Derek Walin - Entrepreneur and Music Maven
The Business Brew is pleased to feature Derek Walin, @walin on Twitter, this week. Derek is Bill's cousin. They grew up together and Bill has known Derek since he was born. As Derek grew, Bill watched him become the consummate entrepreneur.
Derek began landing "gigs" as a magician. He would do magic for kids, elderly people, and anyone that would book him (by calling his parents). After that, Derek took a liking to DJing (before it was cool). He earned money throughout his high school years by DJing dances, birthday parties, and Bar and Bat Mitzvahs.
Despite Derek's father having a corporate background, Derek knew college wasn't for him. Instead, he wanted to attend Full Sail and pursue his dreams of chasing a career in entertainment/music. Fast forward to today and Derek and his partners manage ~11 artists. Check out https://www.supermusicgroup.com/ and check out the artists on your favorite music app!
As always, thank you for listening.
Album art photo taken by Mike Ando.
Thank you to Mathew Passy for the podcast production. You can find Mathew at @MathewPassy on Twitter or at thepodcastconsultant.com
+ Transcript
Bill: Ladies and gentlemen, welcome to The Business Brew. I'm your host Bill Brewster. I wanted to record a little bit of a pre-roll for today's show. First and foremost, the gain on my mic was a little bit too high at certain times, so there's some distortion. I assure you that it annoys me way more than it will annoy you. With that out of the way, the person featured is Derek Walin. He is my step-cousin growing up. Ever since this kid was 11 years old, all I've watched him do is make his own money and started in magic. Then he went to DJing, and he did like the high school dances, he did bar and bat mitzvahs in Boca Raton, Florida, that is a pretty booked schedule is probably the best way to say it. After that, he went to Full Sail and he's pursued a career being an entrepreneur. He manages musicians. I think that it's a really interesting lens that he brings to the discussion.
The show is called The Business Brew, because I want to highlight not just investors, but stories on business, CEOs, entrepreneurs, anyone that's worth talking to. I think that Derek is definitely that. The music discussion starts around the 38-minute mark or something like that. He really breaks down what it's like to manage artists in the industry and talks a little bit about why labels are necessary, his relationship with Spotify and Apple. I think it's an interesting conversation that a lot of people can learn something from. I thank Derek for joining me. It was nice to catch up with him, it's been a while, and I hope you all enjoy. Thank you for listening.
[Business Brew theme]
Bill: Ladies and gentlemen, welcome to The Business Brew. I'm your host, Bill Brewster. I got a super special guest, my cousin, Derek Walin, ex-DJ Derek Walin. Now manages artists in the music industry. We're going to talk a little bit about Spotify, the labels, his business, his history as an entrepreneur, I probably bring up your start as a magician, I just did. [laughs] Anyway, I don't think there's too many disclaimers that we need on this one, but as always, not financial advice and do your own due diligence. Derek, how you doing, man?
Derek: I'm good, Bill. And yeah, your audience definitely do not listen to me for financial advice at all.
[laughter]
Bill: Well, that's not really fair because ever since I've known you, you have hustled your way to making your own money. When did you start making your own money as an entrepreneur?
Derek: It's always been in some form of the entertainment business. I started doing magic shows for birthday parties and stuff when I was probably 10 or 11 years old, 50 bucks a show, 100 bucks a show, a little extra for balloon animals, stuff like that.
Bill: If I recall correctly, you abused your brother and made him your labor force without paying him. Is that accurate?
Derek: Not only my brother, but my parents as well. My brother was my early roadie at about eight years old. He would show up and I would have him lugging trunk of magic tricks. Of course, my parents were my drivers that would drive me around wherever I got booked.
Bill: Were they your booking agents or were you doing your own booking?
Derek: I think most of it was going through me, but at some point, somebody wrote an article in the Palm Beach Post or something and put our home phone number there that was like, “Call the Walins if you want to book Derek for your children's birthday party.” I'm like 10 years old, so then the phone starts ringing and it's, “Hey, I'm calling to book Derek for my birthday party?” Whoever would pick up the phone would handle the booking at the time and pass it off to me. It was pretty funny, early experience in the amateur entertainment biz.
Bill: Indeed. You were like-- how many weekends a month were you working because it seemed like you were always busy?
Derek: Yeah, I think that between the bookings, which were [sighs], it's been so long now. It was pretty frequent, maybe at least a couple a month. Then also, my mom is very involved in philanthropy. She took it upon herself to get me booked at every hospital and homeless shelter and children's facility. So, in between, all of my paid gigs, I did a lot of volunteer work as well. I was quite the workhorse at 11 years old in the field of birthday parties and corporate magic.
Bill: What was your favorite trick to do?
Derek: My favorite thing to do was, I loved up-close card magic doing card tricks.
Bill: Yeah, you were good at those.
Derek: Those were my favorite because it was like right in your face. It was hard to do a card trick on stage. I don't know how at 10 or 11 years old, I was getting into these rabbit holes, but I kind of became obsessed with these card musician-- Now, I'm saying musicians because I'm sweating-- I'm moving ahead, but magicians who were able to basically do a card trick at huge scale on stage and do a really little trick but make a big show out of it in front of a crowd. I didn't develop this trick, but I started developing my own version of a trick where basically somebody would pick a card-- I bring them up on stage, I'd have them pick a card, and I was 11 years old. I would pretend that I was messing up the trick. I didn't know, and I screwed it up, and I couldn't figure out what their card was. Then, I would throw the deck of cards against the wall or a big surface, slam it out of crazy frustration, and their card would be taped up on the wall or on the ceiling or whatever it was. Then, it evolved. Then, I would start doing stuff like having them sign the card, I would have them sign the card and rip it up. Then, I would throw it and then their card would be there. Except for the one piece that was torn out that I would then hand them and see if it matched. I would kind of expand on that. That was probably my signature trick as an 11-year-old magician.
Bill: How did you get it to stick on the wall? I was always impressed with that trick. You would do that at family gatherings. My mind was blown.
Derek: Tape, Bill, tape. [laughs]
Bill: I guess that makes sense. How do you make sure that it hits the wall the correct way? It's in the throw, right?
Derek: I had to practice the throw. Back to my brother as an assistant, sometimes it would be really effective is if I had him hiding out on the other side of a window or something. Then, I could throw the cards at the wall and then he would stick it up on the other side of the window exactly when I hit it. Then, the card went through the glass, the parents and grandparents would lose their minds. They would not understand what was going on there.
Bill: Yeah, that would be mind blowing.
Derek: Magic’s fun. There's a lot of metaphors for life and entertainment and the broader showbiz environment that I learned early doing magic and getting up in front of people and entertaining them and what's the best way to say it, not deceiving them, but deceiving them for putting on a show, putting up the facade, showing the fun side of things, giving everyone the glossy image while you keep the behind-the-scenes stuff behind the scenes. That's a lot of what we do in all aspects of showbiz, as you might imagine.
Bill: Yeah, for sure. When did you get into DJing because that was closer to high school, right?
Derek: Yeah, more middle school. I pretty much seamlessly transition from doing magic shows every weekend of maybe fourth, fifth, sixth grade, to then immediately DJing almost every weekend. From when I was 12 to when I was 18, I DJ’d to at least one or two bar mitzvahs, weddings or corporate events a weekend without fail. Again, that was early on before I could drive, my parents were my roadies again. It was a lot worse for them in the DJ world because they'd be picking me up at midnight or 2 in the morning or whatever, West Palm, Miami, but my parents were staying up all night to come pick me up from DJ gigs, but that started when I was 11 or 12. It was just a natural progression as I got deeper into music, as I knew what was going on in the world more and also was getting closer to being a teenager and magic wasn't the coolest thing.
Bill: Yeah, no, it was tough to get girls as a magician, huh?
Derek: Yeah. Honestly, though, now, people look back and say, “Oh, you're a DJ, you must have been so cool back then.” But when I was in middle school and high school, being a DJ wasn't as cool as it is now. It's like being part of the AV club. You were the guys that would set up the audio gear for the assembly and maybe you get to play a song so and then do the dance. It wasn't as exciting, but I did get ahead of the curve and I got to soak up some of the DJ coolness right or wrong at the height of DJs becoming in vogue a little bit later on in my career.
Bill: You did school dances, like you said, though. You did some pretty big high school dances, didn't you?
Derek: Oh, yeah. I mean, when I was in middle school, I was DJing the proms for the local public and private high schools in town, and even DJing when the-- not really any local nightclubs, but when a nightclub in West Palm on Clematis Street or somewhere in South Beach had, a teen night and they were trying to get kids from Boca, Palm Beach area, and they were trying to get the high school kids, I would DJ, but I was like 15. Yeah, definitely the bread and butter at the time was school dances early on, but then heavy with the bar mitzvahs and weddings in South Florida through all of middle school and high school, definitely.
Bill: Bar mitzvah season is the best season.
Derek: You know what? In Boca Raton, Florida-
Bill: It never stops.
Derek: -It's evergreen. Yeah.
[laughter]
Bill: It's a good gig. It's a good gig, for sure. I used to love bar mitzvahs. Manischewitz was my go-to at the time.
Derek: I do miss DJing all those private events because compared to clubs where you're like, they're till 4:00 in the morning, you have your general manager screaming at you, like the athletes want rap, the euros want dance, the ladies want Rihanna. There are spenders and there's customers and there's action. It's like when you do a wedding or a bar mitzvah, you're down 11 they feed you, they tip you, you're giving them the best day of their life. It's great.
Bill: Yeah, everybody's happy with you.
Derek: Yeah, it's a lot of fun.
Bill: You went to Full Sail, right?
Derek: Yes, I went to Full Sail in Winter Park, Florida.
Bill: What was that conversation with your parents?
Derek: I feel you might have some inside information on this, Bill.
Bill: Well, I like to let everybody know. I don't actually know the backstory of all this.
Derek: There's nothing major, but my dad is definitely a corporate guy. He worked for GE, sold the company to Siemens, he thought I was going to go on a corporate business track, and definitely would have preferred if I went to a traditional four-year university, but from a very early age, that place Full Sale, there's a lot to say about it, but one is that it is a marketing machine. From a very early age, I was very aware that there was a really cool school that was like Disneyland for audio equipment, video game design, film, and it was crazy. I was very aware of that from a very young age. Probably by mid-high school, I was telling my parents, “This is the school I'm going to go to. If I'm going to go to college, I want to go to the place with the studios and the sound stages and all that stuff.” There's pretty much no convincing me otherwise. Hats off to the Full Sail marketing team.
Bill: Did you feel your experience there matched up with their marketing materials?
Derek: In terms of the facilities? Absolutely. They advertise to people who want to be in the entertainment industry. There is an admissions process, but it's not that rigorous. I would say that it was a great experience. In terms of the motivation level of the other students, there was a few students who you knew instantly are going to go on to actually be in this business. Then there were some others that it was just like they're here because they didn't want to go to a real university, and it seems cool. That being said, I do keep in touch with and kind of follow-through social media, some of my former classmates that have gone on to do some great things in the music business. One's a well-known hip-hop producer, one owns a record store in Detroit, everyone's went on to do some cool things. Yeah, it's a cool community of people that all took their own different paths in the biz.
Bill: A guy I know that worked at Disney animation was at Full Sail for a little while.
Derek: The thing is, I was in the audio engineering program, which was learning about recording studios and software. That was amazing. Then I was in the music business program, which was okay, but what I think where Full Sales amazing is in the computer animation and video game design. That stuff, I would walk by some of those labs and see those guys. It looked like a stereotypical movie, it looked like they were shooting a movie, and it was all fake. There were guys in clusters typing on black screens with white lettering, and then above them would be rendering monitors of crazy dragon video games. I was like, “They really do it like this? This is crazy.” It's a cool place, definitely.
Bill: It's a cool thing to check out, do you have Disney Plus?
Derek: I do, yes.
Bill: The Making of Frozen 2 is a very cool documentary.
Derek: Oh, cool. I would like to see that. I actually have only watched on Disney Plus two programs, the Taylor Swift’s concert film, I guess you would call it.
Bill: This you shouldn't admit to.
Derek: It’s research, I'm in the biz.
Bill: [laughs] She's actually quite good.
Derek: Yeah, she's a great songwriter. Her most recent Quarantine. Two albums, are pretty cool stuff, I have to say.
