Why now is a tough time to start a music marketing agency

“I’d be going to every decent [artist] management company on the planet trying to build them an internal digital, performance and growth team, while I wait for the next medium.”

Cherie Hu
Cherie Hu
Oct 4, 2019 · 34 min read
(Photo by Marvin Meyer on Unsplash)

Below is a transcript of an interview with Garrison Snell (Founder and CEO of Nashville-based digital marketing agency Gyrosity Projects) for the Water & Music podcast. Hosted by me, Cherie Hu, the podcast unpacks the fine print behind big ideas at the intersection of music and tech, featuring a curated selection of leaders, artists, thinkers and innovators from across the music business. You can listen to the podcast on Spotify, Google Podcasts, Apple Podcasts, Stitcher, TuneIn, Overcast, Pocket Casts and Transistor.

Snell founded Gyrosity two days after graduating from Belmont University, and has since worked with music clients like Billy Ray Cyrus, Paul Cardall and Kenny Loggins, as well as several notable brands outside of music. Snell also runs a playlist and music promotion outfit called Crosshair Music under the Gyrosity umbrella (for which I interviewed him for a Forbes article in 2017 about compensating music curators and influencers). In June 2018, Gyrosity was acquired by multinational marketing agency Stadiumred, which is based in NYC.

Topics we discuss in this podcast include:

  • The ongoing consolidation of marketing agencies and consulting firms, both inside and outside of music
  • Whether it’s actually a good idea at all to start a new music-marketing agency in today’s landscape — and where the few remaining market opportunities might be found
  • The extent to which record labels are now competing with music-marketing agencies for work, as labels move towards a more service- rather than ownership-oriented business model
  • The impact of automation on music marketers’ jobs
  • How the gig economy transforms the way music marketing is done — and why artists should care about what is potentially lost

Hope you enjoy! :)

Cherie Hu: Hey Garrison, thanks so much for joining this podcast!

Garrison Snell: You’re very welcome. I’m happy to be here.

CH: First off, I want to talk more generally about the world of marketing and advertising agencies. We’re both part of this music and entertainment industry listserv called Pho (named after the Vietnamese noodle soup), and you had sent this super interesting email to the group about how you noticed a lot of agencies, and traditional consulting companies as well, have been buying up a lot of smaller, more boutique agencies and then centralizing common resources — i.e. finance, admin and business-development services — into one company.

I guess you went through this experience yourself, in that your company was acquired by the Stadiumred Group. But as you pointed out, this is happening across the board at companies like WPP and Omnicom. And then in the consulting world, you pointed to a really interesting article that talked about how consulting firms like Ernst & Young and Deloitte are also going down this route.

If you could start from there, I’d love for you to talk about why you think this is happening. What is the motivation to consolidate like this from the agency side? You also mentioned that this actually leads to better outcomes for the clients of these agencies as well, in addition to the agencies themselves.

GS: For sure, absolutely. You summarized it really well. For a little background: we had a digital advertising agency that came out of the entertainment and music world, [and] ended up building a pretty good book of business over a few years into brand marketing, artist marketing and release marketing, mainly centralized around digital advertising and social.

The thing I kind of noticed and had been thinking about for a few years was — when I started my agency, you’d walk into a Starbucks or a coffee shop or something, and it was like everybody with a laptop was a new digital agency, right? Everybody with a laptop and Facebook ads — they were doing the thing. So you had all these new entrants in the space between the time that Google Adwords first launched and Facebook Ads launched, which is about a 10-year difference [Editor’s note: Google Adwords initially launched in 2000, while Facebook Ads launched in 2007]. You had all these agencies who kind of rushed in, managing social, building websites, whatever.

It’s kind of reached this point where there hasn’t been a new medium that’s come. There was display, then there was search, and now there’s social — we don’t have a new digital advertising medium yet. So you’re seeing this consolidation happen, where agencies that are really good at a portion of that world are getting rolled up and down the value chain of the folks to the left or right of them. Consultancies that do marketing strategy are now buying boutique agencies that will tactically execute it. Or branding agencies will buy experiential companies and digital agencies to carry out the brand messaging that they devise for a client.

The benefit for the agencies is pretty obvious. You end up centralizing, like you said, a lot of the things that you have to have to run the business, but that you may not necessarily need in order to execute the value proposition. You have to have biz dev, you have to have admin, finance, HR and all that good stuff. But you can centralize all that and share those resources, you could share account management and all the things I just mentioned.

For the clients, what you end up with are these really flexible agency collectives, or in some cases agency networks, that are centralized and held by a common company. And when the client engages one of their subsidiaries, they engage with an account manager and with an account team, and they never lose that team as you go through and hire them for other services.

