Troy Carter on the Future of Music Streaming

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Troy Carter is the co-founder and CEO of Q&A, a technology and media company focused on powering the business of music via distribution, services, and data analytics. He has also produced his own music, managed some of the biggest artists like Lady Gaga and Eve, and worked for Spotify as its Global Head of Creator Services. In today’s show, we talk about trends in the music industry and how things need to change moving forward. We also discuss the role that record labels serve, Web3, Troy’s work with Venice Innovation Labs, and his approach to angel investing.

If you want to learn more about IP distribution, the economics between labels and artists, and what streaming can look like, this is the episode for you!

Episode Highlights:

[02:42] What Troy learned while starting Q&A

[08:02] Why Kanye’s path is very similar to how tech founders run their companies

[11:22] Troy’s forecast for major and indie record labels and their relationship with artists

[16:00] His thoughts on sourcing from data, Taylor Swift’s deal with Republic Records, and the matrix of partners that artists should have

[22:52] How artists have benefited from the age of digital downloads and streaming

[27:10] Why Troy is a little scared for the streaming industry

[31:08] What artists should think about before releasing new music

[35:48] Troy’s insights from working with the Prince Estate and his angel investing

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Host: Dan Runcie, @RuncieDan, trapital.co

Guest: Troy Carter, Q&A

Trapital is home for the business of hip-hop. Gain the latest insights from hip-hop’s biggest players by reading Trapital’s free weekly memo.

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Transcript

Troy: I’ve seen it where managers have done an incredible job building businesses for artists sort of outside of the infrastructure of the label.

Introduction

Dan: Hey, welcome to the Trapital Podcast. I’m your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from the executives in music, media, entertainment, and more who are taking hip hop culture to the next level.

Today’s episode is with Troy Carter. He gets this space and he gets the music industry better than most and it’s because he’s worn so many hats and seen so much of it.

Back when he was a teenager, he was signed to DJ Jazzy Jeff and the Fresh Prince’s record label as an artist. Troy’s also produced his own music and he’s gone on in the executive path where he’s managed some of the biggest artists in the game like Lady Gaga and Eve.

More recently, he’s gotten more involved on the tech side. He’d worked for Spotify. He’s now on SoundCloud’s board and he runs his own company, Q&A.

On this chat, we talked a lot about trends, where things are right now and where things are going. More specifically, we talked about all of the outside capital that’s been coming into the music industry, everything from the music investment companies to the broader tech industry and startups that are trying to get more active in this space.

And we also talked about the role that record labels serve and how the industry’s business model could change, what could it look like. We also talk about Web 3.0, his work with Innovation Labs, Troy’s angel investing, and a whole lot more.

I always found his story inspiring. I hope you enjoy it as much as I did. Here’s my chat with Troy Carter.

Interview

Dan: All right, today, we are joined by the one and only Troy Carter and it’s great to have him on the pod, we were just talking before we recorded, I feel like, Troy, you sit at the nexus of so many of the topics that we talk about in Trapital, whether it’s music or tech, so it’s great to have you on. Looking forward to this.

Troy: No, great to be on, you know, I have the utmost respect for what you do and what you write so this is exciting to be here.

Dan: Yeah, for sure. So, I’d love to kick things off and start about what you’ve been doing and what you’ve been building at Q&A, because you launched Innovation Labs from it last year and the concept stuck out to me a lot because you’re doing beta testing around songs and I think with so much of data that’s now in the music industry and I think informing what releases look like, it’d be great to hear how it’s been going and what insights you’ve picked up on because so much and it lines up with where music’s heading right now.

Troy: Yeah, you know, it’s been going well. I think over the last few years post leaving Spotify, I’ve just been thinking a lot about what the future of the music industry is gonna look like, just because it’s been — we’ve seen it go through various iterations.

And when I started the company, I thought it was gonna be one thing. And then as I sort of dug in and started doing a little bit more research and spending more time with people and seeing sort of some technological shifts happening, the question started to become how does this impact the music industry? How does it impact the business that we’re thinking about? And sort of how do we prepare for that?

