And we’re back! Dmitri and Tristra enjoy a conversation sifting through some of what is happening in the world today – aka the Hot Lawsuit Summer!
Head over to our website for links to some of the articles the two of them reference.
Links to events and apps that are talked about in this week's episode:
Listen wherever you pod your casts:
Looking for Rock Paper Scanner, the newsletter of music tech news curated by the Rock Paper Scissors PR team? Subscribe here to get it in your inbox every Friday!
Join the Music Tectonics team and top music innovators by the beach for the best music tech event of the year:
6th Annual Music Tectonics Conference October 22-24, 2024 Santa Monica, California
Episode Transcript
Machine transcribed
0:00:06 - Dmitri
The Big Now with Trista and Dmitri. Welcome back to Music Tectonics, where we go beneath the surface of music and tech. I'm your host, Dimitri Vitsa, the founder and CEO of Rock Paper Scissors, the PR and marketing firm that specializes in music innovation.
0:00:28 - Tristra
And I'm the co-host. You know, every host needs a co-host in the podcasting world, and this is Tristan Newyear-Yeager. I am chief strategy officer at Rock Paper Scissors and I am excited to talk to you today, dimitri, about some of my favorite stuff, which is cool news stories.
0:00:44 - Dmitri
Yeah, this is one of our the Big Now episodes where we're starting to, kind of on a monthly basis, kind of review the landscape of what's being talked about in the music industry and music innovation and just kind of do our own. What is it morning shock jock.
0:01:00 - Tristra
Version of music industry news. I think I need more air horns if we're going to do the shock jock version.
0:01:10 - Dmitri
So this is kind of weird, but it feels like things have kicked up with a lot of legal issues. Tristra.
0:01:18 - Tristra
Oh yeah, oh yeah. The lawyers are having a very busy summer. Sorry, legal teams, so we were jokingly calling this the hot lawsuit summer.
0:01:28 - Dmitri
It sure is looking that way. So I'm thinking there's some press about a variety of things happening. There's some things going on with Spotify, there's some things going on with Live Nation and for a while now there's been some things going on with TikTok, so maybe we'll focus on those and that's what's happening in the big now.
0:01:49 - Tristra
Yeah, the other thing I hope we can if we have enough time. I want to squeeze in at the end that we had a story from Kristen Robinson at Billboard talking about how the majors are contemplating, in quotes, suing Suno and Udio and some other generative AI companies for using copyrighted material to train their models. So maybe we can round out with a fun little coda there.
0:02:16 - Dmitri
I actually wondered if all these lawsuits that were for these more established music and social media companies were happening, because people were like, oh shoot, we got to get these lawsuits out of the way before we get to the AI lawsuits.
0:02:31 - Tristra
I've been wanting you to file suit for the last six months. Dude, get on it. Yeah, I don't know that's a good point, like there's probably a workflow issue, but I'm also thinking this is a sign of the maturity of streaming right Like we wouldn't and you know, I guess Live Nation doesn't fit in that, but Spotify does and of social media in general. I mean, social media has faced a lot of legal and legislative challenges in the US and EU and UK, so in some ways we've kind of reached that point in the development of Web 2.0, you know.
0:03:02 - Dmitri
Yeah, yeah. So you mentioned Kristen Robinson and billboard. We've mentioned a piece she did uh on maybe it was on our last big now episode back about a month ago in mid May. That was about the MLC suing Spotify for bundling, cutting royalties for publishers and songwriters, and uh and, and I think she pointed out that the billboard was already kind of doing an analysis around how much money was going to get lost to songwriters and publishers as a result of the bundling approach to payouts, and they had estimated it at $150 million. Then we saw this MLC lawsuit come out, which I think was interesting. People turned their heads. I mean, there was a Pandora one as well, but this one's a little bit for different reasons. But I think people turn their heads like oh wait, the MLC really is balanced on all of this stuff.
0:03:53 - Tristra
You know, like yeah, and if you want to get a good breakdown of the progression of like how the bundle trouble began, I mean it's from a certain perspective. So David, israelite of the NMPA, gave a great keynote at the NMPA meeting in New York a few weeks ago. It's on YouTube and also Music Ally summarizes it really well. Just a fun aside David comes out to Mama Said, knock you Out.
By LL Cool J, and that should be a clear sign of the atmosphere we're facing in this like hot lawsuit summer. But anyway, he really talks about how Spotify started offering these new tiers of subscriptions, kind of quietly, like you could get an audiobooks only tier and you get this tier and that tier. And that allowed them to make this argument, at least in their minds, that oh, when we have audiobooks and music and podcasts all together, it is a magical bundle. And somehow, if you say the word bundle, it completely changes again to their mind, the royalty equation for publishers in particular. So I think there's a lot of excitement around trying to define the word bundle and this is also happening in some other industries.
