Daniel McCarthy is the CEO & Founder of Musicbed and Filmsupply, the premier music and stock footage licensing platforms for the creative industry. In this episode, Daniel tells us about how he risked it all to go from agency owner to tech entrepreneur, and changed an entire industry along the way.
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Nate Watkin: Welcome to the Creatives Offscript Podcast, hosted by Assemble. I am your host, Nate Watkin, and today we’ll be speaking with an industry-changing CEO, Daniel McCarthy, the founder of MusicBed and Filmsupply. Daniel started his career as a creative and filmmaker, but quickly saw an opportunity to create a new music licensing platform featuring thousands of handpicked emerging artists. He has also launched the Film and Music Magazine, produced the documentary Make, and was a featured speaker at the Cannes Film Festival. Welcome to our podcast, Daniel.
Daniel McCarthy: Thanks, man. Thank you for having me.
Nate Watkin: Absolutely. Let’s start from the beginning. We’d love to hear a little bit about your story. Grew up in Fort Worth, Texas. What was it like growing up there and tell me a bit about your upbringing?
Daniel McCarthy: It’s not very creative in Fort Worth, Texas. We’re getting better. But I definitely … I mean, this is the middle of Texas, I would say film and music, those two industries not mega prevalent here. But I always had a bent towards tech and media. So in high school I got into a tech program which got me into music recording and then ended up going to school for music business and decided when we started to get into it, I had the choice do you go to Nashville, do you go to LA, do you go to New York or do you try to create something in your own world, in your hometown? We felt like where the industry was going and where the world was going, being more collaborative.
I mean, especially right now, in the middle of what we’re going through as a world where everyone has realized that things that they thought could never be remote actually can be. We felt like where everything was going it didn’t matter where we were. It just mattered that we had great people and a great product. Yeah, I don’t know if that completely answers your question, but I think it was not … There’s not a lot of people coming out of Fort Worth, Texas that aspired to be in the music and footage space and then make it happen here. It’s exciting. We think it’s exciting to be doing it where we’re doing it.
Nate Watkin: Yeah. Yeah, I can relate to that. I was born and raised in the Denver, Colorado area and had a similar conundrum growing up as well. I was like, “Do I stay here? Do I move to a big market?” Obviously I ended up moving to Los Angeles, but I think it’s incredible that you guys have been able to create such a nationally or globally recognized brand from your hometown.
Daniel McCarthy: Yeah, it’s been fun.
Nate Watkin: Yeah. Where would you say you first started to find a passion for creativity?
Daniel McCarthy: Man, I’ve been … I mean, when I was a kid, I was really big into piano, and then when I got into high school, I became a drummer. I’ve played my whole life, definitely not as proficient as some of the amazing artists that you represent, but capable, it’s what I would say. Then as I got into high school, our high school just … We got lucky actually, myself and my co-founder, Nick, were both in the same high school and they had a media tech program. I mean, while most high schoolers were doing math and social studies and history or whatever, well, it’s like Nick and I were setting up line arrays for pep rallies and touring the country with … We just had a different experience. We were in a full blown recording studio every single day doing news broadcast for the high school.
It just was not normal, especially in 2002. We had a huge grant from our school district, and so we had great gear, we were working in final cut all the time. So I felt I had, for three or four years in high school, just really well-rounded technology education from video production all the way over to audio production, to live sound, recorded sound. I mean, we had people coming in from colleges being like, “Dude, we don’t even have this stuff at our university.” I felt very blessed to be … My school just so happened to have a program that aligned with my passions. When I got out of college I somehow convinced my dad to buy me a full live audio set up with a trailer and I was running sound for bands and setting up at 2:00 PM and tearing down at 2:00 AM and just doing that whole deal for a while. I don’t think I ever really saw myself not doing something with sound or music or production and just had always loved it.
Nate Watkin: Yeah. It sounds you’re a gearhead, you love the tangible equipment and putting together the technical side of things.
Daniel McCarthy: Yeah. I don’t feel like I … Now I have a big team and so when I get around other gearheads, they definitely put me to shame. I mean, technology has changed a lot and I don’t get to mess with it as much as I used to, but I definitely … I like new shiny stuff. Yeah, I love it. I mean, if I could sit in a recording studio all day, I mean, that’s the dream life. It’s like I just … There’s nothing it.
Nate Watkin: Yeah, that’s awesome. Tell me about your first real job in the creative industry.
Daniel McCarthy: Oh gosh. I got fired from a lot of jobs. Let’s see, my first job in the sound space I was running sound full time at a university. My first job in the creative designer … I went to college to be a music business. I was at a university called Dallas Baptist, and I quickly realized that I didn’t like school. I knew I didn’t like school all along, but I really hated it college, specifically all of the random dumb classes I had to take when I was a freshman. I convinced a friend of mine who was starting an advertising agency to hire me as a designer. I’d never designed anything. He swears he knew it at the time, but I had downloaded a bunch of Photoshop templates and changed out some colors and submitted it as like, “Hey, this is what I can do.” I had no idea what I was doing, and he was like, “Listen, I’ll pay you 500 bucks a month, and you can just come be an intern.”