Let me give you an anecdote as an example. When I was out on my own with Gyrosity, we had a pretty common problem where a client would come to us and say, “Hey, I’ve got to hire four or five other agencies to do different things that you guys don’t do. Are you guys capable of handling PR?” And the answer was no, we don’t do those things, we can’t do them. And so the marketing director’s job at our client ended up being just basically managing a bunch of agencies. They ended up having to manage agencies, not doing any marketing, and they had to duplicate a whole bunch of extra effort. They had to onboard five different agencies, manage five different points of contact, manage five different scopes of work. It’s a lot of duplication of effort, and super inefficient for most folks in that role, and it was not really why they got into that role in the first place.

So for a lot of these clients, what ended up happening with agency groups like what bought my company — basically they now can go to one point of contact and say: this month I want to stand up a digital-advertising scope of work, a video-production scope of work and a website scope of work. And next month, I want to tear that down, and stand up an experiential scope of work and a PR scope of work, and you never have to duplicate all of those efforts.

It’s pretty nice, actually, and ended up being something that, for me, I think is common in a lot of industries. It’s just part of the natural business cycle. You have new entrants, consolidation, disruption, new entrants, consolidation, disruption. We’re just in the next consolidation phase in the marketing services world. That’s basically my view on it.

CH: So interesting. So in the case of Stadiumred specifically and what you’re doing with Gyrosity, I saw on Stadiumred’s website that Gyrosity is just one of a handful of agencies under that company. So just to clarify, do each of those agencies have their own specialization that’s different from what you might be specializing in, which is more on the digital advertising front?

GS: Yeah, they do. It’ll be five [agencies in the Stadiumred group] by the end of this year. A few others are on the docket. They all have their own specializations. We have a branding firm, specifically for branding strategy. There’s an experiential agency coming on this month. We [Gyrosity] are the digital team. There’s a video production team. And these are all different brands with their own different clients that we cross-sell, and we share resources.

A lot of the stuff that we were doing at Gyrosity, we ended up stopping, we don’t do anymore. We used to do customer service on an ecommerce website — so folks would build an ecommerce site with us and then run ads, and their customers would start complaining that they weren’t getting enough attention. So we offered a customer-service, community-management service for managing chatbots and stuff on your ecommerce website, and we stopped offering that — things that are not really within our skill set.

The Stadiumred Group, like I said, is a new player in the space. There have been agency groups around that have done a lot of this. Today, it’s really looking like a lot of older firms are moving into the tactics space. You have strategy firms — folks that were traditionally offering strategy — buying up tactical specialists like us.

CH: Right. That’s super interesting. One trend that maybe is not directly related, but has some similar dynamics to me, is the changing value proposition of record labels.

Last month, in early August, I was moderating a panel at a small conference called the Hudson Valley Music Summit, about the future of labels. One of the core questions that I presented to the speakers was simply, “What is the purpose of a label? What is the primary function of a label today?

And one of the speakers said, verbatim, that now one of the purposes of a label is to “create viral moments.” That was interesting to me, because during this panel we also brought up how the traditional function of a label is to monetize master recordings, or to build up a really good catalog of intellectual property. But no, now it’s also to create “viral moments.”

That’s arguably more the forte of independent marketing agencies, because that’s more of a marketing function than a copyright exploitation function.

As a result of that, I feel like labels are kind of realizing that while they’ve always had some kind of internal marketing or advertising expertise, that’s becoming even more of an imperative, to the point where — well, I’m curious as to whether you also think labels are now competing with outside marketing agencies, in terms of services that they can potentially provide to artists. Do you think that they’re directly competitive now, or do you think they’re still totally separate companies?

GS: Yeah, it’s a really good question, and a really good thought. It’s kind of gotten murky and blurry in music.

This is my opinion on it: It’s happening in brands, where they’re building in-house agencies. There are plenty of CPG [consumer packaged goods] brands who started building in-house agencies, [to] service themselves and service their retail partners. The same thing, I think, is happening in music. When I first started running Facebook ads in 2012, it was hard to convince at least anyone in Nashville, at the major labels that I spoke with, that they needed to staff up tactical, digital folks internally. That wasn’t what that team was for, at the time.

What I’m seeing today is labels — and honestly put distribution into that as well, maybe distribution companies even more so — starting to build “exploitation departments” that are doing digital. They’re basically saying, “how can we buy or bring in great digital advertising and growth folks, great branding folks, great partnership folks — and build what essentially looks like a good agency internally, just for us?”

There are really two good examples of this that I can think of, one of which I didn’t experience personally and another which I did. Everybody knows knows [entertainment management company] ROAR out in L.A. Back in 2009, they acquired a social-media management agency here in Nashville called Girlilla. From my understanding, there’s some sort of preferred rate or preferred relationship between ROAR clients and the social-media services that Girlilla performed. [Editor’s note: In April 2018, ROAR’s entire music roster moved to Activist Artist Management, alongside the departures of Bernie Cahill and Greg Suess, two of ROAR’s original founders.]

