The Pandemic Has Changed the Music Industry Forever. Meet the LA Music-Tech Startups Poised to Reshape It.
Aug 19 2020
- The pandemic has ravaged the music industry, but music-tech companies are poised to drive its growth into an industry where a music company is much more than music.
- Los Angeles is home to a bustling ecosystem of startups empowering musicians through a variety of next-generation technologies.
- The Takeaway: Innovations in music-tech offer new tools to independent artists to help them create music, manage money, reach fans and share their music in vivid, immersive ways.
<p>
The pandemic has hushed the music industry. Throbbing concert crowds have disappeared, artists' sales have plummeted and musicians' overall <a href="https://www.weforum.org/agenda/2020/05/this-is-how-covid-19-is-affecting-the-music-industry/" target="_blank">income has fallen precipitously</a>. But a handful of Los Angeles-based tech startups are providing musicians with everything from socially-distanced collaborative recording to simplified back-office accounting.<br>
</p><p>
"The L.A. music-tech scene is primed to drive this industry forward," says Ed Buggé, partner at L.A.-based entertainment law firm Hertz Lichtenstein & Young. "It's a hugely exciting time in the industry, with startup-driven disruption enabling new models for artists and media companies alike."
</p><p>
Buggé, who advises some of the world's leading tech and media companies, says the ecosystem of music-tech startups is poised to accelerate two big trends in the music industry.
</p><p>
One is the rise of independent artists. In 2018, indies – artists who own most or all of their material – <a href="https://www.midiaresearch.com/reports/independent-artists" target="_blank">earned 6.6% of total recorded music revenues.</a> That's a 78% growth rate from 2015, which <a href="https://www.rollingstone.com/pro/features/diy-artists-will-earn-more-than-1-billion-this-year-no-wonder-the-major-labels-want-their-business-830863/" target="_blank">makes independent artists the fastest growing segment of the recorded music market</a>. Entertainment research firm MIDiA says this change <a href="https://www.midiaresearch.com/reports/independent-artist-survey#become-a-client" target="_blank">"could prove to be more impactful than even the rise of streaming."</a>
</p><p>
The other trend startups are speeding up is the transformation of what a music company even is.
</p><p>
"Music is no longer just music," says Buggé, adding that audio is becoming inseparable from technologies spanning artificial intelligence, gaming, social media, as well as augmented and virtual reality.
</p><h2>Recording Studios at Home
</h2><p>
Musicians today have far more access to high-quality production tools and capabilities than they once did.
</p><p>
Software packages like Logic Pro or Ableton have brought the recording studio's physical equipment and professional engineers right into an artist's living room, saving them thousands of dollars.
</p><p>
"In 2020, all you really need is the essentials – your phone, your laptop, and a good pair of headphones," says Americo Garcia, aka <a href="https://open.spotify.com/artist/4m1yRHUMhvB8gKAJTjK4kO" target="_blank">Boombox Cartel</a>. Add in a good $100 microphone or two and an instrument and you've got a home studio.
</p><p>
"Back in the day you'd have to ship reels of tape and jump hoops and loops just to make a song happen. Nowadays you can email someone in Poland and say, 'hey man, let's start something,'" Garcia says. In addition to tools like Dropbox that enable file-sharing across the world, several companies have emerged to help musicians find and work with each other.
</p><p>
"If you think you need a label to blow up, you're wrong," Garcia says.
