BeatStars Is Making Bank for Its Stable of Music Creators
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That Lil Nas X spent all of $30 to purchase the beat for “Old Town Road” has become the stuff of music-industry legend. As the story goes, a 19-year-old Dutch trap producer, Kiowa Roukema, who goes by YoungKio, built the beat from a sample of Nine Inch Nails’ “34 Ghosts IV.” He posted it to BeatStars, a marketplace for buying and selling sounds, where Lil Nas X purchased it. While BeatStars, which launched in 2008, doesn’t allow creators to see who buys their beats, YoungKio had his producer tag embedded in the file and was able to identify it as his own. The 2018 song ended up a Billboard No. 1 hit that went on to register sales of 1.8 million units and streams north of 3.4 billion.
“BeatStars is where songs are made,” says the company’s CEO, Abe Batshon. “It’s where collaborators are introduced to each other and artists are able to express their art with their own definition and interpretation.”
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“Old Town Road” is not a fluke scenario for BeatStars producers. Beats from the platform and from its publishing arm, BeatStars Publishing, are on Megan Thee Stallion’s “Pressurelicious,” featuring Future; DJ Khaled’s “Big Time” and “Beautiful”; Cardi B’s “Up”; Pop Smoke and Dua Lipa’s “Demeanor”; and GloRilla’s “F.N.F. (Let’s Go).”
Most recently, beats from Nigerian-born producer Israel Fowobaje (professionally known as 1SRAEL), who is affiliated with BeatStars Publishing, can be heard on Future’s “Wait For U,” featuring Drake and Tems.
Lest one think of BeatStars as a fringe operation, in July 2021 the company entered an exclusive publishing administration partnership with Sony Music Publishing. Wholly optional for all BeatStars creators, if they choose to take advantage of this service, they enter into a one-year agreement and are connected directly to SMP, which is home to tunes from the biggest songwriters of all time, including Carole King, Stevie Wonder, Michael Jackson and Beyoncé. Uncharacteristically (for the music biz), the deal is favorable to creators, offering 80/20 splits and allowing music makers to maintain their copyrights.
1SRAEL sees his alignment with BeatStars Publishing as a win-win. “It’s cool having two teams to plan and execute,” says the producer, who shares in Future’s Grammy noms for “Wait For U.” “Both BeatStars and Sony have their own strengths.”
In addition to administration services, BeatStars Publishing is putting together creator camps for its signees and has struck co-publishing deals with a select number of its creators who prefer a lump-sum advance — which can run into the six figures. In addition to 1SRAEL, BeatStars Publishing has signed Hitkidd, Pxcoyo, Emkay, Chris Rich and redMOSK.
BeatStars’ core business is its marketplace, the idea of which came about when Batshon was in high school in the mid ’90s. A burgeoning Bay Area rapper, Batshon, the son of Palestinian immigrants, was already in the business of buying beats. At the time, his transactions took place in chat rooms, where he would haggle with beatmakers, offering them $20 for the nonexclusive use of their productions. Batshon would receive the stems in the mail, burned onto a CD. “It was really inefficient,” he recalls.
In 2008, Batshon addressed that inefficiency with the user-friendly, streamlined, professional and legal platform BeatStars. The platform has 3 million active users across the globe and has claimed profitability from the start, offering three monthly subscription tiers for creators (aka sellers): free; marketplace, for $9.99; and pro, for $19.99. The main commodity on the platform is lyric-free, full-song compositions, which can be purchased by anyone who needs music, such as singers, rappers, videographers and dancers. No subscription is required for purchase.
The price is set by the creator. It ranges from $1 for a nonexclusive license to $5,000 for an exclusive one, with the sweet spot for a non-exclusive commercial license being $55. The key to making real money is licensing a beat multiple times.
“Ninety-nine percent of the creators on the platform don’t entertain an exclusive sale,” says Batshon. “They’re making so much money off the recurring revenue of the non-exclusive. Labels are adapting and purchasing non-exclusive licenses. In the past, creators were quick to sign that license agreement with major labels, giving them their rights. Nowadays, creators have leverage to decide how they want their music to be used, how much ownership they give away, or they can even hold out for more ownership.”
