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Where (How) Does Clubhouse Fit into The Music Industry?
Plus: notes on the indie existential crisis after Sony’s $430 million acquisition of AWAL and Kobalt Neighbouring Rights
Welcome to Issue #8 of Appetite for Distraction, a newsletter dissecting music and tech that bridges the gap between art and commerce. My goal is to make this a resource that cuts through the noise; helping creators and creative industry professionals make informed decisions.
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1 update and 1 plug before we start:
Update: I drafted a reader feedback form and I forgot to check the responses. Until last week! Feedback from ~70% readers who prefer quality over quantity—a cadence of once every two weeks (unless something huge needs to be covered). So that’s what I’ll be doing!
Plug: I am a contributing writer at Every—a business focussed writer collective founded by Dan Shipper and Nathan Baschez, which recently raised $600,000. It’s a bundle of different newsletters so you can pick and choose based on your interests. Go check it out! I personally recommend Means of Creation. :)
Audio UGC’s Potential
Who needs another social platform?
I was one of those people. Clubhouse proved me wrong. It’s rapid adoption is undeniable. From an invite-only beta, the platform has grown significantly. It currently has 2 million weekly active users, according to CEO Paul Davison. The platform also recently raised a Series B funding round led by Andreessen Horowitz, with reports suggesting a valuation of $1 billion. In this essay, I try to map out where (how) CH fits into the music industry; and the creator ecosystem more broadly.
Could CH be a “short-form audio” platform?
If apps like Splice and Voisey (recently acquired by Snapchat) democratise music creation, can CH democratise instant distribution? Possibly. Though I should mention the audio quality in most of the music rooms I joined was terrible. But this is a minor issue and is fixable through hardware and software updates.
The potentially larger problem I see is this — While we have reached a common consensus on the acceptability of raw, amateurish UGC videos, we are still extremely intolerant with amateur music. We need well produced music. A badly shot video of an elephant riding a unicycle is way more engaging than an amateur musician. Moreover, intentional amateurity in the video realm actually happens to be a solid engagement strategy! (pioneered by Casey Neistat)
The creation of music is more democratized than ever before; but it still hasn’t had the “everyone is a photographer now” moment powered by Instagram or the “everyone is a vlogger now” powered by YouTube.
Clubhouse has huge potential for interactive, ephemeral podcasts. But the “musician” tag seems to be more unattainable compared to the podcaster, vlogger or photographer tags. For now.
Making Music is Hard
While our smartphones democratized video creation, the creation of music has been a notoriously high friction activity. Anybody can pick up their phone and create the next viral video on TikTok within minutes of downloading the app. But we have vastly higher standards for music. Unless aspiring music creators have sophisticated means of creation to help them create great sounding music, it will prove to be very hard to achieve the levels of success user-generated videos have.
I know there are companies trying to solve this through hardware and software. And there definitely exists a strong desire among users to become musicians. But we are yet to see a platform that has figured out how to make music creation frictionless and easy!
If Podcasts = YouTube, then Clubhouse = TikTok?
As podcasts become more scripted and polished, there arises a need for unscripted, engaging, ephemeral audio content. CH powers this. While podcasts are static, Clubhouse feels interactive.
It’s like being on a large conference call with communities we aspire to be a part of. Some of the big names spotted on Clubhouse include Drake, 21 Savage, Kevin Hart, Jared Leto, MC Hammer, E40, Virgil Abloh, Meek Mill, The Game, Questlove, D-Nice and Joe Budden.
Podcasting is increasingly moving towards higher production budgets, and paywalling. Whether that be Apple’s move into paid podcasts, or Patreon’s integration with Acast. In Issue #1 we contextualised Spotify’s tests around a podcasting subscription across the Content—Community—Commerce—Distribution framework:
Spotify’s overestimation of exclusive content fails to see what drives successful paywalls in the passion economy — exclusive communities. Spotify wants to pair it’s undeniable distribution power with exclusive content. But exclusive content only works when it is attached to an exclusive community.
*Clubhouse has plans to start testing new creator monetization features through subscriptions, ticket sales, and tipping. It also announced a ‘Creator Grant Program’ to support emerging creators.
Opportunities for Established Artists
Aspiring music creators need frictionless means of creation. But what about established ones? Does CH offer a potential channel to interact with fans, build communities, or promote new releases? Currently, It's definitely not happening in a structured way. But I see potential here!
The Intimacy of Voice
There’s something about hearing someone’s voice (especially in real-time) that makes for a more meaningful connection. Taylor Swift hopping onto an exclusive Clubhouse room with her top fans seems plausible. And significantly more intimate than a static, non-interactive podcast interview.
