Vickie Nauman - Music Software Law Product
Vickie Nauman specialises in digital media and content strategy, the intersection of technology and music, and international business development. She is the founder of consultancy CrossBorderWorks and advises forward-thinking companies in consumer electronics and music tech.
Nauman has a background that spans traditional and digital media - having launched the first DMCA compliant service at radio station KEXP in Seattle, led business development and integrations at SONOS, and spent almost 5 years as President of digital music B2B platform 7Digital. She’s a world-leading expert in the technologies, rights and finance behind the music tech sector.
Dubber Hi, I’m Andrew Dubber. I’m the director of Music Tech Fest, and this is the MTF Podcast. For every piece of music you hear these days, whether it’s streamed, downloaded, in your VR headset, or on some other format, there’s a piece of technology that got it to your ears. Technology that got it to your home, technology that got it to the distributor, technology that made it possible to even exist in the first place. And behind all those technologies are the people who make them. The people who run the companies, the people who do the deals and join the dots. Vickie Nauman has been one of those people since ‘these days’ became ‘these days’ back when we started moving music files over the internet. She’s been the President of 7Digital, the digital music provider that provides the digital music providers, and she’s also been in charge of connecting SONOS to all of the major music services so they can all sound nice all around your house.
These days she’s a consultant advising to new kinds of start-ups and platforms that use music. Platforms like Beat Saber, an immersive experience. It’s a bit like Guitar Hero, a bit like Asteroids, if you’re anything like as old as I am, and a lot like taking pop music and making it incredibly stressful by making it a life and death martial art. Now, Vickie’s an expert in music rights, in successful music entrepreneurship, and about joining the dots so that brilliant new ideas don’t get caught out in the minefield of copyright compliance. Of course, Vickie’s in lockdown, so I took the opportunity to chat with her about digital music, her career, and her advice for anyone who wants to carve out their own innovative path in music tech. From a house on a hill somewhere in Los Angeles, this is Vickie Nauman. Enjoy.
Dubber Vickie Nauman, thanks so much for joining us for the MTF Podcast today.
Vickie Thank you so much, I’m glad to be here.
Dubber You’re looking well. Is the lockdown agreeing with you?
Vickie Well, the lockdown… No, it is not agreeing with me. I’m trying to do a lot of things around my house and projects and what not to keep myself busy, but I really miss travelling. I really miss seeing friends and people all over the world and walking the streets of cities that are new to me. I’m going a little stir crazy, but work is good and busy, and so I can’t really complain. I’m healthy, and that’s all I can really ask for right now.
Dubber Your job is very much about moving things around on the internet, specifically music. Does that make what you do easier to do online? Or is actually going to places and meeting with people core to it?
Vickie Well, I feel like I can… One of the things that I love is having lots of plates spinning. I love talking and working with lots of different companies, and having my hands in pies, and being able to see that… You start to see trends because you’re up above the tree line, so you can see “Oh, there are two or three companies that are working on solving this similar problem over here, and then there’s two or three companies working in something on that problem over there.”. I can do that from home. I have lots and lots of people that come to me all the time, and I can clear rights, I can do all of these things, but I feel like it’s really industry events and these gatherings where I learn what’s really going on beneath the surface. And I feel like the industry events, for me, are more of a bellwether of what people are working on, and we don’t have that right now.
Dubber No, interesting. And are we likely to, do you think?
Vickie I don’t think we will. I think we’re going to be doing things online for a while, and I’ve been trying to participate in some of the… Doing some online panels and events. And it’s probably really good for people that want to join panels, and I’ve participated in those as well, watching people speaking about different topics, but it’s really different because you just don’t get the networking and you don’t get the little conversations in the hallways and over cocktails. But I think we’re going to have to make do with it for a while because in America we just can’t quite get the mask thing together.
Dubber Yeah, for sure. Let’s talk a little bit about where you’ve ended up first, and then we’ll talk a little bit about how you got there. So what you would describe yourself now is as a consultant, primarily, but you’ve had some pretty lofty titles. You were President of 7Digital, you were Business Development Manager for SONOS. These are big areas of responsibility for big, really important companies in music tech. Why? Why you, and why those sorts of jobs?
Vickie Well, it’s so fascinating, Andrew, because there have been points in my life where friends or colleagues have always told me “Why don’t you just go to work with this big, established company? Why are you doing all of these crazy things with companies we’ve never heard of?”. And I feel like, for me, I have a really different perspective on it because I feel like almost every job that I’ve had and every big project that I’ve worked on has been a building block, and I’ve been able to learn something really significant. Like going to SONOS in its early days, when I knew…
I had been at RealNetworks, I had worked on one of the first legally licensed services, I had built a DMCA compliant service in Seattle, but it wasn’t until I got to SONOS that I was able to take this piece that seemed to be missing for me, which was hardware, and put hardware, software, and content all together. And so that was a huge learning for me, and then to see the elegance of what happens to music when you get that equation right. And then that helped me at 7Digital, and working with other companies like Bose and whatnot, that I understood that hardware, software, content, and I understood that you sometimes have to order parts for your hardware 18 to 24 months in advance of when you’re shipping it which is an eternity in the software world. So all of these pieces seemed to me like they’re pieces of a puzzle that I’m slowly putting together over time.