0:05:15 - Dmitri
But it's definitely making for a passionate debate around this issue in Variety by the CEO of Cobalt Music, Lauren Hubert. That, I think, kind of summarized a larger story around all this, because there's all these pieces that are coming together. It came out in Variety June 14th. It said Spotify songwriters want you to succeed. Why do you keep hurting them? That was the title of the guest.
0:05:43 - Tristra
Oh, that's painful yeah it really is.
0:05:46 - Dmitri
But you know, I thought it was interesting because he kicks off the piece really spelling out that Spotify did bring the industry back from the brink, and I appreciated the fact that he start it didn't just start off with Spotify, we hate you.
It really was like no, we actually do rely on you, like this is important stuff that you've done, and I felt like that context was really helpful for what came next in the piece and as it continues on, I wouldn't mind reading just a little bit of it.
The company, meaning Spotify, has made other strategic missteps that have weighed on its ability to deliver bottom line results, such as missing the rise of social media and losing its influence over music discovery and consumption to the likes of YouTube, tiktok and others, as more and more music continues to be shared on social platforms. The typical characteristic of tech business is the promise of mass operational leverage at scale. Considering that Spotify is a business at scale, with over $14 billion in annual revenue and a gross margin of approximately $3.5 billion, surely there are further opportunities beyond the recent cost reduction initiatives that would improve the financial picture of the business without having to pursue a path of reducing royalties paid to songwriters Unbelievably, spotify is willing to barter all goodwill from the songwriter community and beyond for what amounts to approximately 1% of its revenue. Ooh, ouch, yeah. And then he talks about, you know, the longstanding reluctance to raise subscription prices, which is always an interesting conversation, and here's where we really need the air horn sound.
0:07:15 - Tristra
He cites the very, very, you know, terrible note that Daniel Eck dropped about how, you know, it doesn't cost anything to create content Like the cost of content creation is next to zero, which is absolutely incorrect, especially for music, where you can't really do a lot. And even if you're a bedroom producer, your starting costs are pretty significant, and not to mention the cost of your time to learn how to do all this stuff, and if you're producing in your bedroom, you got to learn to do it really well. Anyway, and I think it's it's goes to show sort of the perspective on what that content is always going to be a widget, it's a commodity, right? It's like pork bellies.
0:08:32 - Dmitri
In some ways, there's a deep philosophical divide between the music community and folks like Daniel Ack I don't know if you can call him representing the tech community, but again see the lawsuit on treating music as a widget as opposed to really understanding that Spotify built its income, revenue, profit by basically using, you know, creative content from elsewhere from artists, from songwriters, from publishers and labels and just having kind of a recognition. So I appreciated the fact that he was able to wrap all those things together to tell a much larger story, because if you look at every individual one, you can see an argument for and against, but when you start to paint the picture larger, you say well, you know what. Something is happening here and it's interesting because you know there's been talk for a few years now about reaching kind of the height of streaming, and we haven't reached the height. For a few years now about reaching kind of the height of streaming and we haven't reached the height.
I feel like globally there's still growth happening and I can't remember if it was in this article I think it was in this article, yeah when he said it won't be long until more than a billion people globally subscribe to a music service, and he was saying that media research has already said there's about 713 million music subscribers worldwide and it's grew 90 million over the last year.
So the growth is still happening. But really there's this sort of change in timbre around how people feel about it, how artists and songwriters feel about it, but also the fact that music is starting to get into other new types of spaces where it won't only be put on your music service to listen but it accompanies so much more as digital licensing and the digital music economy has evolved further. Music is making its place in way other places and streaming is feeling like even from a fan experience, feeling a bit commodified and we're seeing some of these fandom conversations emerge because fans want to engage with music beyond just passively listening, beyond just adding it to a playlist, but really want to engage with each other other fans, with artists, or remix you know, or add filters to or you know things like that as well.
0:10:25 - Tristra
It's going to be a very. It's going to be interesting to see how this shakes out. It's kind of cool to see the energy around like settling these issues and bringing them up. And you see, you know, you see American congresspeople raising this issue. You see, you know the NMPA has filed complaints with the Federal Trade Commission. I think they've sent a bunch of letters to some states attorneys general who've been really active in going after different tech platforms I mean most notably Pornhub, but that's a whole other podcast. But there's just a lot of action and part of this is kind of like a general tech lash we've seen off and on for the last two years, three years maybe more, but part of it is a long overdue reckoning with how exactly do we want society and cultural values to be translated into our technological tools and, you know, monetization schemes for artists. So it's a good conversation to have.
0:11:29 - Dmitri
Yeah, so some of the things you just referred to we caught in the news. Stuart Dredge of Music Ally did a piece last week. Us lawmakers write to copyright office about Spotify bundle and it's kind of a big deal that it's not just publishers or songwriters who are concerned about this, but you actually have folks elected in the government to actually write and comment about this Spotify bundling as well. I think that's an indication that there is something If people outside of the music industry are able to actually interpret what's going on and understand the nuance there it's kind of a significant thing as well.
