This payments and distribution platform used by Frank Ocean and Childish Gambino is fighting the music industry’s ‘starving artist’ culture

Milana Rabkin Lewis, CEO of Stem
Milana Rabkin Lewis, CEO of Stem, spent five years as a Digital Media Agent at United Talent Agency (UTA) before co-founding the company in 2015.

  • Music revenue is forecasted to reach $131 billion by 2030. Even still, many smaller artists struggle to get paid.
  • Stem, a distribution and payments platform used by Frank Ocean and Childish Gambino, is trying to change that.
  • “There’s a lack of infrastructure and tools to support the modern music industry,” Stem’s CEO told Insider.
  • See more stories on Insider’s business page.

When you listen to your favorite musicians, accounting is probably the last thing on your mind.

Number-crunching may be the least sexy side of the music business, but for Stem CEO Milana Rabkin Lewis, it’s the key to an industry-wide revolution.

“One of the unfortunate things about the music business is that getting paid isn’t a given,” Lewis told Insider. “There’s this notion of the starving artists … that when you work in music, you’re not necessarily doing it for the money.”

After five years working at United Talent Agency, one of the best artist management companies in the country, Lewis realized the traditional agency model wasn’t working for the majority of rising artists.

“The major label system is really designed to drive superstardom,” she said. “Anyone can make a song … they’re not able to provide this sort of machine that makes superstars every single one of them, so a lot of artists are frustrated.”

On Spotify alone, nearly 60,000 songs are uploaded every day. That’s almost one song every second, the streaming platform reported in February.

While the number of superstars has increased, so has a growing pool of mid-sized artists – musicians who still rely on streaming and touring revenue as their main source of income. Without the backing of large labels, many artists are jumping through hoops for each paycheck.

“Getting people paid wasn’t as big of a problem when there were a bunch of major labels that controlled the whole entire business, and there were 40,000 songs released a year,” she added. “The volume was manageable for humans to be doing the accounting flow.”

Spotify, which has 155 million paying subscribers, generally pays between $.003 and $.005 per stream. Artists need about 326 streams to make $1.

In April, Apple Music said its streaming royalties pay double what Spotify pays, though in reality, it’s difficult to accurately tell.

According to Spotify, 13,400 rights holders are making over $50,000 a year – the median salary in the US – from Spotify streaming royalties. Artists who made more than $100,000 per year totaled 7,800, while 1,820 made more than $500,000 per year.

Converting an indie song played one morning in a coffee shop to cash in the pocket of the songwriter, singer, and producer is a lengthy and complicated process that entails different licenses, rate calculations, and publishing deals. For independent musicians, all this accounting is left up to them.

“Royalty accounting has been made to feel complex and burdensome,” Lewis said. “It scares most independent managers, artists and labels, to the point where they punt handling it so no one gets paid.”

Stem is trying to change that. Its automated distribution and payment software allows creators to get paid 3-9 months sooner and saves business managers roughly 15 hours of administrative work per month.

On Stem’s platform, producers, songwriters, vocalists, and promotional partners can split earnings according to personalized percentages and receive payouts on the 15th of each month.

Through “Scale,” a feature launched last year, artists and independent labels can also request advances in the form of a revolving credit line provided by the company’s financial arm.

“The economics are way more favorable to the artists,” Lewis told Insider. “They get to keep anywhere between 80 to 95% of the profits, whereas it’s kind of the reverse if they’re working with a major label deal.”

Last month, Stem launched “Recoup Rules,” an automated accounting option that enables managers to pay out expenses such as marketing or promotional costs before splitting the monthly revenue.

“I know it sounds unglamorous, but until now it’s been a serious pain point for all artists and especially independent ones,” a Stem spokesperson said.

Alex Goot, a singer-songwriter and multi-instrumentalist whose YouTube channel GootMusic has more than 800 million total views said Stem has helped him run his own business.

“I’m an artist who buys a ton of cover licenses, but all of those expenses come directly out of my pocket. With Recoup, I’m now no longer losing that initial capital,” he said.

Lewis told Insider that the value proposition of a major label isn’t what it used to be, causing many artists to operate independently.

“More and more artists are doing things on their own because they don’t need to give up a percentage of ownership to a major label anymore,” Lewis said.

