Boardroom speaks with the entrepreneur charting a new course in streaming and building music’s middle class.
Coda began because Randy Fusee was growing bored with the way music streaming algorithms functioned. Perhaps a bit adrift and restless after selling his previous company, GamePlan, to Dallas Cowboys owner Jerry Jones, Fusee’s latest idea was born out of a conversation with his wife. “She was doomscrolling through Facebook and was asking why everybody hated each other, why was everybody at each other’s throats all the time,” he explains to Boardroom via Zoom.
From there, Fusee and Jeff Teles, his co-founder at GamePlan, went to work. They imagined a version of Spotify or Apple Music that more easily integrated the positive aspects of social media. Recommendations would be based on what other people with similar interests were listening to, not a pre-determined algorithm. It’s user-focused in that the audience drives their own listening journey. It was lucky for the Coda founders that they launched their platform as antipathy towards Spotify was growing, both for the way it treats artists and the investments made by its founder, Daniel Ek.
Coda is built differently. Whichever artist a subscriber chooses as their “home” artist receives a dollar of said user’s monthly subscription fee. The decision to put more emphasis on artistic support was twofold: “[We] invite the artists in to be the advertisers. They bring their fans in and split with us. It’s a profit sharing venture. It’s a replacement for marketing spend, but we feel it’s more effective and it’s the right thing,” Fusee explains. Of course, taking on the big players in the streaming industry (not to mention the record labels in close collaboration with these entities) is a massive undertaking. But for Fusee and Coda, the goal isn’t to make as much money as humanly possible; it’s about growing a healthy middle class for an industry desperately in need of one. “We’ve literally constructed our business such that we can’t be successful unless artists are successful. If they fail, we go down,” he says. Check out our conversation, which has been edited for clarity, below.
Subscribe for the biggest stories in the business of sports and entertainment, daily.
Where are you based out of?
I am in West Palm Beach, Florida.
What was your familiarity with the music industry before Coda?
None [laughs]. I was a fan. I worked at a record store when I was a kid. That was about it. I didn’t know the industry at all. I really came at this from a consumer perspective. I’m just a big, big music fan. I have a wide taste in music and just found the other services lacking.
In what way did you find other streaming services lacking?
They just kept feeding me the same stuff. When I researched it, that was the number one complaint that people had. Remember going to the record store? There was all this music and you could only afford to buy a certain amount. I was always the guy who overspent and walked out with an entire stack. Now, you’ve got the whole store on your phone, but you have no idea what to listen to. That was the problem I set out to solve.
What industry were you in before starting Coda?
I’ve been in several. Immediately prior to this I was in pro sports. I founded a company in tech. I sold that business just prior to starting Coda.
What sort of tech did you build?
You know the tablets that the players look at on the sideline? I invented that. What we built was used by the entire team, the entire week leading up to gameday. The NFL has really restrictive control over what tech they allow on the sidelines during games. They have a skinny version of our tech on the sidelines.
Have you always been a founder and inventor in that mold?
No, that was my first entrepreneurial attempt. It was successful, which is very fortunate. I met my Coda co-founder, Jeff Teles, there. We founded that company together, too. We did not know each other beforehand, so we felt very fortunate that we found each other and we’ve never had any conflict through 15 years of sharing a bank account. I have a computer science degree. I worked for some big companies doing tech work, mostly on the executive management side. I was always itching to branch out on my own.
When did the idea for Coda form?
It was after we sold our last company. That product was called GamePlan and we sold it in 2019. That was acquired by Jerry Jones, who was running a SPAC and looking to roll up a bunch of sports tech together. We had the founder’s remorse after selling it. We made some good money, but I’m not old enough to coast yet. Jeff came down to Florida and visited for a week. We were just kicking around ideas to figure out what we were gonna do next. We were looking at CRM, competing with WhatsApp, we didn’t know what we were gonna do. Coda was actually my wife’s idea. She was doomscrolling through Facebook and was asking why everybody hated each other, why was everybody at each other’s throats all the time. Music is something that brings everybody together. We’re all music people. You may be a Republican or Democrat but we both like Led Zeppelin. She suggested we create a social music app and that was it. We started churning on that and now we’re here.
