UnitedMasters: The Same Old Industry Scheme
For the last few days, the music industry has been going nuts about UnitedMasters: a tech-focused company that positions itself as a replacement for the traditional record label. UnitedMasters received $70M from Alphabet and is now going-off and hiring former Facebook developers and expert digital marketers. Their actual platform is pretty sparse and the aesthetics are relatively poor, but they are focused on giving artists a dashboard for them to use data and analyze which of their fans are most inclined to turn into super-fans and which fans they should be targeting with merch or ticket sales.
Alphabet, formerly Google, has been hard-pressed to takeover the traditional revenue sources in the music industry. First with the publishing house tech-giant Kobalt, and now with Steve Stoute’s UnitedMasters, it seems like nothing is going to stop their path of pushing out the third-parties in the space.
Great, and all we really need is more monopolization.
Steve Stoute is the former president of Interscope Records; the label that brought us the likes of Death Row Records, Snoop Dogg, Dr. Dre, and Eminem. Now with Apple, Spotify, and Google positioning themselves into the streaming space, it’s becoming a little bit of a clusterfuck and it’s hard to see through the smoke. All of the record label executives seem to be picking favourites of the tech giants, but the record labels are always going to win-out. Universal Music Group are set to have their revenues skyrocket to $2bn this year – mostly due to the back-deal negotiations that they have made with the streaming services.
The record labels have Spotify in a knot. If Spotify doesn’t play ball, then they can pull their catalogues. So they have all these back-deal negotiations and advances in order to allow Spotify access to their catalogue. Nobody has a record deal that includes advertising revenue from the streaming services and so this is just money that the record labels get to pocket without giving anything to the artists.
There’s more money in the music industry today than ever before, but it’s still going to the top-dogs. Independent artists have more power and are keeping more money than ever before, while major label artists are kept in the shadows and those shadows get thicker and thicker as the technology develops. It’s impossible for any artist to access the advertising revenue from Spotify – that goes direct to the major record labels. But you weren’t going to see that money if you signed a major deal, anyway.
The record executives are picking sides and playing ball – they know that they will always have power because they own the masters. Jimmy Iovine, the founder of Interscope, has sided with Apple Music, and so it’s interesting to see Stoute try a different route alongside Alphabet. Alphabet knows that they are not going to compete effectively in the streaming service. Alphabet has become self-centred and unable to look outside of their own culture. It’s why the Google+ social network was a complete disaster and why Google Play Music has about 7M subscribers to Spotify’s 50M and Apple Music’s 27M. They need another play here, and they are being smart with Kobalt Music and UnitedMasters.
Alphabet, though they seem to have a really positive culture, have a culture problem. If you can’t see outside of your bubble, then nothing you build for the market place will ever deliver value for the market place. Business is about problem diagnosis, not a Millennial panacea for a problem that doesn’t exist. Alphabet then becomes strategic in buying and investing in the next companies in the music industry, instead of trying to develop their own innovative solutions in the marketplace.
I hate this UnitedMasters gig, though. If you visit their website, you will see that it is all about working independently and replacing the labels.
It’s a great positioning trick, but here is what is really going on…
Steve Stoute is a record label guy. He knows how to make money when he owns masters. Most of the money in the music industry is in the masters and in ticket sales. LiveNation owns the live music space and nobody has been able to compete with their strong contracts with the largest venues in the space. So if Stoute and Alphabet want to generate more cash than the streaming services, then they have to play with ownership the masters. They can’t beat Apple Music or Spotify, so they will profit off of the royalties.
Here’s where it gets fucked though. When Stoute talked about the launch of UnitedMasters in TechCrunch, he spoke out against 360 deals and record label contracts that were not giving artists their fair share.
But we already know that UnitedMasters is going to take money from streaming, from merch, and from ticket sales. So what’s the difference?
Why are they giving artists all of their data for free?
It’s the same trick that any venture capitalist uses. It’s been the trick that record labels use forever. Find who is going to blow up anyway, who requires the least amount of risk and capital investment, and then put money into them right when they are about to be successful.
Put money into the startup that is three months away from blowing up but the tech founders can’t pay their rent. Put money into the artist that just grew their following by a percentage that is disproportionately higher than any other artists in their region, because you have all of the data, and then privately message them through the UnitedMasters platform: “Hey future-Chance-the-Rapper, do you want to give us all the money that you’re about to make?”
The data allows them to know who is going to blow up early. It’s a perfect model.
Then they sign them to the same record label that gave the artist all of their vanity metrics to begin with, and built the trust and rapport with as many artists as they could.
Most artists will sign anything if they already trust you.
This is a bullshit way to make artists feel like they have more control of their careers. UnitedMasters is supposed to be helping artists run campaigns to their audience.
Can I use their data to run my own advertisements? What’s the point of using their data platform if I’m going to give them a piece of everything that I sell through my own efforts?
This is just the record label of the future. Another monopoly. But it’s even worse than a record label because they build a false trust in their brand and then they will hit you with a record contract right when they know you don’t need it. The data doesn’t lie.
I signed up to their platform and gave them all of my data. I’m interested in seeing what is going to come of it. How much access to the data do I have? What can I do with the data? Unfortunately, I have to give them my data in order to see what I can do it with and see how the company works… but who really owns the data?
Remember that you have the power today, as an artist. That’s the thing that they are scared of. If you can make the music that will sell, then you have the power. The game is open. Anyone can play now.
That is why Stoute talks about Chance the Rapper. Artists like chance the Rapper are a major threat to the major labels. So they want to do everything they can to limit the amount of independent success in the music industry.
Don’t listen to the hype here. Keep pushing, keep hustling, work on your stuff and do it yourself. Know that if you’re going to be successful, you are going to be successful.
Don’t sign with the label that doesn’t look like a label. A wolf in sheep’s clothing is still a wolf, they’re just a little bit smarter than the other wolves.