Apple's $50 million investment in this music platform is the first time it has led a startup funding round since it backed Didi in 2017
- UnitedMasters, the anti-record label, has scored a rare investment from Apple.
- Founder Steve Stoute says he found alignment with company execs on empowering independent artists.
- The company helps artists distribute their music without giving up ownership.
- See more stories on Insider’s business page.
Former record label executive Steve Stoute has known the top brass at Apple for years. Still, he didn’t expect to take in money for his startup from the “ultimate strategic” investor in his latest fundraise, Stoute tells Insider.
UnitedMasters, a startup that helps independent artists get their music to fans, said this week it closed $50 million at a $350 million valuation. The funding round was led by Apple, meaning the tech Goliath wrote the biggest check.
Google parent company Alphabet and Andreessen Horowitz, both existing investors, also participated in the round.
The startup is a rare investment for Apple, the world’s most valuable brand. The Cupertino company hasn’t led a funding round since it backed Chinese ride-hailing giant Didi Chuxing in 2017, according to an Axios report.
Stoute, who is founder and CEO of UnitedMasters, said there was no formal courtship. He’s known Eddy Cue, Apple’s head of services, for years, and he worked on a star-studded commercial for Apple Music that aired in 2015.
He said he found “alignment” with the decision-makers there.
UnitedMasters bills itself as the record label in your pocket. It signs independent artists and helps them release their music on streaming services, like Spotify and Apple Music, find sponsors, and grow their fan bases, all from an app.
The company is set apart from traditional record labels, because it lets artists hold onto ownership of their music for a $5 monthly subscription or a 10% cut of revenues. They get paid on PayPal when people stream their tracks.
“We’ve always been about trying to help artists and the best way to empower them is to make it easy for them to create and get their music out there,” Eddy Cue, Apple’s head of services, told The Wall Street Journal. “We want artists to be focused on creating the best music on the planet. That’s their art and skill and it’s hard to have to be the marketing person and the finance person and the salesperson and do all these things when you’re starting out.”
Stoute said he partnered with Apple because it tells artists that they’re not giving anything up by being independent.
“You want to be the company that makes the independent artist feel that they are not second class because they are independent,” he said. “That they have the same opportunities and the same options as artists that are signed.”
In the future, we might see the tech giant heap marketing support, promotions, and early access to new tools on independent artists. That’s how the two companies start to level the playing field for musicians, Stoute said.
On Wednesday night, Stoute went on Clubhouse to discuss the deal with investor and hip-hop fanatic Ben Horowitz, who is known for friending rappers like Kanye West and Nas and quoting hip-hop lyrics in his investment memos.
They talked about the importance of hiring great engineers. Stoute tells Insider that he plans to spend the new funds on scaling the product and engineering and executive talent organizations from about 240 employees.
“In a perfect world, every artist would have a CTO,” Stoute said.
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