0:12:07 - Tristra
Yeah, yeah, and the fact that any, I mean the fact that this is a bipartisan effort. So you've got folks like Marsha Blackburn, which I know you know depends on what side of the aisle you prefer, but you've got Democrats and Republicans working together and it's difficult to think of another issue where they're where they're quite so aligned. So see, music brings everyone together, and it's difficult to think of another issue where they're quite so aligned. So see, music brings everyone together.
0:12:29 - Dmitri
It's a beautiful thing. Stuart quotes some of the information that was written to the Copyright Office talking about, basically, that they were raising quote serious questions regarding whether Spotify's recent actions are in step with the spirit of the Music Modernization Act, whether Spotify's recent actions are in step with the spirit of the Music Modernization Act. And also the letter said digital service providers should not be permitted to manipulate statutory rates to slash royalties, deeply undercutting copyright protections for songwriters and publishers. A fair system should prevent any big tech company from setting their own price for someone else's intellectual property, whether the owner wants to sell or not.
0:13:06 - Tristra
That's pretty compelling.
0:13:07 - Dmitri
Yeah, it's pretty direct, you know. It does make me wonder about this constant debate around copyright and the value of copyright, and I think those questions are going to be more and more common and maybe more and more lay people will have opinions about the role of copyright. Have opinions about the role of copyright.
0:13:24 - Tristra
Well, if we talk about the sort of bifurcation theory right that Mark Mulligan and a lot of the very smart folks at Media Tatiana Serizano and Chris Takkar have talked about, you know, if we see more and more creators, more and more people have skin in the game, even if it's just like hey, I get five bucks, I get like a coffee a week from my little IP that I've put out there that I get, you know, micro pennies.
For you know, if we're going to have all these creators, maybe they will be earning money from their property in some way and they'll want to protect it, or at least it will be clear why people who have extremely valuable intellectual property might want to protect it really passionately.
0:14:05 - Dmitri
Intellectual property- might want to protect it really passionately. Oh, trista, you just brought up a great topic and I want to talk about it, but we have to take a quick break. When we come back, I'm going to ask you a little bit more about this because I think there might be something interesting to say about where you land in that copyright discussion. We'll be right back. You might have noticed that the Music Tectonics podcast is a little different lately. We're still bringing you interviews with the most thoughtful music innovators out there. What's changed is how we're organizing our episodes to make it easier for you to find interviews you're going to love. Starting right now, music Tectonics will alternate between four series.
How to Start Up is a series for music tech founders and dreamers. Get expert advice from advisors and investors. Listen to the whole series to get a masterclass and starting up. The Big Picture features interviews with executives and high level thinkers. They share their 10,000 foot view on music and innovation. The Big Now breaks down the latest music industry news and rising trends in adjacent industries. Tristra, new Year, jaeger and I sniff out the stories you might have missed. Colossal Futures is about the cutting edge. Tristra or I get sci-fi with the innovators who are imagining and building musical futures that the rest of us haven't even imagined yet. You can catch up with each series on our website at musictectonicscom slash podcast. Subscribe to Music Tectonics on your favorite podcast app to choose between all our episodes as they drop weekly and drop us a review so other innovators in music can find the podcast too. Okay, we are back and, as you know, we've been talking about, like all the different elements that are adding to kind of Spotify's hot lawsuit summer Is that?
0:15:45 - Tristra
what it's called. Yeah, yeah, yeah.
0:15:47 - Dmitri
But, Trista, right before the break, you brought up something really interesting, which is that there's this because there's this growth of who is a creator, whether it's a musical creator or not, more people might actually start to become interested in what it means to have copyrighted music, copyrighted material, and I guess what I wanted to ask you was so, if you are an established musician, songwriter, whatever you might say, copyright's important because that protects the investment of the energy and the creativity that I put into this and the marketing and distribution and everything you've paid for or spent time on as well. If you're a creator who is kind of this new generation of creator that maybe you're using a lot more AI tools, you're using a lot more automation or things that help you get there faster, Do you think that type of creator might put less value on copyright because they want to be able to utilize the creativity that came in the past to create their quote new or derivative works? Is that going to be the divide line of whether copyright survives?
0:16:52 - Tristra
That's a really good question. I mean, the history of copyright is interesting in that, you know, it's designed to encourage people to make things right. So if it no longer serves, if people are going to make things no matter what, or you know, or then maybe copyright is irrelevant to them.
However, I think when people get a practice going of some kind of creativity and it could be making derivative works, like you know you know, there I Ruined it, for example, is a great. It's someone who has got this great set of social accounts makes hilarious. They're not even mashups, they're way more sophisticated than that. They're like genre bending crazy new new works, but they're very much derivative, based on the vibes and literally the sounds sometimes of previous recordings, but does something completely different with them, right. And so the idea right, like, oh, let's have Nelly sing in the club. But it's like or is that Nelly? Is that 50s? I can't remember. I'm sorry, my complete lack of pop culture showing, but if you're doing in the club but you're doing it like a classic country singer, that is like an idea, right. So in some ways, copyright is there to protect ideas. It's like patents, right. Patents protect ideas. You don't even have to build something necessarily to get a patent on it, or it could be something that can't be built. So there's like I mean, I'm not an intellectual property lawyer, so please IP lawyers out there, correct me if I'm wrong. I property lawyer, so please ip lawyers out there, correct me if I'm wrong, I'm just cosplaying for a second, but, like um, I do think that there are.