In the same way, I worked a bit for an organization called Thinkswell, which is a small digital agency in Nashville that was owned by Fitzgerald Hartley. [Editor’s note: Fitzgerald Hartley closed its doors in May 2019.] The idea was to build an agency in-house and have first access to some really talented folks for our clients. And then it can pay for itself by servicing other clients, then so much the better, with the best fruits reserved for the roster of management clients that we had. So there are those hybrid models.

As far as the difference between marketing agencies versus labels… It’s interesting because there’s actually a project I’m working on right now with the marketing knowledge that I have, and the question is, can I set up a label to exploit certain copyright or intellectual property that I have access to, and share in that? And I’m finding that there’s a certain discipline that labels do really well, or at least say they do well, and one of those is scale — the scale of three things: finance, distribution and administration. You can piece all that together, absolutely, and I think it’s getting easier and easier to [do that] with things like Songtrust and Merlin — you can kind of start piecing together what you need. And then … yeah, you are, just at the core, a really awesome marketing team.

For me I think that’s just the truth in a lot of industries: that a really great marketing team can be built either to sell with services and mercenary forms to whoever wants to buy it, or they can use it to grow their own interests, their own brand, and in this case their own copyrights and intellectual property.

CH: So now I wonder what this means for the market opportunity specifically for starting a new music marketing agency — because as you pointed out in the beginning, it’s super crowded and fragmented right now, and a lot of these companies are providing the same services and joining forces as a result. I’d love to get your take on that — what do you think the prospects are for someone who may be listening to this who maybe is thinking about starting an agency in the music industry from the ground up?

GS: Yeah, it’s funny, I thought about this a little bit… I think part of [where I’m coming from] is just because I went through it, so I’ve got some scabs and scars.

I’m not sure that today … well, okay, let me back up. If I have to think about it strategically and zoom out, there’s no new medium. From a digital advertising perspective, it’s all lumped into display, search and social right now, right? Those are the three things. And there are other ways to go about cutting that up, like IP targeting or cookie targeting or whatever… but the three mediums are really those right there. Everything from TikTok to Facebook, they’re all considered social.

Until we have a new medium, you’re not going to have a new take on digital advertising for people to build a business around. So you got to put that to the side and say, how do we do what we have today, better? And I think the only way you can go is deeper.

Specifically in music, if I was going to build something today, what I would want to own is a network of micro-influencers — I’m talking probably 100,000 of them, all ranging between 500 and 5,000 followers apiece on a variety of platforms — in one genre, like one type of music, that I can activate for any release at any point. It’s not really about selling it as a service; I would probably sell it as a partnership, as an exploitation arm for some part of a release strategy.

There was an app many years ago called Thunderbolt. Basically what you would do is you would have all your fans or followers sync into this platform, authorize into this platform — and at a certain time, on a certain day, whenever it mattered most to the business, all these accounts would be programmatically required to post the exact same message at the exact same time.

CH: Oh, wow. OK.

GS: That’s what I’m talking about. I would love to own a version of that for music releases. There are those things out there; they’re just small and hidden, and you got to kind of look for them. I don’t even know a lot of their names, but I do know some folks who provide services like that, and it’s usually just, like, their friends in a text message thread, and they get paid a couple thousand bucks to have all their friends posted at. It’s usually, you know, cool-kid influencers out in L.A.

I know Atlantic does a bunch of that. But what I would want is a platform that did all that, and I would want to truly dig deep into one specific type of music. I don’t think you can do it for many different types of music. For me, it will would be digging deep into, like, instrumental piano music or guitar music, like background music.

If I think about a traditional agency model — where I’m selling services on a retainer or a project basis, typically with some strategy or tactics involved, as an outsourced arm of some larger organization — I just don’t think you’re going to see a lot of new interest until we get a new medium, in the “I’m an expert” value proposition. Like, “I’m an expert in X.” You know, we have plenty of “experts” and Facebook ads and Google ads or whatever. What we need is someone who’s gotten deeper and deeper in the thing that matters to me, the client. Which to me is not lucrative — I mean, it could be lucrative, but it’s just very, very specific.

CH: Yeah, exactly. There’s a natural ceiling that you’re putting on yourself by focusing on a specific niche like instrumental music.

GS: Exactly. I know guys out in L.A. who do this in a haphazard way and make very significant money doing it — but only for as long as influencer marketing is a medium that people want to throw money after, which is always hard in the marketing space. You know, the channels that people are saying today are popular … their feelings have had a change over the course of a year or two, right? The feelings on platforms like Crosshair have changed from 2015 to today, over the course of four years.

And it’s in my mind that today, I don’t know that you can go and start another marketing agency. I really think you help someone build their own internal agency. I think if you’re really good at it, you go find a team that has not built an internal team yet, and you go lead that team.

Here’s a good example. I believe it’s Vector [Management]. A friend of mine was telling me that they have an internal agency that’s specifically for brand partnerships for their management clients, and you can go and hire that agency to represent you as well. And I’m sitting here going like, yeah, I’d be going to every decent [artist] management company on the planet trying to build them an internal digital team, or an internal performance and growth team, while I wait for the next medium. You see what I’m saying?