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LinkedIn co-founder describes young Mark Zuckerberg’s awkward silences that lasted for minutes – and why he invested in Facebook anyway

Mark Zuckerberg at the Facebook's office in Palo Alto on Monday, Feb. 5, 2007.
Mark Zuckerberg, pictured at age 23, in Facebook’s office in Palo Alto on Monday, Feb. 5, 2007.

  • Linkedin co-founder Reid Hoffman told Bloomberg Wednesday why he was an early investor in Facebook.
  • He described young Zuckerberg’s quiet demeanor that led to “minutes-long pauses in the conversation.”
  • Hoffman invested anyway, citing Facebook’s on-campus usage curve as the primary driver.
  • See more stories on Insider’s business page.

Linkedin co-founder Reid Hoffman said young Mark Zuckerberg had a quiet demeanor that led to “minutes-long pauses in conversation” on Bloomberg’s The David Rubenstein Show this Wednesday.

He added that the young Facebook CEO was “very quiet” but he “could see that he was very smart.”

Hoffman said he ultimately became an early investor in Facebook due to the social network’s usage curve after it first launched on Harvard’s campus.

“In six weeks, 80% of the campus was using it six times or more per day,” he told Bloomberg.

Zuckerberg started Facebook as a 19-year-old computer science and psychology student at Harvard. According to Hoffman, he displayed the characteristics of “highly successful software entrepreneurs,” even at such a young age.

“Mark obviously had a bunch of interesting … knowledge and attributes,” Hoffman said on the show.

Now 37 years old, Mark Zuckerberg is one of the last remaining Big Tech founder still running his company. The founding entrepreneurs of Google, Amazon, Apple, and Microsoft have all passed along the reins to new management, though Jack Dorsey returned in recent years to run Twitter’s day to day.

From virtual reality meetings to building the metaverse, Zuckerberg is trying hard to keep his company’s entrepreneurial spirit alive in the face of antitrust and misinformation backlash.

“The trajectory that Facebook was on was really interesting,” Hoffman concluded at the end of the show.

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SpaceX and a Canadian startup plan to launch a satellite that will beam adverts into space. Anyone can buy pixels on the satellite’s screen with dogecoin.

SpaceX's Falcon 9 rocket alongside CEO Elon Musk
SpaceX is teaming up with GEC.

  • A Canadian startup told Insider it’s launching a space-ad satellite into orbit via a Falcon 9 rocket.
  • GEC’s CEO Samuel Reid said anyone can advertise on the satellite by buying a pixel with crypto.
  • The satellite’s selfie-stick will film the screen and the footage will be livestreamed on YouTube.
  • See more stories on Insider’s business page.

It’s not just rockets, satellites, and billionaires that are flying to space – advertising is too.

Geometric Energy Corporation (GEC), a Canadian startup that provides technology services, exclusively told Insider that it’s making space advertising possible with the help of SpaceX.

Samuel Reid, CEO and co-founder of GEC, said the company is in the process of building a satellite, called a CubeSat. One side of the satellite will have a pixelated display screen where the advertisements, logos, and art will appear, Reid said.

The company plans to load the CubeSat on to a SpaceX Falcon 9 rocket, which will take it into orbit and release it before the rocket reaches the moon.

Once in orbit, a selfie-stick attached to the side of the CubeSat will film the display screen. This footage will be livestreamed on YouTube or Twitch so anyone can tune in to watch the satellite’s screen, Reid said.

The CubeSat will be released in early 2021, according to Reid.

You can buy tokens for the pixels in crypto

To advertise on the CubeSat, people have to buy tokens to claim, locate, and design a pixel on the display screen.

There are five tokens to choose from – Beta for the X coordinate, Rhoe for the Y coordinate, Gamma for the brightness, Kappa for the colour, and XI for time.

With the Beta and Rhoe tokens, people can decide where to place their pixel. The Gamma and Kappa tokens allow people to control what their pixel will look like, while the XI token determines how long it will last for.

“I’m trying to achieve something that can democratize access to space and allow for decentralized participation,” Reid said. “Hopefully, people don’t waste money on something inappropriate, insulting or offensive.”

People will be able to buy the tokens with cryptocurrencies such as ethereum. In the future, GEC wants to introduce dogecoin payments.

Reid couldn’t reveal how much each token or CubeSat would cost. SpaceX didn’t immediately respond to Insider’s request for comment.

