Cliff Fluet - Counsel for the Disruptive
Transcript
Dubber Hi, I’m Andrew Dubber. I’m the director of Music Tech Fest, and this is the MTF Podcast. Cliff Fluet is not just a music tech lawyer, he’s pretty much the music tech lawyer, certainly in the London context. He’s been at law firm Lewis Silkin as a partner since 2006, and he specialises in the music industry. Music tech brands, intellectual property, entertainment, and innovation. He’s also Managing Director of Eleven, an advisory firm for businesses working at the intersection of media and digital technologies.
Cliff’s a digital strategy guy, and he’s an advisor to some of the world’s biggest names in digital, mobile, social media, brands, music, live events, and in the online space. He also works pretty closely with some future-facing businesses and investors in the areas of artificial intelligence, blockchain and cryptography, and social and immersive video. But ultimately, he’s a music fan and a tech enthusiast who became a lawyer, and he joins me on the MTF Podcast today to talk about that journey, as well as some of the critical issues facing the music tech sector right now. From London, counsel for the disruptive, Cliff Fluet. Enjoy.
Dubber Cliff Fluet, thanks so much for joining us for the MTF Podcast today. How are you doing?
Cliff I’m very well. Thank you again for the invite, Andrew.
Dubber You’re very, very welcome. So you’re a… Well, described as a digital lawyer. It’s not you that’s digital, let me just get that clear.
Cliff Yeah. So I’m a digital media lawyer, is the way that I would describe myself. So pretty much the entirety of my career has spanned the arrival of digital music. So digital media is the way. But the other way, though, is that I do also describe myself as barely legal these days, Andrew, because a lot of the work I do now is much more about the commercial and strategic side of things and with regard to investment and fundraising and things like that. But I worked out that barely legal has other connotations as well.
Dubber Yeah, I wouldn’t put that on a T-shirt, certainly. But let’s start with music. Why is music interesting to you? Where does that come from?
Cliff Well, I grew up utterly, utterly passionate and music obsessed. Part of that, I think, was by virtue of my circumstances. So to quote Steve Martin in The Jerk, I was raised a poor black child. I lived on the equivalent of a council estate, or the projects, for those who are listening in the USA, in the top of a tower block. And, actually, my access to media was essentially through a radio.
And I found myself in some rather bizarre circumstances having to defend one of my clients, who have built a music tech ecosystem in London, from planning laws, because they believed that building more music studios was somehow to do with a real middle class thing or an upper class thing and was the stuff of the privileged, and I was explaining to this guy that music’s one of the only things that I had equal access to princes and dukes to via the radio. If you’re poor, you can’t go and see the opera, you can’t go out and see theatre, you don’t even have the opportunity, or a car, or access to go to museums, but music’s one of those things that, growing up, infused all of my life.
And then when I found myself ending up working in the music industry, or the chance to work in the music industry, it was something I had to grab with both hands. And I thought it was going to be a two-year experiment, but it’s close to 25 years now I’ve been doing this craziness, Andrew.
Dubber So what happened 25 years ago? What is it, exactly, that you got into?
Cliff So the way I put it is… So I decided that, where I worked, you could be on one side of the law or the other side of the law based on where I grew up, which was your path to escape. So I had this crazy idea that I wanted to be a lawyer. That if life was a game, law was the rules, and the good way of winning the game would be to learn the rules. So I went to Warwick University to study law, where they have an offbeat and left-wing, in all sorts of ways, left brain and left-wing way of looking at the law, which is from a contextual aspect. So at other universities, you go and study what the law is, and at Warwick you understand why the law is. And, spoiler alert, that has a very long root into the rest of my career.
But one of the core differentiators about law is it is not a law of nature, it is not a law of science, and it’s not a law of god, i.e. it’s made up by men as they go along. And I still get to meet lots and lots of people in their lives who just say “Well, the law says this.”. I go “Well, the law doesn’t say anything. The law is applied and construed and interpreted, it doesn’t say anything.”. And then, actually, in many ways you can bend it to your will. So that, very much, has a lot of how I did the rest of my career, which is essentially understanding that the law does not stand still, and it has to catch up, particularly when it comes to music technology.
So 30 years ago, I’m starting my university. I’ve never been out of London very much. I’m a couple of years in. I didn’t have lawyers in my family. I didn’t get to do work experience at places or anything like that with family friends. And outside my lecture hall, I had a conversation with three other lawyers… Well, law students. We were not lawyers. We were anything but lawyers. Where somebody told me that there were these lawyers who in their offices had fridges with beer in it, and they were lawyers at record companies. I was like “Why does a record company need lawyers?”, like “Well, you know, artist contracts and stuff.”.
