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How Create Music Group Became Inc.’s No. 1 California Company: Proof You Can Profit From YouTube

By the mid-2010s, big-name artists like Taylor Swift and Paul McCartney were railing against YouTube: The site was home to loads of unauthorized uploads of their songs, and even the authorized versions paid paltry royalty sums. It was an even harder battle to fight for the much less famous–and less lawyered-up–musicians in the industry. So, a lot of them simply put music on YouTube for free and focused on other ways to make money.

It was that middle-class of artists that Jonathan Strauss and Alexandre Williams had in mind in 2015 when they founded Create Music Group, a platform designed to help musicians monetize their music on YouTube. Their pitch was simple and convincing: It consisted of an Excel sheet that showed all the instances in which a particular rising star’s music had been uploaded without her consent. Also in the doc was a royalty figure–not massive, but for some in the thousands–the musician would be able to collect per month if she signed up with Create.

“It was a month-to-month deal, no commitment. It was the difference between getting something and getting nothing,” says Williams, CMG’s chief operating officer. “It was impossible to say no.”

Online streaming has become the music industry’s biggest growth driver. According to the Recording Industry Association of America, in 2018 recorded music generated an estimated $9.8 billion in revenue, with streaming accounting for $7.4 billion of that total. And CMG is one of a handful of competitors, including TuneCore, Stem, and Distrokid, that are attempting to collect some of that revenue for artists.

Naturally, CMG also gets a cut. More than 10,000 musicians use CMG’s platform to collect royalties, with around 500 of them earning at least $3,000 or more a month. CMG itself pulled in $28 million in annual revenue in 2018, up from just $133,000 in 2016. That performance helped the business land at the top of the Inc. 5000 Series: California, a tally of the fastest-growing private companies in the state this year. How it got here–and where it goes next–has everything to do with CMG’s ability to become much more than just two guys and their spreadsheets.

CMG’s first big break came from targeting electronic music DJs, who often had no idea that other people were uploading their music to YouTube and profiting off the streams. “They were the most infringed upon,” says Strauss, the startup’s CEO. After months of pursuing DJ and producer Marshmello, CMG finally landed him as a client by offering him a $150,000 advance and a promise that the company would be able to find double what he was collecting in digital royalties at the time. And CMG delivered on that promise. A third co-founder and now chief business officer, Wayne Hampton, joined in 2016 and helped CMG gain a following among hip-hop artists.

Over the past five years, the company has catered to additional genres and expanded its artist services. Today, the 150-person startup offers music publishing and distribution to more than 100 media streaming platforms, data-driven music release strategies, a content creation team, and soon its Hollywood headquarters will offer artists the ability to record in one of its five studios currently under construction. CMG also runs the YouTube channels for Jennifer Lopez, DJ Dillon Francis, and others, and two of the top three music labels in the U.S. use CMG to track digital royalties for their artists.

Read more on Inc.

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