- 7 weeks ago
Are we on the edge of a music industry revolution? Top investor and founder of SONGS and MUSIC, Matt Pincus, joins host Kristin Robinson this week to discuss how the landscape of music catalog investing has evolved. From the rise of internet-driven copyright value to the shifting roles of labels and publishers, Pincus shares his insights on where the industry is headed and why we may be on the precipice of major change. He and Robinson break down how Taylor Swift has reshaped the conversation around catalog sales, whether AI is the next big disruptor for music creation and what all this means for the industry's future. Plus, Pincus weighs in on one big question: is the music business truly recession proof?
Love what you hear? Follow Billboard On The Record on Instagram, Apple Podcasts, Spotify and Youtube @billboard so you never miss an episode.
Billboard On The Record is a podcast in partnership with SickBird Productions.
Love what you hear? Follow Billboard On The Record on Instagram, Apple Podcasts, Spotify and Youtube @billboard so you never miss an episode.
Billboard On The Record is a podcast in partnership with SickBird Productions.
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MusicTranscript
00:00:00The vibes in the music industry feel off.
00:00:03That might not be the most eloquent way of putting it, but that's how it feels.
00:00:07Amidst constant layoffs and restructuring at the three major music companies,
00:00:10Sony, Universal, and Warner, since early 2024,
00:00:13AI becoming a more and more accepted reality in the creative process,
00:00:17Wall Street increasingly buying into the music market,
00:00:19difficulty breaking through on TikTok,
00:00:21slowing growth of streaming service subscriptions in top markets,
00:00:24and to top it off, an overall shaky economy,
00:00:27it's easy to feel unsettled.
00:00:29So let's unpack that today.
00:00:35Welcome back to On The Record,
00:00:37a music business podcast from Billboard and Sickbird Productions.
00:00:41I'm your host, Kristen Robinson,
00:00:43and today we are going to tackle a big question, which is,
00:00:47where's the music industry going?
00:00:48Right now, if you ask around with folks working in the music business today,
00:00:51they will likely tell you that it feels like we're in the middle of a shift,
00:00:55or as I recently put it in a somewhat viral TikTok video,
00:00:59the vibes feel off.
00:01:01So I called one of music's most respected entrepreneurs and investors,
00:01:05Matt Pincus, and asked him to come help us understand what is going on.
00:01:09And in case you aren't familiar with Matt Pincus,
00:01:11he is perhaps best known for starting the independent publishing company, Songs.
00:01:15It was founded in 2006,
00:01:17and quickly became one of the most important players in the music business,
00:01:21working with artists like The Weeknd,
00:01:22Lorde,
00:01:23Pharrell,
00:01:24Diplo,
00:01:24and more.
00:01:25Since selling songs in 2017 to Cobalt,
00:01:28Matt has focused his efforts on investing in music companies that he believes in,
00:01:32like Splice,
00:01:33Soundtrack Your Brand,
00:01:34Dice,
00:01:35Love Renaissance,
00:01:36and many more.
00:01:37So with all that being said,
00:01:39let's please welcome to the show,
00:01:41Matt Pincus.
00:01:42All right.
00:01:43Well,
00:01:44Matt Pincus,
00:01:45welcome to On The Record.
00:01:46Thanks so much for being here.
00:01:47Thank you for having me.
00:01:47I'm excited to be here.
00:01:49Yeah.
00:01:49And we got our red chairs today.
00:01:51If anyone's actually watching this,
00:01:52you can probably tell that we're not in our usual studio in LA.
00:01:54Matt is based in New York.
00:01:56So I'm out here in New York this week,
00:01:58and I've always wanted to have you on the show.
00:02:00So I'm really glad that we're in the same place at the same time.
00:02:02Oh,
00:02:02amazing.
00:02:03Well,
00:02:03I'm looking forward to the conversation.
00:02:05You've played a lot of different roles in the music industry throughout your time being in the business,
00:02:09but most recently you've really focused in on investing.
00:02:12Can you talk to us about how your vantage point as an investor has given you a new point of view on the music industry?
00:02:19What have you learned?
00:02:20Well,
00:02:21so I'm the old guy now.
00:02:22I'm the investor guy now,
00:02:23but I was an operator first in the independent record business.
00:02:27I grew up through punk rock music and ran an independent record company when I was in my 20s.
00:02:33And then had a corporate job at EMI for a little while and then went into publishing.
00:02:37And now I invest across the music business.
00:02:40I was always kind of like a generalist about the music business in general in the sense that it was sort of my stamp collecting when I was a kid.
00:02:48Like I was interested in the whole business from a very early age.
00:02:52Yeah.
00:02:53Like as a kid,
00:02:54were you reading trades and stuff like that?
00:02:56I played in a hardcore bands in the eighties when I was like 16 years old and I wasn't a very good musician,
00:03:03but we were kind of a DIY scene.
00:03:06So you needed somebody to do like the business in the band.
00:03:09And so I was that guy.
00:03:11Yeah.
00:03:11And so I would like,
00:03:12you know,
00:03:13help us get paid,
00:03:14do our record contract,
00:03:15like figure out the merge situation,
00:03:17like,
00:03:17you know,
00:03:18do the show settlements.
00:03:19And so I kind of learned a microcosm of the music business when I was really young
00:03:25and decided when my friends went on to sign to major labels and have more successful careers.
00:03:30And I knew I wasn't talented enough to do that.
00:03:33I was like,
00:03:33maybe I'll be like a business person,
00:03:35music business person.
00:03:36And so I didn't go to college right out of high school.
00:03:39I was interning at record companies and then decided to go to college and was working as a college rep
00:03:44and doing all sorts of stuff throughout,
00:03:45you know,
00:03:46on the side.
00:03:47Yeah.
00:03:48And so I was always kind of interested in the whole business,
00:03:51but then you have to specify.
00:03:52And so I was like,
00:03:54you know,
00:03:54songs,
00:03:55which was my,
00:03:56you know,
00:03:56main business that I ran for 13 years and was right.
00:03:59We would,
00:04:00I did right before I,
00:04:01you know,
00:04:01I started doing what I'm doing now.
00:04:03We were deep divers in one very narrow area,
00:04:06of the business.
00:04:06We did co-publishing deals with songwriters and contemporary songwriters worldwide.
00:04:12That's all we did.
00:04:13It was like weekend Lord.
00:04:15Yeah.
00:04:16We,
00:04:16I mean,
00:04:16we had 125 clients.
00:04:17We were in business for 13 years.
00:04:19We started as a niche aggregator of stuff.
00:04:22Nobody else wanted.
00:04:23And a lot of the first deals were where I came from,
00:04:26like loud sort of hardcore oriented bands.
00:04:28We started there,
00:04:29went into metal,
00:04:30went into triple A type of business,
00:04:32went into the rock business in a bigger way,
00:04:35and then went into hip hop and they ended up in the pop music business over a
00:04:3813 year period of time,
00:04:39but still very specific lens through which I was looking at the business.
00:04:44And then when you get into the investment business,
00:04:46you learn a couple of things.
00:04:47First of all,
00:04:47you need to understand how everybody makes money in the music business,
00:04:50not just how you make money.
00:04:51And in the publishing business,
00:04:53it was all about like,
00:04:54what's in it for me?
00:04:54Like how do,
00:04:55in my clients,
00:04:56like how do I make this business successful for my employees and my
00:05:01partners and my clients?
00:05:03It was really about being a specialist and particularly publishing.
00:05:06It's so convoluted that you kind of have to be like an expert in order to be
00:05:13able to do it.