How is the social component integrated into the app?
It’s crucial and central to the app. It’s actually the first piece of tech we built. When we set about doing this, the heart of it came through that moment my wife had. For us, we viewed it primarily as a curation tool. We were trying to take the brilliant music discovery aspects of Instagram and TikTok — which all of the A&R people are now using to find out who’s breaking. They’re extremely powerful discovery tools. We asked why it didn’t exist where it was tied to listening to the full-length song instead of just a 30 second snippet. At the time I didn’t know the music industry, so I didn’t know about the different types of licences. It just seemed obvious to me. Let’s go build it.
When we thought about how to execute it, it was actually pretty daunting. We had to build, essentially, Instagram and Spotify, and then design it in a way where it could actually work together seamlessly. From there, we wanted it to deliver on what we ultimately wanted, which was person-to-person based music curation and discovery. We were able to take a lot of lessons from every app out there. The process of putting it all together was really, really tough. We had a great firm called Fueled that helped us immensely. We wouldn’t have gotten through it without them. The end result, we think, really delivers on the promise of putting the keys in the hands of the fans. It’s much more like YouTube in the way we curate content. We let them drive the ship. It gets a little weird sometimes, and not everything is right inside that clean box, but that’s actually the problem we set out to solve. That clean box gets quite boring when you stay in for five years.
It’s much more about peer-to-peer recommendations than the whims of some algorithm?
We do have algorithms. It’s not algorithmic-based music discovery. Instead of trying to use an algorithm to do a case study of one, in which you’re feeding it information. This is what every other service does. The algorithm looks back on its relationship database and says, ‘Since you like Radiohead you must like Coldplay.’ That’s tried and true and we’re not trying to out-algorithm people. We already know what the results look like. If we do our job great, it’s gonna look just like everybody else, which I already said I don’t like.
Our algorithm operates more like a dating app. We’re gathering all the same types of information, but not with the purpose of trying to guess what you want to listen to. We repurpose that information to try to connect you to your musical twin. That person can be in Omaha or Burbank or Minneapolis. Right now, you probably have a circle of friends that you share music with. That’s where most people get their recommendations from. Person-to-person is still the best way to share. Our job is to connect you with people that share your taste and let the magic happen from there.
Was it intentional to launch as antipathy towards Spotify was growing, or was that just a happy accident?
It became the mission. It didn’t start as the mission. Like most people, I didn’t know. I would go to concerts and I’d see people and I assumed the bands would finish the show and hop in their limo and head to their yachts. I had no idea how poorly artists were being compensated. Part of our job is education. Spotify’s not the only one. The industry — the model — is set this way. Disrupting that is very challenging. There are a lot of people that don’t want that disruption to happen. We had to do what we’re doing within the confines of the way the system works today. That was very challenging, but once we understood what was happening, there were two parts to it.
You want to do the right thing. These are musicians, you love what they do, and you see them struggling to get by. That’s clearly unfair. I’m a fair-minded person, I would like to do right by people. There’s also a business side to that decision. Think about the people we’re up against. Jeff Bezos, Daniel Ek, Tim Cook, Jack Dorsey. It’s a who’s who of the wealthiest people in the world. We’re self-funded, small checks, no VC money. We’re the first company to get these licensing rights to bring a service like this to market in almost 15 years. We did it because we’re bringing something new to the table. We’re opening up that data to both the rights holders and the artists, which is currently a black box. We’re an open book. We let people promote on our platform without a paywall. We’re just ticking a whole bunch of boxes that’s good for everyone in the industry.
There’s no chance we’ll be able to spend a ton on ads. CAC — customer acquisition cost — is everything. We’re going up against the rich people I just mentioned who can spend whatever they want. We can’t. That’s where our business model takes hold. We’ll still pay out the rightsholders and publishers exactly like everybody else does. We’ll take our piece that’s left, which isn’t a lot. Instead of spending that on advertising, which is what every other company does, we’ll invite the artists in to be the advertisers. They bring their fans in and split with us. It’s a profit sharing venture. It’s a replacement for marketing spend, but we feel it’s more effective and it’s the right thing.
