UnitedMasters Founder and CEO Steve Stoute discusses his career and the music industry at Yahoo Finance's All Markets Summit.
Steve, thanks so much for joining us. You've been in the business back when they were trying to legislate hip-hop. And back then, if you didn't--
And I think just in general, people thought it's Prince. It's eccentric, not that it was actually a fundamental business reason why. And over time, people really started to understand the value of ownership. They can own your name. They own your likeness. It's in the recording contracts. That's the fundamental understanding of a recording contract, is that they own you.
And as music has gone digital distribution, and TikTok, and Instagram has become the new MTV, and Apple Music and Spotify has become the new record store, per se, and radio, the value of a record company is absolutely diminished. And that's where UnitedMasters come in, because we connect the artists and the creator directly to the distribution platforms.
STEVE STOUTE: Yeah well, so there's a couple of things that I'd like to discuss. So Lena is correct. If you don't own, you can't create generational wealth. That's the whole-- you have to have an asset to pass down. You have to have an asset that keeps putting off money, and putting off value, or creating value in order for you to pass it to your siblings, and pass it to your next generation.
So if you sign a record deal, and you give away those rights, I mean, you have nothing to pass down. You have this short-term financial gain of the money they gave you to purchase those rights. I think what you've seen is this generational, this sort of shift as generations have evolved, where we've gone from the indentured servant, to slavery, to the employee, to ownership. And I think that's where we are.
And the cycle of value creation is like, I don't want to be an employee. I just don't want to be an employee anymore. I want to own. So even if you work at a company, you want equity. And if you're a creator, you definitely want to retain the value of the intellectual property that you created. So that's just the evolution of the way things have evolved.
And that's a good thing, because those stories that we all grew up on watching, I don't know if it was the five heartbeats, or whatever tragic story of a creator who created something, and then looked up, and ended up they didn't own anything, and their name, and their likeness, and their work was gone, are not stories that people want to replicate anymore. These next generation of creators are entrepreneurs. And that's actually exciting for me to go from being in the record business, and not understanding as a record executive actually the economics of the business.
And I tell a lot of people who are friends of mine that work at record companies, they work there. They don't realize that what they're doing is empowering these companies to take these rights. But as I've evolved as a person, we're able to build this business to help provide these opportunities. You're seeing it opened up a lot of eyes. And that's why out of all the things that I've done in my career, I'm really most proud of UnitedMasters, because it's not about me. It's about helping the next generation of artists own themselves.
- Going to UnitedMasters, so I just remember people growing up, if they grew up on MTV, and Making a Band, like you said, there was this big thing about people weren't talking about ownership. It's like, I want the chain.
STEVE STOUTE: Yeah.
- How does United--
STEVE STOUTE: [INAUDIBLE]
- Yeah, people had the chain--
- But--
STEVE STOUTE: The chain, the jacket, the anything.
- It's Too Short [INAUDIBLE].
STEVE STOUTE: Some symbolism, some short-term symbolism.
- Nothing that you said that was an equity or asset. And I think Too Short rapped about it doesn't matter if you're an $80,000 car, but you living in your mama's basement.
STEVE STOUTE: Yeah.
- How Is UnitedMasters helping these independent artists come into their own, and own their own stuff? What does it do?
STEVE STOUTE: Well, the first thing that we providing is a very simple interface so that you can distribute your music. And when you go through us, you don't have any issues about ownership. It's yours. You retain the rights, period, right? So we're first providing that. And that's just distribution.
On top of that, we also provide brand services. So we have a company, Translation, that works with some of the greatest brands, the NBA, State Farm, AT&T, and many others. And between the brand side of the business, and having the artists, we actually make connections. And we've created a marketplace where the brands and the artists connect.
Brands want to be on the front end of understanding culture. These artists are creating culture. So there's obviously a synergy there. And we put that together at scale, whether it be sync, so you know you're watching a commercial, or you're watching a feed on social media, the music behind that feed, we're trying to provide all that through our independent artists network. So we're providing artists distribution plus brand opportunities to underwrite a lot of their-- a lot of the things they want to do to go on their first tour, shoot their videos, whatever they want to do, we have brands that are helping underwrite that and putting money in their pocket. So it becomes distribution plus opportunity, which no one else in the marketplace even come close to providing those services.