00:05:14Yeah.
00:05:14You have to go so deep in the weeds.
00:05:16I used to say about publishing that the barrier to entry is how confusing it
00:05:19all is.
00:05:20So it keeps people out because people are like,
00:05:23holy shit,
00:05:23this is like too hard to understand.
00:05:25That kind of keeps people out of the business.
00:05:26So if you want to be good at it,
00:05:28you need to really get into the piping in the guts and that forces you a
00:05:33little bit to throw blinders up and focus on just your world.
00:05:37Yeah.
00:05:37And when I started being interested in helping other entrepreneurs,
00:05:41so my whole thing was like,
00:05:43I started meeting people that were similar to how I was when I was 35.
00:05:47Let's say I sold my business when I was 45 and I wanted to be the person I
00:05:52wish I had,
00:05:53which is what caper are you trying to pull off?
00:05:55And can I help you pull off the heist?
00:05:59So a strategic investor.
00:06:01Yeah.
00:06:01Like somebody who shows up with money,
00:06:03but also is helpful.
00:06:04Like that,
00:06:04that's kind of who I wanted to be.
00:06:06But in order to do that,
00:06:07I needed to understand how other people made money in the music business.
00:06:11Like pretty much how every category,
00:06:14you know,
00:06:14what the success factors of every category were.
00:06:17And so you kind of have to turn into a generalist and then turn into a
00:06:22synthesis.
00:06:22So you have to then kind of say,
00:06:25wait a minute,
00:06:26how can I help this person relate to this person to create a better outcome?
00:06:30And so you start having a more top down point of view.
00:06:34The first like eight years or so,
00:06:37we were just trying to pull it off.
00:06:38Like just be bigger than we were last year,
00:06:41you know,
00:06:41live to fight another day,
00:06:43like pay who we got to pay and find more successful songs than we did last
00:06:47year.
00:06:47At the last period where we started looking at it from the top down and
00:06:50saying,
00:06:51what,
00:06:51what,
00:06:51what overall is it that we're trying to do here?
00:06:54And so I had to start looking at my own business from the top down.
00:06:58Now,
00:06:58as an investor,
00:06:59you have to look at the whole business from the top down.
00:07:01So that means that intellectually you need to understand different perspectives and
00:07:05how different constituencies in the business think where it might be going kind of next.
00:07:11Yeah.
00:07:11You know,
00:07:12some people like to think of themselves as like wizards who can like predict the future.
00:07:16I'm just trying to figure out like kind of where it's going next.
00:07:20Yeah.
00:07:20Well,
00:07:21that's why,
00:07:21that's why I wanted to have you on because I think that the investor's perspective is
00:07:25really helpful right now.
00:07:27It feels like we're on the precipice of a lot of change in the music industry and a
00:07:31lot of different verticals within it.
00:07:33And I imagine that from your point of view,
00:07:34you're watching all of that because you don't want to invest your money somewhere where
00:07:37the music business is turning away from.
00:07:40One of the things that we've talked about before you and I,
00:07:42in terms of the music business on the being on the precipice of change is the increasing
00:07:49financialization of the music industry.
00:07:51So for those who haven't really been watching that and don't know much about it,
00:07:54can you explain what you feel like is happening there?
00:07:57So this has been a big change starting like maybe 10 years ago, but really five years ago.
00:08:03When I was younger, the music business had two kinds of investors, the major labels
00:08:10and then kind of private money, like usually wealthy people, entrepreneurs
00:08:15that would put money behind private businesses.
00:08:19Every once in a while, you'd get like a stray pension fund that was looking for returns for
00:08:24their insurance company, wander into the business, usually to a great disaster.
00:08:31But it was pretty much a self-contained business.
00:08:34Yeah.
00:08:34Is it because other people didn't feel like it was a good investment to invest in the music industry?
00:08:38It was a lot less transparent than it is now.
00:08:40So now, you know, the funds flows are much more transparent.
00:08:44The money's much more collectible.
00:08:46So you kind of, it was a relationship business where you had to understand how to get paid.
00:08:50And I think financial people like kind of weren't that, you know, it was too risky,
00:08:54but also it was sort of a cash till for larger media companies.
00:08:59Like it was like the guilty pleasure of movie studios that they'd have this like little unit
00:09:04that churned a bunch of cash flow that they could use to kind of lubricate their businesses.
00:09:09But it wasn't really big enough to be like a global business.
00:09:13Yeah.
00:09:13And so it just didn't attract sort of financial markets.
00:09:18Also more recently, like with a hedge fund starting in the early 2000s, they had these
00:09:22things called side pockets where they would trade the public markets, but then they would
00:09:26have this like little pocket of private investment capital that they started putting into increasingly
00:09:31exotic things and they would get very specialized in particular categories.
00:09:35So it started with music royalties, which, you know, were a little bit similar to like
00:09:41mining royalties or drug royalties, other things that spit off predictable cash flows.
00:09:46There would be somebody that was connected to the music business that had a friend at a
00:09:50hedge fund.
00:09:50They'd be like, listen, why don't you look at music?
00:09:52It's fun.
00:09:53And it like acts like the other shit you invest in.
00:09:55And so they started wandering into it and kind of the early 2000s was the first time I
00:09:59started seeing it.
00:10:00Interesting.
00:10:01And then, you know, interest rates went way down.
00:10:05And so it became, I mean, this has been the past, like until very recently, until like
00:10:10the past, like two or three years, I mean, marginally zero, approaching zero, then marginally
00:10:14zero.
00:10:15So that meant that there were, it was harder to earn like yield type of investments, yield
00:10:20type of returns.
00:10:22And so they started getting more exotic about how do you earn the type of returns that you
00:10:27earn from your bond portfolio.
00:10:29They couldn't do it just by buying plain vanilla bond.
00:10:32So they started doing increasingly exotic things.
00:10:34And lo and behold, music acts like a weird kind of bond when you look at old catalogs.
00:10:40So it started with that.
00:10:42But then it became also on the equity side, people investing increasingly in growth companies
00:10:49on the technology side because Spotify was such a massive success.
00:10:52There weren't really venture investments in the music business like of any renown.
00:10:57Like there was a company called Echo Nest that had a successful exit that sold to Spotify.
00:11:02But, you know, if you like, I've done this as like a party trick, like sit down and how
00:11:06many successful venture backed businesses have been in the music business.
00:11:09You get to like one hand.
00:11:11Yeah, I was going to say, I think one hand is probably appropriate.
00:11:13Very few distro kid.
00:11:14Like there's very few.
00:11:16The way that the equity markets were so loaded with risk over the past, like, you know, sort
00:11:20of 10 years, people started getting increasingly interested in the music business and what could
00:11:26be done at different levels of it.
00:11:28So you ended up with this kind of financialization first, starting with a copyright business,
00:11:33which, you know, historically, if you wanted to buy a catalog of music copyrights and you
00:11:38weren't like a music publisher, you would have to put up 50% of the money.
00:11:41You go to the bank and borrow the other 50% of the money.
00:11:45And it was pretty simple structure of your capital to buy a catalog.
00:11:50Now it's evolved into a world where it's like the mortgage market.
00:11:53Like you have your equity, which is sometimes only 10% of the overall money being used to
00:12:00buy something.
00:12:01And then you have like a mezzanine piece of debt that's paying a higher interest rate.
00:12:06Then you have a bank loan.
00:12:07And then when they get it up to a certain level, they sell the debt off to the public
00:12:12in a thing called an asset backed securitization.