[Editor’s note: This is already happening outside of music — where you have agencies like MightyHive that are dedicated specifically to helping brands build their own in-house agencies, through training and execution services.]

I keep thinking, how do I make money by going deeper into one specific world? Which is a great thing, obviously niches are riches — but if you go deeper and deeper and deeper, eventually the window is so small for people’s patience with certain channels, that I’m not sure that I would want to sink all of my efforts there. You tracking with me?

CH: Totally. Your suggestion of building out as wide of a network as you can of these super small, niche influencers — from this new agency’s perspective, it’s like selling relationships more than selling skill. Like, you’re selling access. Yeah?

GS: It is, exactly. That’s exactly the difference between, say, Crosshair and Gyrosity. At Crosshair, we had relationships with playlisters and influencers, and we were selling access to that. [At] Gyrosity, we were selling a skill- [and] performance-based deliverable around digital advertising — like we are really good at this, we have high skill, high competency, high technical knowledge, blah, blah, blah.

Until that next skill frontier opens up, it becomes more of the same [thing], which is why we’re in a situation where people are consolidating. Those that didn’t make it are shutting down, and those that did make it are being purchased. And there’s a group of folks in the middle that will persist for a little while, and either make it to the next medium and be on the frontier, or they will just, you know, die out in the desert. It’s just what happens with consolidation.

CH: Right, totally. What’s interesting to me is that on one hand you have these companies consolidating on an ongoing basis — but then also on the flip side, you have these companies that are coming up in music, and also in general that are capitalizing on the “gig economy.” I saw this described in an article as the “distributed agency” model.

In the context of music, if you’re just like an individual person who happens to be a marketing expert, you can sign up to help an artist or label, or whatever music company, on individual gigs. Kind of like the same mechanism to what someone would do on Fiverr or Upwork with a focus on music. There’s a platform called indie.ninja that’s specifically set up to do that.

I’m wondering what you think the future of that model is like. I think a lot of things are still up in the air about the future of the gig economy in general, but it’s definitely growing, and more and more people are relying on that model as a primary or supplementary source of income, and music is no exception to that.

GS: It’s a great question. And before I hit that, I think I want to go back real quick — I did have another idea about new agencies in the space.

This is something that I’m really envious of that I just personally can’t do. One thing I think you could do in this space is — it’s not selling relationships, it is a skill set — if you can get really, really good at relevant cultural content, especially visual and video, for a very specific subgroup, ethnic group or cultural group. It’s super valuable right now, and it’s being paid for a lot.

And the more I think about it, it’s just something Garrison can’t do. You know, like, I’m a 26-year-old white dude from Arkansas. [laughs] It’s not exactly like my competency. But we have a partner down in San Antonio that’s a multicultural agency. From a music perspective, they know so much about the Hispanic market in the southeast United States. They could really influence a lot of Latin American artists trying to come to the States or in other ways. And I think if you have a cultural competency there and are a great creative, very visual individual, you could really spin up an awesome boutique creative consultancy around that. That would be really cool.

Anyways, back to your question about the gig economy. It’s funny you bring it up, because how I started Gyrosity was around a large network of freelancers. I had a Google Sheet of about 200 freelancers at one point, for everything from placing Facebook ads to quick social content to administration to video editing. And I had a lot of open Upwork contracts, guys that I would keep open at any point. They were all over the world, and I would send them a gig, they would knock it out, and I would pay them hourly. That’s kind of how I built it from the beginning.

From an agency perspective, it’s not impossible; it’s just really hard. With something like marketing, it requires both an art touch and a science touch. What it required for me to manage these folks well was to have explicitly laid out, every day, exactly what I needed them to do, by when, to the detail — almost to the point where it would have been better for me to do it myself, in some ways, because I had a little more nuanced understanding of what the client needed.

These [gig-economy freelance] guys were really incredible executors. What they lacked was — and maybe it was based on my inability to communicate nuances to them — but they lacked nuanced understanding of what the client was looking for, or what the strategy called for. I would lay out targeting parameters on Facebook, or creative parameters for my creative guys, and I thought I was being incredibly detailed. And I’d get back stuff that was technically right, but was just lacking something, some soul and heart to it. That’s not necessarily their fault. If I was sitting in the room with them, they would get it.

So yeah, it became difficult to do it with a lot of them, because I was spending the majority of my time teeing up tasks and spending a lot of time going back and forth on what I considered to be subpar execution. It really also was my fault, because I couldn’t communicate what I wanted to them in a clean way.

What ended up happening was, when I started hiring folks in person to work out of the office, they started picking up on the nuances of what clients wanted, and the nuances of what it would take to make a strategy happen, and things started clicking at that point.