</p><h2>Meet Your Bandmates</h2>
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDgyNy9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY1NjQ1NjUxN30.WPzxOmOeWfRcUTNHvrPYT4MEq3vyN4WHhUkyX9Bcv7Y/image.png?width=980" id="628fb" class="rm-shortcode" data-rm-shortcode-id="65d41b028416e445cdf3b9c5e195a5d1" data-rm-shortcode-name="rebelmouse-image" />
Musicians' Jammcard profiles help them to collaborate
<p>L.A.-based <a href="https://jammcard.com/" target="_blank">Jammcard</a> has been called the "LinkedIn for musicians." Founded in 2017 by professional drummer Elmo Lovano, the company has nearly 10,000 members and has raised around $2 million from Quincy Jones, Twitch co-founder Kevin Lin and Lionsgate President Robby Melnick.</p><p>Lovano formed the company to streamline the process by which professional musicians find each other, rather than relying on word-of-mouth. He estimates that as many as 95% of Jammcard members are independent, and that their median income is around $70,000.</p><p>"A lot of the people that are on Jammcard are the people that support the big artists; Kendrick Lamar's not on Jammcard, but his entire band and crew are," Lovano says. "Sound engineers, stage managers, guitar techs – we like to say that it's for 'anyone that's on the bus or in the studio'."</p><p>Lovano says Jammcard is finalizing partnerships with Sony and Fender and has recently expanded its platform to enable digital payments to members for collaborating, performing and teaching. Jammcard also recently partnered with New York-based <a href="https://splice.com" target="_blank">Splice</a>, an online music production service that offers downloadable samples and plugins that make it "a lot more accessible and intuitive to start creating music," says Ankur Patel, Splice's head of corporate development. Jammcard's artists can host their sound samples on Splice and share in the proceeds.</p>
<p>
<a href="https://soundstorming.com/" target="_blank">Soundstorming</a> is another L.A. company using tech to enable artistic collaborations. Users upload small segments of their self-produced audio files, allowing other members on the platform to provide feedback and even layer in their own bass grooves, vocal melodies, and drum beats to collectively compose a new track.<br>
</p><h2>Build Your Own Label
</h2><p>
Former UTA agent Milana Lewis created <a href="https://stem.is/" target="_blank">Stem Disintermedia</a> in 2015 to "alleviate back office work so an artist can eliminate those costs and release content more easily."
</p><p class="shortcode-media shortcode-media-rebelmouse-image image-crop-4x3">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDgzNy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY1ODY0ODI0OX0.pWF64e99T6hiJHaHfTXrdeaa70RCcrg6TMhcouZzPCw/image.jpg?width=2000&coordinates=211%2C1702%2C198%2C1964&height=1500" id="42ef4" class="rm-shortcode" data-rm-shortcode-id="3afb4c3879ec1b87b7f681591733cc81" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Stem co-founder and CEO Milana Rabkin Lewis</small>
</p><p>
As an agent, Lewis saw how the complexities of music copyright were depriving musicians of opportunities to make money. "The administrative work was too burdensome for any individual artist to do," she told dot.LA. Artists would give up and say, ''I'm just going to put it up for free'" on sites like YouTube and Soundcloud.
</p><p>
Stem has raised over $12 million in funding, including two rounds from L.A. firm Upfront Ventures. The startup also recently launched its own $100 million debt-financing arm to allow artists to borrow money against their existing catalogs.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg0OC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYzMzIwODA0MX0.hVGcHFix-9uoxfeq_qMZn1uUUqEyG3WAqiiS6mf2vHU/image.png?width=980" id="47b09" class="rm-shortcode" data-rm-shortcode-id="c711613438422424bf982e03559e0a19" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Stem's interface helps artists and their managers track their finances</small>
</p><p>
<a href="https://createmusicgroup.com/" target="_blank">Create Music Group</a>, another startup formed in 2015 that helps artists take control of their accounting and distribution, has a similar origin story.<br>
</p><p>
"We realized the YouTube landscape was poorly mismanaged," recalls Sam Casucci, partner and senior vice president of digital strategy at Create, recently named the second-fastest growing company in the country in <a href="https://www.inc.com/inc5000" target="_blank">the annual Inc. 5000 list.</a> Create employs about 120 people and serves over 10,000 clients – mostly indie artists and labels, the company says. "There was a lot of music and (rights holders) who weren't getting paid what they should be," Casucci says. Create has since built technology on top of YouTube's rights-management platform to help artists make money.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg0NC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY1MTAyMTMyOX0.Dscpj9oxYKyx6-dye-p0WwEkNEAeNt4kG10a6mgg0fs/image.jpg?width=980" id="d272e" class="rm-shortcode" data-rm-shortcode-id="606931ca6494f1c234e49b4707d3dec9" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Create Music Group's Hollywood office</small>
</p><p>
Independent artist and Create client Ray J told dot.LA, "They help you study everything that's going on and help you find money you might not have even known existed."
</p><p>
"When you sign to a major label you don't really get to see what's going on behind the scenes," says Ray J. "You can become your own record label now."