And so, initially, we were solving a problem around independent distribution, just because we feel like that’s a fast growing segment, not a lot of tools and services that are out there that are really being able to compete with major labels. So where I feel like with streaming sort of unlocked distribution and democratized distribution, but Web 3.0 is gonna democratize wealth for artists.

And so we sort of shifted the focus to the company around how do we look at distributed music IP. So, not just the MP3 file and not just being able to track revenue and analytics off of the MP3 file, but we feel like the future of music is gonna be sort of this digital portfolio that consists of your virtual merchandise, your NFTs, your music, and however people choose to listen, whether it’s streams, through NFT packs, whatever else,

and then very excited about the space of where gaming’s going with thinking about things like audio skins and so we feel like distribution is no longer just about the MP3.

Dan: Talk to be a bit more about the IP distribution piece of it, because definitely aligned with everything happening with Web 3.0 right now and with all of the assets or all of the things that artists can be offered on this platform, what do you think that’ll look like?

Troy: It’s really eye opening when you look at sort of what’s been happening just over the last two to three years within the crypto community and the blockchain community and seeing how NFTs and collectibles have really transformed the way they built communities and helped out the NBA Players Association and, you know, in some of their deals and helping them negotiate some deals.

And one of the deals I helped them negotiate was the Dapper Labs deal around NBA Top Shots. And I walked away just thinking about the power that music artists have that goes completely undermonetized and underutilized.

And so when you look at a brand like the NBA, they’ve done an incredible job from taking a sport that used to be played in like, you know, small basketball arenas, being able to take that into bigger arenas than being able to take that into television deals, into merchandise deals, and you see this expansion and then become this really big, this big industry,

and there’s only, what? 450 active players, somewhere in that area, right? There’s only 30 basketball teams. And it only travels but so far. So when you look at an artist like a Drake, Drake’s bigger than any NBA star that’s active that we could think of as you travel the globe, because music travels in a different way.

But with music, we’ve been so focused around either the MP3 or the live performance, we haven’t thought about building products like an NBA Top Shots. And when you look at that product by itself, it’ll make the league and players, you know, probably over, you know, a billion dollars or more, you know, over the next decade or so, but music doesn’t productize or monetize the way some other industries do. And, you know, so that’s a lot of what we’ve been thinking about and sort of what we’ve been working on as a company.

Dan: I’m glad you brought that up because it makes me think about Kanye and the influence that he has and what he was able to show this past summer and fall from all the Donda listening sessions. No music released, everything was pre, giving everyone a taste of what’s to come,

but he was able to sell so much in merch and break all these Apple livestream records and it’s just a reminder of look how powerful this person is filling stadiums across and he could have continued to do it.

But if you look at, obviously, you know, he made a lot of money from Yeezys but even if you remove that, just look at the amount of influence he has relative to athletes or other people that may be at that level. How do you tap into that surplus? How do you tap into everything that he’s built in? And I do think that where things are heading with Web 3.0 or with being able to better think about how to monetize these things so that musicians, whether they’re at that level or they’re trying to get to that level, can tap into that. That is how they really leverage that influences to the folks then.

Troy: Yeah, I think Kanye is probably one of the most underestimated and misunderstood human beings on the planet. And what I mean by that is I consider Kanye on the genius level of an Elon Musk or a Steve Jobs when it comes to people who are unafraid and are willing to push and are willing to break all types of boundaries and don’t play by any rulebook whatsoever.

And those are people in life that we always consider the greats. In those moments, they’re completely misunderstood, but sort of in the rear view mirror, once you look at the body of work and the body of genius, then that’s when people sort of give them their flowers.

And, you know, I remember years back when Kanye came to my office and he showed me, you know, this crazy spreadsheet paper of like sort of his vision for what he was gonna build and this is before he was in fashion or anything like that,

and the guy bet on himself and, you know, bought sewing machines and went over to Europe and really built out Yeezy from the muscle, from bootstrapping, and pretty much went bankrupt in the meantime while doing it, very similar to Elon when he had the vision for Tesla, taking that same bet on himself and spending that money and almost going broke essentially.