So in theory, [the gig economy] sounds like a phenomenal idea; [it] did not work well for me, when we got really busy. It would work well for certain things, but it did not work well specifically for content. With content, it was incredibly difficult to get what I wanted, and it became a huge time waste. Placing Facebook ad orders was OK; placing Google Search orders was not great, because there was a lot of lack of nuances and language around what I thought good buyer keywords would be and what they assumed additional good keywords would be, and they would not be in a particular language or culture.

So if you’re going to do it, you have to put a lot of time into making sure that they get what you’re talking about. The ultimate problem, in my opinion, with the gig economy is that you are spread out amongst so many different interests that you cannot do your best work that way. You execute it, and it’s done, but it doesn’t have that extra 10% of emotional intelligence that it requires to make an excellent product. You see what I’m saying?

CH: Yeah, long-term commitment and just a lot of time spent one-on-one with whatever client or artist you’re working with. I’m thinking of how a lot of people say nowadays in the music industry that artists really need visual creative directors — someone to help, you know, hone their visual brand.

But — this is kind of my inference, and I think there have been articles about this — part of an artist’s visual brand is just having someone follow them on tour and take photos of them on tour, and be their personal photographer. Regardless of how glamorous that actually is, that’s an example of creative direction that ends up being extremely nuanced in terms of understanding how an artist prefers to be presented, or how they go about their day to day, how to not disturb what they’re currently doing, what their current vibe is.

I feel like you need to spend weeks with an artist to really understand that. Or just with any person — it’s the same case in any kind of business or creative relationship.

GS: Yeah, and I would say that that is not a principle unique to music. And truthfully, it’s been one of my biggest struggles: because I want to do so many different things, I end up not giving the best of myself, of my creative thought that I have a limited amount of every day, to it all. Something suffers. So if I were a music marketing freelancer in the gig economy, in order to pay my bills I would be just churning through as many of them as possible — never giving them, at scale, the level of emotional intelligence needed to do great work.

There’s another part of this that’s an “outsource versus hire” question, because it’s kind of a tried and true principle: you don’t outsource your core competencies. If you’re an artist, your visual brand, and how you communicate yourself, and the emotions behind it and how it gets to fans and potential future fans — it’s really, really unwise to outsource that, right? Like, if you have this creative director that you’re sharing with a whole bunch of different artists, you’re never going to get the spit, shine and the polish that you want out of that individual, because they’re not yours. They’re a lot of people’s. It ultimately comes down to how much can we process in our emotional brain, and how much can our souls process in a day to put out great work product.

CH: Right. Just to shift focus a bit from the humans on the team to the tools, in general automation is a really interesting topic in the context of marketing. I feel like every year there are new tools or apps that claim to automate the marketing process somehow. There are two that I’ve come across this year for music; one’s called Beatchain — they’ve kind of been making the music industry conference circuit at least, They claim to enable artists to automatically segment and then reach out to and retarget their audience across platforms and just make the process a lot easier. There’s another one called Database Devi, which is based in New York, that’s trying to do something similar, specifically with the goal of getting a song into the Billboard Hot 100, and systematically doing that by strategically retargeting certain types of fans.

This is a general question for you — one, have you come across these tools yourself, or do you use any of these tools in your day-to-day work, whether in music or in other industries? And how has that changed the overall role of a marketer in music?

GS: Yeah, it’s a really good question, honestly. Believe it or not, I tend to err on the side of the more you can automate, the better for the human, because it frees up more of that emotional brain space. It frees up more of what makes us, us.

As far as marketing automation goes, there are plenty of amazing platforms out there, tried and true in the general business market, that you can use, that will do things like automate your retargeting or email. There’s one that we use called SharpSpring, that’s basically a CRM [customer relationship management platform] and part digital advertising, part email, part dynamic CMS for visitors visiting a website and resold through agencies. We use that occasionally for projects.

They’re all super slick, and they work great. But really what you put in them affects what comes out. If you don’t put good marketing in them, if you don’t put good messages in them and strong, nuanced understanding of your audience in them, then you don’t get any results out. But it definitely helps to scale an individual’s time.

As far as music marketing goes itself, my issue’s always been… Okay, I’ll give you an example. So you know Show.co, purchased by CD Baby a while back.

CH: Yes, I do know them.

GS: So there are these platforms that will automate certain things, but they do not provide strategy. They provide tools and tactics, but they don’t provide the why. Like, why do this versus that?

The problem that I noticed, as I was working through Crosshair and in all these different spaces, was that no one could really advise someone on what to do when and why. It was: here’s a bunch of things for you to play with, here’s a bunch of platforms for you to use, and they’re really slick and they’re cool, and they got bells and whistles and they do things that flash and bang and pop, but you don’t know when to use them and why.

You could use a vast variety of these [to] accomplish the same task. If you don’t have some of the basics down, they don’t do anything for you. They don’t solve for an emotional understanding of your audience, or for empathy with your audience. You see what I’m saying?