Flash forward to 25 years ago, I’ve now qualified to be a lawyer. I have decided that I’m going to become a real estate lawyer, of all things. I’m going to be a property lawyer, and that’s what I’m going to do for the rest of my life. And I picked up my roommate’s copy of The Times at 3 a.m., stuck on a boring transaction, and I saw an ad for a job at a record company, and I thought “Huh. I wonder if they’ve got those fridges?”.
So I applied, and after a six month period I got the job. I spent the first interview at the record company craning over to see if they… Yeah, but the fridge was there. So it’s all to do with beer, really. But also, they asked me “Why do you want to work in this world?”, and I’m like “Are you kidding? I grew up the world’s biggest fan of Prince, I was a huge fan of The Smiths, I was a huge fan of R.E.M.”, and for me it was like a shining area of Camelot. And that was it. I got to apply my skills as a lawyer in business affairs at a major record company, at Warner Music, and I had the time of my life.
Dubber Wow, fantastic. So, just out of curiosity, what sort of artist contracts did you work on?
Cliff Oh, well, my role… So ultimately I was head of business affairs for what they call the central division. So there were two front line labels, which are now currently Warner Records and Atlantic, were then WEA and East West, but exactly the same, and my role is I looked after everything else. So I used to look after the cool indie labels in the UK, like Blanco y Negro and Rough Trade, Eternal Records, and anything that was weird and wonderful came my way. I also looked after a lot of the U.S. artists in the UK, so I got to work with the likes of R.E.M. and Madonna and contractual stuff about Prince, and any kind of litigation. I got to work on sync and premiums and Warner Special Products and compilations. And then in 1997, this thing called the internet arrived, and that landed on my lap. And a lot of people saw it like a grenade and ran away, and I ran straight towards it, and that’s what I wanted to do.
Dubber You would have been atypical in that respect, from the point of view of somebody who’s working in the intersection of record industry and law and you’re not building barricades up to the internet. When you say you ran towards it, what did you actually do?
Cliff Well, I think that one of the great myths of the music industry was they didn’t see it coming, and as someone who was there, we absolutely saw it coming. I was involved in some extraordinary conversations. Some of the first conversations with Apple, some of the first conversations with Amazon, some of the first conversations with Napster. Every single person that wanted to be able to digitise their business. The retailers, the likes of MTV, all of these guys, I had conversations with every single one of them. We knew exactly what was coming.
And, in fact, on my very first day, the wonderful guy who hired me, my friend, my mentor, chap by the name of Fran Nevrkla, said to me… I said “Why did you hire me? I’m a property lawyer.”, and he said “One, you love music. That’s all I want. I want a smart person who loves music. And two, it’s because I don’t want anyone who thinks like it used to be, because everything is going to change. It’s not going to be about bits of plastic, it’s going to be about bits and bytes, and there will be a celestial jukebox where you’ll be able to pull down all of your music at will.”. And that was on my first day at Warner Music.
So people knew, Andrew, despite the fact that retrospectively all of this was a terrible surprise. What they were trying to do was hang on to their business model, and also understand and want to hang on to the control element of intellectual property. And control is only one element of intellectual property, another one is remuneration. So, actually, I was the deal maker trying to get these things done. But it was my job that came in from Warner Music International, or Warner Music in the States, “Don’t do this, don’t do this, don’t do this.”. And the reason is, is they weren’t stupid and they weren’t bad and they weren’t corrupt, or any of these things coming into it, they were just trying to make sure they could hang on to where they are right now. And I see it in a lot of the work that I’m doing now. I can see it in relation to retail, I can see it in relation to print. It’s exactly the same issues. I can see it in relation to banks and how they respond to something like blockchain or bitcoin. I see it how any kind of disruptive influence comes along and people just want to hold on to their existing business model.
At exactly the same time, Reed Hastings and Ted Sarandos at Netflix went to the guys at Blockbuster and said “Let’s do a deal. We’ll do your digital stuff, you do that.”, and they were told exactly where to go. And then two years later, Blockbuster did everything they could to try and copy Netflix. They knew where it was going. What they didn’t want to do was let up the control.
And, for me, whenever you release the break on control but you actually apply licencing, everyone makes more money. There’s no recorded example of that not happening in the music industry. Every single time they’ve tried to shut it down, every time they’ve tried to push against the tide, every time they’ve tried to control something, it’s never worked. In my office, I remember those gone days, I have a wonderful gold lithograph of the front cover of Thom Yorke’s album The Eraser, and it’s King Canute done in a stylised fashion holding back the water, and I have that there as my totem. That was what the music industry was trying to do. It was trying to hold back the tide, and it didn’t work.
Dubber Right. The Betamax case aside, the music industry was the canary in the coal mine for all of this stuff, wasn’t it?