00:12:14So it's like become this whole complicated wizardry of capital structure over the past little
00:12:21while, which has had a lot of implications in a lot of different areas of the business.
00:12:27Look at the hypnosis thing.
00:12:29I mean, that guy, when he was going out and buying all the catalogs for twice the historical
00:12:35average price.
00:12:37And for those who might not know hypnosis.
00:12:39Hypnosis was a publicly traded stock, like a company that was, you could buy the stock on
00:12:43the stock exchange and they raised money from the public to then go and buy music publishing
00:12:50catalogs as a public company.
00:12:52And they had a lot of big ones.
00:12:53They ended up starting to drive up the price of catalogs.
00:12:56Totally.
00:12:56Yeah.
00:12:57Yeah.
00:12:57I mean, the historical average price of a music publishing catalog, like start, you know,
00:13:0325 years ago till, you know, seven or eight years ago was 10 times the earnings of the
00:13:09catalog, 10 times the net revenue of the catalog.
00:13:12Now they're trading at up to 30 times.
00:13:16Wow.
00:13:16Yeah.
00:13:16So it's been a huge expansion in value.
00:13:18And you'll hear people like Robert Kinsel just did an interview with Lucas Shaw where
00:13:22he was talking about this, where he was saying, you know, was the internet good or bad for
00:13:26music?
00:13:26Well, one way you could say it's good for music is that the value of music copyrights has
00:13:30exploded.
00:13:31That's partially true.
00:13:33I agree with him.
00:13:34But there's also another factor, which is the financialization of music.
00:13:37Like the way that people are structuring these deals allows them to pay more.
00:13:41And, but what it's done is you had the music business historically as kind of a self-contained
00:13:47world where it was the majors and a bunch of like impresario type of people investing
00:13:53in it.
00:13:54So it's relatively self-contained to now all of a sudden Blackstone and Pimco and Blackrock
00:14:01and all the KKR, all these big financial institutions have exposure to it.
00:14:05And so that starts to, when interest rates start to change, interest rate movements in
00:14:11the broader markets can change the way people behave around music, which is not, it correlates
00:14:17it more with how the broader economy behaves than it used to.
00:14:21And then at the same time, you have now three major music companies.
00:14:25When I started, there were five.
00:14:27Now there's three.
00:14:28Yeah.
00:14:28So a lot of consolidation.
00:14:30A lot of consolidation, but also two of the three are public companies that are pure
00:14:35play music companies.
00:14:36That didn't used to be the case.
00:14:37And they went public within like the last five years.
00:14:39Yeah, totally.
00:14:40So all of this is happening very quickly.
00:14:43And what that means is that anything that happens in music gets tattooed on the stock
00:14:47price of two companies the next day.
00:14:49So people start watching the implications of things that happen on the music business and
00:14:56activist investors get interested in the stock and start buying up the universal stock
00:15:02and agitating for whatever they want to produce returns.
00:15:05And so you start enmeshing the music business with the broader economy.
00:15:10In a bunch of ways that didn't used to be the case.
00:15:13One of the things I've seen multiple times is the idea that the music industry is recession
00:15:20resistant or recession proof.
00:15:23And I think one of the reasons why people have said that before is because something
00:15:28like Spotify gives you access to the entire world's catalog of music for just about $10.
00:15:33I think it's a little bit more than that now every month.
00:15:36So if the economy were to take a downturn, people love music and the odds are they're probably going
00:15:41to cut one of their many streaming video on demand services before they would cut Spotify.
00:15:46It's something that people really love to hold on to.
00:15:49But what you're saying makes me feel that maybe there is a lot more risk for the music
00:15:54industry should an economic recession happen.
00:15:57Tell me your thoughts on that.
00:15:58Do you think the music industry is recession proof or not?
00:16:00Totally agree with you that it used to be like uncorrelated to inversely correlated.
00:16:05Interesting.
00:16:05So it's like a small consumer purchase.
00:16:08So the economy goes down.
00:16:09People may not go on vacation, but they'll still buy records.
00:16:12Like they'll still buy concert tickets.
00:16:15That's definitely true.
00:16:16And if you look at periods in history that, at least in my anecdotal experience of one,
00:16:21that I've had experiences where I worked at EMI in the early 2000s.
00:16:25It was like a crashing airplane with a fire on it.
00:16:29We went from 10,000 global employees to 5,000 global employees while I worked there.
00:16:33Nothing to do with me.
00:16:35And that was a major music company at the time.
00:16:37That was one of the five major labels at the time.
00:16:41And now we have three.
00:16:42So if anyone's keeping up with that.
00:16:44And then in the late 80s, the stock market was doing tanked in 87.
00:16:50But a lot of the great music stuff happened around that time.
00:16:54It was a local economy where it only dealt with itself.
00:16:58And now all of a sudden it's connected to global markets.
00:17:00Like it's a little bit like gentrification.
00:17:02You live in your local neighborhood and you kind of know what's going on.
00:17:06You know everybody in your local neighborhood.
00:17:08And then all of a sudden somebody comes in and starts buying up all the buildings in your neighborhood.
00:17:12Some people get really rich from it.
00:17:14Some people have a hard time finding a place to live as a result.
00:17:18And you're like, wow, this looks great.
00:17:21Well, it's happening depending on what lens you look through.
00:17:25And then at one point you're like, wait a minute.
00:17:26I can't find a place to live and where did all the cool people go?
00:17:30And it's a little bit like the music business is a little bit like that.
00:17:33Like they just never got around to us.
00:17:36Interesting.
00:17:36And now because of the financial markets wanting increasingly like being able to analyze things better than they used to be able to, be able to find transparency in areas that used to be opaque and looking for returns anywhere and everywhere they can around the world, they got around to us.
00:17:55In some cases, that's meant really great things.
00:18:00I mean, I would not be doing what I'm doing 10 years ago.
00:18:04There's nobody would have given me 200 million bucks and said, go invest in music companies 10 years ago.
00:18:11Like forget it.
00:18:12There are ways that you can do that and earn financial returns and also improve the business.
00:18:20And that's why I'm doing it.
00:18:21So I appreciate that, the opportunity to do that.
00:18:24I mean, the hypnosis, the trend that hypnosis started of raising catalog values has made a lot of musicians really rich.
00:18:33More musicians making more money is a great thing.
00:18:37Yeah.
00:18:37So, you know, there's areas where, you know, this has been a really good time, but it's also sometimes complicated.
00:18:47Yeah.
00:18:47It's interesting what you were saying about catalogs.
00:18:50It's obviously made a lot of musicians rich.
00:18:52I think it's interesting whenever I talk to someone who's on the outside of the music business, when they hear about catalogs from their favorite artists being bought and sold, sometimes they're sad about it even.
00:19:01And I think that that kind of might stem from Taylor Swift being their only touch point to what catalog sales are like.
00:19:09And that obviously wasn't ideally how she wanted it to go.
00:19:12So it was a negative experience for her.
00:19:14But I think a lot of people fail to recognize that there are some musicians who are like, oh, I can get $200 billion tomorrow instead of having to wait over the course of the rest of my lifetime to get that money.
00:19:24I would say that there's a difference between I'm an artist who created something and I'm going to sell it for a lot of money versus I'm an artist who created something, sold it for not that much money, and then I'm watching the person that bought it from me sell it to another person for a whole lot of money.
00:19:44Yeah.
00:19:44That's a little bit of a different dynamic.
00:19:46You know, it's a little bit like any buy-sell situation.
00:19:48Like if you did a deal in the old times before things exploded and then the person that, you know, I think there's a little bit of that.