CH: Right, I love that. They don’t solve for that question of why.

GS: Exactly. But they do help scale you once you’ve got that nailed down. There’s one called Shoestring [Editor’s note: the company’s actual name is Shoelace] that’s in the D2C brand world. It’s a customer journey retargeting tool, and it’s slick, it’s really great. But you better have good audiences in there, and you better have good messaging, you better have good creative, and you better know your audience.

CH: I think this is a super common concept in tech at large — it’s kind of like a “garbage in, garbage out” scenario. And to go back to what we were talking about earlier, this only reinforces that, from an artist’s perspective, you’re only as good as the team that you have and their commitment to and understanding of who you are and what you’re trying to achieve. Because otherwise, even with the best tools, you’re kind of just shooting in the dark.

GS: Yeah, absolutely. It’s difficult. You really hope that the people you work with have a solid understanding of you as an individual. I think one of the things that’s unique about music is that you’re selling a person’s ability to access their own emotions and feelings and create art out of it, or a representation of that. And if your team isn’t tuned in with that, it’s really hard to hack around that with “cool” tools.

That’s truly why I stayed more on the marketing-services side than going in-house anywhere, because I wanted to learn the difference between all the artists that don’t work, and the ones that do. For me, the biggest common denominator on the marketing end is that their team understands, at a primal, reptilian level, what works for their media and what does not. They have a back-of-the-brain understanding of what works and what doesn’t.

We had Billy Ray Cyrus as a client for a while. He’s an awesome guy, great family. And it was just before the “Old Town Road” stuff happened, probably two months before that happened. And he was in conversations with us like, “I’m looking for a back door into country again. What can we do?” And I gave them a whole bunch of strategies and techniques that we could use to promote something. But they did not have an understanding yet of what that back door looked like to them. So we couldn’t do anything. We couldn’t help, really, because they hadn’t come up on that thing yet.

Once they did, you saw it happen — he found “Old Town Road,” sent [Lil Nas X] a Twitter message and said, “This is what I’m looking for”. He and his wife both had a really fundamental understanding of what they were looking for, and all the techniques in the world won’t help you find that.

CH: Right, right. I would imagine that particular interaction was also quite spontaneous. That kind of opportunity is very unexpected.

GS: Yeah, for sure. I mean, I don’t know if he could have described what he’s looking for — he couldn’t describe it to us. But he was looking for some cultural, kind of trend-jacking way to be involved again, and he found it, and we weren’t able to provide that to him. Because we had all the techniques and tools in the world, but no substance yet to go with.

CH: In part because he was still trying to figure that out.

GS: Exactly. It was simply just a timing thing. He was simply trying to figure it out himself. A lot of people want to compensate for it with cool tricks, but you know if the audience connects and if they don’t.

We had a campaign this year for a rodeo in Texas that we did some great messaging around, and because we got the messaging right, we sold a 45x return on ad spend for that rodeo. Like $1 in, $45 out, every single time they spent $1 with us on driving tickets. And it’s because they had a solid understanding of their audience, and our techniques worked. It’s pretty incredible.

CH: Yeah, so just having that starting point, and having that core, compelling messaging is super important, before you even go out and try to use whatever tool [is out there].

GS: Yeah, exactly.

CH: Cool. So I think it’s time for the Over/Underrated segment. And I’d love for you to start. I think the piece of news that you have is super recent — I think it was just announced today, as of recording this.

GS: Yeah. I’m looking at the Spotify purchase of SoundBetter from New York; basically becoming a “music-making marketplace” is kind of the headline. And… I don’t want to be a pessimist. I really don’t want to end this on pessimism. I just think this is a way, way overrated piece of news. I would go so far as to say this is a big nothing.

I really think if you step back from it, and you look at Spotify, there is no way on God’s green earth that they are anything in the future other than a music consumption platform. I mean, just look at the frickin’ dumpster fire that was their attempt to be a distributor.

I just don’t think it’s anything. I’m reading articles about it, and it’s like, “it confirms that it’s becoming a very different type of two-sided proposition, after buying New York-based SoundBetter, [a] freelance marketplace, the idea being that there would be some subscription revenue from artists, as well as from listeners.”

I feel like they’re just grasping at straws. I’m not in their position, I don’t know, I’m not running a public company, but it feels like a deviation from what they do. Honestly what they should be doing is just continue to expand globally, and improve the infrastructure around consuming the music they facilitate us consuming. They should have been the first one to put out smart speakers. There’s no reason any of these other companies should have done that.

And I’m still not convinced that Spotify isn’t one of those organizations that, because it doesn’t have a core business other than music consumption, is the first one in [and] first one out, from a landscape perspective. You know, I just think because it doesn’t have one of those other core businesses — hardware, managed services, e-com[merce], whatever that music helps facilitate — I think it’s just grasping at straws. Does that make sense?