Dubber So when it comes to business development for something like SONOS when it’s getting started, is that about doing the deals that allow, for instance, Spotify and Deezer and those sorts of things to integrate with the service?
Vickie Yeah, absolutely. One of the first things that I remember when I got hired at SONOS… There were only about 100 people in the company, and I was in Santa Barbara which is the headquarters, and it was really after a couple of weeks I thought “Why did they hire me? This doesn’t make any sense. Everyone else here is an engineer or a software, hardware, or they’ve come from that background, and I don’t really fit with the culture. I don’t really fit with people here.”. And then they said “Well, we’ve already integrated Rhapsody into our product.”, this was 2007, “But we want a Rhapsody-like service that covers the entire rest of the world, so we want you to go and find it.”, and I was like “Oh, okay. Well, I don’t need to go anywhere to tell you that there isn’t a service like Rhapsody that covers the entire world because of rights and because of all of these other problems.”.
But I did find Spotify when there were only 17 employees, and it was really fun. I can’t remember exactly how I had gotten Daniel Ek and Petra, who was the lawyer in doing licencing… I’d gotten their information, and I went up to Stockholm, and it was amazing to see it because it was just like any other start-up. Really small, little office in Stockholm. And so we started working with them.
But that was also one of the things at the time of doing business development in the music industry for a company like SONOS, that it’s both sides. I had to educate the people at SONOS that there are significant problems with rights, and rights infrastructure, that’s preventing these services from flourishing all over the world. So I had to educate them internally to set expectations, but then also go out and try to just find as many companies as possible, Deezer was in its early stages at that point, and then vetting them and figuring out “Are they licencing things properly? Are they going to be around?”. It’s a significant task to build something into your products, and so we had to try to vet them and figure out whether or not a company would actually be around in two years or not.
Dubber Right. Obviously, Spotify is a little bigger than 17 people these days. But what was the hard one? I use SONOS at home, and I struggled for a long time trying to get Audible, for instance, and that wasn’t about music rights.
Vickie Yeah, yeah. I know, exactly. Well, one of the things that we discovered really quickly when I was at SONOS was this was an era when APIs weren’t even really readily available. Rhapsody had an API at the time but it was still very nascent. And what we had done is, in the very first iteration, we had integrated these services into our firmware, so we hardcoded things into it. And we very quickly also realised “Oh, gosh. These streaming services are pushing out updates all the time.”. Making corrections, taking down content, doing all of these different things that affect the user experience in a very, very minor way in their own applications, but if you’re in an API and you’ve hardcoded something you have to push out a hard software update to do a correction.
So we started an initiative to build, essentially, our own API, and I project managed that. I called it Fender, was it’s codename, because I felt like it was like an instrument. It was a really critical instrument into an entire band. And that was a real gamechanger because it enabled the third parties of any type to build and integrate a user experience into SONOS, versus the other way around which was not scalable at all.
Dubber Right, right. Because the API of SONOS in terms of, for instance, the hacker community is also something I think they’ve struggled with a little bit. Of getting it out there, or making something that is hackable that is a hardware product that has to be sent out to market, that having an open API is a problem. So was there a restriction on that? It was just for particular services? How did that work?
Vickie Well, when we first started out we had very particular services in mind where we felt like, for us, it was really about having that technology that was a layer in between what we had and what our partners had, and that it was a way for us to onboard more services. It was also just a reality that we couldn’t possibly spend the time that we did when we integrated Rhapsody. The first services were Rhapsody, Pandora, and SiriusXM, and we spent a lot of time building this graphical user interface into SONOS Controller at the time, which was the only way that you could really access these things. We didn’t even have proliferation of smartphones at that time, which is so… I can’t remember what that was like.
Dubber It’s another world, isn’t it?
Vickie It’s another world. I can’t remember what that was like. But we knew that we couldn’t really scale, and we couldn’t reach. And I think a lot of this was as a result of all of my conversations, and I had travels all over the world, that we very quickly realised that there probably won’t be one service that’s going to be completely dominant. There will be many. And we couldn’t possibly create that many user experiences, so we needed to put it in their hands. But we also had to have enough traction to have an API that people would invest any time and energy in, and so it was really a matter of making sure everybody was aware of the opportunity of the living room as opposed to just mobile, and then getting them excited about integrating into our environment.
Dubber Right. Not to put too fine a point on it, but SONOS as a company has changed pretty radically since then. What are the…? Looking at it from the outside now, do you recognise it?
Vickie I hardly recognise it. I still use the products, and I’ve just recently gotten a couple of new SONOS products. And I think that in some senses, the company, to become publicly listed, needed a whole new leadership because I think the original founding leaders and some of the founding members… It wasn’t a company that was set on doing an IPO or exiting and selling to some other company. The founders really wanted to build it when I was there. And it was also a real pioneer, whereas now it’s competitive in this WiFi-connected speaker world with the Alexas and those truly smart speakers, and Bose, and some other players, as well as just Bluetooth.
This spring when they… I think it was maybe a year or so ago, last spring, when they announced that they were going to brick some of the older devices, for me that was like [shocked inhale], a stake in my heart, because those were the devices that I worked on ten years ago, and we basically told everyone “We will always support all of these devices. You buy them once, and we will continue to update them.”. I was really glad they walked that back because I don’t feel like that was the right status for the company to go back to all of the original buyers who were promised something.
Dubber Sure. And also to create, instantly, a whole lot of landfill.
