Why Stem?

by Tim Luckow, Co-Founder & President of Stem

Being creative and collaborating with people isn’t difficult, yet making a living as a musician tends to be very complicated. I’ve been playing bass and working in the music industry since high school, consistently frustrated by the absence of options to collectively distribute and manage music online.

My path to co-founding Stem consisted of three main phases:

  1. Learning bass and going to Berklee College of Music.
  2. Managing bands, booking shows and starting a label.
  3. Moving to San Francisco and learning how to code.

It’s time for something new.

Life as a Musician

My first day at Berklee College of Music, I was fortunate to meet Emily Elbert. Emily is an incredibly talented musician and songwriter whom I played bass with for several years. She did everything herself: booking and performing at 150+ shows a year, writing and recording new albums and YouTube videos and maintaining complete control of her artistic direction.

This was inspiring on many levels, and left a lifelong impression of what is possible when you do the work yourself.

Our first tour was a valuable learning experience of what life as a full-time musician could be. We played some shows with guitar prodigy Tyler Bryant and a variety of festivals, TV shows and venues in Texas and the southwest.

Touring was an incredible experience but also very tiring and fairly inconsistent, so eventually I started looking for other ways to earn an income in music. After seeing how much work went into releasing an album and booking tours, I started managing bands at Berklee. Since most of the music business was in New York City, there was a lot of work to be done.

GHouse, My First Company

GHouse originally started as an alias so I could work under a name other than my own; it was named after my best friend’s garage that our band would practice at in high school. Eventually, it became a creative community of hardworking people coming together to manage artists, book and promote shows, digitally distribute music and consult with local businesses and restaurants on special events and marketing for things we believed in.

One of those businesses was local real food heroes b.good. Jon Olinto, the founder and a mentor of mine, was a big fan of music and wanted to incorporate it more into the b.good community. We booked Berklee students to play at the restaurants, gave out vouchers for healthy food to musicians, released a compilation and opened a location across the street from Berklee.

[bandcamp width=350 height=470 album=2631649913 size=large bgcol=ffffff linkcol=0687f5 tracklist=false]

Shows were a major key to building a diverse community of creative people, hosted in all kinds of venues, restaurants, museums, parks and basements.

Wadzilla Mansion was a house in Allston, Massachusetts that hosted a wide variety of shows, many of them with GHouse artists and eventually touring artists we supported. Until Wadzilla let us promote shows there, we had to advance hundreds of dollars for every show we booked at a traditional venue. When they opened their doors to us, it removed the aspect of financial risk from booking shows and we were able to put together live combinations that would have never happened otherwise.

The Boston Phoenix wrote an article about us, and from there things started to pick up quickly, including the unfortunate shutting down of Wadzilla by the city of Boston after a weekend of sold-out shows with Bad Rabbits.

GHouse’s poster for our two sold-out shows with Bad Rabbits at Wadzilla Mansion, January 28th & 29th, 2011

Soon after, a good friend who also promoted shows moved to Austin and called me with the surprising news that he was looking for someone to rent the Austin Museum of Art during SXSW. This led to several years of SXSW events, and printing 20,000 bandcamp download cards for various releases with Botanical Paperworks that grew into wildflowers when planted as an alternative to the plastic CDs being handed out on the same street.

GHouse’s poster for our SXSW event at the Austin Museum of Art, March 2011

GHouse Ltd was now a real incorporated company. Next, we put together a business plan and participated in an accelerator called Future Boston.

After years of hard work, we finally had an office.

The big problem was that the more we grew, the more payments we had to send out manually every month. Compiling reports into spreadsheets to share with the artist and then either writing a check or sending money via PayPal kept me constantly worried about human error. On top of that, our distributor only paid us on a quarterly basis. It quickly became obvious there was a better way to keep everyone in our network informed and paid in full.

An even bigger issue was the lack of understanding of how to register every aspect of a song. Many creators aren’t equipped with the knowledge they need to register with a Performing Rights Organization (PRO) such as ASCAP, BMI, or SESAC for compositions, along with SoundExchange for sound recordings, HFA or MediaNet for mechanical royalties, and the US Copyright Office to fully register and collect on every original song released.

“… If we were to do it all again, we would never design the system that we have today.” – US Copyright Office, 2015

The current process is not efficient, and that sentiment is echoed in last years government produced report: Copyright in the Music Marketplace.

New music was being released every month, shows and tours being booked daily, and creative agency jobs were starting to come through. Around then, Google featured us in a campaign supporting local businesses in Boston, including physical ads in locations like Harvard Square and South Station.