So, when you look at Kanye’s path, it’s very, very similar to how tech founders run their companies. So there’s constant iteration on product and you try things, you see what works, what doesn’t work, and for him to AB test an album and stadiums and iterate on the album in real time in front of the world, we call — in tech, we call it pushing updates.

So he’s basically getting user feedback and being able to push updates and being able to monetize on it in the meantime. So, you know, I think I think he’s one of those artists that’s completely unafraid and I feel like that’s what the universe rewards.

Dan: Yeah, definitely. And I mean, forget about the fact that he was close to being bankrupt. Obviously, he was able to get out of that given the bets he had but it also says a lot about just how the industry is structured and how someone, even at the point that he was bankrupt, to have sold as many records and to have done as much touring and everything else to still not necessarily have enough.

And I think that inspires a lot of what you’re building towards and what others are seeing is the opportunity in this and it also makes me think about some comments you’ve made in the past about the music industry and how the model needs to change.

And I remember this one quote you said that the record labels themselves can no longer be greedy and a lot of that is focused on owning masters and the dynamic of the 17/83 splits between who gets the royalties and how so much of that continues.

But I’m curious from your perspective, as much as I think a lot of people are seeing the opportunity for these things to shift and we’re seeing more flexible options, where do you think things realistically will be five, ten years from now with record labels, the major ones, and how their relationships look with artists?

Troy: Yeah, I think it’ll look totally different, especially ten years from now, it won’t look anything like it looks right now. You know, I think five years will be the sort of end of the cycle that we see right now. We’ll be pushing closer to that.

But I think in terms of the economics, the economics just don’t make sense. And if you look at any other industry, it’s like it’s just one of the most unfair industries that you’ll see. Because I can understand in the very beginning when the record labels are the only people that are willing to take the risk on the artists, they have to have certain economics to make sure that they’re covered, because they’re making really large bets across, you know, a lot of artists and, you know, it’s a pretty big portfolio.

But once you have success, the term should change significantly. And I’m not just talking about going in to renegotiate a joint venture or anything like that. I mean, complete 100 percent master reversion should happen. I think the economics of, you know, whether if it’s 80/20, more towards the artist, you know, and the rest towards the record label after the risks are recouped,

and I think what the labels are gonna be competing with moving forward is a combination of large private equity that’s starting to come into the music industry, you’re looking at DeFi loans that are coming into the music industry, these sort of fan-funded types of NFTs, and then distribution companies that are well equipped and know what global stardom looks like for artists.

And I think in the past, labels didn’t have to compete with that. They may have had to compete with one or two of those things but I think all of those things come in at you at one time is really going to be hard to compete against, especially when you’re locked and your entire business model has been built off of the infrastructure of artists receiving X and you receiving this and ownership of masters so I feel like they’re gonna be backed into a bit of a corner.

Dan: Yeah, it feels like something is going to have to change at some point, right? Because now, especially at the superstar level, you’re seeing more and more of these artists, like you’re saying, they are — once they get to that certain point, once they get to that next deal, maybe they’re getting something that’s a bit more favorable.

Troy: Yeah, we’ve seen it happen. You know, if you look at, you know, we’re just talking about the NBA, it used to be an owners league. The players control the league now. And that shift is right around the corner for artists as well.

Dan: Do you think that — I guess, because I hear you and I think it does make sense that, you know, let’s say ten years from now, the type of deal they would give an artist would be, okay, once you’ve de-risked yourself, then the economics do flip, like it makes sense in practice.

I wonder though, do we think that like would it start maybe the indie labels are the ones that are more willing to be artist friendly would do it first and then maybe we would see the majors follow suit or…

Troy: I think is a myth that the indie labels are artist friendly though. I think it’s a myth. I think that — like I’ve worked with a lot of indie labels and their deals are sometimes just as bad as the majors, you know, with the same sort of economics as the majors.

So I think with indie labels, they’re gonna be under the same exact pressures because it’s all about changing the deal structures, because you’re gonna — I was speaking to one of the heads of a record label and, you know, just talking about the competitive landscape, and I said I wouldn’t think about competing with the other labels as much as competing with mindset.