Crowdsourced Creativity: Co-creation with Fans
I found some songwriter rooms where they were sharing their music and the other room members were commenting on it, critiquing it. Clubhouse has the mechanics to power creative communities, essentially opening up the growing movement of crowdsourced creativity. (The famous example being Mike Shinoda creating an album with his fans on Twitch). This could be a premium-tier value proposition for Patreon-led musicians like Amanda Palmer or Jacob Collier.
An issue I see currently (though I think this one will be solved as the platform evolves) is discovery. Discovery is notoriously hard on Clubhouse. While writing this piece, I tried finding music centric rooms, but I couldn’t. Not easily at least. I did stumble across some “music business hustlers” and “how I made $$$ while being an indie musician” kinda rooms, (safe to say there are many Gary Vee types in the DIY musician world) but nothing valuable, or engaging. Even though most conversations seem to be centered around the music business, there seems to be a lot of room for music itself. I did find some radio-esque 24/7 lo-fi study beats being played, but nowhere close to the quality and engagement found on other platforms.
I see search and discovery being optimized in the future as CH figures out the kinds of creator communities that are thriving on the platform. CH could fill an important void in the creator economy. It makes the distribution of audio content frictionless. The general purpose nature of the content also gives the platform wider reach than narrower audio UGC platforms like Soundcloud. Interesting space to observe!
Sony Buys AWAL and Kobalt Neighbouring Rights for $430 million
I want to deep-dive on this piece of news in a later essay but I have some initial thoughts:
The “D2A” Label Services Model is Financially Precarious:
The direct distribution and label services model sounds great on paper. But without long term ownership of IP, it’s not financially sustainable. Kobalt understood this very well, and the $430 million sale was a smart move. Sony can afford to have AWAL as a loss leader because it adds value to their business as a whole. Why?
All about funnels
If you’ve been a reader of this newsletter for a while, you know I love a good funnel (sorry). Every Major owns an “Indie” distributor now. Hands-off, direct distribution, label services companies are a great place to scout talent. It is a risk-free way to test potential signings, and allocate time and resources to talent efficiently. Basically—If you spread the A&R net wide enough, you’re bound to catch something. Sony now has the mechanism to upstream OR downstream talent across their portfolio companies as per the artist’s and their needs.
If you’re an AWAL artist blowing up on TikTok, but don’t have any accumulated long term social capital (loyal fanbase, presence on socials, brand value, etc), Sony could offer you a deal to upstream to Columbia, give you a fat advance, allocate marketing spend and potentially make you a global superstar.
If you’re an established artist signed with Sony who wants to go Indie, you could downstream to AWAL, keep hold of your IP, while still retaining the label services that you are accustomed to. It’s a win for the artist, Great PR for Sony, and everyone lives happily ever after i.e. nobody ever feels the need to pee on their Grammy.
Bytedance cut down on its 2000 strong workforce in India after the Indian government renewed its ban on Chinese apps. Its global revenue more than doubled in 2020.
What I’m Reading
iAddiction No Mercy|No Malice by Scott Galloway
Scott Galloway psychologically dissects Robinhood retail investors. Essential reading given all the crazy stuff that happened!
“Survival, propagation, and consumption should result in a next generation that’s smarter, faster, and stronger. Where things have come off the rails is a function of our innovation economy moving faster than our instincts. Historically, humans have engaged in activities that have natural stopping cues — the end of a chapter, the end credits. Platforms like Facebook, Instagram, and Netflix have systematically eradicated stopping cues. Even casinos are deliberately laid out without hard angles, so it’s all one continuous space and you keep moving through it, on to the next game.
Technological progress lapping the calibration of our instincts culminates in endless scroll. We’re unable to find the off switch. Unlike our parents and grandparents, for us dopamine release no longer depends on sacrifice, engagement, or grit, but on sitting still, as in 15, 14, 13 seconds episode 5 of Killing Eve will begin. There are more filtered photos, more porn, more equities, more margin, more dopa … more time without the nuisance of needing to engage in … life.
The most recent crack dealers are online trading platforms (OTPs). What does endless scroll look like on a trading platform?”
What I’m Listening To
Joshua Cohen has played a massive role in the legitimization of the creator economy. He is the cofounder of Tubefilter (Great source for industry insight!) and the Streamy Awards (Basically the Grammys for online video creators)
I'd love to get some feedback on your experience reading the newsletter. It'll really help me focus on what you'd like to see more of, and what would be best left out.
If You’ve Made It This Far..
You can make it all the way.
What I’m Brewing — Chikmaglur Peaberry Premium from Kumaradhara Coffee
I’ve been reading James Hoffmann’s World Atlas of Coffee—an interesting deep dive into coffee cultures around the globe. It’s helping me articulate why I like/dislike coffees from certain regions.
Until next week,