Even the most ai enabled person is coming up with an idea. Right, they're not just. I mean, you know, I guess you could. Maybe the bottom of the barrel would be those like weird meme accounts that just like copy and paste memes into like YouTube shorts and make your brain rot. But like that, that, that isn't what I think most people necessarily want to do with all this stuff. And I mean we'll see, maybe people, maybe that's, maybe I'm wrong, but I have a feeling there's going to be another layer below the like content farm world, I mean above the content farm world, where there's going to be people making things that are really meaningful to them and that might be quite interesting and exciting at times to a broader audience, and then they'll want to somehow benefit from that right Like so you think about, like there's. I think I saw an article recently about kids that were, or people who were, kids in certain meme photos, right that became sort of that were really widely circulated.
0:19:25 - Dmitri
It's a Nirvana cover. The Nirvana album cover, guy baby.
0:19:28 - Tristra
Yeah, exactly. Oh, that's a wonderful example. They're really upset, right, that they couldn't control that image and that they weren't asked permission. So copyright isn't just about money, it's also about control, and control often matters more to people in some circumstances than money does.
0:19:45 - Dmitri
It's interesting that we're talking about you know, talking about this as it relates to Spotify bundling when there's this tidal wave of conversation that's going to happen when more of this AI music generation happens. Yeah, and AI audiobooks I mean, the AI books are bad enough. The AI audiobooks are going to make everyone lose their minds. Do you own it? You know, like, even if it's done ethically, as the user, the one that's creator, creating after, even if the AI platform is, has has trained data ethically, they've licensed it, they're attributing whatever. Then, this new type of generation, new generation, that what you said was one layer above the meme of memeification of content. Are they artists? Do they get to own anything? You know it's like, oh, you get to put it out there, but maybe you don't actually get to make any money off of it as well.
0:20:44 - Tristra
I mean, I think it would be in the music industry's interest to get those people, you know, get those people hip to IP, like it would make sense for them to get. Maybe it's that we reward, that we decide as a culture. We want to reward that differently than someone who spent years perfecting their craft as a musician or who's got a really gorgeous voice that just gives everyone goosebumps or whatever it is, or is like a really awesome dancer. But there's some. Maybe we should say there's some reward involved. If I don't know if we really care about innovation, shouldn't we care about it even at the teeny tiny level, right?
Like a little, tiny bit of innovation. I don't know. Anyway, these are deep thoughts here. How did we get? We got really far away from like. Daniel putting audio books in and now, yeah, okay, well you know, I think we covered it. Well, I think we went to a lot of places, and that's good.
Yes.
0:21:43 - Dmitri
We have a couple other kind of news stories that have broken over the last month or a couple of weeks, even, even and I would say you know the next one, I think I'm using a music business worldwide piece called live nation, hit with antitrust lawsuit by us department of justice, and the us justice department, along with 30 state and district attorneys general, filed a civil antitrust lawsuit against live nation entertainment and its subsidiary Ticketmaster. They say they're suing Live Nation for the alleged monopolization and other unlawful conduct that thwarts competition in markets across the live entertainment industry. The lawsuit, which includes a request for structural relief, seeks to restore competition in the live concert industry, provide better choices at lower prices for fans and open venue doors for working musicians and other performing artists.
0:22:28 - Tristra
Yeah, that's a mouthful.
0:22:31 - Dmitri
It's a mouthful. And also it's interesting because I think a lot of us as music fans do feel a little bit bossed around by Ticketmaster and by ticketing companies and we don't always understand what the relationship is between Live Nation and Ticketmaster and ticket prices and access to the supply of going to concerts as well.
0:22:52 - Tristra
Yes, yeah, and I think this is an interesting sort of parallel action with some of the legislative measures that have been taken against Ticketmaster, specifically things like hidden fees. There's been a bunch of bills and other proposals to try to give people some relief, though of course, there's always the argument that it's the secondary market that's causing all the problems, though I think there's been some discussion among lawmakers in the UK and in the US on how to try to address that aspect as well. So there's a consumer protection side to this, for sure, as well as just the overall health of the live music economy, which I think is kind of what the antitrust part of it is, versus just like you're charging these fees and you don't tell me till I check out, which is you know kind of what the antitrust part of it is versus just like you're charging these fees and you don't tell me till I check out, which is, you know, kind of was addressed earlier this year with a bunch of legislative stuff, so it's interesting how they're kind of there's a lot going on for Ticketmaster and Live Nation. One thing that's interesting, though, is I think there's this argument that, like well, one else can really make this work, like you need this level of scale, right, but there are some other competitors out there, like, I don't know, aeg, or just today I saw the Financial Times had some news about KKR, the private equity firm, investing in a big European events company called Superstruct, and you know, if you want to read about it and you don't have an FT subscription, music Business Worldwide also covers this deal.