Vickie And landfill, exactly. Exactly at a time when we say “This is wrong, and we should be retaining…”. Especially electronic devices that are just littering… They’re so toxic. I don’t know. When I still look at the landscape on this, home speaker systems, I still feel like this hasn’t completely been solved. And we’ve had so much innovation, but I feel like the home stereo where people really dedicate time listening to music has still not been re-established in the digital world. So I feel like there’s still a lot of room for SONOS, and Bose, and Harman Kardon, whoever else is trying to get into this space, to bring great music digitally all throughout our homes. It’s a very natural listening environment, and I feel like it needs its own dedicated music listening experience.
Dubber Is there an element of nostalgia in that for you, as there is for me? I’m a vinyl junkie, I’ve got records lining my walls here, and my record player is at least 35 years old. And so, for me, there’s a link to the past with the home listening experience. Do you have that as well, or are you very firmly fixed on the future?
Vickie To be honest, in this pandemic one of the things that I decided to do was I bought a turntable. And I have a small collection of vinyl, I gave most of mine away years and years ago. But I had a small collection of albums that I had saved that were really meaningful for me, from when I was a little kid all the way into probably my college years, so lots of things from the 80s. And I love listening to vinyl. It’s a different experience, and it’s also… I think that it wasn’t until I got this turntable and I listened to my old records that I realised “Yeah, there’s certain music that you just… If you’re going to listen on vinyl, you’re not going to listen to one song. You’re going to listen to an album.”. And so that in itself is a really different listening experience than what most people do in streaming services. I like the blend of both of them because the first time that I played an album on my turntable I was sitting on my balcony and I got a phone call, and the first thing I did was pick up my phone to pause the turntable. And then I realised “Oh my gosh, I can’t do that.”.
Dubber It wasn’t quite that sort of turntable.
Vickie Exactly, exactly. I think there’s some nostalgia for me, but I think there’s also something about the just… That I know the joy of having music playing really loudly in your home, and there’s something that it does to the human spirit. And that’s also why I feel like getting music in the home right is still something I’m really passionate about.
Dubber Sure. The passion comes through when you talk about the music, but what you do crosses over law, tech, music, music industry, business relationships. Where do you come into this from?
Vickie Yeah. When I was… I would say that ever since I started working in digital, which was 20 years ago now, I became really, really fascinated with all aspects of it. And at the outset I thought “Oh, I’ll just be… This new technology is going to be great. I’m going to go work at RealNetworks, and we’re going to build out this company, and we’re going to legalise this, and in five years we will be done.”, and it was radically different from that. And I started to see, I had come out of radio, that you get accustomed to having a road, and having a roadmap, and knowing the way. What’s regulated, what isn’t regulated, what the rules are, what the laws are. And what I loved about digital was that there were so many things that needed to be re-established, and that we were reinventing virtually everything.
And for me, it was like uncovering a piece where I thought it would be… Going into RealNetworks and MusicNet, which was one of the first legally licensed services, I thought “Oh, I don’t need to know that much about software. I’ll be the music person that manages the relationships.”. I was producer, so I was working on the P&L and… And very quickly, I got there, it’s like “Oh my gosh. I don’t know enough about software. I really need to up my game because I’m forever going to be asking developers to do things that are completely impossible to do if I don’t understand it.”. So it’s like “Okay, back to the drawing board. I need to learn about software.”. And so I actually left Real because I felt like “I’m not going to learn here.”. That was the year that RealNetworks’ stock went from $96 to $4, was the year that I joined the company, so I really, really did not get the timing right on that one.
Dubber Right. Because the RealPlayer was the standard of choice for a long time, and then it just went away.
Vickie Exactly, exactly. Well, and it was… At that time, the player, at that level, was really where the competition was, and so… Like Windows Media. There was Liquid Audio, and RealNetworks, RealPlayer, and then Windows Media came out. RealPlayer was paid, so if you were… All of your content was encoded in RealPlayer, you paid Real a subscription for that, for the encoding, everything, and then Windows Media came out and made it available for free which completely upset everything in the landscape. And from then on there was a lot of innovation around different media players, and I think Real still has a business in that in some territories, but that was a massive, massive shift in the landscape, to have all these different media players and audio formats.
Dubber For sure. But you also had to learn about the legalities of things. You had to learn about the way business works in establishing those relationships between organisations. It’s a complex world, the world of digital rights.
Vickie It is. It’s a set of rights, and relationships, and norms, and it’s this multifaceted piece. And I feel like it was really when I built the first DMCA compliant service… That was at KEXP in Seattle which was this taste-making station that had gotten some funding from Paul Allen in Vulcan, and so I went there after Real, and that was when I read the DMCA. It wasn’t yet enforced because this was 2001 to 2004. It wasn’t enforced yet, SoundExchange was just being set up, and I realised… We’d started going through the law and started to see “Okay, what are the rules of what we can play?” because if you’re a radio station, sometimes you might want to play ten songs from Sonic Youth, or whomever, and under the DMCA you can do that on broadcast but you can’t do that on streaming. And there were all these rules that were in place in the early DMCA services that were designed to prevent people from using these new streaming services as a replacement for CDs, so you couldn’t search and play on-demand, but there are all these rules of interactivity.