CH: Definitely. So you’re saying that Spotify should really just be leaning in on the one thing they have going for them at the moment, financially speaking?

GS: Yeah, and I’m going to be real controversial here — no one in music is going to like this — but they [Spotify], from a pure business and economic perspective, were correct in going out, paying someone to create intellectual property that they owned, and uploading it to the platform as “fake artists” or whatever. Economically, it made sense to try and dilute out their biggest expense, which is paying our royalties — which sucks. From a music consumption perspective, it’s not great. But from a finance perspective strictly, running the business, that makes a lot of sense to me.

And there will come a point where they might have to turn back to something like that. I don’t know, I feel like they’re in a Catch-22. They can’t drive that line item down, because it threatens the reason people come to the platform. And the moment they try to drive that line item down, subscribers flee to the other platforms. I don’t know, it’s a scary road for me going forward with them. Anyway, this [SoundBetter acquisition] is completely overrated. It’s a big nothing.

CH: So I agree that Spotify is for sure a consumer-facing platform and business; they admit that as a public company, and that should definitely be their priority. That said, this acquisition of SoundBetter, is maybe a shift in their acquisition strategy away from music-related content and towards creator tools.

This actually really strongly parallels SoundCloud, because SoundCloud completely shifted their strategy after laying off 40% of their company, and thinking, oh God, we need to actually make money, what do we do, we’re not public? And now they’ve shifted entirely towards creator analytics. It’s so interesting. They don’t really advertise the SoundCloud Go consumer product at all anymore. It’s all about, hey, you’re an artist, or a potential artist — you should be getting better data and better analytics, and we’re going to provide that.

And you see similar moves with Spotify, because they also bought Soundtrap in 2017, and they bought Anchor, which is not music-specific but is another great example of one of these tools. And in contrast, several years ago, Spotify was really busy acquiring companies like The Echo Nest and Tunigo, which were all very content- and curation-focused tech companies.

Maybe it’s also kind of a press or perception kind of thing. Like, Spotify is really trying to convince the world, “Hey, we’re pro-artist, and we want to help artists make a living off of their work.” That’s a motto that they say a lot, in investor meetings and blog posts. But that’s frankly not what’s going to make them more money.

GS: For sure. I mean, the Echo Nest acquisition, when it happened, made a lot of sense to me. Because the one thing that was happening poorly, with the exception of [Pandora’s] Music Genome, was recommendation. And so playlists as a recommendation vehicle powered by Echo Nest made a lot of sense to me.

This Soundtrap acquisition — from what I read it, they acquired it in ’17, but I don’t think they’ve done anything with it yet.

CH: Yeah, the only thing that they really expanded on was launching a podcasting-specific tool set, as opposed to just music production which I believe was Soundtrap’s origins. But apart from that, I really haven’t heard anything in terms of growth of that product specifically.

GS: I mean, it’d be interesting to see — it says here that [SoundBetter] is going to be rolled out under Spotify for Artists. So assuming maybe you can do some production work in SFA and distribute and manage your analytics there. I don’t know why they would shut the distribution portal down if they were going to give you the production capability and then the analytics capability. Maybe it’s a temporary shutdown. But I can see the desire for an ecosystem — it just feels like a deviation from what they do, you know?

CH: Yeah, it’s like a deviation, and then without the distribution element, it’s definitely incomplete.

GS: Yeah, exactly. So that’s my take on it.

CH: Cool. The piece of news that I had in mind is that recently Netflix announced the official launch date for a new reality-TV music competition that they’re going to have on their platform. It’s called Rhythm + Flow, and premieres on October 9, and is focused on hip-hop. They have a whole panel of celebrity judges, as you always got to have with this stuff, and the judges are Chance the Rapper, Cardi B and T.I.

I also think this is highly overrated, for a couple reasons. One, I watched the official trailer on YouTube before this podcast, and I think it’s Chance the Rapper who said that it’s “hip-hop’s first legit TV competition.” And I think that is just completely outrageous. One, there’s a history that goes decades back of hip-hop-related competitions and TV shows on channels like BET, at least in the U.S. But also now, if you think globally, reality TV maybe is not as relevant in the U.S. anymore, but it plays a super important role in a lot of other countries. I’m thinking, like, in China and Korea, basically the hip-hop and rap reality-TV shows in those respective countries act as the top funnels for artists to get signed to major labels and actually break. So those are still treated as super important channels. So just to get that out of the way, I think that claim is totally false.

Two, I really don’t think Netflix as a platform is made for this kind of show. There’s actually a really good article in The New York Times that talks about this and goes into how a lot of weekly-updated, more newsy talk shows on Netflix ended up getting canceled after just one or two seasons, because there was pretty low engagement around them.