Cliff Yeah, it was. And a lot of that was because of the size of the file, and also the ubiquity and importance of music. You don’t need anyone to explain to you how important music was to Apple in order to be able to transform its business. You don’t need to see how entire platforms and new paradigms like TikTok, they thrive on music, and it’s because it’s ubiquitous. We have radio, we’ve got… It literally is the soundtrack to our lives. So from that perspective, the fact that music’s really, really attractive is a no brainer.
What really caused it was the size of the file. Now, I’ve been at conferences before, and people who are from photo libraries go “No, no, you weren’t first. We were first. We got a right click and our business died in 1995.”. But the size of the file and the relative that between the movie industry or in relation to software, that’s what saved us. Until broadband and torrenting came along, but we all know how that went.
Dubber Sure. So file size aside, one of the other things that the music industry had in terms of being first and having to wrestle with issues was metadata. That seems like a really big issue in that kind of thing, because it wasn’t standardised.
Cliff No, but it never had to be, Andrew. In a pre-digital world, you’d issue the ISRC code and the ISWC code, and you’d get probably someone who wasn’t terribly well paid as a junior product manager getting these codes out and assigning them randomly. Despite the fact that someone two floors above knew about celestial jukebox, the people on that floor didn’t care about it whatsoever.
But the issue in relation to metadata again goes back to this control paradigm, which, again, has never worked. So I meet a lot of companies who say that they’re going to solve the metadata problem and create a central repository in the sky using, say, blockchain, or something like that. And blockchain definitely has a place in that. It’s not the answer, but it’s part of the solution. But could there have been the global repertoire database on an excel spreadsheet? Yes, there could, but there wasn’t the political will to do that because there was misplaced concern that it had something to do with control. And, again, I take you back to my previous answer, which is control rarely works.
Dubber I get why you’re interested in ‘the internet’, in inverted commas. Why are you interested in tech?
Cliff Well, again, I grew up a bit of a nerd, and when you’re born of few means, you spend a lot of your time looking at possibilities. But also, to the extent I’ve self-diagnosed any element of this, my father arrived in the UK as a British citizen from a former colony, Mauritius, and he was a tailor. He was an incredible tailor. In fact, he, for a while, worked on Savile Row. But in 1981, through a combination of technology, globalisation, and changing consumer habits, I saw a man thrown on the scrapheap.
So when a lot of people come up to me and say “Well, you don’t know what this digital disruption is, this technological disruption is…”, it’s like “Oh yes I do. I really, really do. I know what the Uber driver is feeling. I know what the guy at the corner store is feeling. I know what the takeaway guy is feeling when the likes of the Deliveroo or Uber Eats comes along. I know exactly what that’s like.”. And when I saw that come at me from my hallowed position in the record industry, I knew exactly what was going on. So, really, my genuine focus, passionately, is in relation to disruption and disruptive business models and how people react in the face of disruptive business models, because the thing is, is that in retrospect, there’ll always be the point that there was a choice.
It’s an oft used example but it’s still one of the best, is in relation to Kodak and digital photography. And the guys at Kodak, not only did they see the digital camera revolution coming but didn’t want to disrupt their own business, what a lot of people don’t know is that they filed the first patent for digital photography. It was theirs. It wasn’t the case that they didn’t see it coming, they saw it coming and then they tried to bury it. It just don’t work.
And if you really want to get into the weeds of how the movie industry and the record industry behaved, you had to look at “What were you monetising?”. So in the past it was a business model where you essentially only wanted two or three tracks, those were the singles, but you’d buy an album, and that’s called breakage. In relation to our friends at Blockbuster Video, 70 percent of Blockbuster Video’s profits in 1999 was from late fees.
Dubber Wow.
Cliff Not from hiring, it was from late fees.
Dubber That’s amazing. The 70 percent I thought you were going to say was I heard recently the figure was 70 percent of the people who went in to rent a movie at Blockbuster walked out with a movie that was not what they came in there for.
Cliff No, I think that was even higher than that, actually. I think that might have been 80 percent. It’s a huge number. But the profit in relation to late fees was 70 percent of the profit. So what you realise is that these businesses were monetising inconvenience. They were monetising opacity. They were monetising breakage. There is an argument that there’s some elements of the music industry that’s doing that.
But along comes Steve Jobs, who’s like “Hmm, 99 cents, that sounds like a nice round number. Oh, and by the way, I’m going to disintermediate the album.”. And at exactly the same time you’ve got the world of Napster and the college kids growing up with the idea of unlimited access, you realise that these businesses were about monetising choice rather than monetising the lack thereof. And we saw what happened to the businesses that wanted to try and hold on to the old paradigm, and we saw the businesses that actually wanted to use technology to give people what they wanted. And this is as true of how people bought suits as how they want to rent movies and how they want to date, or anything like that. So that’s what I’m obsessed about.