That was, I guess, when I was 19. So I dropped out of college. That was another rule, was he said, “You can’t drop out of college. You have to stay in school.” I enrolled in some county college classes so he could see the paperwork and I just never went. I just was doing this internship thing, I was doing a bunch of album covers, brochure designs. Really we had this contract with this big CD manufacturer company that they would pay us 250 bucks a pop to do CD covers. So I would do four a week. Looking back on it, I realized it was literally working out for your creative brain. I mean, it’s like every single day I walked in, I had to do a whole album design, full eight panel [inaudible 00:08:08] just the whole deal. I learned a lot about printing, I learned a lot about design, I learned a lot about...
I was working back and forth with the artists, so I learned a lot about just communication, project management. I was just doing it all. That’s really what just got me into it, man. I was making $500 a month so I could pay for my crappy apartment, and I was probably working 90 hours a week and it didn’t feel like work. I mean, I just loved it. Now when I hire kids and they’re 9:00 to 5:00, you guys are a bunch of wussies, honestly. You need to go out there and bust your butt. But anyway, I don’t have a lot of grace for kids, really. Yeah, that was my first real creative job, and I really owe a lot of even just where we are today to those two guys, Brad and David, who started that agency, who I guess saw something in me and let me come and figure out what the heck I was doing.
Nate Watkin: Yeah. It sounds like you hacked your way into the system without the formal education, and then just taught yourself on the job.
Daniel McCarthy: I think it’s the only way to do it. I mean, honestly. Most people that we hire that went to school, we have to unteach them first. I think maybe it’s better, just come get in the game, get around people doing what you want to do, learn from the best and see what happens.
Nate Watkin: Yeah. It’s funny hearing that because it’s actually so similar to my path. I couldn’t stand college either. I dropped out at 19 and started production company and learned as I went.
Daniel McCarthy: Yes.
Nate Watkin: I’m very familiar, which is it’s just jumping in and just learning and starting to make money. It’s I think an incredible way to learn.
Daniel McCarthy: Yeah. Now I have kids, and so they’re like, “Well, dad didn’t go to school.” I’m like, “Ah.” It’s funny because I’m like, “I don’t care if you go to school, you just better have something you …” I mean, that’s the thing. It’s like I knew what I wanted and I was so dang passionate that there was just nothing going to stop me. I felt like school just didn’t make sense. It didn’t line up with where I knew I was going to be.
Nate Watkin: Right, right. From there you went on to run your own agency, correct? What did you learn from that experience?
Daniel McCarthy: I learned I didn’t want to run an agency. I mean, it was the only thing I knew. When I left the advertising world, I had been running creative there, I was decent at photography, I was decent at design, I knew my way around production studio, and it was my whole life. I mean, from 19 to 24, probably, is about when that happened, when I left. It was just everything I knew. I always tell … It’s like when you transition out of something. For me, it was like, “This is the only thing I know. This is my trade.” I started an agency because that’s what I knew. I knew how to talk, I knew how to go to pitch meetings, I knew how to create a brief, I knew how to create a pitch deck and that just was in my life, and so I started it. But this was, gosh, a couple of years after Canon released a 5D Mark II, right? Which I always talk about that as a really … I believe it was a really big milestone moment in the whole production world because it put these cinematic cameras in the hands of everybody.
All the sudden you could shoot beautiful footage for a 10th of the price, and we set out to be this advertising agency but all we were getting was creative work like, “Hey, can you make these films? Can you do branding? Can you build us a website?” And this is just like … I mean, you’re just taking every job you can take. Over 50% of our revenue was coming from video. I always said, I felt like I could control every aspect of the film from lighting to directing and the script and the whole creative direction of the film, and then we would get to the music side, and I just felt like we were very limited. There was a couple of options. I didn’t really understand the whole publishing licensing aspect of things, so it’s like we’re just stuck using Killer Tracks or something that, and it was like this is awful. I mean, there has to be a better way, right? Which is I feel like where most businesses start.
That’s what led us to … I had some artists friends that were living in Nashville. I had some guys that I knew that were managing great artists. I had gone to school for music business, and so I had a little bit of relationship, and I’m like, “I know all of these guys.” At the time we had gotten quoted $2,500 to do some online project from Killer Tracks, and I was thinking, “This is absurd. This music is awful.” I know that my buddy who’s in Nashville trying to make it, who has music way better than this would happily take $2,500 to let me use the music. That’s where it started. Nick and I were like, “[inaudible 00:13:22] we could launch this and have 50 artists in a year,” and that was back in 2011. Then we launched in 2012 with 35 artists and it just took off.
I just felt like if we just stay true to who we are, we never compromise on quality, and we just try to make the most … Because we were coming at it, yes, from an artist perspective and we’re both musicians. But we were really coming at it from the filmmaker’s perspective, and like, “What does the film industry need? What does the creative industry need? They need amazing music, the best quality, but it has to be accessible and easy.” It worked, and I guess fast forward, gosh, where are we now? 2020, so it’s eight years. It’s been wild. It’s been really fun.