Anyone can advertise on a CubeSat

Businesses, advertisers, artists, and anyone else who is interested will be able to put their illustrations on the CubeSat’s display screen, Reid said.

“There might be companies which want to depict their logo … or it might end up being a bit more personal and artistic,” Reid said. “Maybe Coca-Cola and Pepsi will fight over their logo and reclaim over each other.”

Reid imagines the CubeSat display screen to look similar to artboards such as Reddit Place and Satoshi’s Place.

How GEC teamed up with SpaceX

Reid reached out to SpaceX in 2018 to initiate the advertising project but got no reply. He said it took SpaceX a while to take GEC seriously before he eventually had a meeting at the company headquarters.

Reid taught some of Musk’s children at the billionaire’s Ad Astra school at SpaceX’s offices in California, which he said helped SpaceX to take notice of him and GEC.

Reid said he never got the chance to meet Musk in the flesh but assumes he’ll talk to him directly at some point during the project.

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A 2017 lawsuit shows how electric car startup Lordstown paid outside workers to gin up 10,000 pre-orders per year

Vice President Mike Pence at the Unveiling of the Lordstown Endurance_June 25, 2020
Vice President Mike Pence at the unveiling of the Lordstown Endurance.

  • A 2017 lawsuit shows how Lordstown Motors banked some pre-orders for its upcoming pickup truck.
  • The case reveals the company paid outside workers to generate up to 10,000 pre-orders per year.
  • Experts warn pre-orders and reservations are flawed measures of a startup’s potential.
  • See more stories on Insider’s business page.

Electric vehicle startup Lordstown Motors has been paying salespeople to secure pre-orders of its battery-powered truck prototype for at least five years – a practice that is outside the bounds of most startups without a sellable product – a little-noticed lawsuit from 2017 reveals.

In the suit, a former employee accused Workhorse Group, which Lordstown spun out of in 2019, of failing to pay him commissions he earned by logging over 8,000 pre-orders for the Endurance pickup truck now being offered by Lordstown. A recent report by Hindenburg Research noted the suit, but Insider is the first outlet to report its details and its implications both for Lordstown and the host of startups racing to meet growing demand for EVs.

Commissioning pre-orders is not illegal, but it should raise a major red flag for investors, said Gartner analyst Michael Ramsey.

While Lordstown’s practice appears unique in the EV startup world, experts warn that no matter how they’re collected, pre-orders and reservations aren’t great tools for predicting which young automakers will prosper. Because they’re typically non-binding, they don’t necessarily indicate what level of demand a vehicle will generate when it enters production. A startup’s success is better determined by its technology and talent than by a metric that hinges more on interest than intent.

Lordstown’s pre-order list ‘obviously does not indicate real demand’

Even with the electric vehicle market starting to grow, deep-pocketed investors are crucial to any startup. It takes billions of dollars to launch an automaker. The industry’s history is littered with failures, and most of today’s startups will likely flounder before their products hit the market, according to risk consulting firm Guidehouse.

To attract capital, many fledgling automakers use pre-order figures as a proxy for the demand their future vehicles will command. Tesla in particular has a long history of doing this. The problem is that these orders represent a consumer’s interest in actually buying the vehicle once it reaches the market – not their commitment to do so.

The fact that Lordstown paid commissions for bringing in these orders further undermines the figures’ credibility, Ramsey said. “It obviously does not indicate real demand,” he told Insider.

Lordstown Motors has been commissioning pre-orders for years

The idea for Lordstown Motors originated at Workhorse Group. In 2019, Workhorse CEO Steve Burns left the startup. He bought the patent for its electric pickup, along with thousands of pre-orders for it, and made it the basis for a new company, Lordstown.

Workhorse Truck
Workhorse Truck

Today, Lordstown boasts more than 100,000 pre-orders for the pickup. That’s impressive when compared to those for similar EV startups like Lucid Motors and Fisker, which have about 8,000 and 14,000 pre-orders, respectively.

In March, short-selling firm Hindenburg Research became the first to report on the questionability of Lordstown’s pre-orders, calling them “largely fictitious” and an attempt to “mislead” investors. The company’s stock fell 16% the day after the report was released and continued to slide.