Google x GHouse promotion spotted at South Station in Boston, 2013

All this time, I was consumed by the idea of a team dashboard that automated accounting behind the scenes. Everyone was collaborating, but there was very little technology helping them manage. The original idea was an application that can deliver music to Internet platforms and collect data and earnings directly from the source, programmatically paying everyone involved based on raw streaming and sales data to guarantee accuracy.

San Francisco

I decided to go to San Francisco for three months to dive into the tech startup world. There, I pursued an investment to build a system that could deliver to streaming platforms and automate payments using source data.

On April 20th, ten days into my SF trip, a conversation about music at Dolores Park led to a meeting with the Napster himself, Shawn Fanning.

Jamming with Shawn Fanning and a group of friends in San Francisco, 2014

Shawn started another company after Napster called SNOCAP that had a very similar vision for an attribution index. We talked about his ideas that still haven’t been built to this day, and shared thoughts on technology and the music industry, he then enabled me to focus on the dashboard for a year.

Being surrounded by such an amazing group of thinkers, programmers and musicians was beyond inspiring and led to many important realizations:

  • Attribution is necessary to ensure accurate payments.
  • Collaboration is constant, and digital contracts are necessary.
  • Managing digital content across platforms as a team is arduous.
  • Percentages and term length are all that matter in most contracts.
  • Payments must be automated and received by each party simultaneously.
  • Mobile devices continue to gain importance, connecting the masses.
  • New formats of content and methods of monetization are emerging.
  • The number of platforms monetizing digital content is increasing.
  • Apps are starting to pay users, creating a new type of network.

The environment in San Francisco made me want to become more technical and product-focused, so I spent time learning how to code. I never caught up to people who have been doing it their whole lives, but it was necessary to understand how building apps worked. This happened at the same time as discovering my grandfather was the director of systems engineering at NASA for the Apollo missions and worked on the Polaroid Instant Camera. I’m lucky to be part of a family that is entrepreneurial and supportive of pursuing a dream that has gone through many phases. Their values combined with a wide variety of mentors taught the importance of sweat equity and thinking long-term. (special thank you Hank Barry, Rick Hayes, Justin Bolognino, Dan Kenary, Jon Olinto, Malia Lazu, Berklee, many others)

The product design started to come together: a team dashboard that let everyone manage and track what’s happening with their music across Internet platforms on any device. It became clear that experience and consistency are everything when building reputation and trust as a network. Every company already in the space had essentially identical interfaces and delivered to the same platforms, lacking a clear leader in user experience.

Milana and I were introduced through multiple friends, and once we had our first five-hour breakfast conversation, it was pretty much decided we were going to do this together. I’ve known our other co-founder Jovin (whose story will be told in the next post of this series) for years, through many mutual friends in Boston. We were working together on a prototype at the time, and Milana brought a wealth of knowledge and experience, plus a major insight into the true importance of video, specifically YouTube and the accounting and content claiming issues creators and MCNs were facing.

So back to the original question: Why Stem?

Stem has three relevant meanings.

  1. Music – Piece of a song. Every song is a unique combination of stems.
  2. Nature – Plant structure to store and transport nutrients from roots.
  3. Sustainability – The music industry could learn a lot from nature.

Collaborators have no easy way to share data and split earnings across platforms with each other or stakeholders like managers, labels and publishers. There is a growing number of streaming platforms including Apple Music, SoundCloud, Spotify, and YouTube that share exactly how many sales and streams are occurring with source data precision.

The shift from sales to streams is important, and even more vital is that now there is definitive data sets for consumption and earnings provided by streaming platforms. Disconnection starts the moment payment is delivered in a lump sum to a single stakeholder, who is then expected to pay every collaborator, every month earnings are delivered, for the rest of their lives.

[bandcamp width=350 height=470 album=893407331 size=large bgcol=ffffff linkcol=0687f5 tracklist=false]

One of the musicians in Stem’s alpha is Caleb Groh, we’ve worked together in various ways since he released his self-written, performed and produced album Mammoth Moon in 2010. I am a huge believer in Caleb, and it’s been amazing to watch him evolve as an artist, but seeing his options for building his business independently with current distributors has been frustrating.

Now, Caleb can use Stem to deliver his original music and video directly to Apple Music, SoundCloud, Spotify and YouTube. Creators simply sign up, upload content and add collaborators by email to share earnings over time.

My hope is that Stem will enable creative people to collaborate even more, knowing they can earn a fair and sustainable income from their hard work.

Sign up to join the alpha today.


One Day at Stem: Friday October 28th

Discover how Stem can be the backbone to your music business.