Los Angeles-based music fintech Stem is advancing up to $100 million in advances to musicians and artists who can't tour due to the coronavirus.Â
The company, whose investors include record exec Scooter Braun, received requests for $18 million in advances just 24 hours after launching.
Stem's offering, Scale, provides advances to artists based on their projected earnings from four to 18 months into the future and expects that the company's $100 million fund will be deployed far faster than expected due to coronavirus.Â
"We're building financial tools for an underserved part of the population, people don't think musicians have this issue, but in fact it's where [the term] gig economy comes from," Milana Rabkin-Lewis, CEO and cofounder of Stem, told Business Insider in an interview. "People think there's nothing in the middle from superstardom to starving artist, but we want to prove there is a middle ground and that you can build a sustainable business as a musician."
Stem's decision to provide $100 million to artists is double that of a similar fund from Apple, which launched a $50 million scheme to support independent artists in April.
Rabkin-Lewis says her company's offering is helping to provide monthly assistance to musicians, many of whom are failed by a lack of infrastructure in the industry. Â
One way the company does this is through helping commercially successful artists release their music independently by removing the need to pay out songwriting and producer credits, and label cuts. One such example was multi Grammy award winning artist Chance the Rapper who worked with Stem to release his music through Apple and Spotify.Â
Unsurprisingly, with much of the world on lockdown and with it thousands of events canceled, traditional income streams for musicians have been limited. The touring industry, worth approximately $130 billion a year, has been decimated by the coronavirus and if the industry does return it will come back in a "different way," according to Rabkin Lewis.Â
It's part of a journey that saw touring evolve from being a vehicle to sell records, to a major income source for artists with streaming effectively demolishing the value of individual songs and albums.
As a result, five-year-old Stem works with independent artists to not only help financially but also assist with digital marketing strategies and help them think more critically about growing their fanbase globally.Â
Clients beyond Chance the Rapper include Frank Ocean and Childish Gambino, who rely on the startup to get paid.
Another important distinction, for Rabkin-Lewis, is that despite much of the venture capital industry being skeptical of the world of music in the wake of Napster, those who are involved see great value in the sector. Many smaller investors in the platform include Mark Cuban, whose involvement is minimal according to Stem, Mark Gillespie (Calvin Harris' manager), Bradford Cobb (Katy Perry's manager), and Savan Kotecha (a songwriter for Arianna Grande and The Weekend).Â
Undoubtedly, the Covid-19 pandemic will change the music industry but Stem hopes that its platform will offer a real alternative to artists going forward.Â