Troy Carter: ‘The music industry has to change the business model; it’s as simple as that.’

You can listen to the MBW Podcast above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart etc. via this link.


Troy Carter has seen the music industry from all sides.

He was the manager of superstar artists like Lady Gaga and Eve at Los Angeles-based Atom Factory, working closely with huge major labels. He was also an early investor in Spotify, Uber and Lyft.

In 2016, Carter joined Spotify full-time as the platform’s global head of Creator Services, with a direct line into SPOT boss, Daniel Ek. There, Carter helped pave the record industry’s streaming-led future, while bringing Spotify closer than ever to artists.

Two years later, Carter left Spotify before launching his own distribution and services company, Q&A, alongside co-founders Suzy Ryoo and J.Erving.

Q&A services big-league independent artists such as Pink Sweat$ and Baby Rose, and prides itself on the proprietary technology it offers indie labels and artists.

This week, that tech kicked up a gear with the announcement of Q&A’s Venice Innovation Labs, an internal software division that the firm says “enables record labels to beta test songs, manage their artist rosters, and distribute music easily and efficiently”.

Two new products – “sentiment analysis” app StreamRate and holistic label management platform Venice For Labels – were unveiled by Q&A earlier today.


Q&A was in the news for other reasons a few days back, having sold J.Erving’s distribution/services company, Human Re-Sources, to Sony Music / The Orchard. Human Re-Sources takes with it Grammy-nominated indie artist Ant Clemons to Sony Music, with Erving going in-house at the major record company.

(Q&A launched following a merger with Human Re-Sources in the first half of last year, but, thanks to the Sony acquisition, the two companies have now parted ways.)

In the latest MBW Podcast, Troy Carter discusses the future for Q&A, as well as independent artists, major labels and the wider music business.

Listen above (or via Apple Podcasts, Spotify etc. through here), or read the edited highlights below…


Why did Q&A and J.Erving decide this was the right time to sell Human Re-Sources to Sony?

It’s a really interesting time in the music business. Sony were looking at how they round out services for their distribution [offer via] The Orchard.

J and I had always had a great relationship with Rob Stringer – Rob’s a legend. So when we were approached about it, it made sense all the way around. It was a good fit for Sony and a good deal for us.


You’ve just launched and invested in Venice Innovation Labs. What’s keeping you hungry in the music business today?

I think we’re in literally in the beginnings of what the music industry is going to look like in the future. When I was at Spotify, I realized [things were] imbalanced in terms of the knowledge of what the future of the music business would look like that was inside of Spotify versus the rest of the industry.

“I realized [things were] imbalanced in terms of the knowledge of what the future of the music business would look like that was inside of Spotify versus the rest of the industry.”

You know, Daniel [Ek] lives 10 years ahead of everybody else. So one of the things I’ve thought about is: what if the music industry had the same sort of capability? What if, instead of having software companies and outsiders build products for the industry, [music business] insiders were able to do the same thing?

That means a very high a high level of machine-learning analytics to tell you about fan engagement, sentiment, more efficiency in your [marketing] spend – most big businesses have that [but] the music industry lacks that right now.


Artificial intelligence and machine learning is certainly affecting A&R – with Tencent INVESTING IN INSTRUMENTAL and Warner increasingly relying on its own A&R scouting tool, SODATONE.

The problem that the music industry has right now is that everybody’s fishing from the same pond. If everybody has the same exact data, they’re all looking at the same thing.

That actually makes things worse, because it drives up the expense of deals – it keeps the record companies imbalanced, in a sense. Being able to create unique sets of data, unique inputs, that’s what that’s what gets you ahead in the competitive landscape.

[A&R today] really doesn’t use a lot of sophisticated machine learning as much as it looks for velocity – somebody [putting] out an independent record that’s starting to get hot. But there are a lot of different factors that should go into the decision to [sign an artist].


There are around 40,000 new tracks a day being uploaded to Spotify, according to Daniel Ek. One of the criticisms of the streaming age is that it’s harder to make an artist proposition endure in the minds of the audience than it once was.

There’s a few things to unpack there. It works to labels’ disadvantage to have 50,000 songs a day come out. The fragmentation of stars really works to the streaming services’ benefit, not having that high concentration of stars at the top. Just from a pure leverage standpoint, streaming companies lose leverage when record companies have a very high concentration of superstars.

“The fragmentation of stars really works to the streaming services’ benefit, not having that high concentration of stars at the top.”

Labels still have the ability to build those big superstars; it’s a matter of having patience. It’s [about] focusing on the the body of work, the creativity, and the art.

Album formats and listening habits may have changed. But if people make great music, people are going to listen. We can’t lose sight of great artists in the name of trying to keep up with with technology. There’s a happy medium between the two.