But one of the things that we discovered as we looked into the law and we said “Okay. Well, there’s a two week rule where we can record everything that’s made available on our broadcast so we can live stream it, but we can also record and make it available on demand. That’s really interesting.”. And then we went further into that and I discovered you can’t search and play things by name of artist and by track. But we were doing everything by program, so we could timestamp this audio file that we recorded and then we could allow people to go back and listen to entire programs on demand, which is really what we wanted so that if you love the African music show on Monday night but you weren’t available to get it, you could listen to it Tuesday. That was a crazy innovation at the time, and we were able to do it within the DMCA, and that was when I realised “Okay, if I understand how to build software and I understand how the law works then I can figure out how to make products.”, and once you can figure out how to make legal products in music then you don’t have all these problems of building things, and then you’ve built everything illegally.
But then the next big thing was the rights and the relationships, and figuring out “How do you actually get things across the finish line when you need to license them?”. I look at what I did at 7Digital of just licensing almost every imaginable business model. On-demand streaming, subscriptions, tethered downloads, hard bundles, soft bundles with telcos. DMCA compliant services. More interactive but not yet fully interactive. And I was really burned out when I left 7Digital just because I felt like it was like Sisyphus. I just kept pushing this rock up the hill and it kept rolling back down.
But now I look back at the SONOS and the 7Digital pieces and they’re so significant, and they’ve enabled me now in my consulting business to make pretty good choices about the kinds of companies that I work with because I’ve done this a lot. That I can quickly assess young companies on “Do they have a good idea? Do they have the wherewithal to be able to build a product? Do they have the ability to raise money? Will an investor look at them and say ‘Yeah, I want to put money into this’?”. And then enterprise companies, I can evaluate them of “Why does company X want to do this initiative with music? Do they have a champion inside that understands the risks and the potential? And do they have backing?”.
And almost everybody has incorrect assumptions about what they think they need to do from a rights standpoint. They think they know “Oh, we only need to license the performing rights organisations.”, or “We think we should be able to do this.”, and so there’s always this moment where I feel like I’m about to deliver really bad news to you. But you have to be resilient, you have to be flexible in music. And you want to have your north star that you’re driving toward, but how you get there, because you’re using the intellectual property of labels, and publishers, and songwriters, and artists, you’re much better off if you scope and figure that out from the outset than if you… The whole “Ask for forgiveness.” almost always turns out badly.
Dubber That ship has sailed, hasn’t it?
Vickie It really has, but it is surprising how many people still… Once they understand the complexity of licenses, that’s where they always get to that point where they’re like “You know what? We just don’t want to deal with all of this, so we think we’d like to just plough forward and launch and not be licensed, and we’ll deal with it later.”. And so it still happens now just because… It seems like it’s almost romantic, that “We’re going to build something and everyone’s going to love it, and then they’ll all come to us and it’ll be kumbaya, and then we’ll get rights and we’ll move forward.”, but it really doesn’t work that way. If you’ve infringed in the past then when you are at the negotiating table you have to clean up your past and you have to figure out the future. You’re not in a great position to inspire anybody at that point.
Dubber It does, from the outside, look like it’s all set up to prevent stuff from happening, to stop innovation, to squash new ideas, because it seems like the motivation is “We now understand what’s going on now. We’re okay with this, we can deal with it, and we can make money at it, but new stuff freaks us out.”. Is that still what’s going on with the music industry?
Vickie I think it looks like that from the outside, and I think that it looks like this big, chaotic, Blade Runner-like world that people look at and they’re like “I don’t understand the difference between a management company and a label, and a distributor and a label, and what’s a publisher versus a publishing administration company? And why is there performing rights over here and money’s going to the same place if we…?”. It just is this chaos, but I feel like that’s part of what I love, is being able to take an idea, a concept that a technology company or someone in adjacent industry to this, a finance company, a tech company, they have an idea, and then to break that down and figure out “Okay. How can I matchmake to the right people in the industry and figure out ‘Who do we need to talk to? Who are great partners?’”.
And this is a relationship-driven business, so it’s also, depending on the kind of product or idea that an entrepreneur has and wants to engage with music, sometimes you’re like “Well, 75% of the industry might not be right for you, but there could be 25%, the right artists, the right label, the right…”, sometimes it comes down to “I know there’s a guy who’s really… He’s been tasked with innovation at one of the major labels, and he would love this. Let’s start with him.”. And so, for me, it’s like translating ideas on both sides to common language because these sides do not speak the same language. They don’t understand each other’s business incentives. Breaking that down and then finding people who are going to be really receptive to the idea.
Dubber I’m wondering how much scope there is for new ideas about getting catalogue from music companies to people who want to listen to music.
Vickie Well, I feel like being $9.99 a month, on-demand streaming, that… I don’t know why anyone would want to get into that.
Dubber I feel like we’ve solved that one, haven’t we?
Vickie Well, we’ve solved it, and it is the most expensive set of rights. And on top of that, the software, the development of taking 30 to 50 million songs and organising them into a UI for people, and optimizing that for mobile and web in all different countries, and backwards compatible into Android and iOS… The tech stack is high, the rights stack is high, and the money… We have some of the most well-capitalised companies in the world that are offering this product, so I feel like I’m really not that bullish about more companies entering in anything to do with this. I feel like that’s going to be a battle to the death. Let all of these companies go. And they’re all morphing and innovating in their own experience.
