beatBread CEO Talks Funding for Musicians, Streaming, and the Music Business
Launched in November 2020, beatBread is a pioneering music and finance company that empowers artists to take control of their careers without giving away ownership of their music or their decision-making power.
Advances offered through beatBread range from as little as $1,000 to as much as $2 million per artist. Artists receive funding in exchange for a limited share of existing catalog revenues, with options also available for advances against unreleased music.
In February, the company completed a seed round led by Deciens Capital, extending beatBread’s fundraising to date to over $34 million.
We were lucky enough to spend some time chatting with Peter Sinclair, CEO of beatBread, to discuss a wide range of topics, from music streaming and data science, to music funding and building a new company.
P&S: What led you to start a music funding platform — what was the jumping-off point to develop beatBread?
Peter Sinclair: I never thought in a million years that I’d work in entertainment. In 2015, I had to quit my job at a well-funded start-up because one of my children had a health issue, and I took a corporate job at Universal Music. It was a painful transition, and I had A LOT to learn, but my ignorance also gave me the benefit of fresh eyes.
The thing that struck me most in my time at UMG was that a large number of artists in the label system just didn’t want some (or sometimes ANY) of the services that were built in to their label deals. They had their own production, digital marketing, radio, promo, and merch teams, but were being force-fed services just because the label cut them a check. This created a ton of friction and needless cost that artists had to pay for in the end, and needless cost created even more friction. It wasn’t that the label services weren’t “good” or that label staff weren’t extremely hard working and talented.
In fact, the people I worked with across UMG were smart, experienced, and super hard-working. It was just that each artist’s needs were different, and required their own unique mix of service providers. As often as not, the label services weren’t the best fit, not matter how “good” they were in the abstract. This led to friction, lack of clarity and coordination, and missed opportunities for many artists.
After a few years, the idea that services shouldn’t be bundled with the label check became totally unavoidable to me. It seemed to me that if the financing decisions that artists needed to make could be separated from the services decisions, artists would have more choice and get services that were a better fit.
Artists would not only be happier and get better promotion, the whole thing could be done for less cost, with the artist getting a MUCH bigger share of the pie.
So it was pain and experience that initially got me on the road. After more exploration, I discovered that there was a huge and exploding number of artists OUTSIDE the label system who were ALREADY assembling their own teams and who could make $100, $2,000, or even $30,000 per month from their recorded music. These artists didn’t have the greatest funding options, or were captive to a different set of partners. At that point, starting beatBread — a financing platform that was unbundled from distribution, promotion, or any other services — became not only something that I wanted to do, it became something I just HAD to do.
P&S: Were there any notable obstacles in getting beatBread up and running?
Peter Sinclair :Growing a start-up that is doing well has plenty of moments of triumph and excitement, but any founder who doesn’t admit to you that there aren’t twice as many moments where they feel like they’ve gotten in way over their head and that things might not work out is just plain lying to you, or even worse, lying to themselves.
The biggest obstacle I had to overcome initially was finding the right data science team. In the first 6 months of working on beatBread, I hired three data scientists in succession… every one of them quit on me. I wasn’t paying myself, and I wasn’t paying any of them very much. Even though each one of them was excited about the problem and the volumes of data available (most of our seed capital was spent buying a huge data set), each data scientist I partnered with got hired away by bigger companies, in bigger industries, who could offer more money and a more certain future.
So I’d go to the next one…. And then they’d get excited, and then quit… rinse and repeat..
After the third data scientist left me, I had sunk 10s of thousands of dollars of personal funds and months of my time into the project and had nothing to show for it except scribblings in a notebook. My wife was starting to gently ask when I would start looking for another corporate job. My father was less subtle. I had no product, no customers, no revenue, not even a co-founder. But sometimes, when you’re in a hole, the only way out is to dig deeper.
So I started looking for for a fourth data science expert, and one evening, sent out 25 or 30 LinkedIn requests, all after midnight and all to people I had never met before.
