SPIN and Stereogum Get Sold, Jada and Will Smith's Westbrook Inc, Akon City

Hey! Heads up - there will be no Member Update on Monday, January 20. It's Martin Luther King Day in the U.S and it's a holiday for Trapital. On a personal note, the first company I worked for after college never honored the holiday, and many of us were taken aback. We were especially surprised because it was a Dow 30 company! I told myself I would honor that myself if I ever started my own company.

Today's update covers the recent sale of music publications SPIN and Stereogum, Jada and Will Smith's Westbrook Inc. strategy, and Akon's new city in Senegal.

What the SPIN and Stereogum deals say about digital media in 2020

From Billboard:

Music publications Spin and Stereogum will no longer be a part of Billboard-The Hollywood Reporter Media Group, parent company Valence Media announced today (Jan. 16).

Spin has been acquired by Next Management Partners, a private equity firm that specializes in digital media. This past year, Spin's audience has grown over 40%...Next Management Partners will assume all assets and has engaged the current team to continue publishing...

As for Stereogum, an agreement has been reached with the leadership of the publication to buy the brand back, with founder and editor-in-chief Scott Lapatine remaining at the helm. Lapatine will also become CEO...

Spin and Stereogum were acquired by Billboard-The Hollywood Reporter Media group in December of 2016. Vibe, which was also part of the 2016 deal, will remain with the company.

The news of this sale may seem exciting—especially since Stereogum's founder has bought back his company—but it's hard to ignore the underlying story.

When the Billboard-Hollywood Reporter Media Group bought the Spin Media Group (Spin, Stereogum, and Vibe) in 2016, restructuring seemed inevitable. In 2019, Spin Media Group cut 29 jobs (as expected). This reflects the challenges that face the media industry.

According to Business Insider, 7,800 people lost their media jobs in 2019 due to layoffs. That's substantially more than the 5,000 that were lost from 2014 to 2017 combined. It's not just the high profile company layoffs like Buzzfeed and VICE. It's upstart niche operations like ThinkProgress, longstanding media outlets like NBC, and newspapers like The Dallas Morning News.

The flavor of the month is to criticize the ad revenue model. By now, anyone in this business understands that digital ads probably won't cut it. But let's be honest, paywalls wouldn't have saved all those jobs either. There's a bunch of companies that have paywalls and STILL laid off employees.

I've spent time looking at the models that currently work, especially with e-commerce and events. Complex now makes more than half its money outside of ad revenue. To be fair, Complex had layoffs in 2017. But that was before it sold $10 million of hot sauce in a year. That was before ComplexCon grew into a multi-city event. If you haven't already, check out this podcast interview with Complex CEO Rich Antoniello on Peter Kafka's Recode Media. He spends a good amount of time breaking down the business model.

Companies like The Ringer and Barstool have expanded their podcast networks into thriving businesses. The Chernin Group, Barstool's current majority owner, bought its majority stake in 2016 at a $10-15 million valuation. The company has pursued merchandise, branded liquor, content licensing, and other streams of revenue. In 2018, the company was valued $100 million after a $15 million funding round. The polarizing media outlet is now an acquisition target again, with most expecting its purchase price will be well in the nine figures.

‍Anyone who spends enough time in media understands the brand identity of both Complex and Barstool. (Whether you like what those brands stand for is a separate topic! Having a strong identity makes it easier to sell merchandise, host events, and other business lines with higher profit margins than digital media content creation.

Can anyone distinguish Stereogum's brand versus SPIN's? Some of you can, but most of you probably can't. But that's not on you. That's on the new owners of Stereogum and SPIN to strengthen their positioning to better monetize.

Westbrook Inc. Makes moves

2019 was a strong year for The Smiths, and 2020 looks even more promising.

Westbrook Inc. was first launched back in July. From The Hollywood Reporter:

Will Smith and wife Jada Pinkett Smith on Wednesday unveiled a new media venture, Westbrook Inc., to oversee the Smith family's expanding media content and commerce businesses.

Westbrook will serve as a studio for subsidiary companies like Overbrook Entertainment and Red Table Talk Enterprises, as well as the newly formed Westbrook Studios, Westbrook Media and their expanding merchandise business, Good Goods.