Nate Watkin: Yeah. I remember those days. I remember even camera technology right before the Canon Mark II came out, I believe it was the first one, we were using these lens adapters.
Daniel McCarthy: Redrock.
Nate Watkin: Yeah, Redrock Micro, these massive lens adapters that weighed like 50 pounds. It was like when that camera came out it changed everything. I feel like-
Daniel McCarthy: Yeah, you’re shooting with the camera upside down, attaching old crappy Nikon lenses. I mean, we were doing the whole deal, right? Anything you could do to hack together this cinematic look.
Nate Watkin: Right. Right.
Daniel McCarthy: It was really, really game changer. I felt like that was the moment when the whole creative industry began to shift and video became as big of a deal as photo from a creative perspective. It was a big moment for sure.
Nate Watkin: Similarly on the music side, there was these terrible stock music libraries, or you had to try to call up a record label or a licensing company and try to license music. I think that in the same way that these new tools like the Canon Mark II and these started evolving, it sounds MusicBed also became that filmmaker first platform that provided what the industry really needed, which was great music from emerging musicians for film.
Daniel McCarthy: For sure. Yeah. I felt like what happened to the film ministry had happened really to the music industry maybe five to 10 years earlier, which was at one point it costs you $100,000 just to make a record, or more. Then as pro tools and all this stuff, so logic [inaudible 00:16:08] it’s like all this stuff starts to hit the music industry and all of a sudden you have these guys in their basements making records for not a lot of money and it rivals what record labels are putting out. We felt like at that time there was just a ton of great artists that were being slightly ignored or weren’t being recognized or weren’t being really rewarded for the quality of stuff that they were putting out, because the accessibility of the technology, the ability to make great records was at an all time high, yet there was no more radio time, right?
I mean, it’s like we don’t have any more space for more music, so y’all going to have to figure out something else, right? This is when, I mean, everything just starts to just blow up in Spotify and everything else. It’s just the whole music industry really got turned on its head and is continuing to be turned on its head. But as a creative … Dude, I just needed to really grow. I mean, for me, I’m like, “Yeah, I just need really great music,” and I know it’s out there and it’s just really, really hard to find and I can’t figure out how to pay for it. That sounds simple but it was like, “We got to fix this problem.”
Nate Watkin: So you have the idea for your MusicBed, and to fund the company, you sold your house. You made $25,000 from the sale and used that to start MusicBed. How did that feel at the time?
Daniel McCarthy: Dude, you did your homework. Yeah, we did sell a house and it felt a little crazy. I don’t know. I have had this conversation a couple of times. I have a really good friend, a mentor, [inaudible 00:17:55] I’ll rabbit trail for a moment, but I have a good friend of mine that said, “Hey, you should write a blog post about risk,” and I was like, “What do you mean?” He was like, “Yeah, man, I feel like every time you turn around and you’re taking these huge risks.” I was like, “Oh, I don’t feel I’ve ever done anything risky.” Because I think when you’re an entrepreneur or when you have this gigantic vision, risky feels … it feels more risky to not do it, I guess is the best way to say. For me, I was like, “Dude, there was no plan B.”
I saw what MusicBed could be, I saw the need in the industry, and I was like [inaudible 00:18:39] I’d say I need or we probably needed 100 grand, but all I could squeeze out was 25. At least from my wife and I … I mean, Haley’s just probably the biggest supporter in the world. It’s like, “Yeah, for sure. Let’s do it. I mean, if you think it’s going to work, why not?” Right? It didn’t feel that risky at the time. I think we sold a house, bought a smaller house, we were having our second kid at the time, and I don’t know, man. I just knew it was going to work. I don’t know. That sounds weird and cocky, but it’s like I think every entrepreneur or any of those creatives that have had a job and have jumped into freelance or whatever, it’s like they all know that feeling which is just, dude, I just got to do it. I mean, there’s no plan B.
Nate Watkin: It’s almost like the pain of letting the opportunity pass you by would hurt more than the pain of losing money.
Daniel McCarthy: Dude, so much worse.
Nate Watkin: Yeah, Great. So you continued running the ad agency and were somewhat using the agency revenue to help fund MusicBed. What was it like when you were eventually able to transition fully from the agency to MusicBed full time?
Daniel McCarthy: Yeah, that was a great day. We kept the agency for about a year, limited our clients. We basically kept about four clients on retainer, and we’re spending about 50% of our time doing that. I don’t think we would have been able to launch MusicBed without it. It’s so hard to go … Without at least a lot more funding because that cashflow monthly is so important. At about a year in, we felt like MusicBed was strong enough that we could switch all of our payroll over, and then I actually sold the agency back to the previous agency I worked at out of college and it was good for everybody. Honestly, it was great for them. They were able to grab couple of really great designers and creative director, take on four or five good clients, and it was good for me because I didn’t really want to make …
Honestly, at the time I was like, “I don’t really even want to make money on this deal.” We had some really great team members and we had some really great clients, and for me it was more of I just want them all taken care of and a seamless transition. It was amazing and it all worked out perfectly, and then Nick and I were able to fully focus on MusicBed which was about the time that … I mean you can go back and look at when we finally focused 100% of our energy on MusicBed how it really started to take off.