Bill: What happened with the second one? The second one feels like B-roll.
Derek: I think what really happened is that first album Folklore, she was collaborating with Aaron Dessner from The National and Jack Antonoff. They did this album, and it was a departure from what she normally was making. It was very well received. Yeah, I thought it was excellent. I've never honestly listened to a Taylor Swift album front to back before and I thought it was excellent. Then the next album Evermore, I listen to a lot of music criticism podcasts and read a lot of music critics. The general consensus was that it was the leftovers, but really, when you dig into it a little more if you start being a nerd and reading the liner notes, like I do, you know that Folklore was really made remotely. Taylor was at home, Aaron was at his studio in New York, maybe they got together a few times, but there were a bunch of different recording locations. But then, Evermore was all recorded at Aaron Dessner’s home at Long Pond Studios where they filmed that Disney concert film, so it seemed like what happened is they all got together to film the Folklore movie for Disney Plus, where they got into the studio and basically performed the songs from the album. Then, it seemed they stayed a little longer, and we're having fun and said, “Hey, let's stay in this groove and keep making music,” and kept making more songs in that vein altogether. It was a continuation of that. It's like the Folklore Evermore era, like the Folkmore era, I think is like what a lot of the Taylor fans are calling it.
Bill: That's interesting. They just kept vibing.
Derek: Yeah, exactly. If you believe the TikTok conspiracy theories, there is a third album coming from the series, but I don't know. That's what the Taylor stans, as they, say are saying.
Bill: I can't see how that would possibly be wrong. If it's on TikTok and the internet, it has to be correct. The people that are doing that kind of research probably are nerding out, big time. They may be right.
Derek: Absolutely. I think that's part of Taylor Swift's brand if you looked at her as a case study at some of the things that she continues to do to engage her fans, like easter eggs and fun puzzles. putting everything together is a huge kind of part of her shtick. It would make a lot of sense that she was dropping some clues for the hardcore fans that would then lead them to discover the next album title, or whatever it may be.
Bill: I thought she did a 60-minute interview, and somebody said to her that-- she was talking about having a conversation, she said somebody said that I can do anything because I'm Taylor Swift. My answer to them was, I can't do anything because I'm Taylor Swift. Everything I do is about this brand. She was young when she had that interview, that girl's a machine.
Derek: It's insightful that she realized that at a young age. A lot of people, whether it's in music or in the public eye, it's like everything becomes public facing and about the brand. Even working with an up-and-coming artists, I worked with a lot of young artists like 21-year-old songwriters, 21-year-old musicians, and they've grown up on Instagram and social media, and Snapchat as their way of expressing themselves. To me, Instagram is a marketing tool. It's interesting even that trying to break down that wall where they're like, “No, this is my way of personally expressing myself. This is where I put up funny pictures,” or whatever, this is now your billboard for the world, this is how we need to express your brand and express to you as an artist. Maybe you should have a Finstagram, as they call it, a separate Instagram for your friends.
Bill: I go through that a little bit with Twitter, it's quite a bit different, but that's how I do basically my personal marketing, for lack of a better term. I think that since this podcast dropped, I have backed off. It used to be a lot of just straight stock stuff. It's gotten a lot more personal and thanking people for listening to the podcast, but I care more about this thing than I do about anything else right now. That's what it's going to pivot to. It is really interesting how the reach of these platforms and the connection that you get to people, I would have laughed in the past if you told me that I made friends and relationships off of the internet and Twitter, but it's happened, if that makes me a nerd, that's what I am.
Derek: It's really incredible. I don't think it makes you a nerd. I think it makes you savvy. You're a creator right now. anything that's of value that comes from a creator or something, that comes from a creative outlet, it's on an island. There has to be some kind of community aspect to it. Your podcast wouldn't work if you weren't part of a broader community or ecosystem that it fit into. That's what we try to achieve with our music clients is especially if they're developing or new, it's like, where do they fit? In? What community what scene? Are you a part of that's going to support you, and interact with you and collaborate with you? That's why your podcast seems to be working well and picking up a following. It's not because you just started it on your first day on Twitter, but you waited until you were part of a community. Maybe you weren't looking for it, it just happened. Then it was just a natural progression to have this extension of your footer content via audio.
Bill: No, that's right. I do another podcast, and that sort of introduced me to the medium. There were just some things that I felt were lacking in other things. I said, “All right. Well, let's get on here and see if I can do something that people like,” and they seem to like it, I like doing it, so it continues. Taking a step back, before you started or was it concurrently, your management company, you were DJing in Miami, right?
Derek: Yes. The trajectory was I had been doing the private event stuff as DJ in high school. By the time I was probably a senior in high school, I started getting a little interested in the club world and wasn't old enough to go as a patron.
Bill: I'm sure that kept you out.
Derek: Yeah, but I was able to do my research in other ways, and managed to get in even some gigs. They wouldn't ask you how old you are if you were the DJ there. I would start working my way into a few clubs in South Florida or bars. When I went to college, again, about community and having an ecosystem, even though I went to school in Winter Park, Florida, which is right outside of Orlando at Full Sail, a lot of kids that I knew from growing up in South Florida were attending UCF, University of Central Florida in East Orlando. I think it might be one of the biggest schools in the country by attendance.
Bill: Yeah, that school’s massive.
Derek: Their football program was starting, and it was starting to become “real school” and not a commuter school like some of the other Florida schools.
Bill: I was wondering when that started. That started when you were in college, roughly?
Derek: Yeah, they were just getting college. I don’t know nothing about sports, but their football team went into the semi-legit division or conference, and things were starting to pick up. They just built some new arenas and stadiums, and there was a big influx. It was around 2007-2008. I was kind of adjacent to the whole UCF community and I actually made a conscious choice to not live with all the other Full Sail nerds in Winter Park, like me, and live with a bunch of social, fun, kids, guys that I knew from growing up in South Florida. I was living in a house with all UCF kids that were in frats that were going to parties, etc. Even though I was driving to Winter Park, going the studio all night, I still had this whole crew to come back to that we're going out every night, that were going to fraternity and sorority parties. They started saying, “Hey, you should DJ at these UCF bars. You DJ’d in South Beach, you DJ’d in Miami, you should do it where we go out.” Then, started DJing at all the local UCF bars and then that led to DJing at clubs in Downtown Orlando.
Then, by the end of my college experience, I was driving down to Miami every weekend to DJ in South Beach, because by that time, all of our friends were of age and the bottle service in South Beach was at a huge high and open format DJing and bottle service was everywhere. They wanted to have an opening DJ who would bring out some young 22- to 25-year-olds that would round out the crowd from all of the 40 to 50-year-old bottle spenders that were there. That was my way of getting to start DJing at a lot of clubs in Miami and they would book me as the opener, sometimes opener and closer where you would go on.
Bill: Ah, dude, that's a brutal night. Then you got to go away till 2 and then you come back on from 2 to 4 or something?
Derek: Exactly. When I was in college, I started driving down to do that on the weekends. But the second I graduated, I moved to Miami full time. When I first got to Miami, if that was my life, it would be like the Tuesday night shift, I would DJ at this club called Louie which was at the lobby of the Gansevoort in South Beach, which is now the Gansevoort, that property’s now the 1 Hotel, actually, if anyone's familiar with South Beach, but back then it was a really cool club. In Miami, people party for 5 AM on a Tuesday, it's crazy. It would blow your mind, but I would DJ from 11 till 4. I would DJ straight through because I was the resident DJ and it was Tuesday. Then on Saturday, I would DJ at the same club, and they would have an advertised DJ from Vegas or somebody else who's on kind of the national scene. I would DJ from 10 or 11 until 1 or 1:30. They’d play from about 1:30 to 3:30. Then, I would get back on from 3:30 to 5.
Bill: What time are you going to bed when this goes on? You're not going to sleep till like 8 AM, right?
Derek: Oh, 100%. After you've been DJing for a crowd for so long, you need to unwind. If you're going to record this podcast at 10 PM for two hours and then got off, you would probably go watch some TV, hang out.
Bill: Dude, when I worked at Jake's Dilemma up and on the West Side, we'd get off at 4, and then we'd do all this stuff where we're counting the cash and cleaning the bar. 5:30, we'd probably go get the after-work meal. There were times that I'd be coming in and my roommate would be going to work and I'd be going to bed. It was bizarre for a little while. I didn't see the sun for a week at one point. That's maybe a bit of an exaggeration, but not really.
Derek: It's funny because in New York, the bartenders after work at 4 AM or 5 AM, or going to the diner but in Miami, after work, everyone in the service industry is going to Space, which is like an Ibiza style club that's open all night and look for after-hours. Well, back then Space was open more, now they're only on the weekends. Now, for example, guaranteed pretty much any night of the week, the whole service industry crowd when they get off of work, they'll go to 11, which is well known. It's like a 24-hour nightclub, strip club restaurant, a huge Vegas-style monstrosity in downtown Miami, actually across the street from my office, I look at it out my window-
Bill: [laughs]
Derek: -sometimes Monday mornings, it's like 9 AM, I went to sleep early the night before. I pull onto 11th Street in Downtown Miami and Space, which is the club I mentioned before there's a line of ravers outside still waiting to get in, and then at 11, the strip club across the street people rolling out and their suits and stuff. Miami's a trip, man. It's pretty crazy. The hours were crazy. I was DJing all night. To get back to your question, right around the time I moved to Miami after college, I was 21-22, it was 2009-2010, I was a college kid who all I cared about was DJing, so that was the height of my “DJ career.” Because back to the whole community thing, in college what would happen is I would make mixtapes, they would go on Soundcloud or just sharing mp3s via file-sharing networks and I would make a mixtape and then my friends would send it out to friends. Then, kids at Indiana and Bloomington would be partying to my mixtapes. Then kids in wherever in Syracuse would be listening to my mixtapes and just through that natural college kids’ circuit. I ended up having fans from all these-- Well, not, I mean “fans.”
Bill: You did have fans. How'd you get flown out, what was it, Dubai, was that in college?
Derek: That was during college. I built a name for myself and I was able to travel around and the big weekends, like Little Five was a big weekend in Bloomington, and in University of Indiana, I would go and DJ their party at Little Five. At the time, there was a promoter who was about my age, and he got all the DJs that were kind of my peers. Me, Jesse Marco from New York, some other guys and would send us to play for all the kids that were abroad, in Rome, in Florence, in Barcelona, because they're American kids that went to school at University of Miami, or Syracuse, or Indiana or UCF, that would do a semester abroad. I went to Europe and I DJ’d for all American kids that were going to school in Rome for the semester or in Barcelona. That was a lot of fun. Again, I would see hotel room, club, plane, then I ended up getting a club gig in Dubai, basically off the strength of having a little name for myself in the United States on the college and club circuit. Then yeah, I just use that to get myself in the door and a lot of clubs in Miami, became the resident DJ in a lot of places. At the same time, I had discovered Amtrac, my first client who still a client to this day, 10 years later, that was kind of the start of everything.
Bill: Would you guys DJ together?
Derek: Yeah, it's funny. He is totally from the electronic world. He plays-- for lack of a better term, if you want to go see his DJ set, it would be underground house music.
Bill: Yeah. It's pretty like chillwave type. It's cool.
Derek: Yeah, like chill, dance stuff. He’s just putting out an album that was much more like indie rock and everything. He would go DJ, you'd go see him in Ibiza and it's a bunch of people on the dance floor having a great time. He's does a lot of DJ sets in New York, San Francisco, free COVID, obviously. Back then, I was a lot more focused on myself as a DJ, and I would DJ for him. His first show ever at Webster Hall in New York City when we first signed him, I was the opening DJ for that. It was just I DJ’d, and then he performed. These days, I would never try to DJ with one of my clients. [laughs] It's actually making--
Bill: [laughs] It was a different time. It was a scrappy startup, right?
Derek: Yeah. It's actually making my skin crawl thinking about that I would put myself on the bill with one of my own clients. It was just a different time. We were just hustling and doing our thing. At the time, nobody knew who he was, but all of our friends and our whole network and everyone who we could get to show up to the show knew who I was. We were working with what we got.
Bill: How do you know to sign him? How did that go down? You saw him do a couple sets and you were just like, “I like this guy?”