I think Hasan Minhaj’s show Patriot Act is a huge exception, but what essentially happened is that the format of a lot of these shows, and the way they were released, went against the whole binging culture that Netflix played a really significant role in defining. That kind of activity is their selling point — and that kind of release cadence, in terms of releasing everything all at once for you to consume all at once right away. Whereas with these newsy shows, and with Rhythm + Flow, they’re going to release the episodes in smaller batches. So I think for this music show specifically, the first four episodes come out on the first week, and then the next four come out the next week, and so on.

I don’t know if it’s a bad thing. But to me it’s just like reverting back to a cable experience. It’s like cable in new clothes. It could be good in terms of recreating that sense of a shared media experience that maybe is lost in this era on-demand video streaming, but this show specifically feels like a reversion rather than an innovation to me.

GS: Yeah. It’s really funny you brought this up — we had a client for a while that was a TV show called One Shot. You ever hear of One Shot on BET?

CH: One Shot? No, actually I’ve not.

GS: It was a hip-hop competition for MCs. The idea was like, who’s the best MC in the country? And it was interesting to watch. It was like privately funded, and then acquired by BET, and we were sort of the digital team on it a couple years ago.

To me, [Rhythm + Flow] just looks like… as I look at it, and watched the trailer earlier, it just looks like it’s another part of the pop-culture, original-content play that Netflix has going on. It’s like, if we can get three popular folks doing something semi-familiar — I think it’s probably more for the fact that it’s going to be on the thumbnails, than it’s going to be to actually get engagement.

CH: That’s so true. There’s one show, or a film on Netflix — I clearly have never watched it — but I think Common is one of the main stars. [Editor’s note: The film is All About Nina.] And he just shows up all the time on my homepage, because I happen to watch a bunch of hip hop-related stuff on Netflix. That’s such a good point. It’s like visual optimization of the surface-level material rather than the actual show.

GS: Yeah, exactly. I mean, I’m sure they won’t fund it for very long if it doesn’t do well. But it’s just something else to talk about in the new content cycle that has people like us talking. Right?

CH: Yeah. It’s working now. [laughs]

GS: Exactly. I’m with you though, I agree completely.

CH: Cool. So I’m wondering if you have any last thoughts that we didn’t touch upon that you wanted to share? Or if there’s anything that you’re working on that’s interesting, that you’d want to highlight?

GS: Yeah, I should touch a little bit on the intellectual property development thing that I’m working on.

I think something that folks should pay a lot more attention to over the next few years — and I’m hesitant on this, because it’s kind of scary — but I really think we’re getting to the place where some of the basic economics of the recorded-music industry as a whole don’t make sense. Like, for example, how easy it is to create quality music today, and distribute it. There’s only so much time, there are only so many people.

One of the projects I’m working on is A.I.-generated instrumental music at scale. And it’s something that we’ve been using some different platforms for, and seeing how quickly, and for how cheaply, can we create very high-quality instrumental music to feed in the background of playlists and free Pandora radio and places like that. And we’ve been able to create 50, 60-plus tracks in less than a month that are all incredible. The scale at which you can put out music that some of these production technologies will allow you to do is scary, and some people would be wise to keep an eye on that, and just determine where they want to be in that, because we can’t ignore it. It’s here, it’s happening, and it’s going to fundamentally impact whether there’s a recorded music industry or not.

CH: Right, because it totally just changes the meaning of that word [“recording”].

GS: Yeah. Obviously, the confirmation from the Copyright Office that said, “we will not issue copyright to content created by a machine, it has to have substantial human input,” blah blah blah — but the idea of “substantial human input” is going to be debated a lot in the future here. As the line between predictive production technology and just regular digital audio workstations just blurs — you don’t even have to use an A.I. platform, you just use some of Logic’s prediction tools. Like, “You said this, do you want to also do this?” That’s stuff that people are working in everyday to build the tracks that we listen to, and at some point, there’s going to be this line that’s crossed where those are no longer copyrightable.

And people, generation after generation, put so much out, there’s just going to be so much of it, as other countries come online, their creators will come online. I would just be watching this space really carefully, because it’s fundamentally going to affect anybody who wants to be in this world.

Anyways, don’t mean to leave on a negative note. [laugh]

CH: No, I personally don’t think it’s negative. I think it’s realistic and valuable. If there’s any lesson from building any tech company in general, let alone a content company, it’s to have the worst-case scenario in mind before you build. Assume that the worst will happen at some point, and take that into account in your product development process, so you don’t find yourself falling down before you even have the chance to grow.

GS: Yeah, for sure. Thanks for having me, by the way! I appreciate you reaching out.

CH: Oh, yeah, my pleasure. Thanks again for joining!

If you enjoyed this conversation and want to follow similar analyses on the intersection of music and tech, please listen to the remaining episodes of the Water & Music podcast and/or subscribe to the eponymous newsletter.

You can also reach out to me via Twitter, Instagram and LinkedIn.

Cherie Hu

Written by

Cherie Hu

I run Water & Music, an independent media ecosystem (newsletter + podcast) unpacking big ideas in music and tech. bit.ly/waterandmusic

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