</p><p class="shortcode-media shortcode-media-rebelmouse-image image-crop-16x9">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg0MS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0Mjg2MTE3Nn0.P2GltSXW2-xLoudj0GTOz3dJC3Tqi6U-ZaqGjSITds4/image.png?width=1245&coordinates=0%2C29%2C0%2C552&height=700" id="3c618" class="rm-shortcode" data-rm-shortcode-id="6fde8d6674a1a7114390675ab398e010" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Create's dashboard to help musicians manage their copy rights</small>
</p><h2>Get Paid<br>
</h2><p>
Elsewhere in L.A., <a href="https://pex.com/" target="_blank">Pex</a> helps artists manage their monetization by following the data associated with their songs across the web. Wilson Hays, head of business development, says Pex monitors over 20 billion songs and videos on dozens of social media platforms.
</p><p>
The company indexes all that data – which comprises over three-times as much content as what's on YouTube, Hays says – and uses patented technology to allow the people behind the music to track and measure its online activity. It even allows artists to easily issue take-down notices if they wish.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg0OS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYwNjA3ODA4Nn0.zlGf6lj3n8ozN3qDo0d8gw7s8l6PkcfomAQs0Zea-78/image.png?width=980" id="a02ae" class="rm-shortcode" data-rm-shortcode-id="ee0d1d19ef45970df5be8d0d6339e9e2" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Pex's song-tracking dashboard</small>
</p><p>
"YouTube has Content ID and Facebook has Rights Manager, but outside those platforms, in the wild, you don't know how your content is being shared, moved, monetized, or pirated," Hays says. "We want to put control back in rights holders' hands."<br>
</p><p>
That sort of control offers benefits to artists that they wouldn't necessarily have with a traditional label deal. One benefit is that payments come in faster. It also gives artists more freedom to manage their career trajectory.
</p><p>
And that freedom gives artists the choice in how they use the many emerging mediums by which they can share their music.
</p><h2>Reach an Audience
</h2><p>
An artist who wants to interact directly with fans can post their songs on a host website like YouTube, TikTok, Soundcloud or Bandcamp and chat with their audiences on social media channels. But these platforms have limitations.
</p><p>
A post on Instagram, for example, carries no guarantee that it will reach an artist's fans; most followers do not see every post. Artists must also contend with the fact that the interests of social media platforms are not always aligned with their own.
</p><p>
Jake Udell, a music manager and entrepreneur with a reputation for digital wizardry, recognized social media's limitations early on.
</p><p>
"The thing I kept noticing was that the algorithms were making it really challenging for us to reach our audiences," Udell told dot.LA. "I didn't think there was a fix, though. We'd given up and sort of ceded our audiences to these social platforms."
</p><p>
Then he conducted an experiment. Tickets went on sale for an artist of his who had about twice as many fans in L.A. than New York. Not surprisingly, about twice as many purchases came in for the L.A. shows than the New York ones. Udell then decided to collect around 1,000 phone numbers from fans at a New York show.
</p><p>
"We found some random texting service online and just blasted them out," he recalls. "What happened next changed the way I thought about building audiences online forever."
</p><p>
7,000 tickets to two New York shows immediately sold out. <a href="https://artofamanager.com/2018/02/artist-texting-is-the-new-craze/" target="_blank">Udell wrote about it on his blog</a>, which is how he met Matthew Pelltier, chief executive of L.A.-based <a href="https://community.com/" target="_blank">Community.com</a>, where Udell is now head of activation.
</p><p>
"The algorithm has not really been an enabler" for musicians, Udell says. "What if we could just meet the fans where they're already at?"
</p><p>
That's exactly what Community does, he says, by providing artists (and other "Leaders") a SaaS platform for exchanging text messages with fans en masse.
</p><p>
"I think about it like this," Udell says. "How many social platforms have you joined over the last 10 years? Versus how many times did your phone number change?...The phone number is a true atomic unit of identity; it's not going anywhere."
</p><p>
What's more, Udell says 98% of text messages get opened in the first three minutes.
</p><p>
"On other platforms there's a guarantee of instant publishing, but there's no guarantee of instant distribution," he says. Whereas with Community, "the idea that you will always be able to reach your fans, this community, via text, is a really empowering thing not just for you personally but for your business."
</p><p>
Big-timers like Jennifer Lopez use Community, as do aspiring local band types. Prices depend on audience size. One feature: ability to segment fan outreach so that, for instance, a band coming to a specific town can message only the locals – "See you at the show tonight?"
</p><h2>Tour Virtually
</h2><p>
Wave turns performers into digital avatars and puts them on virtual stages where they can entertain and interact with fans, who tune in via VR headset, gaming console or web browser.