Nate Watkin: Going back and looking at the very early beginnings of MusicBed, the notes that you wrote down, the vision, what was the founding mission of MusicBed?
Daniel McCarthy: Yeah, I think it was to empower the artist and the filmmaker. We really saw ourselves as brokering this relationship between the creative industry and the music industry, which was difficult, man. It’s like a tight rope, because I think you can’t serve two masters. So we knew, and our artists always have known, that the filmmaker is our client. If the production companies and the freelance filmmakers and this whole creative industry, if they decide one day that they don’t want your music, then you’re not going to get paid. I think we always knew that we were filmmaker first.
But simultaneously I had been on the side of the musician and I knew that over the course of history we were going to see thousands and thousands of musicians that maybe would have never been able to make it as a musician be able to make it as a full time musician. We really felt like we had two missions and we always wanted to make sure that they never competed with each other. I think that probably continues to today is an internal struggle, honestly. Because you want to make the most money you can make for the musician, you want to support them, but simultaneously we have to keep our eyes on our customers and we have to be filmmaker first.
There’s just no other way about it. Because at the end of the day, they’re our clients and they’re our customers and that’s who we’re serving. So far so good, but it is always a tight rope that we walk. When you start talking about pricing models, when we started talking about subscription, I mean, that’s a big friction point because the filmmaker needs it but then you have to make sure you’re not destroying the value of the music at the same time. I think we’ve just always had to have very honest and honorable conversations with both sides and try to just make the absolute best product and most value possible. It’s a long answer to your question, but that’s that tight rope that we walk on a regular basis.
Nate Watkin: Yeah. So you had to get scrappy at first and really convince these artists to take a chance with you. Tell me what that was and how you did it.
Daniel McCarthy: Yeah. I felt like we said, “What is there to lose,” probably 1,000 times. Yeah. I mean, there’s no website yet in 2011, you have a three-page PDF and a handful of relationships. I remember taking one of my good friends to breakfast at Old South in Fort Worth, which is a crappy pancake place. It smells smoke, and just being like, “Dude, please, just trust me. Right? What do you have to lose? What I mean is if it doesn’t work, it doesn’t work. You don’t make any money. If it does work, then this is awesome.” I mean, Tony Anderson, we probably signed Tony Anderson, gosh, eight or nine months in. I met him in Chicago at a conference. We just hit it off, And I remember just being like, “Dude, I just listened to this stuff and I feel like filmmakers would just go crazy for it.”
We just had this long conversation and thank God he trusted us. I felt like there was just a lot of those conversations early, early on. Jordan Crites, I think, was one of the very, very first people that we signed. He was a friend of ours in Dallas, moved to Nashville. So it really was these handful of artists, Razor & Tie up in New York was one of the very first labels that signed with us, and it was just a series and a handful of relationships that were maybe dumb enough to trust us. I don’t know. You know what I mean? I think we had a compelling story at the time. It’s hard talking about it now because now we have so many competitors, the landscape is completely different and it feels a no-brainer today. But you got to rewind back to 2010, 2011, when this doesn’t exist at all.
Record labels make 100% of their sync revenue off of big, big, big deals, $50,000 deals, $100,000 deals, and they’re like, “Wait a second. You want a license on one of our songs for 49 bucks? You’re an idiot.” I think it was way different then. Our philosophy was then and continues to be today, it does not matter how much money each license makes. What matters is the value of the song. So if I can make you the same amount of money over 3,000 licenses, what does it matter to you? I would actually argue from a marketing perspective, it’s even better for you because you’re distributed amongst 3,000 different videos. Some of them may go viral. You’re just going to have bigger reach.
For us we felt like a weeding filmmaker or a freelance filmmaker or a small production company or a small company in the middle of Michigan shouldn’t have to pay the same amount of money as Apple doing a broadcast commercial on the Super Bowl. We felt like that value should reflect the distribution and it should reflect the terms of the agreement, and I don’t think … I mean, obviously they always had different values. But until we came around, there was a we’ll never do a deal under 10 grand. That was where most record labels were. If you email us and you want a deal, I don’t really care how small it is, we’re just not going to do it.
We just felt like there was a ton of money being left on the table for artists. That was the crazy thing, not to completely rabbit trail, but we had artists we were signing that were locked into publishing deals that they come to find out they’ve been in this publishing deal for two years, they’ve made no money, and the publisher has passed up 12 opportunities that would have been two grand, three grand, 1,500 7,500, and it’s like, “Wait a second, that all adds up to 80 grand, and you said no to all of them?”
So you had a lot of artists that were like, “We got to get out of this deal because I mean, we would have said yes to all of those deals.” It was a big deal for us at the time to come out with this mentality. I felt like a lot of times we were at odds with the legacy record industry. It’s just been a lot of education and a lot of really, honestly, us having to prove that our perspective actually works and it’s taken a long time to do that.