What’s the split between Coda and the artists?
Artists are getting $1 if they’re designated as the home artist of a user. Not every artist is going to be eligible. These are mainly for independents. We’re hyper-focused on that middle class of artists. This is trying to restore a class that’s been squeezed out with the streaming model.
Is the goal of Coda more to make the middle class successful in the music industry than to be the biggest streaming service in the world?
We have a north star metric that is unique. The north star metric of our business is how much cash we’re paying directly to artists; not through a publisher, not through a rights holder, directly to an artist. We drive everything to that. Our success rides along. We’ve literally constructed our business such that we can’t be successful unless artists are successful. If they fail, we go down.
Obviously the business needs to make money, but it’s not about extracting as much wealth as humanly possible. That’s refreshing.
The last thing we’re gonna do is turn around and charge artists for access to the platform to promote themselves. Out of all the bad things that are out there for artists, people squeezing them on tickets and merch sales…These artists are just getting squeezed everywhere they turn.
It seems like Coda emerged from your life as a music fan.
Absolutely. I didn’t know that all of this was how it was. I learned, just like how I learned about how NFL teams construct their playbooks before getting into that business. If you talk to the people that live the problem, you start hearing the same thing over and over again. My mind shifts right to problem solving. This was a tough one to crack and took several years.
It must be a bit nerveracking going up such a powerful entity.
I have my head on a swivel [laughs]. I have been pleasantly surprised, I’ll say, with the people that I’m dealing with. I’m working with a lot of artists, artist management companies, promoters, and rights holders. I’ve found a lot of good people who genuinely want things to be better. I’ve found more cooperation than many, many people who were telling me not to try this suggested would exist. I’m really encouraged by it.
How many artists are on the app now?
We just cracked 1,000. You will see some big ones, too. We don’t close the door to anybody. On one side of the spectrum, you have very small, emerging, DIY artists. Spotify made this move where if you don’t get 1,000 streams, you don’t get paid anything. To Spotify, that on aggregate is a massive thing. Why shouldn’t the artist get that money? If you wanna bring five fans to our platform and earn a dollar a head, go for it. We’re happy to have you. If you’re the largest artist in the world and you wanna come in and you’re okay contract-wise, we’ll take you too.
What does it take to be a verified artist?
All we have to do is verify who you are. If you’re signed as a frontline artist, there are approval steps that need to happen and to understand if they’re restricted in working with us on a marketing and name and likeness basis.
Is that more of a hurdle than licensing music from major labels?
No, artists have been screaming out for this for a while. Artists are in front of consumers. I’ve got more artists than consumers. We want that dynamic to switch, obviously. Artists are coming in droves because the value is there and it’s clear. Artists are skeptical because they’ve been manipulated a lot. They’ve had a lot of people in their pockets, so once they understand that we are actually earning from them in a fair, transparent way, pretense drops and they tend to sign up. Getting the rights took me five years to get done. It was not an easy task.
Talk to me about how the exclusive releases and perks from artists operate within the platform.
There are a lot of different ways they can do it. Some independent artists have that freedom. They can put music wherever they want. Others have less granular control. Exclusive content on our platform could be music, but more often than not it’s social content. It’s perks, it’s connection to the artist, it’s having a relationship with the artist on the same platform where you can stream their music. That’s the uniqueness here. It can be a video that goes out to people who have chosen that artist as their “home artist.” That means that a dollar of that user’s subscription is routed to that artist each month. The artist will know who those people are, because we give them access to the data.
Now, they can target them back — send them merch discounts, tickets, things like that. We have some artists reserving the front row of their show for fans who have made them the home artist. Other artists are letting fans in early to see soundchecks. Artists are gonna get really creative about how to use exclusivity to bring their fans in.
Inside the NBA’s Million-Dollar, Mafia-Linked Sports Betting Scandal
From ‘Hereditary’ to ‘A Quiet Place’: The 25 Best Horror Films of All Time
From Pods to Performances: How ‘Love Is Blind’ Completely Lost the Plot
From Olivia Dean to Tame Impala, Here’s What’s Been on Repeat at Boardroom
Breaking Down Big East Basketball’s Major Money Advantage