Right now, Red Table Talk is carrying Facebook Watch like LeBron James on 2007 Cleveland Cavaliers. And Will Smith's strong social media presence has brought him back to the forefront of pop culture. This weekend, Bad Boys for Life is expected to earn north of $50 million, beating its initial projection by over $10 million. That opening is in large part thanks to Smith and Martin Lawrence's active promo run. The best thing Will Smith did recently for his acting career was to start an Instagram account and hire a team to help him manage it.

These two recent Westbrook Inc. developments highlight that they understand the current landscape:

• Red Table Talk card game We're Not Really Strangers

A card game like this achieves several things:

• Interactive - it brings the Red Table Talk experience to life. The show has empowered women—especially black women—to have vulnerable conversations with loved ones. The audience can now recreate those experiences while respecting the privacy of having these candid conversations in their own home.
• Monetization - this type of e-commerce strategy is key for a company like Red Table Talk. Facebook Watch has posted favorable numbers on its payouts to content creators, but these data points are cherry-picked. It's great that the number of creators earning over $1,000/month has increased 8x, but what's the total percentage of creators earning that much? Facebook didn't share that number, and it's probably because it's not an impressive number.

The other announcement from Westbrook is the World Tour. From BusinessWire:

Apollo World Touring and Westbrook Inc. announce today that they will co-produce World Tour, a new multi-genre event-series, staged in the world’s most iconic cities.

Each live event will feature internationally acclaimed A-list artists, locally celebrated superstars and globally recognised DJs. Fans will be able to engage globally through exciting content formats on multiple platforms.

World Tour kicks off in Melbourne, Australia on 14 March 2020, alongside the Formula 1 ®Rolex Australian Grand Prix. International superstar Robbie Williams is announcing his only Australian public performance of 2020 as one of the headline artists, with other incredible acts to be announced shortly.After Melbourne, World Tour will be touching down in other exciting world cities including; Montreal, Berlin, Milan, Seoul, Taipei, Osaka and Miami. The schedule of live events, complemented by multi-platform media elements, will make World Tour a non-stop year-round experience for audiences and brand partners, uniting millions of fans globally.

It's essentially a traveling music festival. The most well-known version of this is Rolling Loud. I expect The Smiths to invest more into the logistics and operations than the often unsafe, poorly planned, and occasionally problematic Rolling Loud festivals.

Details are still vague, but it looks like there's a desire to reach different markets across the world. Music festivals may seem saturated in the major North American metros, but that's not the case elsewhere. If World Tour is successful, it may logically expand to South America and Africa.

Tickets for the Melbourne show go on sale Monday, so we may have new information then.

Akon City

In October 2018, I heard Akon speak at Black Enterprise TechConneXt event in the Bay Area. He mentioned that he was building his own city. I'll be honest, it seemed like a pie-in-the-sky, shoot-for-unreachable-goals, type statement. But clearly I was wrong and should never have doubted the man who once sang, "we takin over, once city at a time."

From CNN:

It's official, Akon has his own city in Senegal.

Known as "Akon City," the rapper and entrepreneur tweeted Monday that he had finalized the agreement for the new city.

"Looking forward to hosting you there in the future," his tweet read.

Akon, who is of Senegalese descent, originally announced plans for the futuristic "Crypto city" in 2018 saying that the city would be built on a 2,000-acre land gifted to him by the President of Senegal, Macky Sall. The new city would also trade exclusively in his own digital cash currency called AKoin, he said.

The official website for the city said at the time it would be a five-minute drive from the West African state's new international airport.

Before we get to the assessment, he missed an opportunity to name the city Akonda! Come on, that was a layup. His last album was titled Akonda, and this would have been a logical extension. Maybe there was concern about pandering or co-opting the Wakanda-Black Panther theme too much? But I doubt that's a concern for someone who named their cryptocurrency "Akoin."

I've been impressed by Akon's desire to uplight the African continent. But his efforts aren't without challenges.

"A lot of countries in Africa are controlled by Western countries. It's not like they are in control to make decisions that would be to their benefit...There are so many agendas attached to it that it becomes so political to make a simple decision as bringing basic electricity to these countries."

It's too early to tell whether Akon City could face similar challenges. This green light from the Senegalese government is great, but how does a utopian city maintain its place in a country and region that still faces a myriad of other challenges? The unfortunate nature of government is that Akon City may be seen as a one-off case, and not a potential concept that can be replicated elsewhere in the continent. How many other heads of African states have the power to gift a hometown celebrity with thousands of acres of land?

Akon City should improve the lives for some, but hopefully this isolated utopia won't cause more problems for him or his ambitious sustainability goals.