</p><p>
"We started the company four years ago to help musicians make money," <a href="https://wavexr.com/" target="_blank">Wave</a> chief executive Adam Arrigo told dot.LA. "We've been touring musicians and we know how hard it is."
</p><p>
Wave has now hosted over 50 events. Its recent concert featuring The Weeknd in partnership with TikTok <a data-linked-post="2646923010" href="https://dot.la/the-weeknds-concert-on-besieged-tiktok-2646923010.html" target="_blank">reportedly drew a digital audience</a> of over 2 million fans.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg1MS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYzNTc0OTYyOX0.LPZMZWipBamYsrPT8hxnLSZ0AamP4hN3ugroBwtRPJs/image.png?width=980" id="698f4" class="rm-shortcode" data-rm-shortcode-id="c11631bd2cd2da7e040b1a08b2815a6e" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">A Wave concert of Swedish band Galantis</small>
</p><p>
Arrigo says his former role as a designer for the Rock Band video game franchise showed him how novel technologies can empower musicians.<br>
</p><p>
"From working on that game I learned that when you create new experiences you can create additional revenue streams for the industry," he says.
</p><p>
Building on a blueprint established in part by L.A.-based <a href="http://www.brud.fyi/" target="_blank">Brud</a> (whose digital influencer and singer <a href="https://www.instagram.com/lilmiquela/?hl=en" target="_blank">Lil' Miquela currently has 2.6 million Instagram followers</a> and attracts <a href="https://www.youtube.com/channel/UCWeHb_SrtJbrT8VD-_QQpRA" target="_blank">millions of views on YouTube</a>), <a href="https://strangeloop-studios.com/" target="_blank">Strangeloop Studios</a> is currently designing a cast of animated characters of its own.
</p><p>
Co-founder and chief executive Ian Simon, who is also on the creative team at Wave, says, "the long-term vision is to be a studio; to bring in storytellers and visual artists and creators to tell stories using these characters. The characters are a medium in themselves."
</p><p class="shortcode-media shortcode-media-rebelmouse-image image-crop-16x9">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg2Mi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMDk0MTQ5OH0.2u4Jl20-ZsS2IoBPWbJBOBO--6EdbmVd6yxfWBMCr_A/image.jpg?width=1245&coordinates=0%2C824%2C0%2C825&height=700" id="2d48c" class="rm-shortcode" data-rm-shortcode-id="631605323631149e2ec18c363cb4c57c" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">A character from Strangeloop Studios' virtual artist label, Spirit Bomb</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Strangeloop Studios</small>
</p><p>
Those characters present musicians with scalable creative opportunities. "You can play the same show with the same character in multiple places at the same time," Simon says. "They're vessels for human collaboration – multiple musicians contributing songs, various visual artists creating content and fans informing the narrative and aesthetic trajectory of the characters."<br>
</p><p>
"People are already listening to music on screens, even if the screen isn't really being leveraged," says Simon, whose small team includes former visual designers for megastars like Kendrick Lamar and Flying Lotus.
</p><h2>Immersive Music</h2><p>
<a href="https://virvii.com/" target="_blank">ViRvii</a> – a portmanteau of virtual, visual, and immersive – gives artists a new "paintbrush" for creating immersive fan experiences, says founder Juan Dueñas, who formerly founded My Mixtapez and was an early user of Oculus' development kit.
</p><p>
Dueñas says ViRvii will allow fans to "hang out" inside The Beatles' Yellow Submarine while the album plays in the background, for instance. Contemporary artists will be able to design VR experiences to accompany their releases. Despite the high-tech approach, Dueñas says he wants users to be able to get a homespun feeling of "sitting around a stereo or record player and smoking a joint and drinking a beer with friends and listening to your favorite album."
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NTE1Ni9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0ODMyNjg3NH0.4Zh0Ng5dMUM1ex1Om6FtZcM_MVFFd6VtWF6cs4k1rec/image.png?width=980" id="76310" class="rm-shortcode" data-rm-shortcode-id="7c57a0a0d666f337408736e857c9e799" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">ViRvii's continuous VR world will immerse fans into albums</small>
</p><p>
Formed in 2019 and now with a staff of 30, the L.A.-based startup <a href="https://dot.la/explaining-big-techs-la-for-vr-2646036087.html" target="_blank">recently announced a partnership with Facebook and its Oculus VR subsidiary</a>.<br>
</p><p>
<a href="https://www.splashmob.app/" target="_blank">Splashmob</a> gives performers control of their audience's cell phone screens. They can preprogram the screens of anyone who opts in with features like polls, audiovisual media to accompany the main show, and merchandise sales portals. The screens can also be controlled in real-time, not unlike an effects technician manipulating phone screens rather than lights and sound.