Because once you’re competing with mindset, that’s a losing battle. Because once artists get into that, like it becomes the mantra across all artists across the board of, “Hey, we’re gonna have ownership.” We’ve seen these changes happen before in other places so I just feel like it’s inevitable.

Dan: Yeah, that makes sense and I think especially with the private equity money and just outside capital coming in. The part that I’m curious about, I’m curious to hear your thoughts on though, let’s say that the outside investment opportunities become strong enough, at that point, is there still some type of built in strength or built-in infrastructure that the labels would have that would benefit them relative to the outside capital, like one of the things I hear is just the data that they have and how they are able to use that as an inference to make certain decisions that an outsider necessarily couldn’t? What are your thoughts on that?

Troy: That’s just not true, by the way. Like I’ve lived with probably the world’s best data and watched on the side as most people didn’t even know how to read it. So asking for all of the data in the world and not really being able to use that data to make great decisions from that data.

So, if you’re using data as an A&R pool, for instance, you’re fishing from the same pool as all your competitors so none of the data is proprietary because everybody’s sourcing from the same, whether it’s the DSPs, whether it’s Nielsen and MRC, chart metric, everybody’s sourcing from the same data so the only thing that means is that the deals become more expensive because you got everybody competing for the same deals essentially.

And so I don’t think the industry is in a place of like where they can say that their data is gonna be better than an artist’s options of doing something independent. And from an infrastructure perspective, it used to be labels pitch, “We got boots on the ground all throughout the world,” but what we saw that shifted is most of those boots around the world are focused on local repertoire within those territories.

So when you see how well a local repertoire does, whether it’s France, whether it’s Germany, whether it’s Africa, each territory is mostly focused on what they signed so if you do a deal in America, that doesn’t necessarily mean you’re gonna be a priority in London, and for Canada, for that matter.

And then other piece is the way music’s distributed throughout the world right now, you don’t necessarily need — you know, Spotify can activate you globally. Apple can activate you globally. Amazon can activate you globally. So, once you learn how to activate and you got platforms like YouTube, you got TikTok, I think it’s overstated the value that if you’re starting from zero as an artist of what the record label can actually do,

and that’s why we’re seeing like a lot of the labels let artists get to a certain point independently and then they’re willing to overpay for the deal because it’s already de-risked because they know how hard it is to be able to build something from scratch.

Dan: Right, yeah, it’s like if the artists can do the 0 to 60 piece, then their pitch is, “Okay, we’ll overpay for that 60 to 100,” and it’s gonna be interesting to see how artists deal with that decision over time.

I think a lot about — it was 2018, when Taylor Swift had done that deal with Republic and I remember there was this whole discussion leading up to it like, “Oh, what is Taylor going to do? Is she gonna go independent? Is she going to go this?” and I think people, at least close to it, didn’t actually think that she was gonna go independent, it was just a matter of, you know, which of these she was gonna go with?

Troy: Yeah, I was one of them who didn’t think — I didn’t think she should go independent or she would go independent, because the market wasn’t ready yet. And for Taylor, it’s like you’re going into a new album cycle and it’s like, you know, I think the most important thing to her was fix the economics and she fixed the economics for sure and she has full control, she owns her masters moving forward,

so all of the things that you want at that stage, it wasn’t necessarily about, “I’m just independent for the sake of independent,” I think it was, “I’m independent because I’m able to make the decisions that I wanna make and I capture the value, the financial value, from the work that I make as well.”

Dan: Right. And the benefit that she gets from licensing with Republic is enough for her to justify doing that deal as opposed to others who are going independent.

Troy: Yeah, absolutely because, like I don’t know the specifics of her deal, but my guess is it’s probably cheaper for her to pay whatever very small distribution fee that she’s paying than having to go out and build infrastructure right now.

Dan: Right. And I think what you’re alluding to, which I think I agree with as well, because of that time, 2018, the outside capital market wasn’t quite there. Let’s fast forward, okay, what does this look like then in 2025, when the Taylor Swift equivalent, if there is one, is out of their deal, they’re ready to re-up, then things are gonna be really interesting because some of those outside options could be a bit more competitive than they would have been back in 2018.