So I think there's this notion that more competition could be possible, like why would you know if I were KKR? I wouldn't necessarily, though I don't know, they know their business better than I do but it just feels like there's probably a lot of potential for companies right now who might want to step into that space and see what else is possible.
0:24:49 - Dmitri
Yeah, I'll be interested to see you know how far this gets and what the impact is, Because I think you're right, Like we don't really know what the alternative is because we haven't seen it yet, you know. Yeah.
We don't really know what the alternative is, because we haven't seen it yet.
You know, yeah, and you know I also don't even fully understand what the impact of this potential monopoly is on independent venues.
You know, yeah, and maybe it's only on the ticketing side. I'm not really sure you know. The other question is, as a consumer, you never really know, like the fees that are being added, which make us crazy, or the secondary ticket market, where prices get bumped up. You don't really understand who's getting paid in the end there, like who's actually benefiting from these things. To look at that and to understand what, um, what the financial motives are behind that and, uh, and whether there's a way to kind of diversify who the innovators are that can help add value to both the artists the performing artists and their teams, as well as the fans and their families, as well being their teams. Um, so yeah, so it'd be interesting to see again, as part of this, uh, this kind of trend towards legal developments in in the music space, how this plays out I'm wondering how it's also really interesting to keep in mind the sort of rash of cancellations of big arena tours by by people who have big names.
0:26:17 - Tristra
They may not actually be very good, like good artists with a big following because of their music, like JLo, for example, but anyway, but there's, there's. It's definitely an interesting time is like, is there sort of the softness in the market that hasn't quite fully developed and emerged and, you know, is there are people finally getting fed up with like I can't pay $100 and drive two hours to go see this person. You know, I think I don't know. It's a really interesting time for live and I would love if someone's out there and wants to send us a note or comments or your thoughts on this. I would love to hear them.
0:26:54 - Dmitri
Yeah, absolutely Definitely. Ok, we're going to take another quick break and when we come back we're going to talk about TikTok. We'll be right back.
0:27:02 - Speaker 1
It's that time of year again when we gather previous Swimming with Narwhals startup pitch competition winners and other experts to dive into their experiences, sharing tips and insights for navigating this highly competitive landscape of music tech. Join us on July 17th at 10 am. Join us on July 17th at 10 am Pacific. That's 1 pm Eastern, 6 pm UK time for Startup. Start your Engines. No-transcript. We'll hear from a surprise investor as we dive into what it takes to grab their attention and succeed as a startup. Our Swimming with Narwhal's pitch competition applications are gearing up to launch, so event attendees can find out what to expect this year. Register for free and learn more about our monthly seismic activity online event series at music tectonicscom. See you there.
0:28:09 - Dmitri
Okay, we are back and, as we continue this journey, into the legal battles that have sort of taken over the news cycle for the music industry. We've covered some Spotify, we've covered some Live Nation, ticketmaster and now it's time for TikTok, which is not a brand new story. This has been going on for months.
At this point, but the New York Times last week did report TikTok lays out past efforts to address US concerns. The company said the disclosures support its argument that a law signed by President Biden in May is unconstitutional. So the battle continues. The article by Sapna Maheshwari from June 20th says TikTok detailed on Thursday why it thinks the new federal law that could lead to a ban of the popular video app in January is unconstitutional, calling the legislation an extraordinary restriction on speech. The company said that congress did not consider the law, which would force tiktok's chinese owner to sell the popular social media app or face a ban in the united states, with nearly enough scrutiny and care. Tiktok made the arguments in a filing to the us court of appeals for the district of columbia circuit, where the company sued to block the law in May. So it's really talking about freedom of speech.
0:29:27 - Tristra
Yeah, yeah, it's framed as a First Amendment thing, but I want to point out some of the political dynamics, especially for our listeners that may be outside the US and not intimately familiar with our wonderful politics here. So we've got on one side, we've got some xenophobia. We've got some deep, deep concerns about China and Americans' data. There, though, we don't have our own federal data privacy law, so I'm not sure why we just care about what the Chinese are doing with our data, yeah, facebook.
Yeah, lots of, lots of questions there. So, however, there you know, and TikTok is not alone in being targeted as a company. So there is a drone company called, I believe, dji, that is a very popular drone maker. They just have been facing lots of crazy stuff from the federal government and Congress. There's Kaspersky right, the virus protection software, which is based in Russia, and they just got banned. So there's sort of this thing like we're going to ban the software of our enemies and the technology of our enemies. I think there were some CCT cameras that faced the same fate. So this is not an unusual move in certain ways. On the other side, you have this ongoing concern like, for instance, the Surgeon General of the.