It was borderline spam, but through one of those messages, I found the guy who ended up being my co-founder, John. I think caught him at a similar low point of professional frustration; he had already decided to quit his corporate job when he read my message. We hit it off, and, after several months of partnership, we (mostly he) built an amazing algorithm that is able to predict future music revenues not just for an artist’s catalog, but for unreleased music too, at a level of accuracy that neither of us could ever have expected.
beatBread is more than that algorithm — the talent that we’ve lucked into in our operations, product, finance, and BD teams amazes me every day — but data science and the business process automation that followed from our algorithm is the bedrock of what we do and how we are able to get contracts into artists hands so efficiently, to the tune of more than a deal a day.
P&S: How do you see the music funding marketplace changing over the next 5–7 years?
Peter Sinclair: There will be more entrants for sure. Hopefully that will mean even more choice and even better deals for artists, which in turn will result in better music and more of it. I don’t think labels are going away, but I think that more artists will assemble teams on a project-by-project basis to fit their particular career stage, and that labels will have to compete on the quality of their service, not on the basis of having a big check book or any unique access to promotional platforms.
The days of privileged gatekeepers are gone.
I have no doubt that a lot of the executives I worked with in the major label system will thrive in this new eco-system… if you are a certain kind of artist, I think the John Janicks, Monte and Avery Lipmanns, Wendy Goldsteins, Rob Stevensons, and Mike Carens of the world offer an unparalleled level of expertise to guide and accelerate a music career. But music execs will have to sell themselves on the basis of advice and service rather than their ability to cut a check or leverage a unique relationship. I also think that a great management team will become more important than ever.
All in all, decentralization will rule the day, and there will be lots more artist empowerment. Things like ‘power lists’ probably won’t go away, but I’d guess more and more people will start to see those lists as quaint, irrelevant, and eventually (maybe more than 5–7 years from now), totally ridiculous. Power will be about the artist, their fan base, and the quality of the music, not a magical gatekeeper who can open doors that no one else can (those doors are open to everyone now).
P&S: How does beatBread differentiate itself from similar platforms?
Peter Sinclair: There are a few ways I think we are different. We don’t take ownership of the music. Our deals are based on a share of income, for a finite amount of time. We let artists chose the distribution, marketing, and production partners that are right for them. We also don’t get involved in any management or partner decisions.
We don’t charge interest or have any penalties if the music underperforms our predictions, so the amount the artist owes can never go up. We show artists a range of estimated advances within minutes, and we can get a deal done in a day or three if the artist gets us information quickly. We let the artist choose the length of the term — 1, 2, 3, 5, or 8 years. That’s doesn’t just provide flexibility, but also gives access to a longer term (and therefore more money) than any “pure play” finance platform I’m aware of. We make advances on future work, and so take a whole lot of risk and trust the artist to make their own decisions.
We also do deals as small as $1,000. While we can provide up to $2 million per artist, I think we’re most proud of the fact that we fund artists at a level that most companies won’t even bother with.
P&S: What are your thoughts on the music streaming business as a whole?
Peter Sinclair: It’s very easy to look at the per-stream payment and say that streaming isn’t “fair” to artists. For sure it would be great if that payment was higher, but the great thing is the sheer volume of artists that can now make a living from their streaming income. At least 25,000 artists are making $50,000 a year or more from streaming income across platforms, and we think that number will double by the end of the decade. Only five years ago, there were only 5,000 musicians globally who could make that much on their recorded music.
With all due respect to David Crosby, Neil Young, and other musicians who complain about streaming rates, there has never been a better time to be a musician from the standpoint of economic opportunity and economic leverage — artists really have the streaming services to thank for that. Should the per-stream rates be better for artists, and, in particular, for writers? OF COURSE.
But the idea that streaming hasn’t been anything other than a boon for creativity and musician empowerment strikes me as lazy.
P&S: What’s on the horizon for beatBread? What plans do you have looking ahead for the business?
Peter Sinclair: We have a lot of plans! The main challenges for a business at our stage is remaining focused on doing a small number of things well. There are many things in the works, but the three that will go public soonest all have to do with getting more money to artists, on even better terms.
This summer, we plan to announce a range of plans related to our capital, our platform features, and our artist tools, all of which are designed to further democratize funding. We’re excited by what lies ahead and can’t wait to share more.
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