Troy: Yes, and especially when you look at the sort of — when you think about the matrix of partners that an artist like a Taylor Swift would have, right? And you think about — and I’m just being completely straight with you, like I’ve seen it where managers have done an incredible job building businesses for artists sort of outside of the infrastructure of the label.

You give the label credit, right? In terms of, “Okay, we financed it, we help break this thing,” or whatever else or whatever. But then you look at — let’s just use Kanye as an example, right? Or you use a Drake as an example.

A lot of these guys are just — they’ll turn in their album four days before it comes out and you got to artists like a Drake who — Drake doesn’t even do television performances. He barely does like award shows or late night talk shows or anything like that.

Drake makes his record and he sends it right before it comes out. And so when you think about what is the cost of sending a file to Spotify, you know what I’m saying?

And when you think of artists of that stature who makes the level of music that they make, it doesn’t take a lot of convincing to get editors to play it. Fans are already gonna be waiting for it. And we see what those streaming numbers actually look like.

And so that’s the thing where, you know, I don’t wanna completely discredit the work that people actually do on the projects but the point that I’m trying to make is how much should artists pay for that.

Dan: Yeah, it’s an interesting question, especially when you get to that level and there already is that ubiquity. Yeah. I think that someone like Drake, because you also think about, yeah, at this point, how many more people in the world who haven’t heard of Drake or don’t have awareness or interest to seek out Drake are going to therefore do it, right?

I know that, obviously, awareness still helps. I’m thinking about even the Amazon live stream that they had for Larry Hoover with Drake and Kanye and, yeah, Amazon advertised it everywhere but that’s more so for Amazon to aware its people.

Troy: Yeah. And I’m sure there wasn’t any arm twisting to get Amazon to do it when you got Kanye and Drake and so it’s like it becomes a much easier sell when you’re at that level. People are probably selling to them more than them selling to the corporations.

Dan: Exactly, exactly. It’s also interesting with them too, I’m thinking about people that are at this superstar level, something I’ve talked to a few other people with about as they’re these stars that became these higher level stars before streaming really took off and I think, in a lot of ways, they’ve been a bit grandfathered into this higher level ubiquity status that I think that it’s harder for a lot of the stars who got big in the streaming era to reach that same level of fame.

Like when I think about who the biggest stars in the industry are now, many of them are still many of the same names that were big back in 2009, right? I mean, I think there’s a few exceptions. So, when I zoom, fast forward, we look at what does it look like ten years from now, who are going to be those big stars and will they be as big as a Drake and a Kanye are now?

Troy: I think even bigger.

Dan: Yeah.

Troy: Because like Cardi B was born in this age, Billie was born in this age, Olivia was born in this age. There’s a lot of artists who have become really, really big global superstars during the age of streaming. And BTS, right? Like there’s so many big acts that have really benefited and have done better than even a lot of the older acts.

I think there’s really good acts that like — certain acts have learned to adjust to how streaming works because I think one of the biggest challenges sort of building that bridge between downloads and streaming was being able to explain to artists and labels and managers that streaming is about frequency as well.

So it’s like you had these new artists that were coming into the streaming age, they were releasing records every week or every month or whatever and, you know, you have a lot of artists coming from the older generation that were used to making an album every two years, you know, being able to then going on tour, going on vacation, and then sort of coming back.

And that didn’t work. And so you look at an artist like Drake who was okay with, “You know what, I’m just gonna release singles,” and so Drake was in a real rhythm with it. You look at Kanye who said, “I’m gonna drop these little mini EPS,” and it’s like so they sort of adjusted to it, because on the flip side, I’ve seen a lot of artists, specifically in the pop space, get like really left behind.

And hip hop adjusted much better than pop, I think, when it came to sort of that generation of sort of pre-streaming adjusting. Hip hop adjusted much better.

Dan: Yeah, definitely. I think we see the stats from that and just how much creativity there is with how artists are thinking about releases. I think, especially in pop and even more so in rock, it is much more traditional.

That said, I do think that a lot of those artists are you able to sell a bit more on the physical side and even on the digital download side but still, it’s like this is where things are going and I’m sure, you know, you have a front row seat to that just given you worked at Spotify, you’re on the board of SoundCloud now and so much of this is different evolutions of streaming.