0:30:41 - Dmitri
US.
0:30:41 - Tristra
That's who that guy is Just issued a bunch of reports and saying, basically, social media needs to have a health warning for young people, and there's been also a lot of state level age verification legislation. So, and I'm sorry, I'm going to mention Pornhub again. I'm sorry, but that is a big deal. So, and I'm sorry I'm going to mention Pornhub again, I'm sorry, but that is a big deal A bunch of states here in the US have basically pushed Pornhub to either have some kind of age verification and like know your customer level identification, and they've said no because it's like, oh, it's again. First Amendment, right thing which you believe that or not, that's up to you, but like that's the argument. So these two trends are colliding with TikTok. On one hand, we have this child safety and social media is bad for your health trend and we have, oh my gosh, what are?
the Chinese doing with our data or the Russians trend, and and how? What this you know. The big question is what is this going to mean for the music industry?
0:31:42 - Dmitri
Yeah, absolutely. I mean, I think you make a good point that you know it's not specifically because they're a Chinese company that some of these things are concerns. And yet there definitely is kind of a conversation that seems to have something to do with that. And you know, even if they were to address that particular issue by saying, oh, ownership is going to be in the United States, I don't think it changes very much because the way companies are so global at this point, it doesn't really address the ultimate concerns of what is another government going to do with this particular information.
0:32:15 - Tristra
Yeah, yeah. And China's a really interesting case, and so is Russia because of the way local law is structured, from my understanding, right? So, and you know this has been going on for years, right? Donald Trump and his administration first raised this, this issue, and TikTok tried to respond by either. I think they tried, didn't they try to sell the Oracle?
0:32:36 - Dmitri
or yeah, this was some kind of server hosting type solution.
0:32:39 - Tristra
Yeah, Operation Texas, I think, is what it was called internally, and then it became clear that that was not a completely hermetically sealed data environment and there was lots of data being stored in China, which, I mean, if that's where you can buy your servers or rent your servers, I kind of get it. If I were by dance, that's probably you know just what are you going to do if stuff happens. Dance, that's probably I would. You know just what are you gonna do if, like, stuff happens um, and how much access, uh, say, the ccp has to you know, what your 14 year old has been watching on tiktok is a good question like what would but um, but that's that. Said that there's a sort of multiple levels of misunderstanding um and and um. You know, I think that the solution is just to, like, you know you either sell or you ban. That's the solution, the simplistic solution that's come to mind for folks that are just like well, I don't really get how this is going to work, right.
0:33:31 - Dmitri
It does seem like, with that Surgeon General story that you brought up as well, that the conversation is much bigger than who owns this company and who owns this data Absolutely.
Because as a society we're kind of like letting technology unfold in a way without really understanding the full repercussions of what it means for our social fabric, our mental health, our physical health. You know our education systems, our, you know economy and things like that too, and you did bring up this issue of so what does it mean for the music industry if something does happen with TikTok? To me, I can't imagine that something else won't fill the place if something were to get shut down. I don't understand how selling it really changes much from a political perspective. To me it's very performative at that point.
But you know there's another layer of kind of discussion around, like what does TikTok or what does social video mean to the music industry? Because we watched it with YouTube as well and to some extent with Instagram and Facebook that it changes the power dynamics of kind of the monetization and the attribution of music. Who should be releasing this stuff and sort of being attributed and known for getting this music out there? And so then you get into these debates around discovery. You know discovery versus, you know, I guess, ownership or something like that. Who has the relationship with who owns the relationships with fans?
All of these technology platforms have really kind of disintermediated that relationship. And then you have these fandom apps that are emerging because fans do want to be connected to the artists and the creators and so forth TikTok and social video. To some extent it feels like you're getting sound bites. You don't really end up having any relationship with the artist when you get into a particular song. So but at the same time there's a lot of music engagement happening in those social video platforms and Taylor Swift was not going to, let you know, let a universal music's you know, was not going to let Universal Music's halt of their music stop her from reaching fans there.
0:35:37 - Tristra
And TikTok maybe is the original site of this a part of this trend to mess around with sound right. So TikTok is always TikTok creators love to take. I mean, not only do they love to do things like duets and kind of mess around with video, they often add audio as a way to add another expressive layer. So not just music but also slowing music down, speeding things up, and so you know, in some ways it's like a really valuable place to it's been an interesting test bed, for how much do people want to goof around with sound now, um and the?
I think the answer is quite a few people want to mess around a lot you know, um who wouldn't consider themselves musicians.
0:36:20 - Dmitri
So um, the creativity, the creativity of the interface, and TikTok has changed how people are engaging with music, you know, and video um, which, which I think is a good, is a great point. Engaging with music, you know, and video, which I think is a great point.
0:36:39 - Tristra
Okay, this has been the Big Now, but it's time for Trishra's bonus round, the big tomorrow.
0:36:42 - Dmitri
Well, you did cite this Kristen Robinson Billboard article. Wow, kristen's getting a lot of play on this podcast. She does great coverage, hey, kristen.