Listen to the MBW Podcast with Troy Carter above, or listen via Apple Podcasts, Spotify etc. through this link.


Jody Gerson, who runs Universal Music Publishing Group – and was recently one of the key people to spearhead the Bob Dylan deal – suggested to MBW in AN INTERVIEW LAST YEAR that the music industry has bought into this idea that it has to keep feeding the streaming platforms. The point she was making is that there’s only so much brilliant music that can be released within a weekly avalanche of new records. Is there an argument that labels, including major record labels, should be signing fewer artists and focusing their resources on them?

Everybody’s looking at the volume game right now. It’s this flywheel that constantly feeds: the more music that comes out, the more listeners you get coming back to the platforms, and the more listeners that come back to the platforms, the more advertising you sell.

I think artists have gotten into the habit of releasing in volume, because if you don’t feel like you’re putting out enough music, you [worry about] other artists, your contemporaries, getting ahead of you. So artists feel this constant need to put out music, which benefits the record labels because of the revenue, and at the same time benefits the streaming services.

But when you look at certain artists, whether it’s Adele, or Lady Gaga, or Drake,  these are people who can take their time in terms of making projects, and when they put out music, the projects work. They don’t feel the anxiety of, ‘I gotta put out music or I don’t exist.’


The independent artist market keeps growing its market share globally. How do you think that trend is going to affect the music industry, particularly the record industry, as the years roll on?

The growth of the independent artist sector is obvious. And as crowded as the space may be, there’s still not enough distributors out there, especially from a quality perspective, that can lead independent creators, or independent labels, on a path of success.

The trend [of indie artists increasing their market share] is going to continue to grow because you see the money starting to pour into music. We didn’t really have big pools of private equity capital, or crowdsource capital, or institutional capital, coming into the music industry in the past – especially at the rate we see now.

Right now what [major] record labels have on independent distributors is a core level of institutional expertise on how to build superstars around the world. But when you can marry that capital with that expertise on the independent side, I think we’re going to see a really big shift.


If I understood correctly, you’re talking about the sort of second or third coming of independent labels?

Yes. I feel like we’re already seeing that happen. And [next] we’re going to see even a bigger wave.

You’ll have the new wave of independent labels, but also you’ll have a new wave of independent artists – where being independent isn’t a means to an end. It’s not, ‘I’m going to be independent [until] I can get a record deal.’ It’s, ‘I’m going to be independent, and I’m going to stay independent, because I have freedom, I have revenue, and I have partners in place that can help me long term around the world.’


What does this all mean for the major record companies? How can they counteract the tidal wave of independent artist releases coming out and biting into their market share?

That’s one of the reasons why the Human Re-Sources deal made sense for Sony and The Orchard – it’s a good answer to their problem. Especially as we look at the urban market, where Human Re-Sources has done incredibly well… it helps [Sony Music] solve that problem. And I think we’ll see a lot more roll-ups and acquisitions in that space. But I do think that it’s going to be a long term problem for [major] labels, for sure.


Let’s talk about your old stomping ground – Spotify. Since you left, in some respects, the company has done really well – you only need to look at its share price, which has been greatly influenced by its podcast strategy. But in other regards, especially around the ‘two-sided marketplace’, there seems to be a creeping realization that a path to profitability at Spotify needs to be demonstrated to investors, and soon. What’s your take?

[Spotify] has been doing incredibly well. When Daniel hired Dawn Ostroff as head of content, a lot of people really questioned [whether] that made sense. Fast forward, and I think Dawn has done an incredible job in terms of building out a very clear content strategy that wasn’t as clear during [Spotify’s] earlier years.

What they’ve done with podcasts, from an acquisition perspective and a product perspective… [plus] making search easier, making recommendations easier… it’s a much better consumer experience.

With that being said, music is still very important for Spotify – that’s the reason they haven’t abandoned music and, and [focused exclusively on] podcasts, because, from a consumer perspective, music is still so important. At the same time, there’s that balance of [Spotify needing] to make sense from a business model perspective.

“Spotify has to figure out monetization on music in a way where that doesn’t kill the business that helps grow margin.”

Spotify has to figure out monetization on music in a way where that doesn’t kill the business that helps grow margin. If [Spotify] can offer value in terms of artists  accessing a bigger audience, or help to build engagement with audiences, help to sell tickets, help to do all of these things to build revenue… I do think there should be an exchange in dollars for that.

When you look at the contribution that streaming has made to the to the music industry, it’s the gift that keeps on giving. When labels no longer have to spend money on marketing albums, but still get to collect that revenue, that’s significant.

I’m probably one of the only people who has lived on multiple sides – as a manager, as somebody who’s worked with labels, and as somebody who’s worked within streaming. And there’s a symbiotic relationship there; they [might] be frenemies, but they need each other.


