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Online marketplaces selling music beats and samples are big business.
Los Angeles-based Splice has raised over $150 million to date, including a recent round led by Goldman Sachs, plus Music, the investment firm of SONGS Music Publishing founder Matt Pincus.
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Elsewhere, just before the end of last year, another beats and samples specialist, Loopmasters, was sold to BeatPort for an undisclosed fee. And another successful beats marketplace, Beatstars – best known for supplying the sample pack underpinning Lil Nas X’s Old Town Road – has paid out over $100 million in producer royalties to date.
The latest entrant to this fast-growing sector comes with a twist. Multi-grammy-winning producer Timbaland is launching Beatclub alongside his long-term manager, Gary Marella, who is the latest guest on the Music Business Worldwide podcast.
Beatclub’s pitch is that it offers independent music-makers the chance to use beats crafted by Timbaland himself, alongside other VIP producers such as Mike Will Made It, Mike Dean, and Dallas Austin.
The launch of Beatclub – coming later this year – arrives after Timbaland and Marella found huge success with online battle platform Verzuz during 2020. Verzuz originally launched on Instagram but has now become a multi-platform phenomenon following deals with the likes of Apple Music.
Gary Marella is founder of Mono Music Group, and boasts over two decades of music industry experience , working at the likes of Universal Music Group and Three Six Zero.
You can read an abridged version of our podcast interview below, or listen on your favorite podcast platform through here.
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What’s the producer management game like out there at the minute? What’s the biggest challenge and what’s the most exciting development?
What’s the producer management game like out there at the minute? What’s the biggest challenge and what’s the most exciting development?One of the biggest challenges for Tim was probably [the loss of] that old mentality of, ‘Before I go in the studio with an artist, I want a three-song producer deck, and I want to agree on terms.’ Those days are gone. Even for the biggest producers now it’s about going in, connecting [with an artist], doing five or six ideas, then waiting four or five months for the management team or label to come back and say, ‘Hey, we like this track.’
“What’s exciting is the independent side of the business.”
What’s exciting is the independent side of the business. Tim and my other clients have worked with a lot of independent artists [including] Anderson Paak and Ant Clemons, who just got nominated for a Grammy. To be honest, that seems to be more exciting [than the traditional business], not just to Tim, but to my other clients and myself.
Obviously, it’s still exciting to go in with a Justin or Jay or Missy, people like that. But to go in with the new artists, to be a part of having a hit together and breaking a new act, that’s really exciting.
Are you sensing that independent artists world is changing the face of the modern music business a bit?
It is, and that’s really the reason we created Beatclub. Because we keep discovering more and more independent artists on social media that Tim is excited about working with.
I don’t want to say [indie artists are] the future of the business; I still watch radio charts… that that never gets old, having a hit record on radio. But with companies like UnitedMasters having 750,000 artists that they distribute, [combined with the rise of] beat-selling platforms, especially in a time of COVID and even after COVID – where artists can just dig through demos and acapellas and samples and tracks from the biggest producers on an app – that to me feels like [a big part of] the future of the business.
What exactly is Beatclub? If I’m a producer, how does it work versus what else is out there on the market right now?
There are beat-selling platforms out there. But what differentiates us, first and foremost, the list of producers and writers we have – from Mike Dean and Mike Will Made It to Scott Storch and Tainy, who’s the No.1 Latin producer in the world, and hundreds of other huge producers, in addition to Grammy-winning songwriters.
The other platforms don’t have that roster. And the reason we were able to get them is not just because it’s Timbaland’s platform, but because we figured out a way for those producers to retain publishing [and] retain royalties if they want to ask for a royalty on a track, a loop, or a sample that they’re selling.
“Timbaland has opened the floodgates to show these huge producers that, ‘Hey, I’m going on here; I’m selling my beats [and] my samples.’”
You have a couple of other key [competitors] out there where bedroom producers are licensing the same beat 400 to 500 times. And so the next level of [producer], the B-plus to A-plus superstar producers, are a little worried about affecting their brand by going onto platforms like that.