Derek: Well, actually, I'd never seen him DJ, I'd only heard his production, his music that he made. What basically happened is, it was at the very end of college, I had already been driving down to Miami every weekend. I went to school for audio engineering, my original path is I really wanted-- I love the studio. I love the gear. I thought I was going to be an audio engineer, which is basically someone who mixes records.
Bill: What does that mean in super noob terms? What is someone that mixes a record? What are they actually doing?
Derek: It's really important. Some artists mix their own music, some producers mix, but there's mixers who will get huge money or even a royalty on a record because they're so good at mixing. At a very basic level, if you imagine a recording studio in your head, and you picture that big board that you see with all the buttons and all the faders, each one of those vertical setups with a fader and a bunch of knobs, it's all repeated, it's the same thing over and over. It's just a bunch of inputs. If you think about it, if I'm a rock band, and I go in and record, I might have 20 inputs into that board, while I'm recording. I might have eight drum microphones, then a drum machine, then I plug in my guitar, then I record my vocals, then I do another vocal tape, then I record my own backup vocals. Then you have all these elements that are back in the day recorded to tape, now recorded into your computer. Then, the mixer is literally the person who sits there and plays with the knobs and faders or plays with the computer and finds that perfect sound, and make sure it's all balanced together, and make sure the drums are balanced, that the vocal sits at the perfect place. It's not just mixing but it's a lot of processing. Everyone has their stack of either outboard gear or in the box, in the computer gear that they use, and it's compressors, limiters, equalizers, gates, all types of audio gear that you would use to make every single sound sound perfect on its own and then to all match together.
Bill: You're the coordinator of all the sound, huh?
Derek: Exactly. Then there's another person who masters it. Basically, what you would do is on an individual song level, you mix the song and you bring all the instruments together. Then, you might have a full album of songs. They're already mixed and they sound good, but then the mastering engineer, they basically do something similar to what the mixing engineer does, but they only do it with the main mix, with the left and the right, so the mixer will take 100 tracks and either on the board in real life or in the computer, mix them all together, and you get a stereo left and right, that's what you're going to listen to in your headphones. Then, the mastering engineer will take that stereo left and right track, then will do additional processing to make it sound broadcast or radio ready. Maybe they have a whole album and to make everything sound sonically unified, they'll maybe do the same audio processing in a very light and nuanced way across the entire album, and that's the mastering process to kind of make it all sound sonically cohesive.
Bill: When you're talking to Amtrac-- Well, you did have the skills, was your pitch to him, “Come join me and I'll make sure that all that stuff is taken care of,” or, “We'll do your promotion.” How's your career veer into management?
Derek: Okay, so yes. Basically, I love mixing in the studio. I love the gear. I love recording.
Bill: Dude, I'm just thinking real quick, when you got to sit in Dr. Dre’s chair, that must have been sick for you.
Derek: I told you that story?
Bill: Yeah.
Derek: Yeah, that's pretty cool, right?
Bill: Yeah, that's insane. Given what you to do and to be in that chair, that'd be nuts.
Derek: I do have to give a disclaimer, that wasn't because of any special accolade or because I was deserving of it. What actually happened is, I had a client who was being wooed by Interscope Records, and they have Dr. Dre’s studio, they have a full compound, and they're like, “This is Dr. Dre studio that we build for him. Do you guys want to sit in the chair behind the board?” Hey, that really worked.
Bill: [chuckles] By the way, you can have anything that you want that we have.
Derek: Yeah, we ate that up, for like, you don't need to give in advance. Can we just meet Dr. Dre? That would be cool.”
Bill: Wasn't that about Amtrac?
Derek: No, that was about another client at the time. The way I veered into management is, while I was in audio engineering school, I was talking to my teachers, I was learning about the engineering world. I really quickly learned that it was going to be a long, grueling process to be where I want it to be. A lot of it was kind of about waiting to get lucky. You could say a lot of things in the music business, about waiting to get lucky. But as a manager, I can be proactive, I can pick up the phone. If I think one of my clients has a song that belongs in Starbucks, I could find Howard Schultz’s email and hit him up and say, “I want you to listen to the song.” I didn't do that, but a friend of mine did, and it worked.
Bill: You're talking about on the Starbucks CD that they used to sell or are you talking about playing in Starbucks corporate?
Derek: No, I'm just thinking about that because actually, I was catching up a few days ago with someone who worked in the agency world who's now a manager, and he was telling me a story-- We were catching up, it's been like 10 years.
Bill: I'm just curious how that happened.
Derek: No, he was telling me a story, I just loved it so much, because I was like I should be doing this kind of stuff. He was managing a band, they were signed to Republic, which is part of Universal Music Group. They're plugging along, they had a single that was doing pretty well, and people kept saying to him, like, “Yo, this song sounds like it should be played in Starbucks.” This is at the time Starbucks was doing Hear Music, they were heavy on the music in store doing CDs.
Bill: Yeah, they used to like that introducing people to music. Spotify killed that for them. Hmm.
Derek: For sure. Yeah. Well, nobody wants to go buy a CD with their coffee anymore. [laughs] Everyone was saying the song belongs in Starbucks. He was like, “You know what? Screw it.” He found Howard Schultz’s email, or figured it out. He said, “You know what, people are probably hitting up the music people all the time, but nobody's sending the CEO a song.” He basically sent like a real brief email. “Hey, Howard, I'm a fan of the brand. I'm a fan of yours, I think you would be a fan of this song. I think it would be great. It would fit Starbucks, let me know what you think.” He said within 30 seconds, he had a reply from Howard Schultz, “Love the song,” and CC’d whoever, from marketing, music, whatever. Instantly, the song was being played in Starbucks. He was just telling you that, and that was just a little smart hack. Instead of hitting up the music, people that are in pitch, no one's hitting up Howard Schultz with a song, but if you see an interview with that guy, he probably appreciates a good rock song every now and then. I was just thinking about that. As a manager, you can do stuff like that, as an audio engineer and a mixer, you're at the mercy of-- first, you're like an intern at the studio. First, you start sweeping the studio, then you have to wait until the assistant engineer calls out sick, and then you could be the assistant engineer. Then you're the assistant engineer for 10 years. Then you might get a chance to mix a record.
The only way to really get somewhere quickly as a mixer is if you're like making the opportunities happening yourself and really doing stuff on the business side to then get those opportunities. As I just learned about, I was like, “You know what? I don't want to wait forever to be working with great musicians. I don't want to be sitting around in the studio.” That's what I've been doing is waiting for an opportunity. I feel like that's what I've been doing in school. I'm good at getting my name out there, marketing and talking to people, and putting a team together. As I was learning about the music business, I felt like, I really want to discover artists. I want to be an A&R guy and work at a label.
An A&R guy is the person at the label who signs the acts and then they help them make the record. If I'm Justin Bieber's A&R guy, then I might have not been the person that signed him, but I'm the person at the label who is not really the project manager, that's separate, like the creative project manager. You're going to get in the studio with this producer, I'm going to give you songs from the songwriter you're going to try recording this. I really wanted to be an A&R guy. I got an internship while I was still in school at Atlantic Records, I was the assistant to the Senior Director of A&R for summer in New York City. It was a great experience. I got plucked out the intern pen and got made an assistant to the Senior Director of A&R, and I got to sit in his tiny office and listen to all his phone calls and observe how he talked to artists.
Bill: What's that guy's job like? Is he just getting pitched all day long?
Derek: Yes. Now, he actually doesn't work at Atlantic anymore. Now he's a manager and manages one of the most successful pop producers that's out there. He's doing great. But yeah, an A&R guy, he would get calls all day from lawyers, managers, whoever trying to pitch him acts, and then also from managers of songwriters and producers would either come into the office or on the phone and try to pitch him songs and say, “Who you looking for songs for?” I don't remember who was on the roster at the time, but you need songs for Alicia Keys? Check out this one from this writer I manage or this writer I manage, trying to pitch songs.
Bill: That makes sense. He's brokering the songwriter and the artist.
Derek: Yeah. He's representing the artists on the label’s behalf on the creative side. He's facilitating creative music making with songwriters and producers for the artists on his roster. I sat there, and that was a huge education. I learned how he spoke to artists, his demeanor with artists when artists were playing the music, how to talk to executives, how to talk to just all the different stakeholders, and that was huge for me, and I came back and I was like, “All right, I'm going to be something like that.” He said, “Come back here. Once you're done with school, you can come start entry levels and assistant in the A&R department, and you're good. I got you. No problem.” Between the time that I had that internship and I finished school, I had spoken to a few other people in the music business, and really was digging in to imagining my career and an early mentor, who was my business partner, Brandon, who I started managing Amtrac with in college early, his father's old friend was an old school music business head and had worked for Arista in the 80s, with Whitney Houston and had worked at MTV, and had been through the whole system.
When we were in LA, met with him, and he basically told Brandon and I, “Listen, if you find a life-changing artist, and you're an A&R guy at a label, you're going to take your 30 or 40 grand a year, you're going to give the label this life-changing artist. They are going to make potentially millions of dollars off this life-changing artist, and you're going to be on your salary. Maybe you get a point, an A&R point they call, and you're incentivized, and you get a piece, but not until you're like a senior director, like a vice president. An entry-level A&R, you got to prove yourself before you start getting.” He basically said, “When you find the artists that you think you would sign to a big label like that, that would be good enough, you should just be the manager. The manager gets to commission the gross, he gets to be involved in every part of the business. Everything. The shows, the publishing, the recorded music, the endorsements, all the fun stuff. You can start making money instantly, and you're totally in the driver's seat.” Then, once you do that, you can do anything. Once you're established as a manager, you could always go work for a label.
Bill: Yeah, go find somebody.
Derek: Go find someone and do it yourself. If you just get a job, you're going to find someone and sign them to someone else. Basically, what's the fun or where's the profit in that?
Bill: You would say to somebody like Amtrac is, “Look, you do the music side of this, you do what you like to do, and we're going to manage your career.”
Derek: That's exactly it. You are amazing at making music and you're an amazing artist, you worry about making your art, you worry about making music. We will worry about you having a sustainable career making money, and connecting with fans and all the business affairs, and it's like you do the art, we do the commerce, and it works together. That's how the manager artists relationship works at its best. We have some artists that are super involved in their career and will need everything to be approved by them. There's not a social media post or a tweet or a gig that gets booked without them being intimately involved in the details. Then, I have some artists who are like, “Look, dude, tell me when to start, and I'm there. Put the check in my account, all good.” They just want the management to deal with everything. “Let me know if there's a social media post I should see,” something like that.
Bill: Yeah. Are you running their social media presence, for lack of a better term?
Derek: Here's the thing, as a manager, you're the wheel. If you're thinking about like a wheel and spokes, you're in the middle as the hub and then you're the coordinator. As a good manager, it's your job to-- you're in the middle with the artists and then you hire the publicist, you hire the agents and the different agencies. In a perfect world at a high level, I would be overseeing a social media company or a service or some type of contractor that was handling that for us. But in a lot of cases, especially with developing artists, there's not the budget to support that or there's other priorities. It's like, “Look, we don't want to spend our money on that.” Sometimes we have somebody in our office, an intern or an assistant or even me, I'll do Instagram posts for some of my clients sometimes. Yeah, we'll take that into our purview. At least what we do as managers, because we do like to identify things early and work on things from a very early stage. Sometimes, as the manager, we do everything until there's other team members. If we sign a band and they don't have a booking agent, the bookings go through us. If we sign a new singer, and we're doing a campaign for them, and they don't have a publicist yet, we're basically acting as their pseudo-publicist. As the manager, you're the catch-all for everything. Even if they don't have a business manager who does their invoicing and bookkeeping and stuff, we don't like to, but we do a little bit of that for them.
Bill: Yeah, you got to do what you got to do. If you have an emerging artist, what's your strategy? It's hard to ask for just a blanket playbook. Let's just say that you're excited about somebody. Are you trying to get them noticed on Instagram? Are you trying to get them up on the Spotify playlist? How do you go through trying to figure out-- what's sort of the first channel? Or, is it omni-channel and just like a blitzkrieg-type thing?
