looking at. But this will be an interesting trend to continue to follow.

Ari: Yeah. Um, I’m curious what you’re seeing. You know, speaking of kind of the regional successes or the local, uh, the local cultures and communities and, uh, around the world where it’s not just about Western music or American music. Um, not only are there, uh, you know, local artists, but they’re local. DSPs, Um, like you’ve mentioned Audio Mack few times, I think there’s a good number of people listening to this right now that have never heard Audio Mack until you mentioned it. It is not a streaming service. It’s not a DSP that many people in the states have been paying attention to, whereas, In Nigeria, it’s massive. It’s huge. And Nigeria is one of the, the fastest growing music markets in the world, and there’s a whole market there. And so it’s like Audio Mack is an example of kind of this specialized, almost localized streaming services. Deezer huge in France, you know, and like, but Deezer’s, uh, state side, uh, you footprint is minuscule compared to Spotify. Apple Music Tidal, Uh, well, even Tidal. Tidal name because, because Jay-Z, you know, bought it and started or whatever. But like, if we’re really talking about how many people are like, there are more users of Audio Mack than there are Tidal, like, I hope everybody like, knows that and, and understands that um, you know, there’s like, I believe. Look, there was like 20 million monthly Audio Mack users, uh, right now. So I’m curious if you’re noticing like, where is discovery happening right now? Like, you know, previously, other than TikTok, which we’ve talked about ad nauseum, but like, um, you know, there was SoundCloud wrap. Five, eight years ago, kind of that, that, that SoundCloud thing. Actually it was a little bit, yeah, eight, 10 years ago. Uh, there was, you know, SoundCloud was this hotbed of discovery for a while. Um, and there is, uh, you know, dat piff for a while was where discovery was happening. People are dropping their mix tapes. Is there a place. You may maybe most people don’t know about where you’re seeing discovery is happening other than tos, Spotify, playlists and all that stuff.

Dan: I do think you mentioning Audio Mack is a good one because I feel like every week or every other week I see some article that says there will be another big. Star coming from Africa and they will be, you know, the biggest star in the world and that person may already be on their way. Of course, artists like Burna Boy and Wizkid have been doing their thing for years now and do have a strong fan base, especially here in the us. But I think a lot of people are expecting the next wave of stars just in the same way that we’ve seen K-Pop habits moment. We definitely seen. Um, artists in Latin America have their moment and now Bad Bunny is the most streamed artist we have right now. Yep. I think we will see that same level of impact likely come from an artist in Africa. Yes. And as I mentioned, I think it could still be some of the names that, um, I mentioned earlier, but I think it also will benefit the platforms. that are, that have a strong foot in that area and Audio Mack is one of those. So I think that if anyone really wants to track those things, it’s getting deep and granular with that data to be able to see, okay, what’s trending? What’s popping here? What can you see? And where do these things take off? So I think that can be one to see for sure.

Ari: Nice. What are you seeing in release strategy these days? Uh, how are, how are artists releasing music? Is it, uh, just singles? Are there even such thing as a mix tape anymore? Uh, if so, what does that even look like right now? Are there albums? Like, how are people releasing music in your perspective?

Dan: I’m seeing more and more singles. I think that’s something that we definitely saw that the streaming era has made easier, but mm-hmm , we’re seeing it from the big artists. We’re seeing it from the middle. Um, you know, mid tier artist as well. Really product izing, the release of a single and making a seem in many ways, just as big as so people may assume from an album. I think that’s been pretty effective. We’ve also seen these smaller packs as well, so I think these things have been good ways artists to still save the album work for. Whenever the big moment is, but we’re also seeing them still just find ways to be frequent and be regular. Because one of the unfortunate, I mean, well, I guess it may be a bit biased or call it unfortunate, but one of the trends you’ve kind of seen in music right now is that. The streaming era has rewarded those folks who have been more likely to be consistently good as opposed to being occasionally great. And that’s just given the nature of the releases. So a lot of the artists who are releasing things on a regular basis, they still are having the streams. I was talking to, um, currency, who’s a hip hop artist, and he has been one of the leaders on the independent front for a while now, and he was talking about, Okay, I. Release three or four times as much as your other artists do, but at the end of the year, we still have the same number of streams and we’re still recording the same amount of music because they may only be releasing a 10th or you know, 8% of all the things that they record, but I’m gonna release 50% of it. Right? So they’re treating streaming, um, in a lot of ways, the way that a lot of folks do, and I know that this is definitely a bit of a tension point because one of the. Frustration as a lot of people have is just how streaming has, in many ways reduced the marginal value and the perceived value of music itself, and that so many people believe that music itself should have inherent value the way that it did in. Previous eras before piracy and all of that. Mm-hmm. So there are still artists that are doing that. I think that vinyls have been a great way to be able to see that, uh, trend happen if it weren’t for some of the supply chain issues that are happening. I think we see even bigger trends with the impact of vinyl right now. But now things are being a bit rationed off and you’re seeing some artists get priority over others, is a whole other topic we could go into, but I’ll, I’ll, I’ll, I’ll pause.

Ari: Don’t gimme started on vinyl. I got, I got this, just, just hearing it boil, just my blood pressure’s rising with all of the issues that I had dealt with, with my previous , uh, vinyl plant manufacturer with everything that went, but, but, Yes. All of that being said. Cool. Well, Dan, this has been a very fascinating conversation. I appreciate your perspective on everything, and it’s just been a, a joy to, to kind of shoot the shit and, uh, you know, vo back and forth. Um, I, I have one final question that I, that I ask everyone who comes on the show and what does it mean to you to make it in the New Music Business?

Dan: Making it captures so much that we talked about in conversation, right? It’s being able to have the choice and the ability to release music on your terms, be able to pay the bills and do all the things that you wanna do, and ultimately make decisions that are based in your choice. You can make decisions based in today, and you’re not necessarily sacrificing your time or your efforts today for some type of promise tomorrow. You’re ???? there, or you’re very close that so you can live more in the moment and make decisions based on that.

Ari: Dan Runcie, thank you so much. That was great.

Dan: Thank you. Appreciate it, Ari.

About The Author

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Ari Herstand
Ari Herstand is a Los Angeles based musician, the founder and CEO of Ari’s Take and the author of How to Make It in the New Music Business.

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