But I look at this like the pyramid of music where the streaming services are largely like radio, they’re the foundation for this, and what are those higher-value goods and things that we can build on top? That pyramid at the top where it’s not necessarily about accessing 30 million songs, it’s probably about a really special experience or artists that you really care about, and so I think that’s music being integrated into more artist-centric things. There’s an explosion right now around live streaming, and virtual concerts, and ways to use technologies to bring the live performance into the home. Super excited about that. All of the labels and publishers are very open to that. Gaming… I’ve been working with company Beat Saber for the last couple of years, and they were acquired by Oculus, so I’m working with Beat Saber and Oculus clearing music for that. We’ve had tremendous support from labels and publishers.
And so I think that once streaming… For almost 15 years everyone was working to achieve streaming adoption. That happened, and now it’s like “Okay. What’s next?”, and most of the major labels have people that are specifically tasked with figuring that out, and they’re usually young people who embrace and are not embarrassed or intimidated by technology. And I think augmented reality, virtual reality, all of these kinds of very deep, immersive experiences, and gaming, that’s where I’m focussed.
Dubber Is AI going to throw a spanner in the works?
Vickie I feel like AI is going to end up just being a tool. It’s going to be a tool that helps people… Songwriters are using all sorts of different AI software to help them break through writer’s blocks. It’s not replacing songwriters, but people are using tools. And then I think, from a business standpoint, of recommendations, and understanding and machine learning about all sorts of different aspects of music. I think AI is going to be a huge part of it. I don’t personally think that we’re going to have an AI industry any time soon, but I do feel like it’s an important tool.
Dubber What about AI that doesn’t create music but is trained on listening to large catalogues of it? What are the implications of that, do you think?
Vickie Yeah. I think that we haven’t even really… I don’t even feel like we’ve seen the potential of AI and machine learning and these… AI and these problems that they might be able to solve when we are considering the fact that music used to be this high-touch, white glove, and now we have 50 million plus songs that are available and everything, where it’s beyond human capabilities to manage all of this. So I feel like we do need tools, and we need not just data tools but we need tools that are going to help humans curate and help humans make sense of all of this. So I feel like there’s a lot of potential for using AI in a way that doesn’t completely disrespect music. I think it’s interesting, there are all sorts of different AI start-ups that are around creating music, but I feel like I’m much more interested in things that are tools because we need more sophisticated tools in the industry right now.
Dubber Sure. And it feels like… For instance, you mentioned Beat Saber before which is very much a way of experiencing music that we haven’t seen before. It makes pop music stressful. But do you think that that sort of experience for the user is something that’s a place for innovation?
Vickie I really do because I think that whenever I’m involved in a project I always look at “Is this going to be meaningful to the consumer? Is it going to be meaningful to labels and publishers?”, and it’s hard to get both of those things correct because often times adoption is a lot slower because of all these big tethered relationships in music, and so sometimes things take longer. But I really believe that for most streaming services, if you’re listening on your mobile phone and you’re commuting you might be having a music-first experience, but for the most part a lot of music streaming is now running in the background. It’s my audio wallpaper. It’s the thing that accompanies me while I cook, and I work in my garden, and I go about my daily tasks.
Dubber It’s radio.
Vickie Yeah. But I feel like the power of music, especially when you think about live music, is that you are there and you’re immersed in it. And I don’t think we will ever necessarily completely replace live because there’s something about the human experience, I think, of being in the same room with people, the excitement, the tension, everything is there. But I do feel like there are all sorts of experiences that we can build with technology that get us close, and Beat Saber’s one of them. If I play Beat Saber and I’m listening to an Imagine Dragons song and I’m playing to that, or playing a Green Day song, I will have that song bouncing around my brain for days, and I hear it differently, and I experience it differently, and I think that’s really where I feel like the next horizon is. Is it about really bespoke games, and platforms, and experiences?
Music for running, music for fitness, I think is also another area where I’m really excited. I feel like this pandemic has proven that we can do a lot of things at home like work and exercise that everyone just said “Oh, no. You have to go to an office and you have to go to a gym.”. But that’s changing, and I feel like music is a part of all of these things.
Dubber The new experiences that come up bring their own issues, but there are some issues which are common to all of them. What are the really big issues in music tech?
Vickie Well, I still feel like a really big and longstanding issue is tech companies come up with an idea of what they want to do with music, and they’ve got it in their head, they’ve vetted it in their minds, and then it comes to what they need from a rights infrastructure in order to do that. And I think Peloton is a really good example of that where they’ve now had to scale back and remove some videos. But when you want to go and you want to have every song that’s ever available, and you want to make a recording of something associated with that song, and maybe you even want to change the speed, and you need sync rights, and you need public performance rights, and you need all of these different rights and you don’t know who owns what, it can just cause this massive collision of you being able to execute on your business idea. And then it becomes something where you’re in a hurry and you’re in a rush when you’re talking to the labels and the publishers, and that’s never a good position to be in.
And I feel like if you start from the beginning and you say “Ultimately, in two years we want to have a catalogue where we have all of our own direct licences and we have access to a highly curated catalogue of 10,000 songs from all different artists, all different labels.”, maybe that’s a north star, it’s like “Great. Well, if you’re a start-up maybe you don’t need that at the beginning. Maybe that isn’t your MVP. Maybe your music MVP is something smaller, and that you build the right model, you build the right infrastructure, and you get it right from the beginning with a smaller group of artists or maybe a small collection of music and then you can gradually build and grow that over time.”. That obviously doesn’t work for an all you can eat, access everything, where you need everything from everyone, but most companies that I think are operating at the top of the pyramid, or that will be operating at the top of the pyramid, don’t need everything.