The beats-selling arena is a competitive one. Legacy platforms like BeatStars and Airbit are vying for buyers and sellers in the same space as glitzy sites like Timbaland’s Beatclub, as well as Splice and Steve Stoute’s UnitedMasters Beat Exchange, both of which have raised funding upward of $50 million. Numerous other sites offer beats for sale, such as Gemtracks, Traktrain, Audiodraft, Sellfy, SoundClick, PremiumBeat and Buy Beats. Producers can also sell beats on Facebook, YouTube and, of course, SoundCloud.
But it’s the commercial license that sets BeatStars apart from other beat marketplace platforms. At the point-of-purchase, a licensing agreement is generated. All buyers receive a license to create a new master with the piece of music they purchased. There can be thousands of the same beat across different masters, and it’s entirely legal, with the rights already cleared. BeatStars says it’s not a royalty-free platform, and it strongly advises against its copyright creators and owners of intellectual property giving away their music in a royalty-free format, be it licensing or selling.
The licensing agreement is a vetted template created by BeatStars’ attorneys and is entirely customizable by the creators. The default terms are that the creators maintain the entirety of their writer’s share and 50% of the publisher’s share. This is what YoungKio had in place for “Old Town Road,” which was estimated to have earned $9 million in revenue in its first year. BeatStars asserts no ownership or rights to any of the licenses sold on the platform. If further deals are negotiated with publishing companies or record labels after that initial licensing agreement, BeatStars is not involved with those transactions.
To get noticed on a platform that offers so much content, Batshon makes a couple of recommendations. One is to be consistent, releasing fresh material on a daily basis, if possible, in order to cut through the noise of the millions of releases on BeatStars. Second is to use BeatStars’ marketing tools, including its ad system — which is available only to creators, not third-party advertisers — to promote products.
“You have to throw free content at people until you’ve built a user base that you can remarket to, rebuild on and provide value to,” says Batshon. “At BeatStars, the cream always rises to the top. There is never a point where you will find anything in the top 1,000 tracks that’s garbage. We weigh our algorithm and our ranking system based on metrics that are real, not vanity or plays or how many social media followers you have. It’s how many customers around the world are really engaging with your music, licensing your music and building something with your music. It’s crowdsourcing of data that reflects in the quality of the music.”
BeatStars has creators living in remote locations whose beats are licensed to charting songs, who choose to remain anonymous. Says Batshon, “We have producers who have become millionaires on the platform that have never shown their face. They have small amounts of social media followers. They don’t have to live the crazy 24/7 lifestyle to keep people’s attention. They just have to drop hot shit every time. You can build a brand and plug into social media marketing techniques that are proven to be successful. But if you want to be reserved and be a family person and live your life privately and still make music, you can do that too.”
In addition to the ad service, BeatStars has launched several other offerings for its creators that are beneficial to both sides. BeatID is a tool that scours the internet for copies of creators’ work. The copyright holders can get accurate analytics on how and where their music is being used, and can market to re-engage those users. BeatID is also a good way to track how their music is performing, spot trends and maneuver them into their sales funnel. Plus, if they’re signed up with BeatStars Publishing, they can collect revenue where it applies.
BeatStars has also relaunched its music distribution arm, which originally started about a decade ago. BeatStars Distribution was a way to address digital distribution platforms’ inability to handle BeatStars’ output of 60,000 tracks a week. It had lain dormant, but now, in its reintroduction, it’s a way to close the loop and offer a 360 array of services to creators.
In June, BeatStars reached a milestone, paying out $200 million to its creators.
“We are a totally open, transparent platform,” says Batshon. “We don’t want to control anything. We’re the first platform to give user data and customer data back to musicians. The first digital music service to pay creators at the point of transaction. The first music company to implement collaborator splits, giving collaborators the ability to assign percentages and get everyone paid at the point of transaction. There’s no more funny business. We’re the people’s platform.”
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