Derek: It's different for every type of artist and it really depends. If you are trying to break and artists that are really high level, something that's in the pop world, I would definitely say that it's omni-channel. You want to go and try to get them a big label partner who's going to be able to market it, and push it to Spotify and get that playlist thing, which is huge editorial love from Spotify or Apple Music.
Bill: Can you just explain why do you need the label now just because of their scale basically? They have the connections, and they can get the artist out?
Derek: Well, it really depends. I have a lot of artists that I work with that we don't work with labels, and they just self-release or we start their own label for them. But the reality is, if you want to be a global superstar, you typically need a major record label that has a global scale. It happens without them, but it's rare. We work with a lot of more niche acts that for us, it's like we start with the client and our first priority is trying to build the world around them. That's the first thing. It's like, what is their aesthetic? What are their fans called? I mean, not all artists have a name for their fans, but it's like, what does their merch look like? What is their tour going to look like once they start doing shows? What are their artists are they going to collaborate with? You're building in their brand and figuring out who they are as an artist. Then, in terms of rolling it out, it's all different. Sometimes you want to go top level and just go straight to promoting it on the radio.
Bill: How do you promote it on the radio? Do you'd call up a studio or a radio station? You say, “I got this thing that I want to--?” I know this is like old school and basic, but I don't even understand how to start to get the artists’ promotion out. To someone like me, it seems like, “Oh, you got to get them on a Spotify playlist or something like that. I know it's not that easy. I'm just trying to figure out how do you start to get the momentum going?
Derek: I think you're spot-on on that instinct with a Spotify playlist because the name of the game, while we're talking about a lot of the time is editorial support from the service providers from Spotify and Apple Music. That means that if you are the flagship playlist on Spotify every week is New Music Friday. I'm not sure probably is a few million followers that have that stuck on their Spotify app, so it appears, but then millions more will reference it and search it every week. That's the definitive list of all the biggest music that came out that week, according to the Spotify editors. If you have your song that shows up in New Music Friday, depending on how high up in the playlist, that could be good for millions of streams instantly, which equals revenue. More importantly, it's eyeballs from fans, the industry, and the broader music community.
There's the aspect of the editorial new music stuff where it's like you have something, you want to pitch those Spotify editors and say, this is going to be the biggest thing, like the day the song comes out, you want this to be in your editorial playlist and you want to start supporting this from the beginning because this is going to be everywhere, or on a smaller scale or a more nuanced scale, there's for Amtrac, for instance. He has a lot of instrumental house music. The seven minutes long house jams that are electronic dance music, but they're great for studying or hanging out or just background music and so his music is frequently in all of these playlists that are-- one of them is called Deep House Relax or there's Concentration. These are playlists that are made by Spotify that are genre-specific, but some of them are just mood-specific. They don't update those as frequently.
Bill: Yeah, like Peaceful Piano is almost never updated.
Derek: Exactly. There's Amtrac songs that he controls the rights to, that came out on his own label that have been sitting in some of those Deep House Relax playlists for, it could be months or year, and people are listening to that when they're studying in the car, and if unlike when you bought a CD, and it's front-heavy, and you might have got that 10 bucks upfront, when you're streaming, you get a few pieces of a penny every time, but it's forever. For us, back to your question, with a lot of artists, the way at least we look at it is, look, some things are slow burn, and that will get discovered years later, or months later. In most cases, you have a finite window of the release of a song, which is the single cycle or the album cycle. If you think about old school, like the general promotion cycle of when you have new music out, you have that limited window to thrust the song or blast off the song into the ecosystem and the cultural consciousness and make that song something and make people aware of that song and make people connect with that song and hear it. If you can get enough awareness in that first window when it comes out, chances are that song will then always generate revenue. Depending on how big you can get it when it comes out. If you have a big hit song, if you have the biggest hit of this week, or of this year, better yet, chances are that song will continue to live on.
If I'm a 16-year-old right now, I love Taylor Swift. I had my first crush to August by Taylor Swift, then I'm thinking about that when I'm thinking about this girl that I have a crush on. When I'm 26, and I hear that song, I'm going to be thinking about it. When I'm 36, when I'm 40-- you grow up, you keep the music that you grew up with.
Bill: Do you think that tail is long anymore? I think there's so much music coming out and so much content, generally speaking, that maybe the tail would be slightly shorter.
Derek: I agree. There's so much competition now. There's just so much saturation of music. It's interesting-- I don't know the actual numbers off the top of my head, but I'm pretty sure that about 80% or 70% of the music that's consumed is catalogue, an older music. Then about 30% of it is newer music. Out of that catalogue stuff, it's so spread out. It's vast and wide. There's so much different stuff that people connect with in terms of older music or music that's already come out. In terms of contemporary music and the stuff with the kids are streaming, it's so concentrated. There's 600 songs that are getting streamed over and over and over again. That's why it's kind of counterintuitive. If you're looking at the number of plays on Spotify, or a song like Blowin' In The Wind by Bob Dylan, which has been on Spotify since the platform came out and is one of the Greatest Songs of All Time, and you would think people are listening to it over and over again. It has maybe 100 million plays or something or 50 million plays in the lifetime of existing on Spotify.
Bill: Yeah, but like Lil Uzi Vert will have 30 million in a week or whatever, something crazy.
Derek: Exactly. Ransom by Lil Tecca, who's 19 or 21, and his song came out last year, he has a billion streams on Ransom by Lil Tecca. It's like Lil Tecca has a billion streams and Bob Dylan has 50 million.
Bill: [laughs] How does that happen? Is a label talking to Spotify’s editorial team and saying we got to get this guy going or does that happen virally? Or, is it a combination, I mean, like everything in life, it's probably in the gray area?
Derek: It is a combination, but it's very similar to-- Back in the day, when the labels wanted to get their song on the radio and get it played, you would have the promotions department hitting up the program directors saying, “This Lil Tecca song is going to be the biggest thing. You need to add it, you need to play it on your stations. This is going to be huge.” Then you're selling it. You're like, “He's going to be on MTV. He's going to be on tour, he's got an interview with Katie Couric. Then now we're doing that with editorial playlisting and with playlist. The label or we just signed a distribution deal for our in-house label. That's the main thing, we're going to be hitting up our distributor, when we have a release saying, if it's a rock release, we want you to talk to the rock editor at Spotify and at Apple Music, or if it's a hip-hop release, we want you to target this person. They're doing the same thing. They're reaching out to these editorial playlisters and music editors and saying, “Look, we have a new project, it's going to be huge. We've already got this, this and this lined up, and you guys should support it. You guys should be a part of blowing this up.” Sometimes there's a little rivalry between Apple and Spotify, too.
Sometimes if one of them is starting to support an artist early, then another one will say, “If we like it more, we want to give even more support.” Apple will say, “Oh, they're getting a lot of love on Spotify, we're going to ignore them a little bit.” It's the typical politics in any business, and with vying for limited amount of spots and viability. To their credit, the streaming services, I would say do their best to try to-- I don't know how exactly they get, but they do try to be fair. There are plenty of music industry blogs that will do an analysis of music of New Music Friday and say, “There's three songs from Warner. There's three songs from Sony. There's three songs from Universal. There's three songs from this indie.” You could tell that they're trying to spread out the love amongst all of their partners. Yeah, I mean, I would not want to be one of the editors at Spotify getting bombarded on all sides.
Bill: Well, you might get a lot of dinners.
Derek: That's true. I had a teacher at Full Sail, who was telling us about all the crazy things they were trying to do to get radio programmers’ attention back in the day. I mean, I'm sure some of the same stuff goes on now.
Bill: What's the difference between a distributor and a label?
Derek: A lot of it is very murky in terms of, like the customer-facing side of it, a lot of it's just behind the scenes. Basically, there's two copyrights in any music, and that all of the revenue pretty much in terms of the IP flow, based on one of these two copyrights. There's the sound recording or the master recording, and then there's the publishing or the composition, let's start with the composition of the publishing. That's the sheet music. That's the words and music on paper. The original publishing companies were literally like companies that printed sheet music book, that's the publishing. Then the sound recording is the recording of that composition, on tape, or digitally. The label is traditionally the owner of the master recording. I'm a singer or band, and I go to a label, and they say, “I like what you do, I'm going to give you an advance, and you're going to give me the copyrights to your album, or you're going to record five albums from me, and we're going to own the copyright. If you have a lot of leverage, if you're a superstar, maybe you can own the copyright, we'll license it from you for a set amount of time.”
Generally, the label owns the master recording. Then, the publisher will partner, most artists will, if they're a writer, too, they can get a publishing deal and have the publisher basically co-own or own their publishing copyrights or they can control themselves. The distributor is who the label uses to basically distribute the music to the streaming services in the store. Really, it is just an old model, because it's from back in the day of physical products, so you might say, “Why do we need a distributor?”
Bill: Yeah, it's like office space. “What would you say you do here?”
Derek: Yeah, exactly.
Bill: “I'm a distributor.” “You take the physical product?” “No, not the physical product. I'm a people person.”
Derek: Exactly. that's really what it is. The distributors are really more of like a relationship middleman. We have a label in-house at our company, we just signed a distribution deal with The Orchard which is a wholly owned subsidiary of Sony. It's part of Sony Music. If you have an independent label that Sony Music distributes, your distributor is The Orchard. Basically, what that means is I can go out, and I can sign music, I can sign artists to our label. Then The Orchard is the distributor, so they then take a distribution fee, a small fee, we create the music, we own the music, then we send it to them. They make sure it gets on Spotify, Apple, all those places.
There's a lot of DIY distributors, like DistroKid, which is actually owned by Spotify, there's Tunecore, CDBaby, UnitedMasters, which is owned by Steve Stoute, who's a former manager and CEO Translation ad agency. There's a lot of places where you can just upload your music if you're just an independent artist or label and you don't need to have a distribution deal or deal with a distributor. The distributor gives services if they're a good distributor. For us, in our case, we want to do a distribution deal with Sony, and the reason why we did it is if we have bubbling artists, they pretty much do the same thing than anyone else does at first is make sure the music goes on Spotify, tries to make sure we get some good looks from Spotify and Apple Music and get it out there. Then, if it starts to really blow up, we have the option to then add services and then basically upstream the song and have the worldwide Sony Music system pushing it on all levels.
Bill: It gives you a scalability that you otherwise wouldn't have without that?
Derek: Exactly. If I have a song that's starting to go crazy and stream in Germany, then I can have Sony's Berlin office, setting up local press, radio interviews, talking to the local Spotify office and the regional offices and making them aware of it. Now instead of just one office in Miami for our label, we have 40 offices worldwide that maybe and they're working our whole catalog, but we can turn on the switch if a song is picking up in whatever region we want. In a perfect everything's working together in unison, that's a great label distributor relationship. Again, a lot of people are doing it without a distributor and a lot of people are doing it without a label. It just depends the individual situation for the artist.
Bill: If I'm a reasonably big artist on YouTube or something like that, people have found me, does it make sense that I would just try to upload through DistroKid, do it all through Spotify? Or if I'm using DistroKid, would Apple de-emphasize me a little bit because their competition between Apple and Spotify within DistroKid, for instance, or not really?
Derek: DistroKid operates as an independent company, but they are quietly owned by Spotify at least--
Bill: Yeah, you were saying you can play your music in all of your--
Derek: Yeah, exactly. Spotify has actually been great at expand-- they also own another company, Soundtrack Your Brand, which is music for retail stores and stuff, which is really cool. The DistroKid thing, it's not like Spotify is going to give you preference because you're releasing from a DIY distributor that they own. A lot of times, you might not be on the radar if you don't have a distributor pitching you, but if they start seeing the analytics, and they see that something came out independently and is doing great, then everyone's going to want to jump on it because they want to support it.
Bill: Dude, they reached out to me on this podcast, somebody from Anchor. She reached out to me in a day. It's crazy how they have that analytics.
Derek: The same thing with the major labels. They have some really advanced A&R tools where they can check, and if they see something is picking up at an exponential rate, they're on top of it and signing it. That's why there's a lot of these, like, rappers that you've never heard of that are getting signed to these huge deals with major flagship record labels of major music companies like Columbia, or Republic because their A&R research departments are seeing the numbers and they're like this, the velocity of these streams are insane. These kids are listening over and over again. Even if it's just based on this one song, they scoop it up. It's a numbers game, they sign 10-20 things a year if they have a couple hits.
