Seek wealth, not money or status. Wealth is having assets that earn while you sleep.

"Most artists don't live as good as the execs, and they end up depressed.."~Nas

Wealth vs Status games in the music industry.

Anyone who isn’t familiar with Naval Ravikant’s thoughts on “How to get rich without getting lucky” needs to read this immediately.  

The game is played daily and whether or not you know it, you are in it.

Are you renting your time to someone else to build their assets or are you building your own?

What moves you? A big job title at someone else’s company? A nice salary? Followers? Press? Clout? The social hierarchy doesn’t really matter.

There are folks out here building and selling their own assets daily.

I wrote about this a little while ago but to reinforce the point, here is a refresher.

When Len Blavatnik bought WMG in May of 2011 the company was valued at $3.3B.  The market cap today is $18.7B.  In eleven years, Steve Cooper’s leadership helped drive over a 5x valuation of WMG and 2x the company’s revenue.  Warner Music Group’s value increased $15+ billion dollars in less than 12 years.  

So let me pose the question, who would you rather be?

The person getting paid $1M a year and who has the relationships with the artists, brought in the top talent, signed the talent directly to corporate so that they can own and monetize the asset?

Or would you rather be Mike Caren who signed the talent directly, built the asset up, and sold it for a reported $250 million?  Or 300 Entertainment who sold for $400 million?

Everything starts with the music and those who create it.   

If you have the ability to identify great talent, know how to get deals done economically, and have the ability to help the talent execute their vision, you need to exercise your leverage.

Let me provide some specific examples.

Pop Smoke has been one of the best selling artists over the past 3 years.  When Rico Beats brought Pop Smoke to Steven Victor he had just left his job running a&r at Def Jam but was still working in the center at Universal Music Group.  Victor believed that Pop was going to be a superstar without any data to support this thesis.  His gut instinct told him.

He got Pop what he needed to get the deal done and signed him to his own company Victor Victor Worldwide.  But imagine what would have happened if Victor would have signed Pop Smoke directly to Def Jam as part of his job...

Pop Smoke is an artist who has generated 10.6 billion streams in the United States alone.  Using some back of the napkin math, his streams have generated in the ballpark of $53 million in the U.S. 

If Steven didn’t exercise his leverage by signing Pop to his joint venture, he wouldn’t have participated in the upside of Pop’s success.  He would have just been an employee with a great salary who did his job exceptionally well. 

But he did exercise his leverage and because of that he is an employee with a great salary, who did his job exceptionally well, and also has generated life changing money.

Another example would be Justin Bieber. Scooter Braun + Usher’s belief that Justin Bieber is a phenomenal talent that would become a megastar proved to be lucrative for everyone involved, because they signed Bieber to their joint venture and helped him achieve his vision.

Usher recently sold his piece of the masters for an estimated $40M.

Bieber sold his publishing for $200M.

Scooter sold his holding company for $1.05B.

They worked together, built an asset up that makes money while they sleep, and they all have done extremely well financially.

Sir Lucian Grainge got UMG to an IPO and his compensation for the year of 2021 was $300M.

There’s a reason why Elliot Grainge, the son of the man running the most valuable music company in the world has his own label versus being an executive at someone else’s.  He’s building his own asset and doing a damn good job at it, instead of being an asset for someone else’s company.  When he liquidates, best believe that the payday will be better than an executive salary.

This is an incredible time to build in the music industry.  There is a reason why Blackstone, Blackrock, Apollo, and the Carlyle Group are pouring tons of money into music IP acquisition companies.  It’s a strong alternative asset that should continue to appreciate as more platforms, experiences, and new technologies mature.

Additionally, streaming has minimized the costs of distribution.  Artists no longer have to worry about getting on the shelves at Best Buy and then staying on them.  Consumers can visit their catalogs in seconds and they can be continuously earning money while they sleep.

But that doesn’t mean that there aren’t any challenges to actually break through.

As Ben Thompson highlights in his newsletter, Stratechery, “in a world of scarcity distribution was the most valuable; in a world of abundance it is discovery that matters most.”

Brands are looking to work with artists.  Consumers are looking for authenticity.  Someone has to build the pipes to help these artists raise their profiles and share their talents so they can be discovered.  

Who has the best relationships with and knowledge about brands?

There’s a reason why United Masters is valued at > $550M. Helping these creators breakthrough is extremely valuable and brands play a part in that.

That’s not the only path though.  If you are an artist that knows how to build and sell, there are potentially even bigger rewards.

Nipsey Hussle was firm in his intention. He believed in building the asset from the ground up and then monetizing. He was interested in equity, not lending his brand to others for a check. It takes time and dedication but it’s worth it if you can execute.

You need to have a crew.  Like minded people that are in it for the long run.

Once you have a crew, make sure you have each other’s backs.

“If every _____ in your clique is rich, your clique is rugged

Nobody will fall 'cause everyone will be each others crutches..” ~ Jay-Z

And then you need to put in the work until you become the best.

Jay-Z is the best at this because he plays wealth games that look like status games. He does a bunch of great business deals and then raps about them which reaffirms his place in the social hierarchy.

The intention here was to inspire. Every time I read Naval’s thoughts on this subject, I’m ready to build. For myself, and my crew. And I hope you are too.