At the time, Burns responded that the company has been transparent with the status of its orders. He also reiterated Lordstown’s plans to release the electric pickup truck in September.

Pre-orders were heavily incentivized

The 2017 lawsuit was filed against Workhorse by its former director of fleet sales, Jeffrey Esfeld. When he was hired in 2016, Esfeld said, he was tasked with securing up to 10,000 pre-orders per year. In just over a year, he logged more than 8,000 pre-orders, according to the court document. That number alone would account for over 8% of Lordstown’s current pre-orders to date. A Lordstown spokesperson would not confirm whether signatures gathered by Workhorse Group in 2016 are part of that total. (Esfeld declined a request for comment from Insider.)

Esfeld received a commission of roughly $30 per vehicle for each signed pre-order, according to the suit, on top of his $100,000 base salary. He would also receive a commission of 0.14% of the vehicle’s sale price for pre-orders that officially became sales. He was one of several employees that worked specifically on obtaining pre-orders for the truck.

During his time at the company, Esfeld was paid commissions for 3,050 vehicle pre-orders, from companies including Duke Energy and American Electric Power. (The case also notes Esfeld had been working to win over Amazon, which ultimately agreed to buy 100,000 electric delivery vans from Lordstown rival Rivian.) But, he alleged, after laying him off in 2017, Workhorse failed to pay him $440,707 he had earned in commissions, representing about 5,000 pre-orders, including from Ryder, one of Lordstown’s biggest pre-order signees to date. (He ultimately won the suit, and Workhorse paid him an agreed upon amount of $87,000 in damages and $32,245.02 in attorneys’ fees and costs.)

Steve Burns Workhorse
Steve Burns at Workhorse Group

The practice continued at Lordstown. In 2020, the startup hired consulting group Climb2Glory to commission orders, according to Hindenburg Research. On a page that was deleted after the short-seller’s report was released, Climb2Glory referenced how it helped Lordstown generate pre-orders.

Workhorse Group, Lordstown Motors, and Climb2Glory did not respond to requests for comment from Insider.

A questionable spin on a questionable practice

The Workhorse and Lordstown policy of paying commissions for pre-orders appears rare. “This is the first time I’ve heard of a start-up in that space doing anything like that,” Pitchbook analyst Asad Hussain told Insider. Comparable electric car startups, including Rivian, Lucid Motors, Fisker, and Nikola, do not pay commissions for pre-orders or contract workers to secure them, Insider found.

In recent automotive history, Elon Musk set the standard of using pre-orders to preview sales figures. “Tesla’s reservations taught the industry that this is a way to develop credibility with investors,” Ramsey said. But while it once charged $50,000 to pre-order a Roadster, it now asks a mere $100 from someone who wants a Cybertruck. That’s comparable to (usually refundable) reservation fees charged by the likes of Fisker ($250) and Lucid Motors ($300).

That lesson isn’t necessarily a good one, Ramsey said. “Investors need to think long and hard about the viability of the pre-orders that any of these startups are touting.”

Hussain told Insider that investors need to focus more on technology and execution, rather than “propaganda.” He thinks the Wall Street trend of using special-purpose acquisition companies to go public has put a lot of companies, like Lordstown Motors, in a position they’re not mature enough for yet.

Endurance electric pickup truck by Lordstown Motors
Steve Burns with Lordstown’s Endurance.

“The ability for early stage startups to go to market, even without revenue, creates a double-edged sword,” Hussain told Insider. “It allows everyday people to gain access to disruptive technologies like electric cars, but it also puts new companies and investors in a precarious position – how can they prove there will be demand for their product, without revenue? That’s where pre-orders can get tricky.”

For Lordstown, reliance on pre-orders has put it in the crosshairs of notorious short-seller Hindenburg Research. Just last fall, the same group released a damning report on Nikola that caused the company’s stock to plummet and its CEO Trevor Milton to step down. Currently, Lordstown is under investigation by the Securities and Exchange Commission for its pre-order practices. Its stock is trading at around $9, down from a high of $30 in February.

“A lot of these companies tout non-binding pre-orders or reservations,” Hussain said. “But, if you’re actually paying for them [the pre-orders] it does bring up some questions and it is not characteristic of the space.”

“The key question mark for many of these startups is: Can you actually get your factories up and running? Can you actually manufacture those vehicles?”