Bill: Yeah, try to hit a couple. As a manager of an artist, let's say that your artist is trending and blowing up. Why would you say to go to a label when it appears as though, you could probably do it yourself with the distribution that Spotify gives you, or Apple for that matter. What's the incentive to still use labels? I guess it goes back to scale and whatnot, what they can do for you outside of streaming distribution, right?
Derek: Yeah. Well, let me give you a perfect example. We just signed a 21-year-old Jamaican artist, his name's Projects. He's 21, he is an amazingly talented musician, but he basically to really blow him up and to get him where he needs to be, I mean, he's making contemporary pop, urban dancehall, like, it's right in the pocket of-- he's competing with some of the biggest musicians in the world are in the same genre or the same thing. We want to get on the radio, we want to get a New Music Friday. In order to compete for attention with the Ariana Grandes, or Justin Biebers, or even like Sean Paul or his in his genre, or something like that, you need to have scale, and you need to have marketing, and you need to have the records, too. The thing is, when we signed him as managers, we work on commission. We don't have a way of really of funding his career without a label, or without an outside investor. He did a deal with Warner Records, which is the flagship label of Warner Music Group. That deal, it's Warner now will own his next few albums. In return for that, he got some money upfront in advance, few $100,000 per album and going up in cash advances.
Bill: What he's got metrics, he's got to hit and then they bonus him out on the back end or something like that?
Derek: Well, yeah, and then plus a royalty rate. Then, after he's recouped, then he gets paid a royalty on everything. In addition to the cash advances, they also give a recording budget. The recording budget’s also recoupable. Basically, we have a public company, Warner Music Group, that's going to now give us definitely hundreds of thousands if they continue to option millions of dollars in cash advances, and also recording support. That means, look, we want for Projects to breakthrough, one of the biggest things would be collaborations or affiliation. Maybe we want to get ASAP Rocky to do a verse, and that would maybe-- because if we want to get on the radio, a radio programmer, or Spotify editor might not put on a Project song, but they might put on Project’s featuring ASAP Rocky, or I'm just throwing out a name, we don't have a song with him. That's going to cost $100,000 for that ASAP Rocky verse either payable to him or to his label, depending on his deal. Now we have a way to do that. They want to do that too, because they don't just want to have little songs. They want to have big songs. They're a big company, or maybe we want to get a superstar producer, not even a superstar but just a really well-known producer to get in the studio with him, that costs money. Really, we could if we wanted to. We could have said like, “Look, Projects, John,” his name’s John, like, “You're a great guy, we love you. We know that you're going to blow up, let's just hustle this thing. Let's get in the van and go do shows and club shows. Let's try to get on Spotify 's radar ourselves, and let's do publicity stunts and creative stuff to get things moving.” Or, “We can do all that with a million dollars of funding, too.”
There's a little bit of a trade for some artists. It's like owning their master recordings is like, I heard Jay-Z saying that owning your masters is important, I'm going to own my master recordings, like no problem. I don't care, you can give me all the money in the world, I'm going to own my work. For a 21-year-old artist who is about to get a huge shot and wants to be a global superstar says, you know what, if this company owns my album, like, I'm still going to get paid off of it for life. I haven't sold my publishing yet, when I have a big hit, I could still go get a big publishing deal for another big advance, like, I'm good with them owning this IP. Once I'm out of the deal, I'll have more leverage, and I'll be able to license my next records and own those. You're not going to get to the place where you can have enough leverage to get yourself a good deal, unless you get in the game a little bit and show that you're down to play ball. It happens, but it's very rare that you just completely blow up independently.
Bill: It's like Chance, right?
Derek: Exactly, like Chance the Rapper.
Bill: The rumor that I hear the Chance had a big-time backer, not to take anything away from him. I just had a conversation with somebody, and they said, yeah, it wasn't as organic as it may appear.
Derek: You could still be independent, meaning that you own your own master recordings and you're not signed to like a global music company that's supporting you, but if you're going to be a global household name, somebody has to fund it. It's like a tech startup, a music career cannot be making money for years before you have your hit, and it's like you're acquiring users or fans. A lot of times, that's how it starts. We're not worried about revenue, we're finding fans, we're doing the look. The same thing, if we have an opportunity for projects to come out on stage, with Lil Yachty at Coachella, but there's no fee, because we're just the guests, you better believe it, that we're going to put him on a plane, get him to Coachella, so he could be there in front of everyone. Look, he's going to lose money on it, you're losing money every day when you're starting a brand or starting a company.
Bill: Yeah, it's a heck of a marketing expense to get that kind of exposure.
Derek: Exactly. It's a great problem to have, if we need money to get them on a flight to perform at Coachella for free or whatever it may be. Then I have other clients who are more in the indie niche space where it's like, they don't care about that, they'll get booked for Coachella when they get booked. when they get paid. They're waiting till they get their big fee. Then, for some artists, it's like, “Look, we need to not fake it till we make it, but we need to show everyone we're in the ecosystem. We're happening, we're out there. A lot of times you need to start that before the revenue is being generated to get to that place.
Bill: Is that when you told me that sometimes you buy Facebook ads and clicks to get the algorithm sort of going, like, is that maybe more of an indie artist? Or is that for all the artists because you said that you'll use internet properties to get some of the buzz going to get the algorithms to start recommending the songs?
Derek: Well, yeah, for sure. I think that digital marketing across every single platform is a huge tool of every single label, but especially as a manager on behalf of our artists, or for artists signed to our label, like, if we have a song that's coming out, like an indie track, coming out on a Friday, the second that song comes out on Friday, we're going to start sending ads, we're going to run Instagram, Facebook, Twitter ads targeted at people who we think would like the music, fans of other acts, or maybe even if the act is established enough their own fans that we can target. Then what we try to do is drive traffic to Spotify, or to Apple, right when that song comes out, so that way, the woman who called you from Anchor FM the day after your Spotify, yeah, I mean, they're not calling us directly, they may be calling our distributor, or they're just looking at their dashboard and they're saying, there's people from 23 countries streaming this unknown band from Miami, like, maybe we should put that in our Miami playlist. Or maybe we should put this in our international flavor or Fresh Finds. Everything so database that we try to make the data work in our favor and not only drive fan.
What I was explaining to you is like when we spoke last is, it's counterintuitive, because you get a fraction of a penny for a stream, not even, you barely get a cent or a fraction of a cent each time you get a stream. We might spend 50 cents or $1 to try to send a customer or a fan to go check out that band, and obviously, there's no ROI on the revenue side, but it's marketing. It's getting eyeballs on the band and at the same time, it's putting traffic into Spotify or Apple showing the platform that people valuing this music. People are listening to it. People are checking it out from different places and they're getting links from different sources. They could tell where the traffic's coming from. One came from Twitter, one came from Instagram, one came from an email. To try to get as much as many different sources feeding Spotify that traffic. One way to guarantee that you get some Spotify editorial love if they see that you have a song that's blowing up on TikTok, and you are driving traffic to Spotify off of TikTok, if they see that you're taking traffic from another platform and driving it to them, oh, there's nothing they love more than that, because they taking eyeballs off and other platforms. I'm not talking Spotify specifically, because I don't--
Bill: Yeah, just generally. It's interesting that you mentioned TikTok, there is somebody I talked to he goes by the handle full all the time on Twitter, he has been saying that he thinks that TikTok is the new music discovery platform.
Derek: Well, yeah, absolutely. It has been for quite some time, even in its former form, as musically, it was on the major labels radar. They were already doing, so before it was even called TikTok, the three major music companies were aggressively running campaigns on the service.
Bill: Why do you think it's so much better than something like Instagram or whatever? Why is it where everything is going?
Derek: Have you used it before, by any chance?
Bill: I have looked at it a couple times. I do not use it, I hear it's extremely addictive. I need less of that in my life. I have not even started.
Derek: Not to just sound completely, like the cliche that everyone's saying, but I really do think it's just their algorithm is insane. You could start scrolling on there, like an hour later goes by. I don't know what they're doing, you can look through someone's Spotify. It's like, I go through my wife's TikTok account, and it's like all Thai diving and tropical vacations and cooking and stuff. Then I go through mine-- this is not stuff that's [unintelligible [01:06:55], this is the four-year page feature, so you can follow things and have a feed, but then there's just a constant discovery four-year page, and you go through mine, and it's like, everything that I like, it's cool music gear. They really learn to hone in. I think that and music is just an important part of it. It started out with people doing singing along or doing lip sync stuff, but now it's just kind of evolved into music being a part of the fabric of everything that happens on TikTok. They've done a pretty good job at integrating the music and letting you know what you're listening to, if it's a real song, they can link back to that artists official Tiktok page.
Bill: How do you do all the royalties on that thing? Who monitors that?
Derek: So that goes through your distributor as well or your publisher PR. Basically, there's two-- Well, there's many different royalties, it's very convoluted and confusing, but generally, everything either goes through, there's a master royalty, that's going to the record label, and there's a publishing royalty, that's going to the publisher. Pretty much everywhere that a song is played on any platform, there's royalties flowing to both entities, as well as the artists.
Bill: That's crazy. That's so much administrative work to go through. You almost need a distributor or somebody that-- like as a manager that would be overwhelming to manage, I think without a partnership.
Derek: If I own my own label, which I do, but if I own my own label that didn't have a distributor, it's very possible to go out and get direct accounts with like Apple, Spotify, Rhapsody, Deezer, like all of these different platforms. The distributors, they have all the tech, they have it all ready to go. I can upload it in one place and they shoot out to everywhere. As new platforms and new things come online, they keep it updated there. There's a lot of done not obvious ones. Napster was obviously everyone knows the history of Napster. Napster was around is a real streaming service, I think it might still be in some territories. Now the Napster technology and the Napster music library, that's white labeled for a bunch of other technology companies. A lot of places where music appears streaming has Napster underpinning them. We still distribute, like Napster, is like, oh, yeah, and you wouldn't know that. Oh, well, if I want my song to be in whatever library or accessible to whatever customer and whatever territory, then it needs to be everywhere. It's just interesting that the distributors deal with all of that.
Bill: Napster is crazy. We took a quick bathroom break, so here we're back, and we started talking about the old podcast stats. The interesting thing, I hosted on Libsyn.
Derek: Is that an independent platform, or that's part of it?
Bill: It's Liberated Syndication. It's a third-party hosting platform, the guy that helps me out shout out to Matthew Passy, he recommended that I sign up for it. It's been really good. The thing that's a benefit on Libsyn is, I don't have to pay for downloads, I pay for what I upload.
Derek: Hmm. Interesting, okay.
Bill: I'd rather not have a show blow up and have to pay a bunch of money because of it. I'm not monetizing it right now. I'd rather not have the risk of having something go really well, and then I'm like, “Oh, shit.” [laughs]
Derek: Wait, just so I have this right. If you put on a podcast through one of these services, and then I'm downloading it on Apple podcasts, they're charging you or if it's being downloaded off their platform you mean?
Bill: The way that it works is the hosting service will charge you at times. I think one of the things that Spotify is working on, is they like to market that they have 75% of all new podcasts. They have Anchor, and that doesn't charge you to host. What they said to me is they said, “Okay. Well, we'll help you place ads.” I think that they take like 40% of the ad revenue or something like that in exchange for not charging you for anything. What I have with Libsyn is I can control what I pay when I upload it. There's three other platforms or whatever, and some of them will charge you, they don't charge you to upload the episode, but they do charge you to download it. If you were downloading it on Apple, I would have more variable costs associated with my episode. Right now, I have a fixed cost structure, which is basically just personal marketing expense, for lack of a better term. The guys that, what is it, Masters Invest or something? I'm pretty sure it's a crowdsourced art Masterworks, or are interested in sponsoring the show. I don't know that I want to go that route right now, but I appreciated them reaching out. I said, “Let's talk and see where it goes.” I'm just trying to keep everything manageable from my end, and then I'll worry about sort of where it goes in the future. That's part of the reason I didn't go with Anchor is, as of today, I'm not really interested in selling the advertising, and I like having the control.