00:19:57But there's also, you know, a musician who makes a decision on behalf of their own work, I think has a different sort of dynamic around it versus a musician who watches somebody make a decision on behalf of, you know, with their copyright.
00:20:14Yeah.
00:20:15How do Wall Street players tend to think about music differently from someone who's like born and bred in the music industry like yourself?
00:20:23Financial people are really smart.
00:20:25And often they are able to perceive things analytically that a lot of other people don't see.
00:20:32You know, ways to model things, similarities between how one type of investment acts relative to another.
00:20:39They're very good at analysis and research and parachuting into things and make sure to compare the right two things to one another.
00:20:46The human factor is hard to factor in.
00:20:50I mean, I think of the music business like when it works, you kind of understand the dynamic and you're making high conviction investments around people.
00:21:01It's about the music rather than like an asset.
00:21:03Well, it's not it's not always like only about one thing, but it's always something about that.
00:21:10Yeah.
00:21:10The music business is not really like an industry.
00:21:13It's like a thousand people that know each other.
00:21:17It's a very small business.
00:21:18It is.
00:21:19And so it's just and I'm sure you as a reporter, you must, you know, come into contact with us all the time.
00:21:24I'm like, how does how on earth does this person know this person?
00:21:27Everyone's like it's just big enough to be considered like a global business.
00:21:32And so that means that the human factor is relatively high, you know, compared to the pharmaceuticals business, a gigantic business.
00:21:39And so it's never out of the room.
00:21:42And and that's hard to price in when I set up my operation that I'm doing now, like what I explained to the people that I raise money from is is like this is not a portfolio business where I'm managing risk in a port from a portfolio level.
00:21:58This is a high conviction investment business.
00:22:02I think there's a lot of different types of investments to make in the music, music business.
00:22:06One of the interesting things about it is that it's a small business, but you have yield investments, venture investments, you know, entertainment style, underwriting it kind of mid teens returns.
00:22:17You have a lot of different types of deals you can do in this relatively small world we lived in, but there's not enough of them to construct like a wide ranging portfolio.
00:22:27And so by nature, you need to kind of understand the dynamics around what you're doing.
00:22:33And I think when it really sings is when you have good financial investors that are providing capital alongside people that understand the way the sort of intramural relationship based part of the business works.
00:22:48That's where the real unlock happens.
00:22:51Yeah.
00:22:51And you've seen people throughout history have stupendous outcomes that are able to marry those two things.
00:22:58Like, for example, Stephen Swed, who was the owner of CSAC for a very long period of time.
00:23:03It's a performing rights organization.
00:23:04Yeah, performing rights organization.
00:23:06Collects royalties.
00:23:07And one of the best investments ever made in the music business.
00:23:11You know, he wasn't really a financial person.
00:23:15He was an entrepreneur.
00:23:16But he knew a lot of financial people and could could bring financial people into it that trusted him and understood him.
00:23:22He's like on my Hall of Heroes.
00:23:24Like, I never met him.
00:23:25He was older than me.
00:23:25But he was kind of on my Hall of Heroes because I feel like that's the alchemy in the music business from an investment point of view.
00:23:33When you understand the human part of it, the relationship part of it, the history of it, but you have access to financial capital that with an alignment that understands what you're trying to do.
00:23:44Do you think there's any possibility that we're in some sort of a bubble with catalogs?
00:23:48I was sort of Debbie Downer on the catalog market for a while.
00:23:51Like, after I sold songs, we did all contemporary artists working with, like, people for their future output.
00:23:57Yeah.
00:23:57And I didn't buy catalogs.
00:23:59And when I sold it, you know, I was 45 and I had a successful publishing company.
00:24:04So I felt like the world kind of wanted me to raise money and buy catalogs.
00:24:09At that time, I could not get comfortable with it because, A, the prices were going up and up and up.
00:24:16And the earnings are kind of capped.
00:24:20So you have to be careful to make sure that, you know, you don't try to make catalogs into something that they're not in terms of what you're able to do with them.
00:24:32Like, for example, 66% of the music publishing revenue base is regulated one way or another.
00:24:39The publisher can't actually move that many levers to create value.
00:24:44And, you know, when you look at catalogs, like, you know, the Bob Dylan catalog, you obviously understand why that traded at such a high price.
00:24:52But one of the things that people talked about at the time was Girl from the North Country, which was a Broadway play made from Dylan songs that was a big success.
00:25:01And so people started writing that in to their valuations, like, oh, stuff like that's going to happen.
00:25:05And I'm like, listen, I love Metallica.
00:25:07Like, I grew up on those records.
00:25:09But there's not going to be Metallica the musical anytime soon.
00:25:12So you need to, like...
00:25:13Case by case.
00:25:14Like, not everyone can have a biopic.
00:25:16Not everyone can...
00:25:17Like, there's a Whitney Houston slot machine in Vegas now.
00:25:19Yeah.
00:25:20Like, you know, not everyone can do all of these different things to increase the value of their catalog.
00:25:24And so I was always a little bit skeptical.
00:25:27As somebody who's done the job, can you really move the earnings enough?
00:25:31But then I watched a couple of things happen.
00:25:32And so, you know, the valuations went up.
00:25:36A bunch of us sort of assumed this has to pop and come down.
00:25:38Like, it has to be like a tool at market phenomenon.
00:25:40Like, the price is going to come down.
00:25:42But then I started over this summer.
00:25:45What if I took the other view?
00:25:47And I started thinking about film slate financing in the movie business.
00:25:52Okay.
00:25:52I'm not super familiar with that.
00:25:54Movies cost a lot of money.
00:25:55And so the studios don't have enough money to pay for all the movies they make as movies, the cost of movies have gone up.
00:26:03The studios don't have the money and can't get the money to do it.
00:26:06So they started letting investors pick up the risk on big Hollywood productions.
00:26:13Okay.
00:26:13And I'm not an expert, but, you know, I seem to remember this started sort of in the kind of early 2000s time.
00:26:20There was sort of a boomlet in this of, like, hedge funds.
00:26:23Like, there was a guy called Ryan Kavanaugh at Relativity Media Film Company that would do these slate film financing projects.
00:26:31Steven Mnuchin, the Donald Trump Secretary of the Treasury, made a bunch of money.
00:26:35I think the firm was called Dune Capital.
00:26:37And, you know, in the original, in the early times I remember hearing about this, I didn't know much about it.
00:26:42But, you know, it seemed like it was people who were sort of wandering into it in a similar way that, you know, people wander into the music publishing catalog business.
00:26:51But now I think a majority, is my guess, of movies are slate financed now.
00:26:58It's become like a standard way that movie studios defray their risk.
00:27:04So I'm like, what if the same thing is happening in the music business?
00:27:09The financial markets are going to permanently finance music publishing transactions going forward.
00:27:13Does that change my point of view?
00:27:15In a couple ways, yes.
00:27:16And one is that, you know, you're going to need music people again now in this part of the world.
00:27:24If you've got a permanent demand for music copyright acquisitions and the capital necessary to do them, then you need the supply.
00:27:37What's been going on for the past couple of years has been, you know, Bob Dylan and Queen and, you know, Neil Young and, you know, the sort of big, like, you know, all time Bruce Springsteen.
00:27:50And as this goes on, it's going to get increasingly more specialized.
00:27:56Like buying and selling catalogs will go to more specialized artists?
00:27:59Yeah, more niche.
00:28:01Yeah, more niche.
00:28:01Over time.