So I feel like there has been an opening of the mind from labels as well, and that in addition to tech companies saying “We see music as this great thing to integrate and help us engage with fans, and we want to build the next big thing.”, I think that labels have also seen that streaming is here, and it’s here to stay, but what is that next thing? And honestly, I think that having Marshmello do the set in Fortnite a year and a half or so ago, I feel like that was really significant because it wasn’t so much that labels saw it as “Oh, there’s a way for us to make money.”, but in the A&R and the marketing world they see “Okay, so you can do one set and reach 10 million people? Mind blown.”.
And I’ve been one of these people saying to music for years “Look at gaming. It’s bigger than music and film combined. Lots of free to play and in-app purchasing.”. And there aren’t that many opportunities for music and the gaming industry to work together, so when we do have a few of these, and I think that bringing artist’s live performances to life inside gaming environments, and just music itself, I feel like that’s where it is golden. And so I think that any tech entrepreneurs that might be listening to this, I feel like I don’t want to be discouraging because I feel like people oftentimes feel like “Oh, we can never get the labels on board, and it’s going to be too hard.”, but it really isn’t. If you take a thoughtful approach you can do it.
Dubber Can you reassure the tech entrepreneurs that the labels have sorted out their metadata now?
Vickie Oh, we’re out of time.
Dubber That is the big problem now, isn’t it?
Vickie It’s still a really big problem, and now it’s actually… I feel like on the master recording side, because of DDEX and because of creating some standardisation about getting things from label servers into DSP servers via DDEX standards, adopting standards… It’s not perfect. There’s all sorts of different versions of it, and some have forked into slightly different interpretations of a standard. For all intents and purposes metadata has largely gotten onto a track where it is being cleaned up. It’s not perfect, and there’s still all sorts of problems around issuing ISRC codes differently in different countries, and having duplicates, and having all sorts of misspellings, but I think that there’s been a concerted effort over, really, 15 years to solve this problem.
I remember when I was at 7Digital and we would take in licences and music from all over the world, and it was a nightmare because everything was non-standardised, down to even the format, and the bitrate, and metadata schema, and how basic fields are populated. I remember at one point we had one of the labels that was issuing a different ISRC code for all of their releases that were at uncompressed quality, so you would end up having an ISRC code, which is supposed to be attached to the actual sound recording, but they would have different ISRC codes for a 128 MP3, and then 275, and then uncompressed. And so it was things like that.
Dubber Right, because this is supposed to be the unique identifier that says “This is this song and not any other song.”, right?
Dubber Right, yeah. And the same song at a different rate is now a different song.
Vickie And so we’ve seen things like that getting cleaned up. And now we’ve got publishing, and publishing is exponentially worse because for every one song on the master side there’s one owner, for every song on the publishing side there’s nine or ten, and so you don’t have just 50 million identifiers, you have 500 million identifiers that are all associated with the composition but they’re splits of ownership. And so this is part of the industry’s leaky bucket where there’s a lot of money that is travelling between end consumers, and licensees, and through all these different partners, but at every point along the way if you don’t match and you aren’t able to reconcile that this song was streamed, and all ten of these rights holders need to get paid, and then it needs to go through all of those channels, that’s where money just falls out. And sometimes it goes into the black box which can get settled of unattributed revenues, but there’s also money that never even makes it there because it’s caught in conflict and it’s caught in disputes about ownership or some other kinds of problems, and so it’s just money that’s due to songwriters that is just…
I like to use the metaphor that if you have your garden in the back yard and you go to your front yard, you fill up your watering bucket, and then you have a leak in the bucket by the time you get to your garden, it’s mostly gone. And you say “Well, where did that go?”, it’s like “Well, it’s everywhere between here and there, and you can’t go and pick it back up.”. That’s the way the royalties are with music publishing, and it’s being sorted out.
We have the MLC, which is Mechanical Licensing Collective in the US, and then Music Modernization Act. I’m hopeful that this piece of legislation and the MLC will be a catalyst for companies around the world that have publishing data to start sharing data and not storing it in silos, and start reconciling it. There’s a lot of international publishers and writers that I think are losing money in the US that they will benefit by participating in getting clean data in on the publishing side. But there’s no… I don’t really see an end in sight to what we need to do to clean all of this up because we have the proliferation of creators and the proliferation of releases happening at the same time that we’re trying to clean everything up, so it’s going to be a long haul. But things are going in the right direction.
Dubber Sure. But there’s probably a group of people with a vested interest in putting holes in buckets and making sure that they’re underneath as they go past.