Derek: Yeah, I thought Anchor is doing something pretty cool for music podcasts. While I guess now it's part of Spotify, where they have a platform where I could basically record a podcast in pieces, I guess I'm using their in-house editor, and then play songs throughout the podcast, but those songs which are licensed Spotify real songs from the catalogs. In the past, if I was going to record a podcast where I was like DJ Style, hosting a bunch of music, or even a DJ mix, or presenting different songs, it would kind of be on licensed illegally, just like putting dropping these songs into my podcast file. Now, they're actually linked to the song on Spotify. I could do a top 10 of my favorite Billy Joel songs podcast, and each time that song gets played, it shows up on Spotify as the actual track with the art and it also pays the rights holders as well. Then it will go back and then I'll say, you just heard Uptown Girl, that was my number 10, now number nine is this and then it will go into the next one. It will like create the podcast for you that way, which is actually something that Apple Music has had for their official shows. If you listen to any of their-- Elton John has a like Rocket Hour and he'll host or have guests people are [unintelligible [01:12:43] has the show, too and they'll host on air and then it will go into a song. If you're looking at your phone, it'll go from the name of the episode to the name of the song and the artwork and then go back, but that's only for the in an official capacity if you have like a Beats 1 show, which is their Apple Music live radio service, and then comes back on demand. Now on Anchor through Spotify, I guess anyone could do a show like that. That kind of piqued my interest. I thought that was pretty cool because you can actually pay the rights holders for those songs being used in the podcast.
Bill: Yeah, dude, My boys Francisco and Alex, I want them to come on, and I wanted to Kanye song, Ain't nobody fucking with my clique. I was like, one, I probably can't afford that. Two, how the heck would I pay them?
Derek: Exactly. I believe on this new Anchor service, you could even just use that as an intro song. then after the song plays, it's like, “Welcome back to The Business Brew,” like that.
Bill: That's what I want. I want that to be their intro song.
Derek: You should look into that, it might be worth dabbling in Anchor for just one episode. I don't know.
Bill: I thought I was going to have to write Kanye and be like, “Dude, help me out.” I think he's got some other things going on right now. Do you care as the manager where things are played? Do these platforms pay you all the same amount, is there a preference?
Derek: Yes and no. In terms of Spotify versus Apple, it's really all the same. There's some intrinsic value with each platform. For example, one of my clients, Steven A. Clark lark, who's an R&B singer. Yeah, you came to his show, you came to you open for Chromeo in Chicago.
Bill: I did. He opened for Chromeo. Yeah, that's right.
Derek: Yeah, he was touring an album that came out on a big indie label, Secret Canadian, but now he's actually out of his record deal. He's been self-releasing some stuff on our in-house label that we have at our management company. From that last album that he went to the tour for, he had a song that an Apple Music was supporting it a lot. It was called Feel This Way. It was really fun, summery jam. Yeah, it has like kind of a 70s funk vibe. It's a great one. They were supporting that song a lot, putting it in their playlist and stuff. All of a sudden, I mean, in the iTunes or Apple Music upload agreement, and the Spotify upload agreement, in there basically says, like, “We could use the song and this artwork for whatever we want, for advertising,” for whatever, but you don't really think that they're actually going to use it. I'm like a big Apple nerd, so I'm watching the keynote of Tim and Phil introducing the new products.
Bill: No way, dude. Did they use it?
Derek: Well, they didn't use a song because they would have had to license it. On the iPhone, in Apple Music ad, it was maybe the new iPod Touch or something. I don't know, it was an iPhone of some type, it was like all the music you want, and his album art was right there on the screen.
Bill: Ah, that's sweet, man. Good for him.
Derek: Yeah, so that was cool. I mean, it wasn't anything like revolutionary for his career, but it was like, wow, his song was doing well on Apple Music. The marketing team definitely went to the Apple Music people and said, “Hey, what's a cool artist that has some cool artwork?”
Bill: Yeah, that is some good artwork.
Derek: Yeah. They're probably like, because it was visual for the presentation. The album was called Where Neon Goes to Die was a very visually appealing bright with his face on it and it just looked like a product shot of a cool album, and they used it. Spotify due to their editorial strains with New Music Friday and all of their playlists, they definitely have, there's a little bit of cachet with doing well on Spotify. Everyone loves Apple. Apple actually has a better relationship I would say in some ways with the songwriters and with the songwriting publishing world and with the artists in some case, but Spotify has those eyes. Everyone looks at New Music Friday, like everyone's fighting for those spots. Everyone wants to be-- If you're on the United States, Spotify Global Chart, or the Worldwide Global Chart of the Top 50 Songs that are moving, every label, you're on their radar, every publisher, you're on their radar, agents are looking at it. Apple doesn't really have charts as much like that but they still have slower moving “iTunes charts,” or whatever the Apple Music Charts, but because Spotify has such robust analytics that are widely available. They have the editorial and even just the charts, you can go on and see what the top 50 songs in France, top of the songs in Germany, and it's live updating.
Bill: I've noticed the podcast data certainly appears better from Spotify than Apple for me.
Derek: Apple Music might have a top 50 songs in Germany viral playlist, I don't know how much it's updated, but it's not really on my radar. I don't know if it's updated as regularly. Spotify are algorithm updated regularly, that carries a lot of weight. I think just generally in terms of from like a business perspective, Spotify really digs in on the technology and the user experience. They're music company, they're an audio company, they have a lot of great products because their whole future is based on maximizing the money that they make from this music. I think they're just naturally at odds with the rights holder’s community of because it's always the negotiation, and yeah, exactly of their money versus the rights holder’s money. I think everything that's kind of this bubbling weird climate, it's weighty, it's serious, it's personal, it's their art, it's their business. It's everything and so it gets tricky, but with Apple, for example, when all of the service providers, like Spotify, Google, Pandora, were all in court arguing against the songwriter rate hike, Apple said, “We don't care. We love songwriters,” because again, Apple is making money from everything else. Music is just an added service. It's a feature. It's a great. If they have to pay a little bit more to songwriters, cool, just chalk it up to a marketing expense. They're making autonomous cars or whatever, like they don't care. For Spotify, if they have to pay a couple more cents to the songwriters, this is like, tectonic huge issue for them. There's that natural friction, but it's interesting, but then at the same time, from just a basic in my world, I'm like, I love Spotify, I love Apple, I want everyone to play us, but in terms of the broader music industry, that's kind of how things are feeling.
Bill: That particular battle was over the publishing rights, right?
Derek: Exactly. Yes, there's been so much action on the publishing side right now. It's basically just because publishing royalties are legislated, which is very strange. On the master side, the three major record labels Warner, Sony, and Universal, Universal being owned by Vivendi, not only do they have all of their wholly owned subsidiary and joint venture labels, but then they also have full systems of distribution companies that then distribute indie labels, like how Sony just picked up our independent label to distribute. They have so much market share, and they get to sit across the table from Daniel Elk or whoever and say, “This is how much we want you to pay us to license this content. These are the terms.” The publishers who own the content, they are based on-- it's legislated, it's like copyright board resolutions.
Basically, the standard since pretty much the iTunes download era based on the 99 cent per song construct is basically for every 99 cents or every dollar of a song about nine cents in law goes to the songwriters and publishers, that's the mechanical license that goes to anywhere where you're playing a sound recording, you pay the label to play their sound recording. You're also using a composition, you're also using publishing that you have the license, when you're playing that that's part of the sound recording and you pay the publisher, their mechanical royalty of nine cents. Then there's always like in record deals, they try to cut down the mechanical rate that they're paying to the artists, whatever, and that used to be a whole big song and dance with the-- if I'm an artist, that writes my own stuff, the label would try to cut down my mechanical royalty rate that they paid on my records.
Bill: Oh, so then the label renegotiates with you and they say like, “Okay, out of that nine cents, we'll take four, you get five,” something like that?
Derek: Yeah, or, “We're only going to pay you 75 cents of it because we're paying you an artist royalty, and you're making money on the artist side, you're making money touring? Why do we pay you to license the song that we paid you for,” and they would cut that down. The artists would always try to get that up because the mechanical is a license, it's paid on the first dollar. While they have to wait to get their master royalties until they're fully recouped, they start paying out those publisher royalties from first stream or first sale, because it's like an expense on top. Now, with streaming and Spotify and Apple mechanical royalties are now withheld and paid directly at the source. Spotify withholds those mechanical royalties and pays them directly to the publishers.
It's actually great for me, like when I've a record label, 10 years ago, my royalty calculation would have to be paying out all of these royalties to the publishers as well as the artists. Sometimes songs can have 10 writers, and each of them has a publisher, and then I'm paying them fractions of pennies, adding it up. Now Spotify just does that for me and pays directly to the publishers through agencies. Through third party agencies, so that's great.
What's happening is the rate is still legislated. Those are all being paid at that like nine cent contract rate. Now, it doesn't really make sense if you're a publisher or a songwriter, because that might have made sense when it was like the Bob Dylan era when he was writing his own songs, so all the money was going to him, but now 19 out of 20 songs on the top 20 or 99 out of 100 songs have more than one writer, and usually have professional songwriters, it's like a Justin Bieber song might have a couple producers and a couple writers on it. All of them then share that little nine cent royalty. Now, in other aspects of the business, like licensing for film and television, and stuff like that, it's much more equal, the norm is 50-50. If there's a sync for a Ford commercial, that's worth a million dollars synchronization license to use a song in a commercial, usually, the way that ends up getting split up is half and half. 50% to the publishers and writers, and 50% of that to the master owner, the label and then they pay the artists the royalty off of that and that makes a lot more sense, if you're a publisher or songwriter or just somebody with common sense.
The reason why, I mean, in my opinion that it hasn't changed is because the three major publishing companies that have the most market share in publishing are happened to be owned by the three major music companies that make more and recorded music. The three biggest publishers of market share are Warner Chappell Publishing, Sony ATV Publishing and Universal Music Group Publishing. Those are all monster companies that make billions of dollars, but not as many billions as they make in the recorded music side. They could easily change the rates, but then they're just moving the money from their recorded side, one pocket to the next. To them, the status quo is good. That kind of leads into now how there's this whole movement with Wall Street getting into buying publishing catalogs because Merck Mercuriadis, who's a famous manager, he started on the London Stock Exchange, Hipgnosis Songs Fund a couple years ago, they raised a billion dollars. His goal was to prove that music was an investable asset class, like the publishing of it, because it is a reliable asset. If you have a hit song, every time it's played, every time it's performed, it rings that register a few pennies, publishing is like the waterfall of pennies, it just keeps coming in.
He basically realized that eventually there's going to be a paradigm change. Eventually the songwriters and the publishers are going to be able to get more money and flip that paradigm and get a little bit more out of the mechanical license. Maybe it's legislated at a higher rate, like this most recent court case that Spotify was against that Apple said they were okay with, which was a 44% increase, that would take it to about 13 or 14 cents out of the dollar. The major publishers never cared to do that. Now, Hipgnosis and there's another company that's been in the game, even longer Primary Wave, they're more of a traditional company, but they also are doing these big song acquisition portfolios. They're buying up all these publishing catalogs and they don't own any recorded music. They don't have a label that they're making more money off of. It's basically a play for, as soon as they get enough market share, once they own the publishing to all the biggest hit songs in the world and all of the classic hits songs, then they're going to go and say we need these rate, they're going to have a lot more leverage to negotiate this kind of stuff. They're going to be able to through legislation and business negotiation up the rates of the publishing, so that's why people are saying, “Oh my gosh, they're paying these crazy multiples on publishing like 20X, 13X, whatever it is. That's a multiple based on the current rates.
Once those rates flip, there's a lot more upside. That's why, I mean, in my opinion, why it seems like they're going on this publishing, buying spree. Then now Universal, in turn is coming back and saying, “Oh, well, you guys are buying all these classic catalogs, we're going to pay Bob Dylan 300 mil for his catalog, for his publishing.” These are all just acquisitions of the publishing of the copyrights.
Bill: Do you think it's going to be a fixed pie? Do the artists have to give up something on the master side? Or, is the pie going to grow, and the whole music industry makes more money?
Derek: I think it's a little bit of both. In terms of statically, right now, if they were to flip the rate, then I don't know, that's kind of is going to come down to negotiation. If that extra money is going to come out of Spotify’s pocket or that's going to come out of the-- I don't really know that much about the mechanics, I basically know that the way Spotify works is they don't pay you a set rate per song stream, they basically pay you like a stream share. They like say, “Okay, 60% of our top line.” or however they do, it is going towards our artists royalties, this quarter and out of that, these are the songs that all got played, and they divided up pro rata. It always fluctuates. With the master recording, it's right now, if they would flip, yes, I think some money that would normally be flowing to the master side, like the labels and the artists would now be flowing to the publishers and the songwriters. The idea is that as everything grows, as more things come online.