00:28:02Like the big artists, there's a finite number of Bruce Springsteens.
00:28:04Exactly. And the marquee stuff, you understand why it trades for, you know, it's kind of, and I used to say this at songs, like, the biggest deals we ever did were the easiest ones to do.
00:28:14When we paid a big advance to somebody, we were sure, you know, it's the middle stuff that becomes where discernment is really important.
00:28:23That's interesting.
00:28:23And so, so I think now you've got a lot of demand on the buy side and on the, and in order to find stuff that's big enough for these people to be interested in buying, it's again going to have to be a little bit like the mortgage business.
00:28:36Like, there are people who package up properties and then sell them to larger investors.
00:28:41I think we're going to have to see that kind of thing happen in, in, in the music business.
00:28:46But also on the, on this, on the side of like making the copyrights work in the market, you're going to need people who understand how to make music more valuable.
00:28:58And, and, and when you're dealing with, you know, if you look at somebody at the, like Taylor Swift level, for example, like she's like a general interest, like global phenomenon.
00:29:08Yes.
00:29:09You're going to handle that like a little bit, like you handle like the Marvel franchise in the movie business.
00:29:14I mean, she's like a huge, you know, touch reach is huge.
00:29:19When you start getting into like the mid tail, you have to understand the music.
00:29:23Like if you do it well, I think it could be permanent value.
00:29:29So that's what I'm saying.
00:29:30Like I was Debbie Downer, like this is, this is going to go bust.
00:29:33This is crazy.
00:29:34It doesn't make any sense.
00:29:35And then I started saying, but wait a minute, like people that are smarter than me have figured out that this is something that they want to do.
00:29:43Yeah.
00:29:43And so what if it is permanent, then how do you do it?
00:29:48There's going to be a supply issue.
00:29:49I want to move on to another area of change that I have really seen.
00:29:54And that's, it's somewhat related because the three major music companies since the start of 2024 have been undergoing a lot of restructuring, which involves a lot of layoffs.
00:30:05And also they're kind of changing what kind of team members they're investing in radio and press.
00:30:10And these kinds of departments are seeing a lot of losses during this restructuring, but they're also bulking up in other areas like digital marketing or A&R.
00:30:18Sure. And I'm wondering, do you think, in your opinion, that this move by the major music companies to do all this restructuring starting in 2024 and continuing to now, do you think that this is just them playing catch up with the digital age?
00:30:33Or are they seeing something in their crystal ball that most of us on the outside might not have noticed about the way the music industry is changing?
00:30:40I wish we all had a crystal ball in the music business. I think part of the issue with the music business is that there is no crystal ball.
00:30:47We don't.
00:30:47What you're kind of looking for is 51% confidence. So it's not 50-50, it's 51%. I think that's what you're shooting for rather than crystal ball.
00:30:56But there are a lot of smart people in the major label system. And, you know, broadly speaking, I think there's kind of two people, two paths in the music business.
00:31:07There's a up through the building where you, you know, get a job as a coordinator, then a director, VP, senior VP, VP, and then you run the company up through the major label system.
00:31:16And then there's people who feed on what's available in the wild, all the independent people. I was sort of more in that camp for most of my career.
00:31:25So in terms of what the sort of boardroom decisions inside the major labels are, it's not my power alley.
00:31:32But, you know, the major labels are tankers, big ships. The market is moving quickly.
00:31:40They always do catch up. Sometimes there's a lag between what's going on in the market and what the major music companies are providing to the market.
00:31:52The reason why my company, Songs, was successful is because the music publishing business at the time we started was making big records for Celine Dion.
00:32:01They would hire a studio for a year and put the biggest writers in the world to make a big record for a big pop star.
00:32:08And the world was moving in the direction of singles, not albums, 13 writers on a song, rappers guesting on a pop record where the two artists didn't even know each other.
00:32:22And we were young and had nothing to lose. And so we did that. We created a business for that market.
00:32:31You could move fast.
00:32:32And we had it to ourselves for a little while. And so we went from publishing stuff that fell off the back of a truck to having 5% of the U.S. radio play market in a 10-year period of time.
00:32:46And then the majors all figured it out. And they put in charge of their companies, the A&R people, that instead of-
00:32:55People from songs.
00:32:56Well, that was later.
00:32:58Okay.
00:32:58But, you know, they made the A&R people the CEOs of the companies to great effect.
00:33:04Okay.
00:33:04And it became harder for us to compete.
00:33:06Yeah.
00:33:07You know, there's a reason why I sold the business. It became harder for us to compete because they caught up.
00:33:13And so sometimes there's a lag, but they always figure it out.
00:33:17And I think right now you're seeing a normalization of the streaming market in a way where it was growth, growth, growth, growth, growth.
00:33:25Now there's still growth, plenty of growth, but it's decelerating.
00:33:29Yeah.
00:33:30And they're starting to look at the future now and plan and plus two or the three of them are public.
00:33:36So, you know, they have shareholder pressure and they're trying to build a durable business over a long period of time.
00:33:42And it makes sense that they would start to move the cost structure of their business, you know, in ways to address that.
00:33:51But there's also been some interesting moves, you know, on the creative side of the business.
00:33:54I mean, I think Atlantic hiring Elliot was really interesting response to where, you know, to the market and where the market is going.
00:34:03The way you framed it, like, you know, the promotion people, radio people, you know, are taking hits and publicity people are taking hits.
00:34:09But A&R and digital marketing are attracting resources.
00:34:12Like, I'm like, that's interesting.
00:34:13I mean, interesting, creative things will come from that.
00:34:17The one thing that I do think from having been on the talent side of the business as a publisher and also we had a record label called Records that was run by Barry Wise.
00:34:27So I've been kind of on both sides of it.
00:34:30But one of the things that people always say is, like, what does your label do for you?
00:34:36What does your publisher do for you?
00:34:37And the fact is, like, records need champions and artists need champions.
00:34:42That's what record companies do, in my opinion, is they believe in you.
00:34:47Yeah.
00:34:48They front the cost for your creative vision, not knowing if it's going to work out.
00:34:51Yeah.
00:34:52I mean, they take a risk.
00:34:53That's true.
00:34:53But they also believe in you.
00:34:55Yeah.
00:34:55And by extension, sort of tell the world what they think is good.
00:35:02Yeah.
00:35:02It's just they increasingly have less levers to pull and less gatekeepers they can contact on your behalf.
00:35:08Which means they just have to get – they have to figure out how to do it now.
00:35:12Yeah.
00:35:12So I think it's digital marketing now.
00:35:13Yeah.
00:35:14It's like if the gatekeeper is not a person, it might be the algorithm on TikTok.
00:35:17Yeah.
00:35:18That's true.
00:35:19But I also think that, you know, there's times when the music business all works in concert and things work well.
00:35:30And then there's times when things become dissonant because of format shifts or consumption shifts in the market.
00:35:36And I think where, you know, TikTok was a big one, big impact to the market.
00:35:43And it was a little bit like, you know, the TV business with reality TV.
00:35:48Like NBC used to make very expensive sitcoms on Thursday nights and that was their business.
00:35:54And then all of a sudden, look, over here we can make a show with no actors, no unions, no script and do whatever we want.
00:36:02Just send a bunch of people to an island and sell to the same advertisers.
00:36:05Isn't this great?
00:36:06And so they just started doing that over and over and over again.
00:36:11And then the reality numbers, the unscripted numbers started leveling off and they had to get back to making shows again.
00:36:21But it was the cable people that were focusing on doing that, not the networks.