- So you talked about distribution plus opportunity. You started off in the record industry. Why did you make the switch into branding, advertising with Translation?
STEVE STOUTE: That's a long story. But it started with oddly enough, I worked on the film Men in Black, the soundtrack Men in Black. And it was one of these things where the glasses 14 million. And the album sold 10. And the glasses not only sold more, but we were a big reason why the glasses were selling, but we got no credit for it at the record company.
And I was like, I'd much rather-- if we can create culture, and then somebody else monetizes it, I'd much rather be on the side that monetizes it. So it wasn't a coincidence. I knew that music actually creates cultural moments that then creates consumer behavior, contagious consumer behavior, where you got it. I want to buy it. Like, you got that haircut. I want that haircut, that kind of thing.
And I went on the advertising side. The company that did the product placement to put the glasses in the music video and all that is a company that I first went to. And I left the record business, and I wanted to learn the advertising business. And I learned it.
And in 2004, I left, and I started Translation. I've owned the company since 2004. I can't believe it's been almost 18 years 17, 18 years.
- So we talked about branding. One of the things that I want to bring up is in 2020 after George Floyd a bunch of companies, black square, we're involved in ESG, environmental social governance. We care about social justice.
STEVE STOUTE: Yeah.
- However, it is now 2022, and we've had more cases since George Floyd. How does this whole branding, ESG?
STEVE STOUTE: And DEI, diversity.
- Yes.
STEVE STOUTE: Right, diversity officers and stuff. You know, it's sadly enough to say that every time something happens, you see industries. So I can talk about the advertising industry for a second. They say, oh, we got to do better. And then they just go right back to what they were doing before.
And I wrote a lot about this, because unless the brands say, unless you have a certain amount of people that are diverse, or this is your employment requirements, then why would I be in business with you? I hold you to a standard. Unless it affects your money, these brands, these agencies specifically on the creative agency side, they're not going to police themselves.
So then they go around and they go, and on the brand side they go, oh, we're going to put a black square. Like, that's not going to do anything. A black square means nothing. That's not commitment. That's commitment to somebody, a social media manager just making a square block.
What are you going to do about the infrastructure in your hiring process? What are you going to do about your board? What are you going to do about your marketing campaigns, and how inclusive are they? Like, those are the infrastructure things that need to be checked.
And unfortunately, what I've seen over and over again is that this stuff when it's in the top right hand corner of The Washington Post, or The New York Times, everyone cares. Then as soon as it dissipates, and something else comes up, like the war in the Ukraine, all that stuff just goes to the side. So nothing really changes.
I'm doing the best that we can at UnitedMasters, that my companies we're hiring, we're fully diverse. Like, I'm committed to that. But I've always been committed to that. Like, it's not a new thing. The commitment is real.
And there are some brands that I will say that has done a really good job, and have reached out and said, I want to do better. I'm trying my best to do better. Show me the way. And I'm proud of those partners.
Google is one of those partners. Apple is one of those partners. There are some brands like the NBA that is absolutely-- Adam Silver believes that it's core and diversity. But then there's others that honestly, they visit the subject right when the sun is shining on them, and then as soon as it goes away, then they go back to business as normal, yeah, normal, usual, that kind of thing.
And it's sad, because you really do want your board and your marketing to reflect society. You become actually a much better business when you have diverse thoughts at the table. You become--
- Thank you.
STEVE STOUTE: It means you're a much better company.
- It makes it better.
STEVE STOUTE: It makes it better. But like, it's almost like the nepotism is so strong that you choose nepotism over outcome.
- Thank you so much, Steve, for shining a light, and coming to AMS, and sharing these words with us. Hopefully, our independent artists who are watching are listening and learning, and also, those creators out there who want to become their own employer.
STEVE STOUTE: That's right. Well, thank you so much for having me.
- Thank you.
STEVE STOUTE: Such a pleasure. And I love the fact that you asked me those questions, because I can't not talk enough about helping our people. I can't talk enough about helping the independent artists, and providing them the tools, and the education to own their future.
- Thank you.
STEVE STOUTE: Thank you. All right.