Nate Watkin: I want to backtrack there for a second. You mentioned at the time you had no website, I think you said you had a three-page brochure. How were you making money in the early days before the technology came along?
Daniel McCarthy: Yeah. I mean, we didn’t make any money until we launched the website. 2011 was 100% build. I designed the very first version of the website, I designed the first logo. We made all the videos ourselves and we hired a bunch of engineers all over the world to develop that first site, and then we launched it in 2012, had to wait three weeks before we made 50 bucks. That’s probably the best $50 I ever made. Then it just started snowballing. It’s like the first month we made $100, the second month we made $300 and then it started to pick up traction. Yeah. I mean, we didn’t make any money. But I think by the time we were in year one my salary was slightly above the poverty limit. Nick didn’t take a salary for the first 12 months of the agency side. Yeah. I mean, it was very slow at the beginning.
Nate Watkin: Yeah. I know at the beginning you were targeting more SMBs. Who was your first big client that you felt like this really put MusicBed on the map?
Daniel McCarthy: Oh, gosh. Maybe Nike. I think we did a streaming … It was just a web-only deal for Nike. Yeah. I mean, when we launched MusicBed, we were doing nonprofit stuff, wedding licenses, little small businesses, $199 deals, and the biggest request we were getting was … You had all these freelance filmmakers that were doing small work, but their careers were growing at the same time. Whereas hey, last year I was doing … I did this wedding project, and then I actually just got a call from Nike and they wanted us to do this big project for them like, “Can I still license music from you guys?” We’re like, “Heck yeah, you can.” I think at some level, I think our customers really helped transition us because all of our customers were growing in their careers and getting bigger projects and were very loyal and we were very thankful that they were very loyal.
So they were coming to us saying, “Hey, I have a bigger project. Can we do it?” We did some stuff with Nike. I think we did some stuff with Google. I’m a really big car guy so my favorite was probably a big Acura NSX Sport that we did. I’d be happy if just all we did was car commercials. Honestly, just love it. Yeah. I mean, that kind of stuff started to really … Then from there you start working with bigger agencies. It was probably three or four years before we were working with the agency of record for some of these larger companies. Now agencies is a really large portion of our business. Very slow evolution. It definitely did not happen overnight, and we owe a lot of it to those early on just super loyal, amazing customers.
Nate Watkin: Yeah. That’s great. How did you overcome the perceived challenge of not being in a major advertising market like New York or LA?
Daniel McCarthy: Man, I think for a long time, a lot of people thought we were in LA. I mean, I don’t think people really paid attention to it. Editors would come across MusicBed, they would place us in a … I mean, early on we made it into big advertising via temp tracks. We call it temp love, which is you have some editor at some production company who drops in maybe a Tony Anderson track or they drop in a Utah song just as a temp track for the ad. Then that ad gets sent to the client and the client’s like, “Yeah, I love it. I like the song. Let’s just do that.” I think for the first couple of years, when we were working with advertising agencies, advertising agencies didn’t really even know who we were.
They were just approving the song through the production company. It really wasn’t until the last three years that we started building really good relationships on the agency side as well. Doing work with Droga and 72andSunny and a lot of Omnicom agencies. I think that really has been more recent, the last three years. I believe we owe a lot of our current success to [inaudible 00:33:53] legitimately those early guys, those freelance filmmakers, those editors, those production houses that dropped some of our music into edits and the commercials and then clients ended up falling in love with it. That’s really how we transitioned our way in.
Nate Watkin: Yeah. You guys have really built some incredible name recognition in the industry with your background in design and advertising and creative. What was your goal for how you want it to shape the brand?
Daniel McCarthy: Oh man. The MusicBed brain is definitely my baby. I just really liked … I mean, I wanted it to be inspiring, I wanted it to be award-winning. We came from the advertising world, and so to me, I was like … There were so many … Some of this was built up frustration for creative work that our clients never let us do when we were at an advertising agency. I think if any creative director is listening to this, they will fully understand this. Right? You bring a pitch and it’s the most genius idea and you freaking know it’s going to work. Just let me do it, just give me the money, let me do it. I know it’s going to work, and the client’s like, “I don’t know, it seems risky, maybe,” and then it just becomes a vanilla. You’re like, “Dang it, man. I wish they would just let me do it.”
We’ve been doing … I mean, I had been in the advertising space for a while and then we have been running our own agency for a few years and I loved our clients, but this was early on when branded content was fresh and no one knew are we going to do this thing? Are we not? I don’t know. Articles and blogs were new. I had all these ideas and nobody would buy it. So I felt like we launched a MusicBed, I’m like, “I’m doing them all. I’m going to do everything that I think is going to work and maybe it’ll work.” I felt like we should be making films about filmmakers about their life, introspective, what’s working, what’s not, what are you pissed about? What are you happy about? What gets you up in the morning?