A few years ago, we weren't even talking about TikTok royalties, or Twitch royalties, or Oculus, virtual-- whatever it is. As more things come online, there's just going to be more places that need to get publishing and licenses for all of the services for all the masters that they're going to be playing.
Bill: Are you guys going to do a Roblox concert anytime soon?
Derek: [chuckles] My friend, my college roommate is the creative director does all like the merch and artistic stuff for Travis Scott, the rapper who did the big Fortnite concert. He had a little bit of insight into some of the creative. I wasn't anywhere near it, but Corey was telling me a little bit about how all that went down. It's just so awesome. All of the virtual stuff. We haven't got there yet with any of our clients.
Bill: I could see Amtrac doing something like that.
Derek: 100%. We do short term and long-term goals with our clients. A lot of them on the long-term goals is like, do something in the virtual world, that's like cool.
Bill: Dude, Steven. A Clark that Where Neon Goes to Die, if you could do something in the virtual world with neon and stuff, that would be super cool. Or if I could listen to that somehow on Oculus and tour Miami at night or something, that'd be pretty freakin cool.
Derek: If any of those listeners out there have an investment in some kind of cool VR-AR platform that wants to do some cool music experimentation, hit me up.
Bill: It's wild the experiences that you can get now.
Derek: Not to completely go off topic, but I've heard you talk about the Oculus a few times.
Bill: We can go off topic. This is all just a conversation at this point.
Derek: One of my clients walks in the office with Oculus, I've never worn it before. I put it on. I don't know if it's a game that you buy, or if it's just a demo mode. Basically, the game that I was playing is you basically you walk into an elevator, you go up the elevator, the elevator opens and it's like a plank, and you're basically on the top of a skyscraper in New York City or somewhere, and you walk out on the plank and you jump off and you experience jumping down, and then you land and that's the whole thing. It's just a quick demo to show you. He puts headphones on me, so I'm completely immersed in the experience. I go on and I'm like, “Oh, this looks pretty cool,” whatever. The elevator doors open, I feel my feet on the ground. I'm in my office, my heart starts beating, I'm walking out, and in my brain, I'm saying I know I'm just standing in my office, but my body is having the full reaction of as if I was standing out on the ledge 100 stories high. My heart is beating, I'm sweating. I'm feeling I want to rip this thing off my head and just get back into the real world. It is incredible, dude. It's so crazy.
Bill: It's wild. I showed my father-in-law. There's something where you can go down and dive with manta rays. I think it might be YouTube VR. It's just crazy. I don't even know how to describe it other than, I view it as a complete inevitable that we're all going to be doing this in some way shape or form in the not-too-distant future. I think for kids, I just don't understand why you don't go into class and rather than read a marine biology book or as a supplement, not everything has to turn into watching TV all the time. “Okay, now we studied this fish. Let's go take a dive with this fish.” Then all of a sudden you have a class that's pops on these-- I mean, they're $300 apiece, it's like nothing, for that tech.
Derek: Yeah, Elon or Bill Gates or someone can just buy them for the whole country's classrooms if they wanted to, or they get to Facebook and just donate them. Those things are amazing.
Bill: Which I think what's going on is Zuckerberg understands that if you can get them in enough people's hands, then the developer ecosystem thrives. Then, you get this virtuous cycle, I almost think it needed someone like Zuckerberg that had enough money and the passion, that would just say, like, “We're selling the hardware at breakeven or a loss, because we're going to get this out there.” Then once people figure out how cool this is, then it's going to be on because I'm convinced it's the next screen.
Derek: You can't help but just imagining this vast ecosystem, like the iOS App Store, but for virtual reality, and it just normal, it's like, “Oh, yeah, if I have biology class, download the class app, for the first lessons,” or whatever it is. I don't know if it's going to be day to day replacing your typical vote computer screens, but in terms of any type of immersive experience, it's there.
Bill: That's exactly what I think is going to happen. Then, I think what's probably going to end up happening is Apple is going to release some copycat product that's just going to blow people's minds because they're so good at screen resolution, and I just have a feeling that whatever they come out with is just going to-- people are going to just go nuts.
Derek: That seems like a likely scenario I would say for sure.
Bill: Plus, they got Beats. I was surprised, I found the Oculus, the sound is quite a bit better than I thought it would be.
Derek: Yeah. Also, I mean, content, Apple TV, and whatever, they're already investing so heavily in content. At some point, when all of this converges with this new platform of, however we're experiencing virtual stuff. Then now the content that they can take Apple TV and that content platform and you're paying four bucks a month, or whatever it is, 10 bucks a month for 2D movies right now, then a few years, we're going to be paying for it for the next season of whatever on Apple TV might be completely immersive. Or, when you're watching Cosmos with Neil deGrasse Tyson, instead of on your 2D screen, it's like there'll be a version where you can watch it on the Oculus, or whatever platform that could be.
Bill: Dude, that would be wild, because I have not been that impressed with Apple TV. If somehow you got a exclusive offering within there-- like if they started doing VR movies and stuff that you got access to through their VR headset, that would probably make me flip and say, “Okay, it's worth it.”
Derek: I mean, it would only make sense.
Bill: It's going to be crazy.
Derek: I mean, they're having an in-house content studio, all they're going to be doing is like, how are we going to provide content for our new platforms, and that's going to be what drives demand. I mean, imagine if Apple comes out with their Oculus Plus, or whatever they call it, their Oculus competitor, and not only is it badass hardware that has cool apps, but also it's like the new Denzel Washington movies premiering exclusively on there, where you can look 360 degrees and look at the car chase and explore the house. It's endless.
Bill: Yeah, that would be sick. How IMAX is the most immersive screen before? It's almost like bigger than an IMAX because it completely-- it's your entire eyesight.
Derek: Yeah, I mean, like back to that example of when I was in the skyscraper or jumping off the plank, you hear the birds chirping, and I look up and it looks like there's birds out like 50 feet in front of me. It's crazy. The field of depth is amazing.
Bill: I know. It's wild. The only thing that messed me up was when I was doing that manta ray thing, I looked all the way to the left, and I saw like a black spot. I said, “All right, they got to fix this.” It needs to feel like I'm fully in an ocean, the frame cannot end. Once we're there, it's on. At first, I was like, “Okay, well, it'll probably take share from travel a little bit.” Now I almost think that it's like, “Oh, well, where do I think I want to go travel?” Then Google is the search engine that it gives you places in Nice or whatever, I don't know, you check that out. It's going to be wild.
Derek: 100%. It's like I've always dreamed about going to New Zealand, but I'm not really sure if I want to commit to spending the money. Let me throw on the headset and check it out a little bit. See what the vibes like and the town I wanted to visit. “Oh, now I'm definitely going, that was sick,” or whatever the sentiment is.
Bill: I play the boxing game a lot. I've thrown my elbow out a little bit too often.
Derek: [unintelligible [01:34:21] the kids, do boxing the air, they're like, “What's going on with daddy?”
Bill: One day one of the kids was in the living room and I heard something, and I took the headset off and I saw him looking at me and I was like, “Oh, okay. Yeah, I must have looked like an idiot.” Then he's like, “Can I put it on?” I said, “When you're older.”
Derek: You're really a dad, huh, with the one year older. [laughs]
Bill: Yeah, I say all types of stuff that my father used to say to me that I swore that I would never say. One of them did was, I don't know what it was. Man, I was like, “Oh boy, I really have become who I said I wouldn't become.” Going back to the podcast stats. I'm looking, so I have 30,000 downloads on Apple Core Media or Apple podcasts and 10,600 are on Spotify. I think it's wild how much more the apple distribution is for my particular program.
Derek: Well, I mean, it's interesting like you say that because I love Spotify. I subscribed to every single music service obviously, just because I'm in the business, I have Amazon Music, Pandora, you name it, I've got it. I am addicted to Spotify, in terms of listening, I've been listening to Spotify for however many years, 10 years, whatever they know me, I can put on my custom algorithm playlist, they know what I like to listen to. I'm used to the interface combined with the activity of I can browse what's happening in the music business on my fingertips. In the car, I can catch up on what's going on with in different countries, whatever. I'm addicted to Spotify. I've tried so hard to listen to podcasts on Spotify, for some reason in my brain, I'm just so used to using podcasts in Apple. Now even when I put in my air pods, too, an iOS update, I just get a bunch of little podcasts artwork. It's like Kara Swisher and Scott Galloway. It's like another music business worldwide. It's a great podcast from a blog, and every time-- it's just right there on my thing. I'm like, “Oh, I don't even need to open Spotify. I'm just listening to podcasts there.”
Bill: I have found that when I watch Rogan now on Spotify, and I listened to him less than I did before when he was everywhere.
Derek: Is there a video component to that? Or, you mean just when you listen?
Bill: Yeah, man, and it's glitchy. I was saying to my buddy, I don't even know if it's Spotify’s fault. It could be something that's going on elsewhere, but my Bluetooth will drop when I'm listening and then I'll have to play it on the phone and then reconnect to the Bluetooth and it'll just stop playing. The weird thing is, I do sort of know in my head that the tech problem may not be at Spotify’s level. When I'm listening to Spotify, and it happens, my mental association is with Spotify. It almost doesn't even matter what the real issue is because my association is with Spotify. Then, I get pissed off.
Derek: No, that makes sense. It's all about the perception, it could be a device issue.
Bill: Yeah, when I was running the flooring business, it went horribly wrong. One of the guys that was talking to me, I said something about what happened with the customer. He said, perceptions, reality, and that always stuck with me. It's like, it really doesn't matter what your version of the truth is, if somebody else's version of the truth is different, that's not their truth.
Derek: Absolutely. You can apply that to everything that I do in the entertainment business, but also with the current political climate and the news and everything. I mean, yeah, that's very true.
Bill: Is there a group of artists that you don't enjoy working with on average?
Derek: You mean genre wise, or just personality wise?
Bill: Yeah. Are there some guys that just won't show up?
Derek: It really depends. It's like working in every genre, we work with a lot of different types of artists and a lot of different genres, and different age groups, and backgrounds. It really depends. The most important thing is that there's just some artists who are fully engaged in the business side of their career and are on it, and then they can still be great artists. Then there are some who really, like embody almost not the stereotype, but how you would imagine the ethos and the vibe of a true artist, who is detached from the business operations and stuff like that, and the scheduling and logistical parts.
Bill: I would think that there would be some tension there where you're like, “How about show up on time?”
Derek: With, also, especially as managers, it's like, we really only work with artists that we get along with personally, and we can handle working with because your lawyer, your publicist, even your label, sometimes it's not that intimate of a relationship, but your manager, we are talking to them all day, we are doing everything from negotiating the most important deals of their life to planning their financial situation and their career and planning their schedules, sometimes years ahead of time. Then also, the bus breaks down on the way from Georgia to South Carolina in the middle of the night, we're the ones that get the call, or they're supposed to go to the studio, and they broke up with their boyfriend or girlfriend or whatever, and they can't get their head straight. It's hard enough, and also being the person that has to tell them the hard truths and be like, “I don't think we should send the song to your label. They're not going to like it.” To be able to talk openly and honestly about everything, from their art, to their finances, to their career and their personal choices, it kind of has to be someone that you have a little bit of a vibe with, or you feel comfortable with because if not, it's just never going to work.
Even the best artist manager relationships, like some of the most legendary ones all time, there's a time limit on them. In most cases. It's the exception to the rule some of these lifelong things and it's not because everyone could be doing a great job, but it's you are so close with your manager, like a best friend and also business partner position, it's like maybe after-- I mean, there's a lot of news we talked about Chance the Rapper, he was legendarily grew his career with Pat the Manager, Chance the Rapper and Pat the Manager, they recently had like a public breakup.
Bill: Oh, is that the manager's name, he went by Pat the Manager?
Derek: Yeah, that was his nickname.
Bill: That's dope. I kind of like that.
