The Gamma Opportunity

Larry Jackson’s pitch for gamma was clear. Artists wanted an alternative to the traditional record label. Not just in ownership, but across multimedia and consumer products. gamma was his answer. The company would offer music distribution, speed up the royalty payment process, and make a splash with a strong cast of artists and connections. There would be a cultural focus that empowered Black artists and creators as well.

Jackson hustled his way through the industry since he was 11 years old, lending a helping hand to the 106.1 KMEL radio station in the Bay Area. He has a strong pedigree with ties to Clive Davis and helped lead Apple Music’s exclusive strategy with Jimmy Iovine.

But Jackson was still turned down by 14 investors before he heard a “Yes.” KKR, TCV, TPG, Providence, and other firms said no. Many of them were interested in music, but more interested in the back catalog shopping spree for music rights. Frontline music was too unpredictable for them.

It wasn’t until Jackson’s former employer Apple put money in, which led to over $1 billion raised in a mix of both equity and debt from Eldrige Industries, A24, and Alpha Wave Global. gamma was last valued at $400 million in February 2024.

Jackson spoke on his issues with the frontline vs back catalog distinction in a recent episode of The Joe Budden Podcast:

“There’s a myth out there that catalog is bigger than it's ever become. It’s an intentionally skewed perspective that’s been seeded because anything that’s ‘catalog’ is music that is older than 18 months… the biggest catalog is stuff from the 90s onward… The music from the 2000s and 2010s is the most popular catalog music.”

He’s right. As I mentioned in our Trapital Report 2023, this is why Eminem has one of the most popular catalogs of any artist.

I also agree with Jackson’s point about Drake. In 2021, when Certified Lover Boy came out, Drake’s music streamed more than all pre-1980 music combined. His highly-anticipated 21-track album helped boost his numbers, but Drake also has one of the strongest shallow catalogs of music from his 2010 hits, including the Apple Music exclusives that Jackson helped champion.

The nuance for gamma though, is whether the frontline music from the 2020s onward will have the same legs as the shallow catalog that dominated the 2000s and 2010s. Attention is relatively tougher to come by now in the age of TikTok. Those artists who rose to power during streaming’s rapid growth phase, like Drake, Kendrick Lamar, and Taylor Swift, have a very strong advantage, but it’s not impossible.

Artists like Sexyy Red and 4batz have been pushing units for gamma. The company also relies on the big-name legacy on its roster, like Snoop Dogg, Usher, and Rick Ross, their ability to sell both content and commerce and its partnerships across the board.

The mechanics

gamma’s first big move was to acquire music distributor Vydia, which has worked with everyone from Kanye West to LaRussell. It’s reminiscent of Apple Music acquiring Beats Electronics for its streaming service, which Jackson was also involved with.

Music distribution is a commodity, but these services can be valuable assets for companies that offer a wide range of label services. That’s why Believe owns Tunecore and Warner Music Group owns ADA. Partnerships in general, like gamma’s with SKIMS and TikTok, or UnitedMasters with Translation and NBA2K, are how these companies differentiate.

The more unique opportunity though, is gamma’s partnership with Eldridge. According to Variety:

“[gamma] will also collaborate with Eldridge on the growth and development of its music copyrights, which include the Killers’ pre-2020 songs, an investment in Bruce Springsteen’s catalog, and others.”

It’s a response to the catalog investors who shied away from gamma for its frontline focus. It’s also an opportunity for Eldridge to promote its catalog. One criticism of the catalog acquisitions are passive investors with no interest in working the asset.

gamma now has a line to The Killers’ “Mr. Brightside,” the second-most streamed song on Spotify from the 2000s. That song alone might be more valuable than some of the music catalogs that have been sold for tons of money.

Beyond the music

Music distribution isn’t just a commodity, but it’s also a low-margin business. Royalty splits are often 80% or higher in favor of the artist. Annual distribution fees on some platforms can cost as low as a Chipotle burrito. Success often requires massive scale or outsized hits to fund the rest of the business. Not unlike a record label, but it’s arguably even harder.

gamma’s push is its wide range of multimedia and consumer partnerships. From its podcast deal with The Shade Room to Rick Ross's multimedia endeavors, to Usher’s Super Bowl products, and Sexyy Red’s lip gloss named after STIs. It’s fitting that Snoop Dogg is one of gamma’s biggest names. His frontline music may no longer top the charts, but his brand partnerships and NBC Olympic success create value-added opportunities.

Every company in the space wants to grow the pie in their respective ways. Ownership discussions can often seem like a zero-sum game, but artists and their teams are often willing to give up more if there’s a true value add that’s offered. It may be tough for non-major labels and companies to match the eight and nine-figure advances and lucrative licensing deals that keep the superstars at the majors, but there are now more options than ever. I’m eager to see how gamma continues to grow to serve its artists and grow the brand.