We just started making these films and then we started getting staff picks on Vimeo and it just … We were writing in-depth articles. I don’t know. I just felt like … Branded content is a real struggle because it’s hard to measure. When you’re a marketer, you’re putting these films out and they’re getting 35 comments on Vimeo and it costs you $50,000 to make it, and you’re like, “Does anybody even care? I mean, honestly.” We’d be at NAB or something and a filmmaker would come up and be, “Oh my gosh, I saw that film you did about Solomon, and it totally changed my life,” and I’m like, “Did you comment? Could you comment next time so that I know you liked it? Give us a little bit of feedback.” I think that was just … I don’t know, man.
I just knew that we wanted to a brand that connected with the filmmaker at a different level than any other brand had before, because it was so important to me that our clients understood and continue to understand that we get you, we’re fighting for you, we’re fighting on your behalf, we understand your struggle. We’re making films ourselves. We’re actually searching. I mean, it’s literally … I mean, you got 10, 15 people in our company every single day that are using the website, that are searching for music for films, right? It’s like I think that that makes the product better. We’re not this out of touch company and a bunch of people that don’t really understand what a filmmaker needs. I just wanted this brand to actually stand for something and be this filmmaker first brand that actually understood the customer.
I mean, hopefully we’ve obtained some of that. I think to be completely transparent, I feel like we lost a little bit of it in 2016 to 2018, maybe 2019. We spent almost two years having to completely retool the organization and figure out how we were going to do subscription and what the future of the company was going to be. I feel like we spent so much time doing internal work that a lot of our brand perception and some of the content we were making had suffered, and so really going into 2020, I mean, I told our creative team, “Here’s the [Amex 00:38:40]. You got your name on the credit card, get to work, start making content, get back in the game.” I mean, I’m more proud of our creative team than I probably ever have been. I mean, they’ve just been knocking it out and making content, a bunch of stuff teed up that hasn’t even gone public yet. Yeah. I mean, we definitely are on a mission to make sure we maintain that position.
Nate Watkin: Yeah. You mentioned you had in-house creative. Do you also produce all the content in-house?
Daniel McCarthy: We do. Yeah. I mean, we make everything internally, everything [inaudible 00:39:15] we do. I have a really good friend in San Diego, a guy named Ryan Smith that runs an agency up there that throughout the years I’ve always bounced ideas off of, he’s done some work with us. But really other than him doing some of our large campaigns, we do a lot of work internally. I mean, we have our own creative team designers, copywriters, filmmakers. I didn’t know any other way. I think that was just what I was used to, so when we started MusicBed I didn’t … We were an advertising agency, so I didn’t think like, “Oh, let’s just start a music company. Well, let’s go hire an advertising agency.” I’m like, “We are. What do you mean? Let’s just do it ourselves.” I’ve really pushed our team … All of our designers know that I freaking love them.
It’s just that they’re my crew because it’s just what I came from and I’m so passionate about internal creative. I think the stigma in the industry has been you go to the brand side when you’re ready to settle down. You do the agency thing, you get burnt out, it’s wild, you get these big projects, you get these massive budgets, and then when you’re ready to have a baby and live in the suburbs, then go grab and go to the brand and do brand work. I just think that’s so crazy. I mean, I tell our team all the time, “I want you to just be making the most creative, crazy, come up with crazy ideas, come up with risky things, stuff that would win awards alongside any agency work.” I hope they feel the freedom to do that. I believe we do. I don’t know. It’s what gets me up in the morning, man. It’s just making great creative work.
Nate Watkin: Yeah. It’s an exciting creative environment to be in, and I think the results show. Piggybacking off that, what would you say is the marketing campaign you’re most proud of?
Daniel McCarthy: Gosh! I really loved our launch, our YouTube launch. We did a bunch of … We did this huge box challenge that we send out to a bunch of filmmakers. It was crazy. If you haven’t seen it, you should go look it up.
Nate Watkin: I have.
Daniel McCarthy: I was pretty proud of that. I was also really proud of our New York agency campaign. We did a big billboard campaign in New York, that won D&AD Pencils. I was pretty proud of that. I think internally we do MusicBed challenge and Filmsupply Edit Fest every year. I always love those things. Gosh, man. I don’t know if I could pick one. I think we did a conference a couple of times, obviously released a magazine. I wouldn’t consider those just advertising campaigns, but I would consider it a part of our marketing and a part of our content. I’ve always been really proud of our films and the magazine just from just a creative, trying to push creative forward. Probably my favorite campaign is the billboard campaign that we did in New York though.
Nate Watkin: I would have to lean towards that one as well. Do you mind just walking us through that campaign? Because I think it was really genius.
Daniel McCarthy: Yeah. That’s one that we work with Ryan on in San Diego. We had talked back and forth about that campaign for a couple of years, and I think there was two real goals for that campaign. The first being we wanted to get on Adweek, and the second being it would be great if we could raise some awareness of our brand for agencies. But the big one, the grand slam from day one, was if I spend $300,000 on this thing and we don’t get on Adweek, I’m retiring. That was basically it. I mean, we didn’t care about awards, we didn’t care about anything. If I don’t get a freaking article on Adweek, everybody’s fired. That’s how I felt about it.