Derek: They were a legendary duo and hailed around the music business is like this amazing visionary duo who did it independently. As an observer, I think Pat did a brilliant job growing Chance’s brand and career. I don't really know what happened there. There's a lot of reporting, and who knows if it's true or not, but it's sad and it can be shocking, but it doesn't really surprise me because it's like, look, when you're an artist, sometimes it feels like it's time to move on to the next thing, or maybe something's not going right, and you just want to change. Sometimes, the manager is just collateral damage. I've seen a lot of artists, not personally, not that have left us personally, but from observing the industry, I've seen artists leave their management looking for a change, thinking that it was going to be for the better. Then they go to another manager who doesn't know them as well, or they just try to do it on their own and things just not unravel, but just the trajectory just falls off.
Bill: Dude, it's the same as relationships. The problem with leaving a relationship is you take you with you.
Derek: Exactly. [laughs] Yeah.
Bill: It's not usually the other person. Sometimes you do need a change. That's cool. It's got to be fun to build somebody's career together find the artist, how do you get through that sort of maturing of a relationship, like manage the egos?
Derek: Back to what I said before about liking the people we work with. We probably won't get into a situation with an artist who their ego is too big to handle. Even more, so sometimes, we have an up-and-coming artist who has a buzzing career, and we're strategizing on how to take them to the next level. Sometimes you need to stop putting out music, take a little hiatus, maybe clean up your visual appearance on social media, can do a little refresh and maybe pull back and not put out some songs. You have to say to them, like, “Hey, we got to slow down and stop putting out music,” but to young artists to stop putting out music, they're like, “But my fans. I can't believe it. Everyone's waiting for me,” like your fans are like 500 people in your town right now. Or like 5000 people in your state. Nobody knows who you are yet. Nobody's checking for you yet. It's about telling, making the artist sometimes who they think in their world, their world is like everything. They're the biggest artists in the world to them. Then we have to be like, “Look, we love you, we believe in you, we think you're the most talented person ever. That's why we work with you, or we wouldn't be sitting in this room, but I got to tell you nobody knows who you are. It doesn't matter if you don't post on it. You have a song with a few 100,000 plays, like we're going for a few 100 million, we got to kind of regroup here.” It's a lot of times having to be able to just work with artists that can take a conversation like that and not take it personally.
Bill: Yeah, I know a podcast personality that maybe could use your help. I don't know.
Derek: [laughs]
Bill: I do think I'm probably going to do this thing in seasons because to your point, I don't know, sometimes I think you got to walk away to refresh and collect thoughts and whatever.
Derek: I think it's good to have a little break to build up some demand sometime, but also, there's something to be said about having constant flow of content also, it's like, sometimes when you're hot, and sometimes when you're on, it's good to just keep feeding that core fan base and growing and riding that trajectory. If you look at, for example, some really popular rappers and buzzing rappers when they're hot, and they have their hit, they'll do 100 features that year, they'll do everything.
Bill: Dude, like Wayne did back in the day. He was everywhere.
Derek: At the time, it seemed like, “Oh, my God, is he oversaturated himself? That actually helped put him into that like legendary status, where it's like, “Wow, this guy is actually one of the most prolific rappers ever.” Not only does he have his whole body of work, but then he has all this additional stuff as well. That kind of like became part of his legend.
Bill: That one- or two-year sprint that he did was insane. He was everywhere.
Derek: Yeah, absolutely, it was pretty crazy. There's some buzzing rappers now that are-- I see them trying to do the same model where they're getting on every-- DaBaby is a buzzing rapper right now is all over the charts.
Bill: Yeah. I listened to one of his songs.
Derek: Get on and do a song with Dua Lipa or whatever pop-- very much how Lil Wayne was like, “Alright, like I'm hot in hip hop now, I'm going to like blanket the airspace and make sure everyone in pop music knows who I am as well.” It's a good strategy if you can do it.
Bill: I don't know what I would do if I had that. I wish I talked to him more but he won't return my messages anymore. That guy Cal Scruby or Scruby, however he says his name.
Derek: Oh yeah, he's good.
Bill: Yeah, dude, I listen to him nonstop. I'm definitely a super fan, but he was saying that he has remained independent and he runs all his own stuff. I think he's his own manager even. He might have a college friend that helps him. He was like, “I can't make as much as maybe I could, if I was-- I'll never be the Uber star if I'm on my own, but the lifestyle that I can create for myself is a good one.”
Derek: For sure. He's an example of someone who has like a nice steady stream of fans and enough of a fan base where you can really make a nice little career with yourself. If you're in a traditional record label deal, a traditional label deal is like, you get like a 17% to 20% royalty after you're recouped on all the expenses, but if you are distributing yourself, you could get 80% to 100% of that income directly.
Bill: Do you think more people going forward or going to take the independent distributor method? Or do you think that's just a small niche of people that just have a sweet spot that works for them?
Derek: No, for sure. I mean, they already are. What's really happening now is there's so much. There's thousands and thousands of songs being uploaded every day, if not hundreds of thousands through all of these independent distributors. Just as technology has become more democratized, and if you're a 14-year-old rapper, an underserved neighborhood, in name a major city that 10 years ago you would have had to get a record deal to have your song on Apple, or Spotify. Now you can record it and upload it on your phone, and it's up there. If it starts taking off, that could lead to huge success and bigger deals later and you see a lot of that kind of stuff happening. I think it's twofold.
Now, nobody's waiting for a record deal. Everyone's putting out their stuff independently at first to try to create that buzz. Then, at the same time, on the high level, these artists that used to be the superstar artists are now clawing their rights back and getting into, maybe they're not doing it through like DistroKid or TuneCore, but they're doing a deal with Universal or Sony, where it's in the vein of more of a pressing and distribution deal where it's, “I'm going to own my masters, you're going to take a small fee to market it and to put it out,” and more of a distributor relationship like that.
Bill: What are you listening to now? You have a very eclectic taste. I've always liked your taste to music, obviously Steven A. Clark and Amtrac and all that. I've been listening to Amtrac a lot in my recent playlist. He's high up on my liked songs, so he comes on every day.
Derek: You got to check out [unintelligible [01:47:18]. He's a really cool indie artist that we work with.
Bill: Is that the dude I saw a picture of him in New York on a Spotify Billboard?
Derek: Exactly. Yeah, he had this for Latin Heritage Month, they gave him a billboard in New York City. Thanks, Spotify for that. Yeah, that was pretty cool.
Bill: That's awesome.
Derek: His music is awesome. He sings in English and in Spanish, and it's all like electronic bass. He writes it and stuff himself and does a lot of the drums electronically and since but then he brings in amazing musicians to play. He has beautiful strings and live drums and stuff. When he goes out and performs live, sometimes he'll do it with a 10-piece band. It's crazy. He's actually an old friend of my business partner, Jake Jefferson. He was self-managed for a long time and had pretty successful art and independent music career self-managed, had his art exhibited at [unintelligible [01:47:59] museums and had his music featured at played at festivals. He was signed multiple very big independent rock labels. He basically just came to us when he was at the point where his career was getting so big that he needed a manager, and he needed a team a few years ago. Yeah, and it's been going great since then, he's a great guy. Great music. One of my favorite people to just hang out with. A lot of times, I listened to so much contemporary new music for work all the time and just to keep a buzz, see what's buzzing, see what my clients are working on. A lot of times, at home, in the car I'm listening to older, calm, relaxing music just to clear my head.
Bill: You still rocking Earth, Wind & Fire?
Derek: Yeah. Well, I mean, if I'm partying, a little disco maybe but I'll chill with some old Simon & Garfunkel kind of vibe, just do a little palate cleanse. There's so much good new music out there. It's insane. I can't even begin to list the amount of good music that is floating around.
Bill: It's the golden age of content, man.
Derek: Yeah, some of my favorite rock bands that have been around for a minute, but they're still active, are like Vampire Weekend and Future Islands, I love that kind of pocket of indie rock vibes, but I still listen to a lot of hip hop, a lot of electronic music. There's a singer Hrye, H-R-Y-E, that's plays a live band. Actually, my client, Amtrac, just did a remix for him that's coming out, but really cool, chill, indie vibe. There's so much great stuff out there that's awesome.
Bill: Well, I got to ask you one thing, and then I'll let you go. I've gotten a request to have guests talk about failure if they're willing. Have you had a crushing blow in your career? Has it all been good for DJ Derek Walin?
Derek: There's a few things. I wouldn't say there's been any really big crushing failure, but there has been-- we have a lot of peers in the music business have gone on to have their big hit or have crazy success. Our thing has always been really building sustainable careers for these artists. A slow steady incline and we haven't really had our crazy-- some of our contemporaries in the industry, they've had their fluke hit, where it's like, “Oh, they had their song, that went viral on TikTok and now they just see them and their client just bought a new house.” I'm not complaining, like, I'm not like asking for any type of like crazy viral TikTok thing without doing any work.
Bill: [laughs] Well, you've also put in a lot of work, so it'd be nice to get that.
Derek: Sometimes it's like a little-- it can be frustrating or-- not disheartening, but it can be frustrating when it's like, “Wow. We're here, all we think about is doing the best for our artists, fighting for their careers, building them a sustainable career, being true to their art.” We're not legally obligated, but almost being like a fiduciary, we don't do what's best for us, we do what's best for our clients. That's our values. We don't take a quick deal, they get an advance the commission, we do what's right for our client. Then, we'll see somebody who like, they just took the first deal, so they can get a fat commission, and they're not passionate about artists rights and about the music and everything. then their clients hit, like, they just had their song go viral on YouTube and it's nuts. Now everyone's saying, “This person is music's next genius.” It's funny, we're sitting back from our standpoint, but we're like, “Well, we work with great artists that we really love that are really talented.” Look, we've had our artists do cool stuff. I had a client producing Enrique Iglesias and Pitbull song, we had an artist producing Katy Perry songs, we've dabbled and can do the pop cheesy stuff as well if we want to. Right now, we're focused on building a curated, tasteful really making our pocket of the industry being good at what we do.
Have you seen the funny song that the guy on TikTok sings or whatever? That's just great. They're killing it. There hasn't been a crushing blow. There's just been a lot of having to just keep your eye on the ball and stick to our values and know what we're doing is bigger than any one hit song. It's about the bigger vision, and then the hit songs will probably come and the big hits will happen. I've heard you talk a lot about when you had a great idea, like a great investment idea, and then you get out of it, and then it works. Then everyone's hitting you up and congratulating you. We had a client that we built from nothing, from zero fans, zero Spotify, Instagram, basically a brand-new electronic project. We built him for like five years does. We expended political capital to make this guy happen, to get top tier agents and turn them into a big electronic festival act, and got him great, like opportunities and stuff, got him remix opportunities to remix. We created the strategy of like, “Alright, your festival act, but we're going to get you brand name remixes with big well-known artists to establish you as a higher profile artist.”
Executed it beautifully, whatever, ends up one of those remixes gets nominated for Grammy, literally, like, a week after his contract ends with us, a five-year management deal and he says, “I don't know, I think I'll just do it on my own for now or just see what happens.” Literally, the Grammy nominations come out two days later, I'm telling you, every single person that we've ever met in the music industry was calling and sending congratulations of our-- it was one of those things where it was like, well, we still kind of deserve the congratulations because-- I mean, it's really the artist does, it's all about the artist would-- couldn't happen without him, and he executed a great, but we were part of that, too. We built that on the business side, but it was just like, wow, if our artist on a whim didn't just say, I'm just going to kind of see how it feels, then we would have been at the Grammys with him. We've been to the Grammys where it's not that big of a deal, but still just the sentiment of, we would have been part of the celebration, whatever. Since then, luckily, I've had other clients nominated and stuff like our client [unintelligible [01:53:40] just got nominated for a Latin Grammy this year, that was really exciting. We've still been able to carve out our little wins here and there still, but show business is tough. You just got to keep going through and persisting. That's the trap we're on.
Bill: You sound like an artist manager to me, so that's a good thing. I have a feeling that your strategy will pay dividends in the long term.
Derek: Thanks. I appreciate it.
Bill: All right, my man, I'm going to let you go, but hopefully, COVID ends, and I can come down to Miami soon and check you out.
Derek: Yeah, let's do it, man. I'd love to see you in person. Thanks for having me, man. It's been fun catching up.