I mean, with Spotify, of course, we just saw what that company’s been able to do and how, in a lot of ways, it’s been the leader for DSPs but also the backbone for how the industry is able to come back but you also look at SoundCloud, especially the past few years, we had Mike Weissman on the podcast a couple months ago and just the evolution there and just thinking about being able to expand and think beyond this $9.99 All You Can Eat model and thinking more broadly about what streaming can look like.

And, of course, I think for SoundCloud, it’s a bit more tailored to some of the artists that are independent and especially in different countries. But, eventually, this is gonna be the norm for so many artists because I think we see a lot of that innovation happen on the independent level and then we see it become mainstream elsewhere.

Troy: Yeah. So I’m a little bit scared for the streaming industry right now. And reason being is not the technology as much as it is the payment model that they’re stuck in from the deals they had to strike with the labels and the publishers.

And so when we look at other creative fields and what technology has been able to do in terms of unlocking financial opportunity, YouTube and TikTok and platforms like that have done a massive job in terms of unlocking wealth for whether you’re a makeup artist, dancer, comedian, all of these things or whatever.

With music, technology hasn’t done the same thing in terms — because we’re kind of stuck into that three-tenths of a cent per stream model. And when you put that up against what we’re seeing in the blockchain NFT space right now, I’m talking to artists like even as recent as yesterday, I was going back and forth with one artist who just launched an NFT, one of one, but within like a few hours, it was already at like two and a half ETH for the bid and it’s probably much more today.

But, you know, let’s say it was at $10,000 yesterday, right? For that bid. And let’s say it goes up to $50,000 to $60,000 for that NFT. Do you know how many streams it would have taken for that artists to make that $50,000? For one NFT, by the way.

And that, to me, the economics of it is gonna drive a lot of artists to be able to experiment with, “How do I engage with my audience in a different way and monetize in a different way?” and my concern is, whichever platforms that’s gonna drive revenue and engagement and fandom for artists are gonna become very, very relevant for the artist community.

And so I feel like the payment structures aren’t gonna allow streaming to compete with new formats as they come along.

Dan: Yeah, I think that’s real, because I think about, yeah, to your point, $10,000, if you’re selling that, you know, it’s a one of one NFT, we’re talking — I mean, I have to do the math but at least hundreds of thousands, if not millions of streams, in order to get to that kind of number, right?

Troy: Many millions of streams. Many. And you have to split that with people, by the way.

Dan: True. Yeah. And, I mean, it’s interesting because one of the things I’ve kind of went back and forth on thinking about it myself is that, okay, you look at things like NFTs or you look at any of these things that would serve your super fans that they’d be willing to buy, so there is a bit of a power law dynamic there.

If Spotify, the traditional streaming services are serving the 99 percent, for lack of a better word, and then your NFTs, is that the compliment? Because it can be the additional thing, no different than seeing someone in tour is an additional thing. Or does it at some point eventually erode enough of the share to replace part of it?

And I feel like that’s where some of the potential is because that’s where the economics could be, right? Because if you think about it as an artist, you’re gonna put all of this work into trying to, okay, let’s say you’re a superstar, you want to top the Billboard charts, you wanna get however many millions of streams in order to try to sell, what? 500,000 album equivalent units or whatever it is, versus maybe selling five exclusive things,

like that’s where I think some of the decisions go in. So then it kind of becomes this decision for the artist, do you wanna maximize your revenue? Do you still wanna have something that’s ubiquitous that everyone can hear? And there’s a likely a way to be able to do both well and I think that’s the type of platform that would win out.

Troy: Yeah, like — so you really hit the nail on the head, right? Because I think it’s — two thoughts come up, right? So, one, I’ve worked really closely with the Prince estate for the past five years, right? And when I look at an artist like a Prince who has like some really, really hardcore fans who know every single demo that he made, all of the bootlegs, all into like the 1989, he played this town and it’s like the bootleg tape that floats around, right?