The FALLOUT BETWEEN CHANCE THE RAPPER AND HIS MANAGER, PAT CORCORAN, is, from a certain perspective, one of the saddest things to happen in the music business for some time, just because their story up until 2019 or so was so inspirational for independent artists. It seems that the demands and the vastness of that career possibly overwhelmed the bonds that tied artist and manager and the whole operation together. What lessons can the industry, independent artists, and artists managers take from that storyline?

I agree with you: when I when I saw [the news], I was definitely sad because I think what Chance and Pat built was so inspirational. Pat’s one of the smartest managers I’ve ever worked with. And I think the work speaks speaks for itself.

I don’t really think [the narrative] has that much to do with Chance being an independent artist as much as it does with him being being an artist.

“The Beatles might be the only act in history that didn’t catch a brick at some point.”

The Beatles might be the only act in history that didn’t catch a brick at some point. And that’s because they broke up after, what, seven years?! So it’s par for the course in terms of the ups and downs of these creative cycles. [But] it means you have to manage through them.

This is without me knowing any information in terms of what happened between these guys personally, but when you’re in the foxhole together, you have your wins together, you have your losses together, and then [the best thing to do] is put your heads together, and figure out how to win again.


Listen to the MBW Podcast with Troy Carter above, or listen via Apple Podcasts, Spotify etc. through this link.


We saw Kanye tweeting out his historical record contracts earlier this year, claiming he couldn’t buy his masters. At the same time, we have Taylor Swift alleging that she’s been frozen out of controlling her masters, and watching them be sold twice over. With those two situations in the background, what are we learning here about the balance of power between artists and record companies?

The music industry has to change the business model; it’s as simple as that. New artists are becoming smarter and smarter, and we can’t be greedy.

In all fairness, record labels take a risk that most people aren’t willing to take; they invest millions of dollars into an artist’s career, without having a clear understanding of whether they’re ever going to see that money back. [But] if that artist has success, then the model should change.

“New artists are becoming smarter and smarter, and we can’t be greedy.”

So you might start off on a traditional record deal where the label gets 83% and the artist gets a 17% royalty. But if that artist becomes Roddy Ricch or whoever, [when the label has] made a significant profit, then maybe the economics flip, and that artist receives 75%, and the label gets 25%. Because now you’re de-risked; you’ve made a profit, and you have a consistent amount of revenue flowing in from [those] projects.

We’re gonna see those those type of risk/reward models a lot. And record labels can’t be locked in a cost structure that [means] they can’t switch their current model, and [which] doesn’t allow them to compete with entrepreneurs who are looking at it through a more artist-friendly lens.


You’re indicating that you think record companies should prepare themselves for a less cost-heavy future?

Yes. In the future, I don’t think record labels are going to own masters. That’s just my prediction.

“In the future, I don’t think record labels are going to own masters.”

There should be deals in place where artists own their masters, or be able to earn the right, through success, to have those masters come back to them. Now, if they’re unrecouped and a record label’s lost money on them, then [the label] should be able to continue to have ownership [of the masters] and benefit off the revenue. That’s only fair.


One other big talking point for the music industry this year has been the new money washing in – billions of dollars coming from Wall Street, the stock exchange, and elsewhere – being spent by companies like Merck MercuriadisHipgnosis Songs Fund, Round Hill, Primary Wave and Concord. What impact do you think this is all going to have long term on the record and music publishing industries?

It’s already having an impact. Merck’s revolutionized the philosophical idea of what catalog ownership means. Years ago, if you were a songwriter, your catalog was passed on to your estate; it was basically taboo for songwriters to depart with their catalogs.

Merck’s a talent manager at heart, so I think he understands what’s important to artists. [He’s] able to have those conversations with artists about being a steward of their catalogs; and, at the same time, he’s able to bring serious cash to the to the table and give people significant liquidity. That’s a game changer. It becomes hard to compete with, when you’ve got the capital and [artist/songwriter] trust coupled together.

People who are coming in with just capital, they won’t be able to get a lot of the deals that Merck’s been able to get, because he has a trust factor there.


Let’s say I’m an independent artist with a track that’s started to catch fire on streaming services. What one golden piece of advice would you would give to me?

Be willing to bet on yourself.

A lot of the conversations that I have, a few times a month, are with artists or with managers who did deals in the past that they now regret because [those deals] won’t allow them to accomplish their long term goals.

So don’t take all the money off the table right now; maybe [the best approach] is figuring out a smaller deal that gives you more flexibility.


Listen to the MBW Podcast with Troy Carter above, or listen via Apple Podcasts, Spotify etc. through this link.

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