Because we felt like we had done really good campaigns in the past and every time our PR team would pitch to Adweek, it was always like, “Yeah, it’s just cool. It’s just you guys really aren’t very big,” and we’re like, “Freaking son of a …” My thought process was if we come at … If we target this at all of the creative directors that Adweek writes about every single week, they’ll have to write about us. They’ll have no other choice. That was the whole deal, was if we go put billboards up and we start calling out the best creative directors, the best copywriters, the best agency owners in the world, we’re either going to piss them off, maybe we piss some of them off, or we’re going to actually get their attention, and when we get their attention, Adweek will have to say something.
That was the whole deal. I mean, I’m telling you our internal team and Ryan Smith, they busted it for that campaign. Because we couldn’t afford one month, two month contracts on these gigantic billboards in Manhattan, so we had to work all really, really hard to find out, number one, where do these creative directors work? Where do they live? What subway do they take to get to work? What floor are they on in their particular buildings? All of these crazy things, and then we had to go work with a media buyer to find can we get two weeks slots? Can we get three weeks slots? Can we get … Because this thing would have cost a million and a half, $2 million if we’d have been signing regular agreements on some of this media.
Yeah, we pulled it up. It actually got leaked to Droga5 that we were going to do it and we got a cease and desist letter before the campaign went live, which was [inaudible 00:45:46] honestly I should frame it, that’s probably my proudest moment in my whole life. Yeah, it was just … We had all these different things. Probably my two favorite billboards of that campaign, one of them was right outside of an agency owners office. He gets into his office and the entire building next to his office was vinyl-wrapped with his name on it. The other one was probably the Droga one that we didn’t get to do because we got told we would get sued if we did it. But yeah, it was a really fun campaign.
Nate Watkin: Yeah, the copy on that was amazing. I don’t remember who it was targeted at, but one of them was something along the lines of I really hope Katie isn’t on vacation because this billboard was really expensive.
Daniel McCarthy: Yeah. Yeah. Some of the billboards, we just put how much money it costs. Like, “Hey, we spent $29,922 on this billboard. We hope you like it.” I think it just was fun, and I also think if there’s anyone in this world taking call BS on a creative campaign, it’s creative directors. They’re just like, “That was stupid. That was a bad idea. Oh my gosh, whatever.” So we also felt like we couldn’t get too creative with it, let’s just get to the point, let’s just write them a letter and put it on a billboard and tell them we’d like to do business with them. It was fun, man. The David Droga one was really funny. The story behind that was there’s a coffee shop he goes to every single day to get a cortado, and it’s outside of their building.
We were going to put vinyl on the entire window around the entire coffee shop. I don’t remember the banner, but it was basically a quote from David Droga from the future. Basically it was like, “I don’t know how I’ve lived my entire life without MusicBed, David Droga, 2020.” It was a little offensive because it was like he clearly did not say this. It’s a quote from him. But they were like, “You can’t quote David Droga.” I’m like, “We didn’t quote David. I mean, how do you know that David isn’t going to say that in 2020? Because I think he will.” But yeah, they were like, “You definitely can not do that.”
Nate Watkin: Now it’s 2020 and maybe he does actually say that.
Daniel McCarthy: I mean, I’m sure he’s saying it now, clearly. Now that he knows about MusicBed and we’re probably his favorite thing outside of his cortados.
Nate Watkin: That’s awesome. You’ve been running MusicBed for almost 10 years now. Tell me about your philosophy on growing the company slow instead of fast.
Daniel McCarthy: Oh dude. I mean, I wish it was faster. I mean, we didn’t take on any capital. I guess at some level we did make the … I mean, we made the decision to grow slow. There’s advantages I think to just 10X your marketing budget, grow as fast as you can. But I think there’s disadvantages. You have a higher chance of losing touch with your customer. It becomes all about the money and sometimes … I mean, you got an investor breathing down your neck and they’re going to make decisions sometimes that you don’t agree with. For me, I would look back on it and say, “What would MusicBed not be had we have taken on initial funding and tried to grow faster than we did?”
I would say most likely the magazine wouldn’t exist, we would have never done the conference, the full length documentary probably would not have exist, some of the branded content that we did probably would not exist because those things are all expensive, they’re hard to prove their value and they’re all longterm plays. When you have an investor and then wants to get his money back out or her money back out in three or four years, you really have to … It changes the game a little bit. So I felt like we were able to make a lot of decisions about the company that we wanted to be and the place that I wanted to work for in 15 years, that may be … I don’t know. Who’s to know? But I would say that a lot of that stuff maybe wouldn’t have happened.
This is outside of the company. But for instance, we give 10% of our profits to local and worldwide charities every single year. I’m really proud of that, our team is really proud of that. We don’t broadcast it. This is the first time I’ve ever said it, but that’s one of those things that if we had an investor, that’s a lot of profit. There’s things like that that I just felt like if we did ever take on money or we took on funding, those would be a lot of those crucial conversations we’d have upfront because I’m like, “We’re not going to stop doing this.”