Now Timbaland has opened the floodgates to show these huge producers that, ‘Hey, I’m going on here; I’m selling my beats [and] my samples.’ And one by one, the biggest producers and songwriters are coming on board.
The brand that immediately comes to mind when I hear you talking about Beatclub isn’t actually Splice or Beatstars etc. – it’s Beats by Dre. In terms of having a big-name producer attached their own identity and reputation to a brand in order to propel it forward.
Absolutely. And I’m glad that you mentioned Splice; I have the utmost respect for Splice and other platforms. That’s actually why we started [Beatclub]; Splice approached us about doing a Timbaland pack [on their platform]. And when we realized Tim couldn’t get publishing on a sound if somebody [then] used it on a record, we decided to do this on our own.
We’ll still allow bedroom producers across the world to sign up and be a part of this. But we’ve come to realize over the last month and a half, that the [real] value in Beatclub is that list of about 800 to 1,000, super-producers and A-level writers. That’s why DreamWorks, AKAI, Serato, Native Instruments, Roland, Fox, and Paramount – all these brands that we’re in business with – want to be aligned with us. It’s because of that VIP list.
[We’re giving] the A-plus-level producers, the front page [of Beatclub], and then still are allowing those tens of thousands of bedroom producers to also be a part of the platform, and kind of earn their way up to becoming a seller on the main page.There’s a school of thought out there that some of the larger scale companies in the music business, including the major record companies, are going to buy their way in to this space, because these beat repository platforms are going to form such a bedrock of the production music world.
We saw that with the BeatPort acquisition recently. Do you think we’re going to see more of an acquisition drive, or indeed a drive to partner with platforms like Beatclub, from the major music companies?
Absolutely. I don’t mind saying this on this interview: All the record labels are already using our platform because we implemented an A&R portal. Obviously, we’re not [publicly] live yet. But A&Rs at labels can come to us and say, ‘Here’s the projects I’m working on.’ And it’s for some of the biggest names: it’s G-Eazy,, it’s Lil Wayne – tons of huge acts.
The labels are coming to us and saying, ‘I’m looking for a ’90s R&B feel… a BPM of this or that, or acapellas.’ We put those requests into our portal that goes out just to the VIP [producers and songwriters].
“I do think the labels are going to want to acquire one if not many of these companies.”
The fact that the labels are already thinking this way [means] it’s only a matter of time that, pretty quickly, we’re going to have a bunch of A&Rs picking beats from our platform and [having success] like Beatstars had success with Little Nas X. I think [Beatclub] is going to have tens, if not hundreds, of those stories, because of the A-level producers and songwriters on our platform.
To answer your question, I do think the labels are going to want to acquire one if not many of these companies, or these companies are going to eventually have to merge [into majors or other companies]. So yes, it’s us acquiring somebody, [or] somebody acquiring us; who knows?
I think Splice is looking for a solution to its publishing and royalty model. So maybe Splice acquires a company [in that field]. I think it’s only a matter of time before that happens.
Your day job, of course, is still managing producers. How is this world of sample packs and beats repositories, changing the way that a producer can approach the monetization of their career? And what can you tell us about the wider transformation that you’ve seen in how producers make money in the modern music business?
Hats off to Pulse – to Josh [Abraham] and to Scott [Cutler] – who have changed the MDRC publishing model. Some of the other major [pubcos] still have the antiquated model of telling a producer: ‘It’s a four option deal, and in each option, you have to deliver 1.5 full songs to be released on a major label.’
Pulse has changed that model to say, ‘You just have to earn back your money, whether it’s an independent release, or a major release.’ The other publishers are eventually going to have to go that route, based on how much how many independent artists are selling, and how many independent artists are blowing up and opting not to go into the major system.
[Raised In Space founder] Zack Katz told me something February of 2020; we had breakfast right before COVID [lockdown]. He said, ‘I learned more this last year in the tech space than I did the last 20 years [in the music rights business].’“I had to wrap my head around the fact that an unknown producer without the accolades of a platinum record, or a major label hit record, was making $30k to $40k a month on a beat-selling platform.”