00:36:26And now most of the great TV is made by different people.
00:36:31So things shift around a little bit.
00:36:33And I think in the music business, it's usually the independents that figure it out first.
00:36:40So now we're in a moment where repertoire is super reactive and stuff is getting signed from TikTok virality very quickly.
00:36:47Yeah.
00:36:47And, you know, sign it and put it out.
00:36:50Yeah.
00:36:50Like 2019 to 2020.
00:36:52Yeah.
00:36:52It was like a gold rush, really.
00:36:53And it became kind of like, you know, a data driven business.
00:36:57And now I think in the past, like couple, three years, you're starting to see story records happen, you know, around artists, not just track by track, but around artists stories.
00:37:09Because, you know, there's been some really good ones in the past three, four or five years.
00:37:13And the independents are the first people who figure out how to tell a story in a new way.
00:37:18And then now the majors are doing it.
00:37:20So you've been through so many different changes in the music business.
00:37:24You've been through a lot of the phases where people thought that the sky was falling.
00:37:26Like we were talking about earlier with like Napster around the time or just a few years before you founded Songs.
00:37:32And then after Napster was the big bad wolf, then, you know, came YouTube.
00:37:38And then after that, people were really scared about moving over to streaming.
00:37:42And you've managed to survive all that and still get to have a very good view of this music business.
00:37:48I'm wondering, do you think that the age that we're entering into, AI would probably be the next candidate to be the big bad wolf that people are scared of?
00:37:58Do you think that we'll still weather that storm?
00:38:01The AI thing is funny.
00:38:02Like I live through crypto, you know, every pitch is a crypto pitch.
00:38:07Yeah.
00:38:08I never did anything in that part of the world.
00:38:1121.
00:38:11And that was a little bit like I was looking at it and going, you know, the music business, the history of the music business is getting.
00:38:18Hundreds of thousands to millions of people to do something simultaneously for like a few bucks.
00:38:24That's like the history of the music business.
00:38:25Like go to sell at a stadium, you know, or a nightclub, you know, sell 100,000 records.
00:38:32Like a bunch of people listen to a hit on the radio, get, you know, hundreds of thousands of millions of people to do something simultaneously for a little bit of money.
00:38:40The crypto thing was like 1,200 people paying $10,000 for a song to hang up on their wall like it was fine art.
00:38:52Like that's not the music business to me.
00:38:53So there was never like an MVP in the crypto market.
00:38:57As theoretically interesting as it was, there was never like a minimum viable product, like a killer product that got out there in the world that worked.
00:39:06I feel like AI is closer, but where's the product that's really going to get kids to do shit?
00:39:18It's coming.
00:39:19Yeah.
00:39:19I mean, could it not be Suno or Uyo?
00:39:21You can kind of see the implication of it's really interesting.
00:39:24Like the thing I like the most about it right now, musicians like to fuck with things.
00:39:29Like sampling in the 90s, like they were kids, you give them a sampler, they have their parents' record collection, and next thing you know, they're making crazy music by fucking with their parents' record collection in this crazy new machine.
00:39:44It's like you can't stop that.
00:39:46And the most interesting thing that I'm seeing with the Gen.AI business is how people in the studio are using it.
00:39:52So that is totally there.
00:39:54Like you're in the studio, you're trying to figure out like, I like this like horn line, but like, what if it was sung by elephants and you can make that happen like in two seconds?
00:40:06That's all good news.
00:40:08I'm talking about the consumer application.
00:40:10When we first saw Gen.AI start to rise up, I heard a lot of people say that like the pitch for their company is that now everyone can make music.
00:40:19But does everybody really want to make music like that bad?
00:40:23That was my question.
00:40:25It's like, I don't know if my mom really needs to do that.
00:40:27I think there's lots and lots of people who want to make music.
00:40:30Like one of my main holdings is Splice.
00:40:33We have a very large addressable market of users that are aspirational producers or artists.
00:40:40I mean, there are tens of millions, hundreds of millions of people globally that want to do that.
00:40:46So Splice is a subscription business that where you can get all of the sounds you need to make records in a digital environment.
00:40:55So loops, beats, samples, instrument sounds, one shots, vocal lines.
00:41:01And it's increasingly become a workflow business now.
00:41:05So we just launched a product called Instrument where you can record an instrument in its context.
00:41:14Think like a piano in a concert hall and then play that back on any MIDI control device.
00:41:23So they give you access to the world's sounds in your creation.
00:41:29And then now increasingly help you figure out how to make music on the platform by doing that.
00:41:38It's big business.
00:41:39It's like over 100 million in revenue, over 600,000 subscribers.
00:41:42Yeah.
00:41:43Every producer you've ever met has a subscription to Splice.
00:41:45Uses it.
00:41:45I mean, we're in, you know, probably over 50% of the hot 100, the top 100 songs use some Splice content.
00:41:55There have been songs like Sabrina Carpenter, Espresso that uses a recognizable sample from our library.
00:42:01So this is a big business that's scaling even bigger.
00:42:04So I think there are lots and lots of people who are aspiring musicians and are trying to do better, trying to make a song that for themselves, trying to make one that will impress their friends, trying to make one that will impress people that they don't know, try to make money, try to make one that's worthy of people buying it.
00:42:22Like all the way on up to trying to play stadiums.
00:42:25What I'm not so convinced of is that it can be gamified to a general consumer base that is not aspirational, but is using it to, you know, it's my, you know, boyfriend's birthday.
00:42:43Yeah.
00:42:43So I'm going to make a special song.
00:42:45Like, I don't think that's the killer application of AI.
00:42:49Yeah.
00:42:49It's like, it's fun for a minute.
00:42:50You get on one of these applications that can do these things and you generate a few songs for your friend's birthday or to be like, LOL, isn't it funny that I can do this now?
00:42:59But those people tend to not become paying subscribers.
00:43:03To me, I haven't seen the consumer application, like the consumption application.
00:43:08Okay.
00:43:08That's like the killer use of this technology yet.
00:43:11It's coming.
00:43:12You can see it.
00:43:12But like the fake Drake thing, like it got everybody's like, look at what the computer can do.
00:43:17But like, was it a good song?
00:43:20Like really at the end of the day, I think we're waiting for that.
00:43:23And the very smart technology people like the team at Splice who have a lot of experience doing this in a bunch of different technologies, you know, like the people that Suno's bringing into their business and starting to build out are going to figure it out.
00:43:40But I'm not sure that we yet know what the true format shift of that is going to be.
00:43:47Is it going to be allowing people, fans, to have more interpolation capabilities to the stuff that they already love, for example?
00:43:56So like remixing a song you already know and love?
00:43:57Yeah, or be more involved in it, you know.
00:44:00Or is it going to be, you know, there's been some interesting stories recently about fully synthetic artists that have reactive songs.
00:44:08Like we'll see.
00:44:10We'll see.
00:44:11My gut tells me that it's got, it'll get there.
00:44:15But we haven't seen the real, like, that's the thing that's going to make this whole thing crack.
00:44:23Also, one of the things that I always come back to when I think about generative AI, I do think it's going to be a disruptive force in this business.
00:44:29And I think it's part of all the things that we're talking about, about how the music industry is starting to shift.
00:44:34But it's really more of a revolution or a change on the music creation side rather than the music consumption side.
00:44:43This is what I'm saying.
00:44:44Yeah, yeah, yeah.
00:44:45So like I was saying earlier, just to clarify my own point, that yes, like Napster was very disruptive, but it was disruptive in the way that we consume music and listen to it and buy it or not buying it.