</p><p>
Founder Blaise Thomas was formerly a sound engineer in London, where his work in recording studios and live performances got him thinking about how to enhance concerts, whether in-person or streamed.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg2OC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYwNjg2MjI0Mn0._EFPNkWwMC5R5GYvAfsML25obs9HfaxTIWuOBTcvoV0/image.png?width=980" id="559ce" class="rm-shortcode" data-rm-shortcode-id="b385f8c62957fa443595c70ebbdcc7cf" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Splashmob's control panel gives performers the power to curate audience members' phone screens</small>
</p><p>
"The flashlight on the phone is all well and good," Thomas says, "but how far can that go?"<br>
</p><p>
Splashmob has collaborated with Dani Van de Sande and her L.A. startup, <a href="https://www.ulo.world" target="_blank">ULO</a>, which along with Splashmob and Strangeloop was part of the 2020 Techstars Music cohort.
</p><p>
"Imagine you're wandering around Melrose Avenue on your way to dinner," Van de Sande writes, "and out of the corner of your eye you spot a bright, iridescent light. It looks otherworldly, like something from another universe."
</p><p>
These cocoon-like walk-in installations, called ULOs ("unidentified landing objects"), offer immersive, interactive experiences for the adventurous souls who enter. ULO plans to dot them around city-scapes.
</p><p>
"We're another avenue where artists can do something beyond releasing a video – by creating an experience for people," says Van de Sande, who formerly worked on augmented reality at L.A.-based Snap.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg3MC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNDcyMzQ4OH0.SWZUZGH1mIk7gXpYKH2ZLhlycs_E-zdAxTNXdT6NGbE/img.jpg?width=980" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU2NDg3MC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNDcyMzQ4OH0.SWZUZGH1mIk7gXpYKH2ZLhlycs_E-zdAxTNXdT6NGbE/img.jpg?width=980" id="d1c3f" class="rm-shortcode" data-rm-shortcode-id="f3becabf57b005207d04fefb9ec8c09a" data-rm-shortcode-name="rebelmouse-image"></a>
<small class="image-media media-caption" placeholder="Add Photo Caption...">The Pandemic Has Changed the Music Industry Forever. Meet the LA Music-Tech Startups Poised to Reshape It.</small>
<small class="image-media media-photo-credit" placeholder="Add Photo Credit...">
StillVika
</small>
</p><p>
These new visually oriented channels for sharing music may help to shrink the gap between the ear and the eye that Spotify founder Daniel Ek often invokes when he describes the growth potential for his company. Why, he has publicly wondered, is the total video market worth around 10-times more than audio, even though consumers spend about equal time with each?<br>
</p><h2>Get a Side Gig
</h2><p>
<a href="https://www.cameo.com/" target="_blank">Cameo</a> offers anybody with over 20,000 Instagram followers the opportunity to build a profile on its platform and set a price for which they will record a personalized video message. The company was formed in Chicago, but its chief executive Steven Galanis recently moved to L.A. With his move, <a href="https://dot.la/cameo-ceo-on-his-move-to-l-a-and-his-companys-future-2646225672.html" target="_blank">Cameo's center of gravity has shifted</a>.
</p><p>
"L.A. is the best place for me to be for Cameo right now," Galanis recently told dot.LA. "I've been focused on being the tech company to work for in Chicago and I think that's mission accomplished in many ways. Now my objective is to make Cameo that place in L.A."
</p><p>
L.A. was once the destination for artists with a guitar case and a dream. Now, many of them can pursue those dreams from home. Music-tech companies, however, are flocking in.
</p><p>
"It's not an accident that Techstars Music is in L.A.," says Bob Moczydlowsky, who runs the accelerator, which recently <a href="https://www.f6s.com/musicaccelerator-2021/apply" target="_blank">opened its 2021 cohort application</a>, with an emphasis on attracting a diverse candidate pool. Moczydlowsky attributes L.A.'s centrality in this flourishing wave of music and tech innovation to two main factors. First is the access to an ecosystem of artists, managers, labels and touring companies. Second is the venture money in Silicon Valley.