Vickie Well, that’s exactly right. There’s a secondary industry around breakage and around not having accurate data because if you don’t know who to pay then you don’t have to pay them. But one of the things that I think is encouraging in this space is that I think the word is out now that there are problems in this regard, and that artists and actual composers, they’re the ones that are really missing out. And that publishers, smaller publishers, are missing out. So I think that there’s been an eye-opening that companies that don’t have good systems are probably not going to be the best choice if you’re an artist or a writer, and so it’s becoming a little bit more of a competitive advantage for companies to be able to say to artists of all sorts that we have good systems, and that we can handle the volume, and we can handle the micropayments in terabytes that are coming to us. And I feel like that is where the industry really changes. The industry doesn’t change because a tech entrepreneur has a new idea. The industry changes when they see that they need to put on a different face and a different pitch to artists and to songwriters because that’s really the lifeblood there. And I feel like the more that we can educate artists and songwriters about what they should expect from a label or publisher, and what they need to do for their own careers, the better we are at solving some of the problems.
Dubber A lot of the online discourse around this sort of thing is that the artists are these embattled victims of this system and then there are these monolithic baddies, whether it’s the streaming services, or the major record labels, or… Is the story more complicated than that? Or is it more interesting than that? Or is it just that there are people who have set up these monolithic organisations to ensure that artists just don’t get their money?
Vickie Well, I feel like labels and publishers to a certain extent are almost like venture capitalists where they’re going to make a lot of bets, and they’re going to invest money in high-risk situations where they’re going to invest in… Ideally, they find someone who is early in their career and has not yet broken, and that they have the opportunity to shape that artist’s career, and that’s the same as what VCs do with start-ups. And so you might have 20 different signings on the label or publishing side and two or three break. That’s pretty good odds for you as an investor, but if you’re one of the three that break as an artist it’s great, if you’re one of the 17 and you don’t get what you need, or you get shelved, or whatever, that’s not particularly pleasant.
But I feel like right now the artists have so many choices, whether you’re a songwriter or a performing artist, you have so many choices about what you want to do. Whether you want to sign with a label or publisher or whether you don’t, whether you want to own all of your rights, whether you want to have a team around you, whether you want to go it solo, how you engage with your fans, how you release your music, when you release your music. You can do anything you want. There’s so many choices for artists, and I think artists have a lot more power than they may realise. If you’re up and coming you can map out your own path, and we’re seeing, I think, a different generation of creators now that are digital natives. They understand everything. They’re not used to having, necessarily, a huge team around them until the right time.
But at the opposite end of the spectrum we also have Taylor Swift, who was able to sign a deal with Universal Music that enabled her to retain some ownership and some control of her own masters, and that’s a phenomenal thing that would not have happened even a few years ago. So I feel like we’re seeing on both ends of the spectrum, of the half a percent of artists at the top as well as the artists that are just coming out of the bedroom, that we’re seeing that they have much more control and more influence over their own careers, and it’s just really a matter of deciding which lane you want to be in.
Dubber It’s 2020. Do you find yourself still having conversations about blockchain?
Vickie There are still some conversations about blockchain, but I feel similarly about blockchain as I do with AI. I feel like blockchain, it’s an enabling technology. Blockchain is never going to completely replace labels and publishers and completely democratise things. Everybody who was out saying that a few years ago… I understand, you see the technology has a capability of it, but this industry will never, ever be completely disrupted by that because it’s all private. Everything is so private. But blockchain can be an incredible tool.
And when you think about some of the metadata problems that we have where music gets released from an artist, goes to a label, and then it gets distributed to DSPs, and then out to rights management companies to match with sound recordings to underlying publishing, and we’ve got data flying around at so many different touchpoints that when you send it out at point A, by the time it comes back to you at point Z something has changed, and that no one knows where in the chain a field has changed. A title may have changed, some other identifier is different or has been appended or modified. This happens all the time. And so I think just in this one instance if you think about permanence of data, and that if we had permanence of data where we weren’t allowing all of these different touchpoints to change, that blockchain has a role and has a function there. It isn’t about, necessarily, licencing, it isn’t necessarily about disrupting and disintermediating, but it is a tool to be able to help manage the massive number of transactions and modifications that are happening.
Or I think another really good example is change of ownership. When someone buys and sells a catalogue, or you buy and sell splits and associated ownership of songs… That if you’re acquiring a publishing catalogue or you’re acquiring a master catalogue, that in the DSP world normally if a catalogue changes ownership everything has to be taken down at the DSP. So they say “Okay, we sold our sound recordings from Sony to Beggars.”, and then everything that was on Sony, that was that catalogue, has to get ripped down. And that means even in the DSPs the number of plays that you have, the fans, your subscribers, all of the data in that front end, all of that goes away with those sound recordings. And then it comes and gets re-ingested from no longer Sony but now from Beggars with several fields that have changed, and then you have to have the DSP rebuild everything on the front end.
Dubber Right. By DSP you mean the people who are supplying the likes of Spotify, and Deezer, and those sorts of people with the content.
Vickie No, a DSP I mean like a Spotify, or Apple, or Pandora.
Vickie And that there’s a long-standing practice where they take everything down and then you reupload. And there’s a lot of work, a lot of wasted time and energy around that, and I feel like that’s a really good example of where blockchain could be very useful. It doesn’t mean the blockchain revolution, but it means that if we could just keep that music up there but have permanence of data where we say “Yes, on August 18th it changed from Sony ownership to Beggars ownership. Let’s just change that field. Then we don’t have to take everything down, we don’t have to take the sound recordings down, we don’t have to do any of that.”. So I feel like there are things like that where when you get down to understanding the tech and you get down to understanding the problems there are some solutions there.
Dubber Now, we met in Norway. Do you want to tell me a little bit about what happens in Kristiansand? Because that seems like an important gathering, and not a big public one like a Midem or a South by Southwest.