00:44:58Same with Spotify.
00:44:59This is kind of a different thing.
00:45:00Yeah, it's more in the lineage of sampling and that sort of thing.
00:45:03And also, like, Napster provided something, like, it seems like the dark ages now, but they provided something that the record business couldn't give you.
00:45:11Like, you had to buy a CD for 18 bucks to get the song you wanted.
00:45:15Oh, yeah.
00:45:16And then they gave you, you can get whatever you want for free.
00:45:20And not only the for free part, but the whatever you want part song by song.
00:45:24You know, Spotify came in and gave you the world's music for one price.
00:45:30That's stuff you really couldn't do before.
00:45:32I think the only place that AI so far has done that, like, in a productized way is in the creation side, where it gives people making music like, holy shit, like, that works.
00:45:43Mm-hmm.
00:45:44I'm increasingly hearing professional songwriters and producers tell me that they have been playing around.
00:45:50Totally.
00:45:50And it's amazing to watch them do it.
00:45:52Because, again, musicians like to fuck with things.
00:45:56For the most part, the most interesting use cases are when it helps get out of you what's inside of you quicker, faster, and better.
00:46:04Yeah.
00:46:05That's, to me, the real power of it so far.
00:46:08Yeah.
00:46:09The consumption side of it, it kind of has an internet slop feature to it sometimes, where you're like, do people really want to hear, like, functional music in a billion different ways?
00:46:19Like, I don't know if that's really going to capture the world's attention.
00:46:22Yeah.
00:46:22And I'm curious as to what it is that's going to do that on the consumer side of it.
00:46:26And it's probably gated to the licensing agreements between the major music companies and the AI platforms.
00:46:36Yeah.
00:46:37So I wanted to talk a little bit about that and get your pulse on AI and how it might interact with the traditional music business in the near future.
00:46:45So the three major music companies, Sony, Universal, and Warner, sued Suno and Udio, who are kind of two of the frontrunners in the AI startup or AI music startup space.
00:46:56They sued them for widespread copyright infringement.
00:46:59But more recently, Bloomberg and the Financial Times have both reported separately over the last few months that they're discussing a settlement and potentially nearing a settlement to license their works for training with Suno and Udio.
00:47:14I'm wondering, do you think that that is a likely outcome here?
00:47:18Or do you foresee the majors going to the bitter end with this lawsuit?
00:47:22Whether whatever the discussions are between the majors and the AI companies is going to really result in this technology being out in the wild unrestricted, I'm very skeptical that that's the next place it's going to go.
00:47:34So the fact that they're cooperating and having some conversations between the two parties will lead to something.
00:47:41But is it going to be the unrestrained use of this technology in the wild?
00:47:48I would be shocked if that happens anytime soon.
00:47:51I think the sort of conventional wisdom point of view from the sort of been in this business for a while perspective is that it'll go down the path that's somewhat similar to what happened with YouTube.
00:48:07Okay.
00:48:08Where YouTube came rolling into the music business in the 2006 timeframe, like uncapped, out in the wild, being used by a million people, no licenses.
00:48:17And through a combination of negotiation and litigation, there ended up being this painful sausage making process, which actually also had a very big technology component to it.
00:48:33So there was the licensing legal framework that was a combination of litigation and negotiation.
00:48:40But then there was the infrastructure of the YouTube CMS, the content management system.
00:48:45That was a big part of the technology was allowing copyright holders to control their own works on the platform.
00:48:53That was a big technology build.
00:48:54So it was a combination of those three things that turned the YouTube from the death of the music business, which everybody thought it was going to be in like the 2006-2007 timeframe, to like a third of the revenue base, something like that.
00:49:10Yeah.
00:49:10I don't know off the top of my head, but it's paying out a lot of money.
00:49:13But it's a real revenue base.
00:49:16It's not everything that maybe the music business, the copyright holders in 2007 thought it could be, but it's meaningful and it certainly hasn't hurt the growth rate of the music business.
00:49:29In fact, you could argue that it's been helpful.
00:49:31If I'm a betting person, I suspect that the AI thing will, the argument over AI will follow a similar path.
00:49:41How long that takes and how expensive it is, you don't know.
00:49:43The record companies are more prepared for it than they were in the YouTube time, but the technology companies are also more prepared for it.
00:49:50So we'll see how that happens.
00:49:53Irregardless, YouTube was a killer application that provided real value to its users from day one.
00:50:01So it was out of the bag day one.
00:50:04I just haven't seen that yet on the AI side.
00:50:08Again, more on the creation side.
00:50:09The music industry is still in its TikTok age.
00:50:13But it does feel like TikTok now for the music industry is a little bit different than it used to be.
00:50:18I like to think of it kind of in two time periods.
00:50:21The first time period would be like 2019 to 2023, where, you know, like I was saying before, it's like kind of a gold rush.
00:50:27There were all these people who were getting visibility on the platform that never had before.
00:50:31And record labels were, you know, gobbling up all this talent, signing them right away to really good deals.
00:50:38But now we're kind of seeing the aftermath of that.
00:50:41All of the viral singles that happened in, you know, those early years of TikTok often didn't amount to that artist becoming a superstar.
00:50:48Yeah, no artist buy-in.
00:50:49It's about the reactive songs, but not necessarily the story around them.
00:50:54Yeah.
00:50:54And I mean, TikTok still is the platform that everyone goes to for digital marketing.
00:50:59And that's still the way that we're thinking about moving songs.
00:51:02I'm wondering, do you think there's any chance that we're coming to the end of the TikTok age in the music industry?
00:51:08I don't think it's like the death knell for, I mean, TikTok is a huge platform that like hundreds of millions of people use, you know, it'd be billions of people use it on a daily basis.
00:51:20So, but I do think that people figure out better ways to tell a story.
00:51:26As platforms age, people figure out how to use them more effectively.
00:51:29There are levers on TikTok that you didn't use to be able to pull that you can pull now.
00:51:36Like what?
00:51:37There's a lot of really interesting, talk about AI.
00:51:39There's a lot of really interesting businesses that are using platform information that they're jailbreaking out of user information that they can collect to do predictive analytics in terms of how to expose records to audience.
00:51:56Interesting.
00:51:57So there's like, there's one, for example, called CoBrand.
00:52:00That's a, that's a really interesting business.
00:52:03Yeah.
00:52:03And they're using AI, a really interesting way, in an agent sort of focused way to figure out how to match repertoire and audience worldwide by taking information from platforms like TikTok and, and analyzing it in more effective ways.
00:52:18You know, the thing about TikTok that is sort of distinct from other platforms, I think, is that it's frequency.
00:52:27So radio was a slow melting ice cube before COVID.
00:52:33COVID pulled everybody out of their cars.
00:52:34The melt rate increased.
00:52:35So what the world loses when radio audience declines is the ability to turn a song or an artist on to millions of people with a switch.
00:52:47And that's a function, not only like, I'm going to display this for one listen, but they keep on playing a record till people figure out, oh my God, I love this.
00:52:57Or I never want to hear this again.
00:52:59And that's like a process of a record finding its bottom.
00:53:02Like it gets displayed.
00:53:03And then some of them, when they're displayed, like a certain number of times, take off like a rocket and other ones die.
00:53:10That's frequency.
00:53:11That's what promotion does.
00:53:12And when radio goes away, it's harder to display a record to people all at once.
00:53:20The gatekeeper function is gone.
00:53:21The thing about TikTok is because people are making so many videos around a song simultaneously, people using the platform can hear a song like a thousand times all of a sudden, which does effectively the same thing that radio does.
