In 2019, Beyoncé released her “Homecoming” documentary on Netflix, following her performance at the Coachella Valley Music and Arts Festival in 2018.

Releasing the film with Netflix might have seemed like an odd choice since Beyoncé is a part owner of the streaming service Tidal.

But in an essay titled “Beyoncé’s streaming strategy, explained,”Dan Runcie dove into how Beyoncé was likely thinking about Netflix and how deals with different streaming services reach distinct segments of her fanbase:

Beyoncé’s 2013 documentary “Life Is But A Dream” was released on HBO in 2013. But back then, Netflix was a far less powerful player. Today, the streaming behemoth consistently offers stars eight-figure deals because it’s in aggressive growth mode. It subsidizes its monthly subscription costs to prioritize customer acquisition. Subscribers stay for the massive amount of content. Bad content gets cut, but the top content gets heavily promoted to further drive growth. That’s why Netflix dropped $25 million to try and help “Roma” win the Best Picture Oscar.

And that’s why Bey likely got paid whatever she asked for. Let’s assume Netflix paid $30 million total to produce and market Homecoming. According to the Financial Times, Netflix’s customer lifetime value is just under $200. A 3:1 ratio of ‘lifetime value’ to ‘customer acquisition cost’ is a common target in tech. If Netflix wants Homecoming to meet that, the documentary needs to bring in (or maintain) 450,000 subscribers to justify the $30 million it spent. That’s a relatively small number for a service that has 140 million subscribers and grew 9 million in the first quarter of 2019.

Netflix’s 140 million subscribers (and the millions more y’all who log in with your friend’s cousin’s account) are another reason why Beyoncé chose Netflix. It’s a great way to reach casual fans.

It’s one of Runcie’s most popular essays in Trapital, a digital media venture he started in 2018 to cover the business of hip-hop.

“That piece resonated with a lot of folks and solidified an opportunity to focus more on stories like that, that I felt like I was uniquely positioned to tell,” Runcie said.

As a life-long fan of hip-hop music, Runcie grew up watching MTV and BET. He reminded me about “Making the Video,” which aired from on MTV from 1999 to 2012 and followed artists and directors through the process of making a music video. The episodes often included prices and costs for video elements and the decisions that went into them.

“1999 was also the height of the CD era. If you adjust for inflation, the current music industry has not caught up to the revenue that was coming in back then,” Runcie said. “That kind of stuff really stuck out to me.”

As he got older and studied business, he came to understand that hip-hop artists, a majority of whom are Black, weren’t given the same level of coverage, credit, or praise for their business accomplishments in mainstream media in the same way that finance or technology sectors are covered.

“It’s easy for the media and others to dismiss [entertainers] as just being famous, and whatever they sold was a benefit of their fame and not necessarily the business insights that came from that,” Runcie said. “When we double down on the fact that these are Black entertainers and all of the challenges there, especially when it comes to rising up, money, economic empowerment, there wasn’t as much credit given and therefore, there wasn’t as much coverage. There was definitely a big inspirational aspect of wanting to start Trapital as well.”

When Runcie was in business school at the University of Michigan in 2014, everyone was talking about a Harvard Business School case study about Beyoncé’s surprise album “Beyoncé,” which was released without traditional marketing and promotional strategies. All of the talk about that case study got Runcie thinking about other stories in hip-hop: What if they were covered in the same way on a more regular basis?

After graduating from business school and working in education technology for a few years, Runcie started Trapital in the spring of 2018. By February 2019, it was his full-time job.

I'm often asked if business school prepared me for Trapital.

Yes, I learned a lot about building a case and backing it up that influences how I write.

But how to write well, content strategy, growth, sales, digital media? All that was learned on the job.

— Dan Runcie (@RuncieDan) April 21, 2021

Trapital, which is now approaching 10,000 email subscribers, includes several offerings. The weekly newsletter memo lets Runcie give his take and analysis on the week’s news. The monthly essay is more of an evergreen story about an artist or company whose work offers interesting lessons or insights. He’s written about things like why Rihanna broke barriers that others couldn’t, why Instagram is hip-hop’s quarantine destination, how hip-hop helped Cash App grow faster, and why Latin hip-hop is still undervalued.

The weekly podcast interviews artists and business leaders in hip-hop. Runcie also offers advising and consulting services on strategy and partnership development, customer acquisition, and digital media. Those are currently the main source of Trapital’s revenue, though Runcie also accepts sponsorship for the weekly newsletter and podcast.

Runcie’s business model for Trapital is interesting, as more and more journalists are leaving their legacy media and newsroom jobs to start their own newsletter businesses. While Runcie doesn’t consider himself a journalist, he uses his writing to leverage his most valuable asset: his industry insights.

The writing brings him new opportunities that bring in more money than a subscription model would. He knows that because he tried it. For about a year, Runcie offered both free and paid newsletters, but ultimately decided to sunset the paid one when he figured out that he could be concentrating his efforts in more profitable projects.

“I think Substack and others thrive on the $10 a month or $100 a year model. That type of model is still a scale play, and you’re not necessarily maximizing the highest-utility thing you can get compensated for,” Runcie explained. “So much of my time and energy was spent on trying to convert the small number of people who had already known about Trapital to purchase that $100 annual subscription, as opposed to just getting my words out there. That’s when I started to talk to more people and realized there’s a number of different business models that can work here.”