So when you look at bands like — you look at an act like Prince, you look at the Dead Head, you look at Phish, you look at like these cult bands, most artists have some sort of cult fans, right? Who just are the super fans.

So with artists like Prince who has this vast catalogue, honestly, if it was only up to me, we probably would have all of the hits on the streaming services, the Apples, Spotifies, and Amazons, and everything else that only the super fans listen to that don’t stream nearly, nearly, nearly as well as a standalone subscription service just for the super fans.

And when you think about — if you’ve got 250,000 fans that are willing to pay whatever amount per month for that is significantly higher than whatever royalty you would make off of those songs sitting on a streaming service somewhere.

So like when artists release records, we gotta think of it like — they have to think of themselves as if Disney is releasing, whether it’s a Marvel movie or a Pixar movie, ahead of time, they’re looking at how does this integrate into our theme park business? What are the lines of merchandise that we’re doing around this? Who are our licensing partners around this? They’re looking at all of these different things.

And so think of like the NFTs and things along those lines as just sort of one vertical of your business that when you release that music and your streams are one vertical as well but you have many, many verticals, you know, that lives around that release and the only thing the artists and their team should be focused on serving is what is absolutely best for that specific artist and their specific business.

Dan: That’s a really good point. And I think for as much as people look at the Disney synergy map and try to replicate Disney’s synergy model, like that is the piece that they don’t quite grasp. And I think that’s it, because even if you look at something like a Spotify Wrapped, for instance, and they’re telling you you’re in the X percentile of fandom for Drake, right?

Okay, am I in that X percentile of Drake because I listen to “God’s Plan” and “One Dance” all the time? Well, those are his two like biggest hits. But if I’m the person that’s listening to like “Ratchett Happy Birthday” over and over, then I’m probably a big and unique Drake fan. I’m gonna be much more likely to subscribe to something that is just a back catalogue of Drake’s hits and those types of things. That’s a really good point.

Troy: But that’s why Mike from SoundCloud, and I know Spotify, you know, wanted to do this at one point too, like fan powered royalties is a real thing that it’s like, if you think about — like I looked at my Spotify Wrapped, right? And it’s like I know what artists I listened to more than any other artists, right?

And when you look at how things are distributed, it’s not distributed — financially, those distributions aren’t done in a way that benefits people who like — because I would prefer my money goes to Stevie Wonder, you know? It’s like, that’s my favorite artists in the world, I listen to Stevie and probably — I thinks Wrapped said Stevie and Frank Ocean were my top for this year or whatever, but they don’t get the benefit of what I would be willing to pay as a fan.

Dan: Right, right. Yeah, and I think about Stevie, I think about, and I’m sure you probably got a lot of other insights from working with Prince’s estate too. I mean, you think about all of the things that folks are trying to do to help, not necessarily help but they’re trying to maximize the platform for musicians that are no longer with us, but you’re trying to do it in an artful way. You’re trying to do it in a tasteful way. Are there any other interesting insights from working with Prince’s estate?

Troy: The biggest thing learning for me was I would say two sides. One, this guy just was prolific when it came to the work, like his work ethic and level of artistry was just completely uncompromised and unmatched and we talk about sort of independence and being independent as an artist and owning masters and all of those things or whatever and it’s like, Prince walked the walk. He really walked the walk.

He was willing to give up his career and like he changed his name and he didn’t — like all of those things that’s really, really hard to do, he did. So, he was like the Muhammad Ali of music when it came to artist’s rights. And so, to me, I just got a lot of learnings from that.

And then the second piece, you know, is more on the business side and just estate planning. Nobody really plans to or knows exactly when they’re gonna pass and, you know, I think when I came into the estate, I was a very experienced talent manager but what you learn is, this is different. This is different, because you’re working with the court systems in Minneapolis, you’re working with fiduciaries from Comerica, you’re working with the heirs, you’re working — like it’s very, very different. So having your affairs buttoned up and planning properly is the best advice that I could give.

Dan: Nice. And I would also assume that a lot of other estates have been hitting you up too, especially if they’re — I mean, unfortunately, there’s just been so many artists that have passed recently and I know a lot of them haven’t always had things hit up. Have you been having a lot of those conversations too?