Vickie Exactly. No, I absolutely love Kristiansand. And part of it is the people who gather there who are generally… You don’t have lawyers representing Google and Amazon in the room. It’s not a huge anonymous group. It’s a small group of very passionate people from all over the world who are thinking about everything from an artist’s standpoint and from a creators standpoint of… If you look at the industry and you say “Oh, here’s labels, publishers, DSPs, distributors, there’s the whole ecosystem.” it kind of makes sense. If you’re an artist and you say “I’m going to create a song and I’m going to put it out.”, that same ecosystem has a very, very different view. And so we look at things around “What is really happening so that artists understand the landscape? What are the cultural differences? What are the territorial differences? What is really going on in some of these legacy organisations that don’t have the right technologies?”. And it’s just a group of people who really, really care about the landscape. I think one year, and it may have been the year that you were there, we got onto blockchain which was such a huge mistake because it was a group of non-technologists talking about blockchain.
Dubber Sure. There was an IBM guy in the room, to be fair. There was somebody who knew their stuff.
Vickie Yes, that’s right. There was an IBM guy in the room. But a lot of the people I feel like… We don’t need to have everybody in the world become a blockchain and distributive ledger expert, but I think that knowing enough to have an informed decision of whether something is good or bad and why I think is important. But I think the gathering in Kristiansand is… I love that it’s in Norway. It’s just a small group of people who are really, really passionate about how the industry is evolving. And as an American it’s especially valuable to me because I feel like in the U.S. so much of this is just around “How can you build a tech company that’s going to be big, and you can scale, and you can exit?”, and it’s very much a commercial view of the industry, whereas in Norway it isn’t. It’s much more nuanced.
Dubber Right. And I feel like when we have these conversations about big industry, and rights, and streaming, and these sorts of things, what we think of is the Anglo-American popular music industry, but actually what’s at stake is a lot bigger than that. There’s stuff from all over the world in different languages and even character sets for the metadata. Is global music becoming more global?
Vickie I think it is becoming more global, and I think that the… At the last Kristiansand roundtable that I went to there were a couple of people that also were doing really interesting things of looking at… Especially in Europe where you have a lot of small countries that overlap and that people frequently travel and live in between different countries, and how differently your music recommendations are if you’re in Denmark versus Germany, and what that means for local repertoire, and what get’s surfaced, and what’s associated with your listening behaviour. That was really, really fascinating because I feel like we don’t want the industry to evolve to a point where everything is so standardised around the world that we don’t have the local flavours. But it was really fascinating to look at screenshots of how different the different recommendations, going granularly down into different categories of local artists and international artists, of how varied that is from country to country.
Dubber Is this getting better, or is it just getting more complicated?
Vickie Well, I think it’s both. Actually, I feel like it’s getting more complicated at the same time, and I think that for the number of songs that are being released, the globalisation of music… No one could have predicted that BTS and some of these K-pop bands would be as wildly popular, in their own native language, and around the world, when that flew in the face of everything that artists had always been told. “You always have to sing it in English”, and “You have to adapt to what the other cultures want.”. I feel like we are having this really big global explosion, but what happens with that is that the problems just keep taking on different dimensions, and so we have to fix things and build new systems while we’re riding the horse, basically. And I feel like…
I look at things a lot from the business side, and from the willingness to do business, and engage, and have some shared skin in the game. I feel like that is getting better, and I feel like the gaps between the tech industry and the music industry are slightly narrowing. And I think some of that is because we’ve had people at music labels go work at Pandora, or Spotify, or whatever, and then come back, so they’re sharing knowledge of different perspectives on the same industry.
Dubber Right. And is it fun?
Vickie It is really fun. I’m having a blast. Despite the pandemic and everything else that’s going on, I feel like the… We’re having an acceleration right now of innovation, and I think some of that is because in the past all these technologies have been available but we’ve had probably some resistance to doing anything that’s going to make live performances online be more meaningful because everyone wants to protect this huge cash cow of live touring. So I feel like the pandemic is accelerating innovation. Not just in that, but fitness, and using music for fitness companies in the home. For dance, for rowing, for yoga, cycling, all of these different things. And gaming, and live performance, and there’s an acceleration right now to build really meaningful applications and use music in them. And so, to me, it feels like a really, really fun wave to be riding at the moment.
Dubber Fantastic. It sounds really optimistic and really energising, so it’s quite a nice place to leave it. Vickie, thanks so much for your time today.
Vickie Thank you so much, this has been my pleasure. And I appreciate the thoughtful questions as well.
Dubber Thank you.
Vickie Thanks so much.
Dubber That’s music tech expert and consultant Vickie Nauman, and that’s the MTF Podcast. I’m Andrew Dubber. If you want to follow me on Twitter you can find me @dubber, and Music Tech Fest is @MusicTechFest, all one word. The MTF Podcast is out every Friday, so if you haven’t already you can subscribe on Apple Podcasts, Overcast, Spotify, or whatever your favourite podcast app might be. And if you like what you hear you can share, rate, and review us, it really helps other people who might be into this sort of thing to find us.
Don’t forget we’re still doing the whole wash your hands thing. Make sure you’re also wearing a mask, some VR goggles, and a pair of headphones, so you can be safe, be healthy, have a great week, and we’ll talk soon. Cheers.