Shout out Kristen's getting a lot of play on this podcast. She does great coverage.
0:36:52 - Tristra
Hey.
0:36:52 - Dmitri
Kristen Shout out. Kristen. So this article major labels weighing lawsuit against AI firms Suno and Udio for alleged unlicensed training. Umg, wmg and Sony are said to be considering a lawsuit against two of the most dominant AI startups in music comma.
0:37:07 - Tristra
sources say yeah, I mean, I think we all saw this coming. Yes, of course, right um that once it was pretty obvious that this was had been trained on commercial music, because that's how it sounds really good, um, and it has, I mean no offense, creative commons creators, you know, I, I love you, keep making your music, um, but you know, I've used it in slideshows exactly.
Um, I love you enough to put you in a slideshow, um, so, but yeah, so. So this is kind of like it went when, when suno and udo came out, I think everyone was like pretty, you know it was pretty obvious what had happened. Um and um, you know the the majors seem pretty. You know it was pretty obvious what had happened and you know the majors seem to be, you know, willing to. And you know, here's what I love, as opposed to the Napster era where they went after individuals for downloading files.
I think there's this thing of let's go right to the source, let's figure out. You know we're not sending out, you know, subpoenas to people who are generating music that sounds a lot like commercial music. We're sending it to the company itself, right, and we're doing it early, right? This hasn't been sitting around in the wild for like a year or two, and then, all of a sudden, people like, hey, what's going on with this thing, you know? So I kind of want to applaud the music industry for seeing a problem because it is a problem from a music industry perspective and jumping on it and trying to solve it. And you know, in some ways, this is great evidence of why you need to figure out if your product is going to fit the industry. And you really do need to have conversations with people because unless you're just kind of hoping that you'll raise enough money to be able to pay the lawyers to get through this Well, and they might be.
0:38:53 - Dmitri
I mean, she did quote the Rolling Stone story about Suno. Investor Antonio Rodriguez admitted that Suno does not have licenses for whatever music it has trained on. However, he said that was not a concern to him, adding that this lack of such licenses is quote the risk we had to underwrite when we invested in the company, because we're the fat wallet that will get sued right behind these guys. Honestly, if we had deals with the labels when this company got started, I probably wouldn't have invested in it. I think that they needed to make this product without the constraints, so that is, oh my God, yes, so yes, they are ready for the lawsuits, apparently.
0:39:27 - Tristra
Yeah.
0:39:27 - Dmitri
That's part of their investment is to pay for the lawyers.
0:39:31 - Tristra
Okay, so what's the question?
0:39:33 - Dmitri
though.
0:39:33 - Tristra
Here, here, to be sure, you're good at this and I'm not, but business model what's the business model here? Like, if you're hoping, if you're a VC and you're putting money in one end, you kind of want a lot more money to come out. The other end is my basic understanding. So where's that money going to come from?
0:40:09 - Dmitri
no-transcript. That's bigger than rights ownership is what they're saying. They're basically saying the whole world is going to be transformed by this in 10 to 20 years. Nobody's going to care about what it was trained on, because everybody's going to be making music and it's going to sound great and it's going to transform how society operates is basically what they're saying.
0:40:34 - Tristra
Yeah, that's an interesting. I want to. I want to know, kind of you know, what Kool-Aid they're drinking.
0:40:40 - Dmitri
What kind of narcissism it takes to get that far.
0:40:42 - Tristra
That's a pretty fantastically beautiful delusion. Well, so, like who's you know? But the thing is, if you can just make it, and just make it yourself, like are you going to pay for it?
0:40:51 - Dmitri
But the thing is, if you can just make it and just make it yourself, are you going to pay for it? Yeah Well, I mean, that's true too.
0:40:56 - Tristra
They could have gotten great music and paid for it as well, but also the users, if I'm going to generate something using Suno am I? Going to pay for that? That's a good question. What is the market? What's the total addressable market? It's not just everyone who likes music, it's everyone who will pay for 45 seconds of AI generated music. I do.
0:41:12 - Dmitri
I mean it does raise some really interesting questions about the future of the technological economy. You know, if you look at something like Canva, which automated and made it really easy for quote creators to do design projects and, you know, probably started with kids doing slideshows and businesses doing pitch decks and things like that, where it's going next, I don't know I mean Canvas added a lot of other developments as well for video and audio and things like that too Is the plan that ultimately, these big tech platforms will charge more subscriptions. We're all going to be subscribing to more and more types of stuff, the types of things that we thought of as B2B, saas software, where it's like, oh, we've got five bucks or 10 bucks a month for this email program, 10 bucks for this DM program, direct messaging and messaging program, 10 bucks for, you know, video conferencing and so forth. Are people going to pay 10 bucks to do music making you?