Yeah, I think the slow grow has allowed us to really have good conversations with our customers to transition slowly. I don’t know. I mean, a lot of companies would look at our revenue growth and say, “You didn’t grow slow.” I don’t know. I mean, gosh, this first four or five years, we were doubling revenue every year. It felt very fast I guess to us, but we probably could have multiplied it had we have taken on some initial funding. I just don’t know that I would still want to work here, honestly.
Nate Watkin: Yeah. It’s like if you had investors, it’s almost like you’d be back at the agency with the client that had to okay everything, right?
Daniel McCarthy: Oh, my gosh! I don’t do well with bosses. I’ll have to figure it out one day.
Nate Watkin: Yeah. What do you think is the best piece of business advice you’ve ever received?
Daniel McCarthy: That I’ve ever received? Gosh! The thing that came to mind … I care about the customer first, honestly. I mean, I don’t know. That seems so cheesy. But I think if CEOs come in every single day and they’re willing to put their customer’s shoes on, then you can’t go out of business. Yeah, I mean the demand can change and the market can shift. But it’s really, really, really hard to go out of business when all of your customers love you. It’s a lot easier to go out of business when you’ve lost trust with your base. I think it’s just so important to be having conversations with your customer service team, the people having conversations with your clients on a regular basis, really, really, really understand and have a lot more empathy than you think you should, which has been hard for me to learn because I was not born with empathy.
I think a lot of business owners are not, right? I mean, we’re like a breed in and of ourselves and we’re like [inaudible 00:53:22] a crazy driven, we’ll run over anybody to make our thing happen. The amount of times I’ve cussed out a customer in my mind because I think it’s just the stupidest thing, and then you got to go back and be like, “No, their perspective is right.” You have to see it and you have to have empathy for how our customer feels in this moment. I think it’s like … That’s been the biggest thing I’ve had. Maybe I think that’s the biggest advice because I think that’s the thing I’ve had to work on the most, which is the second you lose sight of what your customer values, you’re already dead.
Nate Watkin: Yeah.
Daniel McCarthy: Yeah.
Nate Watkin: If you had to start your career all over again at 20 something years old, what would you do differently this time around?
Daniel McCarthy: I wouldn’t sign crappy royalty deals early on with MusicBed. Some of that stuff we’re still paying for. That’s a total technical thing. I think I would be more confident that this thing is going to work. You learn as you go. I think early on any good entrepreneur, I mean, you’re basically begging people to work with you and trust you, and so you’re just having to build a repertoire of things. Gosh. Knowing what I know now, I would see things a lot sooner than I would see them before. I think I would say that today … I’m today solving problems that MusicBed is going to have in three years. I don’t even care about next month. I’m solving three-year problems.
I think when you launch a company, you’re just so reactive to the day that it’s like you’re just having to solve next week’s problem. You’re just putting out fires for right now. I think there were things … We had a little bit of a revenue slump for a few years that we’re growing again, which is amazing. The last two years have been phenomenal, but there was a year and a half, two years in there that I felt like we had a slump and I would put that on myself and say we didn’t have to have that slump. I believe we had that slump because I didn’t see far enough in the future. What sucks about it in hindsight is I saw it all. I knew exactly what was going to happen. I just didn’t trust myself, and I didn’t have a level of urgency in the moment that I had to figure it out. I mean, I think there’s a lot of …
I don’t know when this podcast airs. It’s like every business in the world right now is dealing with some level of traumatic event to their company, right? I mean, COVID hits, the world shuts down, there’s all these what would you do if revenue drops by 40%? How would you solve it? What would you do if you had to go remote for … Everyone’s like, “Yeah, I don’t know. I’ll figure it out when it happens.” Yeah. You figured it out real fast. I think there’s things in everybody’s business that they can look ahead and say, “That’s going to impact us.” You either solve it ahead of time or you solve it in real time, and when you solve it in real time, your profit and loss statement is going to feel it.
I think it’s just like you got to be able to have vision, and then I think … I don’t know, man. At some level, if you’re a business owner, gosh, have wise counsel but don’t let anybody tell you what to do. Freaking trust your gut. I think I lost my gut a little bit. When I was talking about that whole season where we weren’t making good content, I felt like we had lost our footing a little bit on just where I wanted to be and we’re finally coming back. I would say a lot of that was me not trusting what I wanted the company to be longterm, and just being like … You almost have to get angry. You almost have to come back to the point where you’re like, “Eff it. I don’t care what anybody says. This is what we’re doing.”
Then out of that, I think you get a little bit more compassionate and then you have to find somewhere deep down like that optimistic vision to bring that to your team. You can’t be angry with your team. But internally you have this internal friction of being like, “No, dude. This is what I want, this is what I know, this is who I know we can be. Yeah. I mean, I think just trusting your gut is pretty critical.
Nate Watkin: Yeah. I love that. Well, thanks so much, Daniel. This has been an incredible conversation. I really appreciate hearing your story and all the insight. It’s been great to have you.
Daniel McCarthy: Yeah, man. Thank you so much for having me.
Nate Watkin: Absolutely. Take care.