00:53:35So it's sort of that, like, how many plays does it take, like, till that nth play that makes a record a hit?
00:53:44There's this psychological phenomenon called the mere exposure effect, which I always cite whenever talking about music marketing, because basically what the psychological effect says is that the more times that you're exposed to anything, the more likely you are to report that you like it.
00:53:58Yes.
00:53:58And so that's kind of the idea.
00:54:00But not all records that are played for somebody turn out to hit.
00:54:04But that's a very important function in the history of the music business.
00:54:09And I feel like labels, digital marketing people, companies like Cobrand, are figuring out how to promote using platforms more effectively.
00:54:21And so in the first instance, when it was like, oh, my God, what's this new play thing?
00:54:25They were just reacting to a phenomenon that was naturally occurring in the world.
00:54:28And now they're starting to say, wait a minute, like, how can we figure out where an audience is for an artist or a record?
00:54:36And how can we more effectively map that record to that audience, which is essentially record promotion?
00:54:44Yeah.
00:54:44And so that's and that's, again, like a function of the music business reacting to a format shift and saying, like, we have to do the job now that we've always done.
00:54:55Just do it in a new way.
00:54:56It doesn't happen overnight.
00:54:58One thing that I've been watching a lot as a reporter this year is, you know, the Trump administration.
00:55:03But, you know, he came to office in January and since then, I've had a lot of experts in the music business tell me that they've they find his policies to be like, quote, predictably unpredictable.
00:55:14From your vantage point as an investor in the music business, have you seen any of Trump's policies over the last year impact the music business?
00:55:22Well, Liberation Day was interesting.
00:55:24I had four transactions going the day before Liberation Day that were transformative for my companies.
00:55:34I have five businesses that I have sizable positions in, four deals that were transformative for those companies, and they all went sideways on Liberation Day.
00:55:46And so I was like, and I'm not used to that for the reasons that we were talking about before.
00:55:50Like, I'm used to, like, the music business is like this weird little scene of we do our own thing and the world doesn't really get around to us.
00:55:56And then all of a sudden, I'm like, would me?
00:55:58Like, like what?
00:55:59Because and it's part of the financialization effect that, you know, it's because there are two public stocks out there that are major music companies.
00:56:09There's billions of dollars of debt and equity capital invested in the copyright business.
00:56:16And so the markets pay more attention to the music business than they did before.
00:56:19But obviously, like, Trump is like a volatility magnet.
00:56:22Like, it just, you never know what's going to happen.
00:56:25There's been all sorts of, like, wild rumors that, like, he could suspend copyright for AI training purposes in the name of national security.
00:56:34I've sort of asked around to people who I feel like know about policy and sort of, you know, presidential authority with respect to copyrights.
00:56:44I don't see any mechanic by which that could happen.
00:56:48So I think some of the more exotic, like, freak outs people are having, I'm not so sure.
00:56:52I'm kind of interested.
00:56:53You know, I come from the punk rock world.
00:56:55You used to play in hardcore bands.
00:56:57The golden era of punk rock music in the United States was Ronald Reagan time.
00:57:03And so...
00:57:03So you're ready for a punk resurgence.
00:57:05The Republican, like, authoritarian world is really good for angry music.
00:57:14And so I'm kind of, like, you know, interested.
00:57:17And there's some evidence of that.
00:57:18I mean, you know, loud music is flying off the shelves.
00:57:22Tickets are selling like crazy.
00:57:23There's a bunch of great young bands that come from the hardcore world that all of a sudden are making things happen in the world.
00:57:30And so I'm like, I'm kind of, as a fan, I'm curious.
00:57:37It's time.
00:57:38Man, well, I could talk to you for hours.
00:57:40Thank you so much for sharing all of your insights.
00:57:43But before I let you go, let's end it with something a little more fun and lighthearted.
00:57:48I like to do this with everyone that comes on the record.
00:57:50And it's called Make Me a Playlist.
00:57:52So I'm going to give you three prompts for songs that I want you to add to our playlist.
00:57:58So the first prompt is, what is a song you can no longer gatekeep?
00:58:03There's an artist called Odile that has a record called Miami.
00:58:09And he's an LVRN artist.
00:58:12The record's a split record with Leon Thomas.
00:58:15And it's just a fucking great record.
00:58:18And like the world's kind of figuring it out in real time, like give it another, you know, heartbeat and it's going to be everywhere.
00:58:29What is a favorite throwback of yours?
00:58:32A record by a band called The Chromags, which is a hardcore band that influenced a lot of us in a major way from the 1980s.
00:58:42They have a song called We Gotta Know.
00:58:43And the first minute and 15 seconds of that song are just uniquely and absolutely flawless.
00:58:52I must admit, I don't know.
00:58:55Yeah.
00:58:56I'm not familiar with Chromags.
00:58:56And we'll see how it lands on you.
00:58:58But for me, that's a tried and true standard.
00:59:00I'll send you an email and be like, with my full review of that song.
00:59:04And lastly, what is a guilty pleasure for you?
00:59:07There's a rapper from Atlanta called Belly Gang Cushington.
00:59:11Okay.
00:59:12He has a record called Friend Do.
00:59:14It's the remix of it.
00:59:16I can't stop listening to it.
00:59:18It's not a polite record, let's say, but it's uniquely captivating in its own way.
00:59:23Like in a, like you want to hear it again kind of way.
00:59:28That's a good pick.
00:59:29Matt, thank you so much for coming to On The Record.
00:59:31It means a lot that you came.
00:59:32This was so much fun.
00:59:33Oh, well, thank you so much for having me.
00:59:35I appreciate it.
00:59:36Another special thank you again to Matt Pincus for coming on the show this week.
00:59:40Now let's throw it to our chart roundup for this week.
00:59:43After many weeks with K-pop Demon Hunters tracks dominating the top 10,
00:59:47it's now Taylor Swift's turn.
00:59:49Following the release of her new album, The Life of a Showgirl,
00:59:52she holds all 10 spots on the chart this week.
00:59:55So let's count it down.
00:59:58At number 10 is Cancelled.
01:00:03This week's number 9 spot is Eldest Daughter.
01:00:06At number 8 is Life of a Showgirl.
01:00:13Number 7 is Actually Romantic.
01:00:19Coming in at number 6 is Wishlist.
01:00:24This week's number 5 is Wood.
01:00:27Number 4 is Father Figure.
01:00:36Coming in at number 3 is Elizabeth Taylor.
01:00:42Number 2 is Opelite.
01:00:44And finally, in its first week at number 1 on the Billboard Hot 100 chart,
01:00:51it is The Fate of Ophelia by Taylor Swift.
01:00:57Taylor Swift has taken over the Hot 100 top 10 this week,
01:01:00but Life of a Showgirl has done even more than that.
01:01:02This album has now sold 3.4 million physical and digital copies, according to Luminate,
01:01:07which means she now has the largest sales week for any album in its first week
01:01:11since Luminate first began tracking music data in 1991.
01:01:15The single-week album sales record was previously held by the debut week of Adele's 25.
01:01:20Thanks so much for tuning in to this week's episode of On the Record,
01:01:24and another special thank you to this week's guest, Matt Pincus.
01:01:27If you enjoyed today's show, please give us a rating, a follow, a thumbs up.
01:01:31All of those things really help us to grow and reach new audiences.
01:01:35Again, I'm your host, Kristen Robinson,
01:01:37and tune in next week for even more industry insider knowledge.
01:01:41See you then.
01:01:41See you then.
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