The Future is Bright
While many people were celebrating 420 around the world, history was being made. Part two of the highly anticipated Verzuz Battle between super producers Teddy Riley and Babyface went down. It was a win for all music lovers coast to coast and worldwide. Many people will be talking about Teddy Riley’s music not being loud enough, or the fact that he produced Dougie Fresh and Slick Rick’s “The Show” at age 17, or Babyface playing the acoustic guitar and singing live (which was amazing!). I, however, want to discuss the business side of things … after all that’s what the B-Boy Guide is about.
Necessity is the Mother of Invention. Yup Yup.
Let’s do a quick top down analysis and start with the market. Currently, there are more content streaming services than ever before. The number of podcasts in the year 2020 is staggering. However, the global Coronavirus pandemic has proven beyond a shadow of a doubt that human beings love live content. Teddy Riley vs. Babyface part one had many technical challenges; nonetheless, 400K+ people hung in there until Swizz Beatz and Timbaland (the creators of the Verzuz Battles) shut down the event. Many memes were created as frustration boiled over. My view of the event was very different. What I saw was real time, online interaction between (A) spectators and other spectators and (B) spectators and the performers. It was absolutely fantastic. Fans were not only engaged, but they were praying that Team Teddy could fix the sound issues (much like the RZA did during his historic Verzuz Battle with DJ Premier). Unfortunately, Team Teddy was not able to rectify the situation in time.
This allowed for a second opportunity to observe the market.
Two days later, another 500K+ people got dressed up and tuned into Instagram Live to experience musical greatness. As I sit on my couch in Brooklyn the day after (April 21, 2020), I don’t have an exact count of the number of individuals who actually saw the event live. Swizz Beatz and Timbaland jumped on IG Live right after to discuss the event and pegged the overall number of people who attempted to join on Instagram at approximately 3 million people. This is a staggering number … like whoa. However, even if it’s wrong, it’s not a fully baked number. Why? Because as Swizz Beatz and Timbaland discussed, there were other sites that were streaming the battle in real time (with audiences of over 150K+). Add to that, a large percentage of the screens that tuned in to see Teddy Riley vs. Babyface part 2 were not watching alone. Married couples, dating couples, and even families (like mine) tuned in together. This means that the number of eyeballs fixed in place far exceeded Swizz Beatz and Timbaland’s estimates—which is a good thing for the culture and a great thing businesswise.
So What Did We Really See?
During the post-battle breakdown, there were rumblings of what can and will become a robust pay-per-view model. Why? Because on two different nights, over a million people had comfortable, front row seats to see a world class live event in the intimacy of their own homes. This included a Babyface story about Michael Jackson wanting to holla at Ms. Halle Berry. You cannot anticipate nor script this type of spontaneous content. And people will pay for it. Many of us who have been enjoying all of the Verzuz Battles have witnessed a glimpse at the future of entertainment. I’ll leave it to Swizz Beatz and Timbaland to share their collective vision at the appropriate time.
Where does it go from here on the business front? It depends on your perspective—whether your investment is active or passive. Meaning are you looking to invest capital in the communications and/or tech sectors as a passive investor. Or are you actively investing your time and money in building the next great company. Aside from passion and desire (and capital of course), the analysis is quite similar. Is there a market for streaming interactive, live music battles? Swizz Beatz, Timbaland, and millions of fans have proven the answer is yes. Would everyone have liked to see Teddy Riley and Babyface’s first battle go smoother. Of course. Regardless, for some period of time, did everybody love the vibe and feel like One Nation Under A Groove? Yes!
I Only Think of Business Opportunities on Two Occasions: That’s Day and Night
The reality is that the current technical limitation is a massive business opportunity. The following information is not investment advice that you should rely upon. You can reach out to your Registered Investment Advisor for her or his guidance on how to size up the risk-reward of investing in the communications and tech industries. Here’s what I know: there are observable data points from the Teddy Riley vs. Babyface battles that demonstrate a need for more capacity to stream a live music event for upwards of 500K people. (Who knows what the natural market is? Could even be higher.)
In order to execute a flawless event, companies will have to make bold predictions about future capacity. Whether or not Moore’s Law currently lags consumer demand is a discussion for PhDs. Regardless, to properly evaluate the potential opportunity, the first step is analyzing the different firms that make up the communications and technology value chain. Here is a quick list of the types of firms that are behind the scenes that make a Verzuz Battle work:
- Hardware Manufacturers that create fiber optics, wiring, servers, and sensors
- Internet Service Providers (ISPs) that provide access to the Internet (Verizon, AT&T, Rogers, etc.)
- Technical firms that install the hardware (architects, engineers, and project management)
- Data Centers/Cloud and Edge Computing (Microsoft Azure, AWS, Google Cloud)
- Tech companies that create applications and platforms (Instagram, YouTube, etc.)
- Consumer electronics firms that create the devices (Apple, Android, etc.)
If you’re not a communications or tech investor—and like Warren Buffett you prefer to focus on what you know—there are a few other industries that could benefit and flourish from Swizz Beatz and Timbaland’s Verzuz Battles. Is there a potential online retail opportunity? The answer is a resounding yes. Team Teddy and Team Babyface apparel could have been sold in advance of AND after the battle. Many viewers enjoyed wine and cocktails (before, during, and after the battle). From a programming perspective, you could easily have the spirit industry’s Best American Brand Ambassador @CocktailColin warming up the worldwide audience by teaching them how to make two #Verzuz cocktails before the battle. This could create opportunities for fledgling craft wine, spirits, glassware and stemware companies. Also, you can’t “go out” while staying in and not eat. By ordering dinner for the event, you stimulate your local economy. If you really want to feel like you’re stepping out, then there’s virtual and augmented reality. How much fun would it be to virtually walk into the Garden with Spike Lee and have a drink in the VIP lounge?
Last Thoughts
The most interesting business opportunities might be reflected in the super producers themselves. I would personally invest in the self-care regimen that gives Teddy Riley so much energy and such a positive attitude. As for Babyface, he seems to have found the Fountain of Youth that Ponce de Léon was seeking. If not, I’d seriously like to acquire, and use, the men’s skin care products that Babyface himself uses.
Verzuz Battles are just what the world needs right now. Thank you to Swizz Beatz, Timbaland, and all of the amazing producers and songwriters that have participated in creating these extraordinary experiences. Shout out to all of the viewers who have commented and made the battles even better. Without a doubt, the culture is alive and thriving. Keep working on the skills that pay the bills (shoutout to Positive K!). And recognize that any obstacle can be transformed into a financial opportunity. Time to Shine y’all!