For a company which only launched four years ago, Stem has one of the most impressive boards of any startup in today’s music business.
Across the firm’s board and its investments team, you’ll find the likes of Scooter Braun and Yael Cohen Braun, in addition to Mark Gillespie of Three Six Zero Group, Bruce Flohr of Red Light Management, Kara Nortman of Upfront Ventures, Jennifer Fonstad of Aspect Ventures, Rick Hess of CAA’s Evolution Media Capital (EMC), Seth England of Big Loud and Jamil Davis (manager of G-Eazy).
Today (August 19), Stem adds another big name to these ranks: Mike Vaughan, the former COO of fintech company Venmo.
Mobile payment service Venmo, which allows users to transfer funds to one another via its app, was founded a decade ago. It confirmed 40m active users earlier this year, and forecasts that $100bn of payments will move through its platform in 2019.
Venmo was acquired by Braintree for $26.2m in 2012, before Braintree was itself acquired by PayPal for $800m in 2013. Vaughan, who joined Venmo in 2011 as one of its first ten employees and left earlier this year, played a hands-on role during both of these buyouts.
Milana Rabkin, CEO of Stem, said of Vaughan’s decision to join her firm’s board: “As we keep building out Stem’s platform capabilities, Mike will provide industry insights and connections that will propel Stem’s artist and label fintech offerings.
“The fintech angle perfectly complements our broader mission of being the most reliable way for artists to get paid and to automate accurate payments for all collaborators who helped them create.”
“As we keep building out Stem’s platform capabilities, Mike will provide industry insights and connections that will propel Stem’s artist and label fintech offerings.”
Milana Rabkin, Stem
In a new blog post, Stem said that the addition of Vaughan to its board was exciting because “[one] area we are especially enthusiastic about is how advancements in fintech can be applied within the music business”.
Said Vaughan: “The amazing thing about fintech is that you can find it embedded in so many different industries and vertical segments. The music industry can benefit tremendously from innovation in the way money flows between the creators, the distributors and the platforms. Not to mention the impact we can make with offering more accessible financial services that cater to the creators in the music space.”
Stem is best known for distributing music from the likes of Frank Ocean and Childish Gambino, and for enabling artists to set royalty splits determining who amongst their fellow rightsholders receives what percentage of future income.
In June, the company, which has raised $12.5m to date, announced that it was pivoting away from elements of its original business model by turning off the ability for any DIY artist to distribute their music through its platform.
As a consequence, Stem cut ties with tens of thousands of DIY artists whose music it previously distributed, migrating them over to its former rival in the space, TuneCore.
Instead, Stem launched ‘Stem Direct’ exclusively for its top-performing acts (and future signings), as a VIP offering which the firm described as “a concierge member service to support our top talent”.
‘Stem Direct’ customers receive benefits like a dedicated account representative who they can call, text or email.
As a result of the new focus on ‘Stem Direct’, Stem last month upped its standard commission for new artists from 5% to 10% of royalty income.
Interestingly, Venmo had links to music when its co-founders, Andrew Kortina and Iqram Magdon-Ismail created the fintech company.
The duo came up with the idea for Venmo because they wanted a way to use their mobile phones to pay bands at live shows without using cash.
Discussing Vaughan’s arrival at Stem, Magdon-Ismail, who is now working on his own new startup, said: “Music is literally the reason that Venmo started. Across the music business landscape, it’s awesome to see how opportunities have evolved for artists, from the earliest days at Venmo to today’s services like Stem.
“This is fundamentally changing the way that artists are treated as legitimate business people and I’m excited to see how Mike’s board role and his knowledge of fintech will accelerate this.”Music Business Worldwide