Troy: Yeah, I get a lot of calls, like I think people started thinking that I manage estates and I’m like, no, I don’t manage estates, you know? This was very specific to Prince just because I thought the world of him as an artist and this has been more of a passion project than anything else.

But, yeah, I’ve gotten a lot of calls. And to be honest with you, I wouldn’t do it again. For me, this is very specific to making sure that Prince’s legacy was protected and respected.

Dan: Yeah, I hear you on that. Yeah, it definitely feels like one of those labors of love and you did it because you care about the artist but I’m sure there’s a lot of challenges there. But before we let you go, though, I do wanna talk briefly about another area, I’m sure you get a lot of inbound is investing.

You have AF Square. That’s where you do a lot of your angel investing. And, I mean, given your workflow and the things you do, you have your hands on a number of things, you’re so involved with so many things and I’m sure your deal flow must be so high but you also have to pick your spots too. What’s your approach like to angel investing?

Troy: Yeah, I kinda look at it as the curiosity fund and it’s like, in the beginning, when I started angel investing, it wasn’t necessarily, oh, I can make some money off of it, because I wasn’t putting enough in that was gonna be like revolutionary or anything like that but it was sort of a membership to a really smart group of people.

And I learned a lot because when I started investing, that was sort of like beginning of the mobile phone era, like iPhone era and app economies. So companies like Uber or Dropbox or Slack, like these companies exist pretty much because of mobile.

And so I learned a lot that sort of helped me see the world through the lens of what the future is gonna look like before the future actually happened. So it allowed me sort of to be prepared, both personally and also as I was managing artists, being able to really push artists and to trying new things.

And, you know, there’s a reason why we were first to streaming out of a lot of artists because we knew about it so early and we started experimenting so early. Same with social media. We were very, very early.

And now I’m feeling the same thing, like we’ve made quite a few investments on the Web 3.0 side and so I’ve been living in this rabbit hole of Web 3.0 for a couple of years now and so like to start seeing the shifts happening and like, you know, where it was a very, very, very — the group is still small, by the way. NFT Week in Miami, I think I might have seen four people from the music industry so it’s like — and that’s scary to me that like music isn’t living in these places right now. Like that, to me, is concerning.

Dan: Yeah. It’s funny because I would expect there to be more than that but, I mean, honestly, given what I saw from the folks that were talking about it, yeah, I mean, it was definitely more VCs and more folks in tech then or if the folks were in music, they were more aligned with music tech or some type of startup that is now grown as opposed to the record labels or publishers.

Troy: Exactly. You know, Janelle Monáe’s team, they were there like front and center. Tom Windish, incredible booking agent, Tom is in it and, you know, so you got people that are in it but from within the music industry music industry, like there wasn’t a lot of the usual suspects that you’ll see at Coachella, they’re not there.

Dan: Maybe that’ll change after this year though.

Troy: The Grammy crowd is not there.

Dan: Yeah, the Grammy crowd is not there. May change next year though. I feel like this was, especially I think for Miami as a hotspot for a lot of these things, the tide’s changing and you have your innovators and you have early adopters, right? So maybe next year, we’ll see more of the late majority come through.

Troy: I hope so. We gotta have it. Just so we don’t enter another Napster moment in our industry, we all gotta be there. It can’t be four people. It has to be the entire industry taking this on.

Dan: Definitely. Well, Troy, this was great. It was really great to have you on. We chatted about a bunch of things. Before we let you go, anything else you wanna plug or you got coming up for the next year?

Troy: No, nothing to plug, man. I’m just excited about all of the changes and changes and shifts and just to see like who are gonna be the new companies that, you know, we talked about a lot of companies today, like in five years, who are we gonna be talking about that we’ve never even heard of today? So that’s the part that I’m excited about.

Dan: Definitely. I feel like this is one of those pods we gotta like go back and listen to five years from now and be like, “Wait, what did we get? Did we catch that one? How did that prediction come true?”

Troy: Absolutely.

Dan: Definitely.

Troy: Absolutely.

Dan: Well, thanks again, Troy. Appreciate it.

Troy: Cool. Thanks, Dan.