</p><p>
"L.A. is less than an hour from the money and down the street from the culture," he says.
</p><p>
The growing entrepreneurial energy in L.A. looks set to provide Angelenos a front-row seat to a new, lasting stage for entertainment technology innovation.
</p><p>
---
</p><ul class="ee-ul">
</ul><p>
<em>Sam Blake primarily covers entertainment and media for dot.LA. Follow him on Twitter @hisamblake and email him at samblake@dot.LA</em><br>
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There's the accelerators and female-founder dinners. Throw in the hyped-up "pledges" rallying public support for inclusion. But, for all the female focused co-working spaces in Los Angeles, the startup scene remains a male-dominated game.
The data tells the story. Female founders received fewer than 10% of venture capital deals in Los Angeles last year, according to an analysis by dot.LA using data provided by PitchBook. When it came to the money, women got even less. Only 2% of the $8 billion in venture capital that poured into Los Angeles companies last year went to female-founded companies. The numbers have moved only a fraction of a percent over the years.
<p>
"That is so depressing," said Anna Barber, managing director of the accelerator program Techstars LA, and a coach to founders. Raising capital is "still objectively and relatively more difficult for women and underrepresented founders to raise."
</p><p>
A dot.LA analysis found that the amount of venture capital investment in female-founded companies has stagnated in Los Angeles, San Francisco, and nationwide since 2015. The numbers are stark despite the region's significant efforts to turn the tide.
</p><p>
In Los Angeles, the mayor's office launched
<a href="https://www.pledgela.org/" target="_blank">PledgeLA</a> in 2018 to incentivize the business community, boosting diversity in the tech and venture capital industries. Backers include the Annenberg Foundation, dozens of LA-based venture capitalists, and tech companies. Another initiative includes <a href="https://medium.com/allraise/los-angeles-cc6681b0f706" target="_blank">All Raise</a>, founded the same year by 34 senior female investors to accelerate the success of female founders. The organization recently opened an L.A. chapter.
</p><p>
"Someone said this to me a couple months ago and it really hit a nerve," Barber said. "For men, making money together has always been part of the culture of male friendship, it's 'I know this guy, he's got this thing, let's do this thing together and it'll be fun.' It's part of how men operate together."
</p><p>
"For women, for female friendship," she said, "making money together has never really been on the agenda. I want to change that, I want to think of the women I know and have relationships together and think 'how can I make money together.'"
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjg0MTQ0MS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYyNDEwOTY0Nn0.AnXpgVCwuNRip-OhVWHXANieXiR_WjaoQgcSi-sT0n8/image.png?width=980" id="cb9f1" class="rm-shortcode" data-rm-shortcode-id="0c7ab50620c29d85bd54548cb079ca11" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Data from PitchBook</small>
</p><p>
That culture seems to be reflected in the data.
<br/>
</p><p>
The Los Angeles area has always been an overall smaller market for VC deals compared to San Francisco, with the Bay Area hitting $40.6 billion invested in companies compared to $8 billion in Los Angeles, according to PitchBook. But, L.A.'s traditionally more consumer-focused market has led to better chances for female entrepreneurs who want to receive VC funding.
</p><p>
In San Francisco, all-male founders made up 73.2% of the total deals in the metropolitan area. Solely women founded companies made up just 5.4% of that total. In Los Angeles, all-women founded companies did slightly better, making up 9.4% of the total number of deals while all-male founders got 65% of the cash.
</p><h2>Smaller Deals, Better Returns</h2><p>
Women founders in L.A. fared better. But, while they got more deals, the investments were smaller in size. This resulted in less total capital.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjg0MTM5Ni9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYxMTk0MjUyN30.Pc3es-yLZm3COUYoUCnytQisv0xFHmMCw9LvIBWTvMQ/image.png?width=980" id="c186a" class="rm-shortcode" data-rm-shortcode-id="9995339460762255e37b9c316f368b24" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Data from PitchBook</small>
</p><p>
Jennifer Acree, the chief executive of JSA Strategies, a strategic communications firm that works with both consumer tech and digital media companies, is not surprised by the data.
<br/>
</p><p>
"Look at how many VCs there are and most of them are men," Acree said. "Venture capital has traditionally been a male-dominated industry, just like technology...it just takes time to fix it and people need to see examples of women in the industry."