And I was on the phone with him yesterday saying you were spot on, because a year ago [I had to] wrap my head around the fact that an unknown producer without the accolades of a platinum record, or a major label hit record, was making $30k to $40k a month on a beat-selling platform. I was in denial, like, that’s just not possible. And when I jumped into the model [on other platforms], I realized these guys were licensing the same beat 300 or 400 times.
Right now that’s a major label system’s nightmare, because they’re trying to figure this out: If 100 artists license a beat, and one of those artists blows up, how the hell do they have exclusive rights to that track? And I’ve been figuring that out with our team and our attorneys.
There’s so much money to be made from doing your own plugins – Mike Dean has been one of the leaders in that space. Louis Bell is sending out samples to every producer out there. People are finding [new] ways to really make a significant amount of money other than just chasing the major label placement model.
You mentioned before that songwriters are able to get involved in Beatclub. How does that work? Are they uploading top lines without uploading full songs?
My original thought was to have songwriters come on and just sell acapellas. But obviously, that wouldn’t be a [licensable piece of music], it would be a one-time purchase for somebody.
Then I had a call with all these amazing songwriters that Tim and I do a lot of work with, probably about 30 songwriters. And a lot of them on that Zoom call said: ‘We have hundreds if not thousands of rough demos on our hard drives – maybe a beginning of a track and a chorus or an idea or verse – that we’re not using and we can’t synch.’ So they asked: ‘Would you guys be open to selling demos on the platform as well?’
And after two to three weeks of looking into it, we added that to to the platform. If a songwriter wants to upload a demo, they have to tag and add their collaborators, and they have to agree on the splits and the terms before it goes live on the platform.
I’m looking forward to the stories: ‘Senior A&R X rejected this demo in the year X. It was found on Beatclub, and it went on to become a global No.1 smash…’
Yep! You know, who’s been really forward-thinking and the most proactive [with Beatclub]? [Warner Records CEO] Aaron Bay-Schuck. He had about 28 of his A&R team on a call with us [recently] for about an hour.
Aaron really has a good understanding of the [songwriting/production] space, as do his A&R team. So it’s nice to see some label heads and A&Rs that not only understand the space but really embrace it, and are excited about being in business with us.
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Timbaland, and yourself, have done a couple of deals to monetize his back catalog, with Anthem Entertainment and last year with Hipgnosis Songs Fund.
Timbaland, and yourself, have done a couple of deals to monetize his back catalog, with I wasn’t even managing Tim when when the majority of those records were done. So I was very sensitive to the fact of how much time and how many years Tim put into [those songs and productions].
He’s still published by Anthem – previously Olé – and then Merck [Mercuriadis] approached us. At the Songwriters Hall of Fame a couple years ago in New York, we bumped into Merck. I was not aware that Hipgnosis was actually buying producer royalties – I thought it was just buying publishing and masters. [After that] we had a discussion and jumped into it.
“We flew out to Vegas, we had dinner with Merck, and Tim walked away from that feeling like, ‘This is a guy who understands the music.’”
I remember, we flew out to Vegas, we had dinner with Merck, and Tim walked away from that feeling like, ‘This is a guy who understands the music.’ At that dinner, Merck was breaking down melodies and parts of songs, and beats and synths, and like all this stuff.
No offence to other funds that are buying assets like this, but Tim walked away from that dinner really feeling like this guy really [is about] music, first and foremost, and felt much better about doing that deal. And after that, things went pretty smooth.
Does that really matter though – selling to a ‘music’ person? Can it really tip the decision over the biggest check?
I think it’s a combo of both. [With producer royalties] Merck was buying assets that are passive income, so he doesn’t have the rights to go out and do a sync. But do I think Merck is going to go out and do something that’s, that doesn’t fall in line with the artist and the song? Is he gonna go out and sell a Bob Dylan song to a Tide commercial or something? I honestly don’t think he would.
Do I think another fund, one that maybe doesn’t understand the importance of how a writer or songwriter feels about their music and seeing it exploited the wrong way [might act differently]? I don’t know.
In the case of Tim, [the Hipgnosis deal] is a passive income stream. But I think in other cases, for publishing and master [copyright sales], I do think [the individual/team buying the catalog] does matter.
Source: Music Business Worldwide