0:42:08 - Tristra
know, instead of paying 10 bucks to do music listening. That's a really good question and, as someone who loves making music and wants people to make music and then, you know, in some ways would love for this to work if it were actually ethical. Yeah, that's a big question to me because we're already seeing subscription fatigue at the level now and you know it's been a tough couple of years for the average person.
0:42:32 - Dmitri
I wonder if it's subscription fatigue or just subscription churn, where people they sign up to Netflix until they don't want to watch anything else, then they sign up for Hulu until they don't want to watch anything else and there's a little bit of arbitrage on profit into, you know, while people are like wait a second. I think I accidentally subscribed to six different TV film things.
0:42:50 - Tristra
Yeah, yeah, yeah. It's like the gym membership thing where you just kind of hope that they sign up for the gym membership and never come.
0:42:56 - Dmitri
Yeah, you don't need them to come as long as they're paying right. They get to be proud of the fact that they made that New Year's resolution.
0:43:03 - Tristra
So it's a really interesting time and, you know, I really think this is worth the next year or two. Like, I can't predict exactly what's going to happen. I often, you know, and often the surest thing with something like this is the hype is incorrect. But what the future holds is something none of us can foresee. And if someone you know maybe there's some random person out there who luck, you know, luck has it they stumble on the right answer and then, like somebody like you know, zuck, who came up with something like Facebook, right, and then could turn it into a huge company.
But that was, you know, that was just something he guessed, right? No one could have foreseen that.
0:43:40 - Dmitri
Yeah, yeah, true.
0:43:42 - Tristra
Maybe we could go back and rewrite history, but in the moment it's very, very difficult to argue. I think that people can foresee those things.
0:43:46 - Dmitri
I do want to make a connection to our how to Start Up series no-transcript audiences, getting big investment, growing it even further, and then they would figure out is this going to be on ad revenue or is this going to be on subscription revenue or some other auxiliary sales or upgrades or whatever? She said. That changed and then the model was you have to show that there's actually a way to make money. So, vcs, yes, you want to build the audience, but you also want to prove that there's actually something that you're solving that people are willing to pay money for.
And vicky's pointed out that the current era which is why I'm bringing this up is you don't have to just build an audience, you don't have to just show that there's a way to make money. You actually have to be cash flow positive. You actually have to show that if someone's going to throw gasoline on the fire, you've already proven that the fire is going to actually have enough flame to heat things up. You know what I mean. Yeah, yeah, yeah. And so it is interesting to ponder, like these huge investments in AI-related companies that don't have licensed material. Which model are they following? I mean, it feels almost like they're going back to the beginning.
0:45:24 - Tristra
It's a cargo cult. I think they're following this sort of cult-like worship of I mean and I'm only half joking, but the sort of, if you look at, like some of the folks from OpenAI who've just, are you know, openly saying we want to, we want us found a new company to create an you know, our artificial general intelligence which are like don't we have like billions of those already on this planet that we could turn to maybe educate?
you know? Sorry, get off my soapbox, but so I do think there's a little bit of like. We have to look at the cultural side of some of these investments and ask the hard questions like how is Suno going to turn a profit, even if they win the lawsuits, or even if it's yeah, it's fair use to train stuff on copyrighted music, how are you going to make money? It's a good question.
0:46:10 - Dmitri
Good question, Trisha. I think we have done it. We have covered the big now the hot legal lawsuit summer of 2024 here on Music Tectomics.
0:46:21 - Tristra
I think I need a cold drink now. Let's go get a cold drink.
0:46:28 - Dmitri
Hey, if you're pulling out a cold drink, make sure you get the rock paper scanner to read while you listen or while you have that cold drink. Just Google rock paper scanner newsletter and you'll find us, or you can look in the show notes. We'll include it there. Thanks for listening, Trisha. This has been a blast. I always have fun with you. Who?
0:46:41 - Tristra
knows what next month will bring. Thanks for tolerating my wild forays into other realms. It's really, really fun to get a chance to go off a bit.
0:46:50 - Dmitri
Absolutely All right, we'll be back next week, thank you. Thanks for listening to Music Tectonics. If you like what you hear, please subscribe on your favorite podcast app. We have new episodes for you every week. Did you know we do free monthly online events that you, our lovely podcast listeners, can join? Find out more at musictectonics.com and, while you're there, look for the latest about our annual conference and sign up for our newsletter to get updates. Everything we do explores the seismic shifts that shake up music and technology, the way the earth's tectonic plates cause quakes and make mountains. Connect with music tectonics on Twitter, instagram and LinkedIn. That's my favorite platform. Connect with me, Dmitri Vietze, if you can spell it, we'll be back again next week, if not sooner.
Let us know what you think! Tweet @MusicTectonics, find us on LinkedIn, Facebook and Instagram, or connect with podcast host Dmitri Vietze on LinkedIn, Twitter, and Facebook.
The Music Tectonics podcast goes beneath the surface of the music industry to explore how technology is changing the way business gets done. Weekly episodes include interviews with music tech movers & shakers, deep dives into seismic shifts, and more.
Comments