<br/>
</p><p>
A dot.LA review of the last 14 years of median pre-money valuation broken up by gender showed that companies with all-male founders had valuations that rose somewhat steadily from $13.1 million in 2006 to $25.5 million in 2019. For female founders, that number was $11.5 million in 2006 with a rise to $12 million in 2019.
</p><p>
Michael Silton, managing director of Act One Ventures, said their VC firm has made an effort to identify and fund people of all backgrounds, with 70% of their founding teams including women or minorities. The firm also requires term sheets carry a diversity clause for hiring.
</p><p>
"We're not doing this to change the world, we're doing this to make more money," Silton said. "We believe finding the best founders no matter their background and making diverse teams means we're going to make more money. It's the right thing to do and it also works."
</p><p>
That has been borne out in a
<a href="https://www.cloverpop.com/hacking-diversity-with-inclusive-decision-making-white-paper" target="_blank">series</a> <a href="https://www.credit-suisse.com/about-us-news/en/articles/media-releases/42035-201207.html" target="_blank">of</a> <a href="https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters" target="_blank">studies</a> that finds diverse teams outperform those that aren't, and that investment in female-led companies actually provides a better return than investments in male-led companies.
</p><p>
Investing in diverse founders requires outreach to communities that are often overlooked and to founders at early stages more proactively, as well as trying to create a more hospitable and welcoming environment for founders of any background, Silton said.
</p><p>
"One of the things you see is that women often present differently, their degree of confidence in relation to their background tends to present differently, than a man," Silton said. "If you listen, a man sounds more positive and a woman maybe less so, when they are equally capable and maybe the woman is even more capable."
</p><p>
<a href="https://hbr.org/2014/08/why-women-dont-apply-for-jobs-unless-theyre-100-qualified" target="_blank">Studies have shown that men are more willing to apply</a> for jobs for which they don't necessarily meet the criteria, while women tend not to apply unless they have all the necessary skills perfected. They've also <a href="https://hbr.org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get" target="_blank">shown that VCs tend to ask women questions they don't ask male founders</a>.
</p><p>
That puts a burden on VCs to look beyond men they've previously invested in, to be conscious of their biases, to support and coach founders, and to give them equal opportunities, Silton said.
</p><p>
"There are intentional biases, there are unconscious biases, and there's a lack of effort to find different founders," Silton said. "And some believe that to achieve a different outcome you have to start differently."
</p><p>
Barber said that to combat some of this she often tells founders who are women or underrepresented to try to "be the biggest version of yourself" and exude confidence. "Sometimes what gets in the way for people is imposter syndrome," Barber said, "just the idea of keeping yourself small."
</p><p>
It's worth noting that PitchBook doesn't track data on venture investments in companies founded by people of color. The numbers are far smaller when you factor in businesses founded by women of color.
</p><h2>The Case for More Female Investors
</h2><p>
"It starts with the capital, and I don't just mean where VC funds are investing, I mean who is investing in VC funds," said Kara Weber, president of Brud and founder of Brilliant Ventures. Weber said the largest shift of private wealth from men to women is occurring globally right now, as people's fathers and husbands pass away. But the challenge is where women put that money. Historically, women have been directed to more philanthropic efforts like the nonprofit sector.
</p><p>
"I've heard women talk about how they will not bat an eyelash at giving $250,000 to the New York City Ballet, but god forbid you suggest investing $25,000 in a startup," Weber said. "I think there were gendered norms around that stuff that we're still shaking off the chains from. The men handle one side and the women handle the other."
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjg0MTI5OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxMTQxNDAxN30.-2YZSV8P6-3uUF5eYatJeibC5qbD_bI4qB7GJuQbYyo/image.jpg?width=980" id="97126" class="rm-shortcode" data-rm-shortcode-id="54ea765d3185e70385257896b1756de4" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-caption" placeholder="Add Photo Caption..."> Alexa Ray Joel wears Tamara Mellon at Go Red for Women-The Heart Truth Red Dress Collection at Mercedes-Benz Fashion Week at Lincoln Center on February 12, 2015 in New York City.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">by <a href="https://www.shutterstock.com/g/dwong19" target="_blank">Debby Wong</a></small>
</p><p>
She added that driving women's capital into the innovation ecosystem ultimately will still benefit women investors and founders: "There's so much economic evidence showing that when you do well by women, you do well by the world." Brilliant Ventures has invested in 17 companies; 72% of the founders are women. But even though there have been a lot of deals, "our check size was miniscule," Weber said.