Mark Matousek contributed reporting.

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This vitamin C serum was developed by MIT scientists and makes my skin glow – it’s back in stock after selling out multiple times

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Maelove Glow Maker

Product Card (small)

Generally speaking, most skincare is expensive. There are good options at low prices, but there are also one too many $300 night creams and pots of rare ingredients infused with gold flecks to call the genre accessible all-around. 

Practically speaking, good skincare should be much easier to get your hands on. Certain ingredients just work, and it shouldn’t be too difficult to cut through the noise and formulate a product that combines those proven ingredients in a basic bottle that can retail for an affordable price. 

That’s what Maelove CEO Jackie Kim thought when she set out to create a “radically affordable” skincare startup – and, in so many words, that’s what the company has achieved with its cult-favorite $28 Glow Maker Vitamin C serum

Kim and co-founders Brad Yim and Rishi Khaitan, MIT graduates, leveraged artificial-intelligence techniques to scan millions of self-reported product reviews to determine which ingredients correlated with success, and which to avoid. The resultant three-years-in-the-making vitamin C serum has been generating enthusiastically positive reviews online, including from me.

The formula

The Glow Maker was designed to smooth, hydrate, and help with hyperpigmentation. It’s packed with ingredients like vitamins C and E for brightening, ferulic acid for antioxidation protection, hyaluronic acid for hydration, and a proprietary mix of botanicals (grape seed extract, aloe, aurantium dulcis, and magnolia) for nourishment and easier makeup application. The addition of extracts also makes the serum better for sensitive skin than most other vitamin C serums.

Consumers have also been quick to note The Glow Maker ($28) has striking similarities to SkinCeuticals’ multi-award-winning C E Ferulic Serum ($166), despite it being more than $130 cheaper.

For reference, we compared the ingredients in the Glow Maker and the SkinCeuticals CE Ferulic Serum:

  • The ingredient list of C E Ferulic according to SkinCeuticals ($166): Aqua/Water/Eau, Ethoxydiglycol, Ascorbic Acid, Glycerin, Propylene Glycol, Laureth-23, Phenoxyethanol, Tocopherol, Triethanolamine, Ferulic Acid, Panthenol, Sodium Hyaluronate.
  • The ingredient list of Glow Maker according to Maelove ($28): Water (Aqua), Ascorbic Acid, Ethoxydiglycol, Aloe Barbadensis Leaf Juice, Glycerin, Lecithin, Sodium Hyaluronate, Ferulic Acid, Citrus Aurantium Dulcis (Orange) Callus Culture Extract, Magnolia Officinalis Bark Extract, Vitis Vinifera (Grape) Seed Extract, Xanthan Gum, Disodium EDTA, Sodium Metabisulfite, Triethanolamine, Phenoxyethanol, Ethylhexyglycerin, Maltodextrin, Tocopherol.

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What it’s like to use

In person, Maelove’s Glow Maker is noteworthy for more than just its origin story. It does what it’s supposed to do (brightens the complexion, lightens dark spots) but its real standout features are that it absorbs completely and almost instantaneously into the skin, and that it provides a glow that’s noticeable but not so over-the-top that people with oily skin should steer clear. There’s no tangible residue, and the skin doesn’t feel sticky or tacky post-use.

And while my skin is sensitive and can be dried out by all-over vitamin C application, I have not had that issue with Maelove’s iteration – something I’d credit to their botanical blend and hyaluronic acid, which can hold up to 1,000 times its weight in water. 

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The bottom line

The Maelove team is an unusual one- comprised of cancer and brain researchers, chemical engineers, lawyers, doctors, and an obsessive skincare enthusiast – but that outsider perspective is its greatest advantage. The startup’s founding goals were affordability and accessibility, and thanks to obsessive research and a streamlined, no-fuss approach to an often stuffy industry, that goal is met with a product line unanimously priced under $30. The Glow Maker is a definite favorite, but other Maelove standouts include the One Cream ($28, currently sold out), Eye Enhancer ($28), and the perfectly gentle but effective Glycolic Acid cream, the Night Renewer ($28)

If you’ve been paying $166 for SkinCeuticals’ C E Ferulic Serum, you owe it to yourself to check out the Glow Maker. If you don’t love it, Maelove offers a 100-day return window for a full refund.

Product Card (button)

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