</p><p>
Weber remembers telling a prominent female angel investor that she wanted to raise Brilliant's first fund entirely from women, "She laughed and laughed and laughed, and said, 'I wish the world for you, but I don't believe you'll ever do it.'" Spoiler alert: "She was right," said Weber. "We did get a lot of women investing, but the bulk of our capital came from men."
</p><p>
She added, with a sad laugh, "I would say, we had a dream."
</p><p>
In 2016, Weber's new L.A.-based venture capital firm Brilliant Ventures was looking to do its first deal, and had the chance to back Tamara Mellon, a new luxury footwear brand founded by Mellon who had previously founded the highly successful Jimmy Choo.
</p><p>
"This deal had everything going for it, it was very well-backed, had a proven founder, and was a category that women investors can understand," Weber said. "And every single woman I took the deal to asked me to speak to a man on her behalf."
</p><p>
One good friend came back and told Weber: "I'm going to do it! My brother thinks it's a no brainer." Weber was dumbfounded. The woman's brother is an emergency wilderness doctor and less qualified on the subject matter than she was to make such a decision.
</p><p>
"We've been so trained to not have confidence in ourselves," Weber said. "That really struck me. These were women, who have plenty of experience buying luxury footwear, they know who Jimmy Choo is and they all still asked me to talk to men, whether financial advisors, private wealth managers, or husbands on their behalf."
</p><p>
Grid110, a nonprofit and accelerator program, has worked to flip the narrative, working with 126 companies over the past five years. About 70% are led by a female founder or cofounder and 60% of the companies are headed by a person of color. So far, 17 companies have raised $16 million and 95% of that is from teams with at least one female founder.
</p><p>
"That's typically the inverse of what you see," said Miki Reynolds, executive director of Grid110 and also a member of the advisory board for PledgeLA.
</p><p>
More women are starting businesses and so there are more female business owners, Reynolds said. But those businesses aren't necessarily the type that has traditionally received VC funds.
</p><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGbWVkaWElMkZEcUpKOU5OVnNBQW9ld2guanBnJTNBbWVkaXVtJmhvPWh0dHBzJTNBJTJGJTJGcGJzLnR3aW1nLmNvbSZzPTYwNCZoPWM2YTZmNmY2NDM5MDNhZjkwM2JjNTkwZGY0YjM5NWU2NTc4MDE0MTM3ZTQzMDdjZWEwMDljYTRmOTczZWJhOWQmc2l6ZT05ODB4JmM9MzQyNTYyMzgxMSIsImV4cGlyZXNfYXQiOjE2NTc2NTY2MDR9.T_Tp4C0ChG9mfAPEAYpuzptP7S4lt06AOXQDm0Dg9IE/img.jpg" id="f3ad9" class="rm-shortcode" data-rm-shortcode-id="16b8cef17adff7d48f2aae0a2e0be3ba" />
<small class="image-media media-photo-credit" placeholder="Add Photo Credit..."><a href="https://pbs.twimg.com/media/DqJJ9NNVsAAoewh.jpg" target="_blank">C</a>ourtesy of LAMayor.org</small>
</p><p>
VCs "invest in what scales and forms the size returns they're looking for, which is a certain type of business," Reynolds said.
<br/>
</p><p>
Carmen Palafox, managing partner at MiLA Capital said having more female investors is also critical.
</p><p>
"I think (the stagnant numbers) goes back to the need for systemic change," Palafox said. "You're going to see incremental improvements, there's some programs that will accelerate the pace. But at the end of the day, bottom line, if you don't have more women investors, you're going to just go at a turtle's pace."
</p><p>
Palafox strongly believes there needs to be strong incentives, perhaps government-backed, to push for VC firms to invest in women.
</p><p>
"You need to create incentives for folks to do something differently than what they're currently doing," Palafox said, "because what they're currently doing is working for them."
</p><p>
Barber, of Techstars, said she still feels "a lot of hope" despite the numbers that "we will move the needle."
</p><p>
"Looking at who's writing checks is a big part of it," she said. "Not only thinking about investing in more women but also enabling more women to invest."
</p><p>
<em>__</em>
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<em>Do you have a story that needs to be told? My DMs are open on Twitter </em><a href="https://twitter.com/latams" target="_blank"><em>@latams</em></a><em>. You can also email me at <a href="mailto:mailto:tami@dot.la">tami(at)dot.la</a>, or ask for my Signal.</em>
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