Dubber If we’re sitting from within an industry that’s reasonably established, let’s say it’s finance or chemical industry or transportation, or something like that, and you’re sitting there going “Okay. This is going to happen to us.”, how do you tell next paradigm from buzzword?
Cliff A lot of it is actually observing what’s going on rather than what used to happen. And I’ve done this with some senior executives where they’ll say “You know what’s really funny? No one’s buying this stuff anymore. But if we just teach them…”, and it’s like “But you’ve skipped over the important bit by looking to the past.”.
So really, a lot of it is, one, understanding the direction of travel and its relation to what you observe, and often it’s what you observe in relation to a generation below. I always think of the guys in the 1950s who’ve grown up in this lovely post-war bliss, and all of a sudden they see people gyrating to Elvis Presley and going “What’s going on?”. And then you see anyone over the age of 30 looking at TikTok going “What’s going on?”. And their brain will tell them “This isn’t a thing.”, yet their eyes are telling them “It is a thing.”. So “Listen to your eyes.” is one of the ones.
And then number two is understanding that if you’re trying to chart the direction of travel for a business, your brain wants to tell you it’s moved five degrees one way, or 45 degrees right. The answer is usually a 180, and actually understanding that the answer could be much more terrifying than you think. So those are the things that you have to hang on to.
I just remember someone just saying to me when I showed them an MP3 player, an early iPod, at someone at a record company who just said to me “Look, Cliff, people will always want to hold something.”, and that was their answer. They were very pleased with themselves, and they were talking about a CD. Yes, people really always want to hold something, but it might not be your thing.
Dubber People are spending a lot of time holding phones these days.
Cliff Exactly. But also, if I tell you how Nokia, who were my biggest client in 1997, responded to the iPhone, not a whole lot different. Their response was it was a shit phone and it only had one button, both of which were true. The first iPhone was not a very good phone, and it did only have one button, but what they didn’t realise was the personalisation, which, again, was accidental as far as Apple was concerned. It was jailbroke. Bit of pirate technology that came in that introduced the world of apps. People wanted to be able to customise and personalise, and the likes of Nokia and Blackberry could not handle that because their role was selling you a device, not the idea that you could personalise and customise the device. So lots of people want to reach back and talk about the music industry and Napster, or Netflix and Blockbuster, but, guys, look at Nokia. Look at Blackberry.
Dubber Well, one of the interesting things about the iPhone story from an innovation perspective is the fact that had you asked people if they wanted a phone that didn’t have any buttons on it, they would have thought “You’re crazy. I don’t want that.”. So from the point of view of how you innovate, you can’t go around and do market surveys and ask people what they want and then deliver it. You actually have to break things and… So what’s the approach? How can an innovator look at the world as it is now and go “You know what? I’m going to make something that does X, Y, Z.”? Where do you start?
Cliff Yeah. Well, I think that if you actually look at a product, it’s Henry Ford who Steve Jobs always talked about, which is “If I’d asked people what they wanted, they’d have said they wanted a faster horse.”. That’s how a car was done. And let’s look at a very, very current example. Let’s look at Tesla, despite good old Elon and his Twitter feed, as it were. If you want to know what’s happening in relation to Tesla, there are two documents you need to look at, The Tesla Motors Secret Plan, shh, don’t tell anyone, in 2006, and part deux in 2016. He lays it all out, and it looks like the stuff of absolute madness. And virtually everything that he’s put in those documents, even in relation to what he wants to achieve by 2026, he has already achieved. And it’s through audacity and not having a business model to disrupt which is the reason why Tesla can do this.
A lot of people come up to me and say to me “Yeah, great. You’ve got a Tesla. That’s amazing. But I’m sure the likes of Ford and things will catch up, and Volkswagen, etc.”. Why haven’t they? All of Tesla’s patents are available for licencing. It’s not that they’re holding on to anything proprietary. None of them want to disrupt their own business model. So to answer your question, the way that a genuine innovator needs to look at it is imagine you didn’t have a business model to disrupt. What would it look like?
Dubber Because the audacity that you’re talking about also sounds like a recipe for bankruptcy, so how do you stay on the right side of that?
Cliff Well, no. The question about that is understanding “How do you enable innovation?”. It’s very rare that you can innovate within a company. So for a lot of companies, and even the likes of Google… The reason why Google has reorganised from Google to Alphabet is that they realise that their companies are a series of bets, and they want to place the alpha bet. And what they’ve done is they’ve literally organised themselves so that they can go away and do all of their crazy skunkworks without now affecting Google. Google is now a fully functioning organism. It’s post-pubescent and it’s growing, and it cannot disrupt from within. And the likes of these companies… Google goes to bed every night worried it’ll wake up and be Yahoo. Now, only people of a certain age are going to get that reference, but I think you and I just apply in relation to that. So that is why it is so innovative.
The same with regard to Amazon. Amazon is organised so that things like web services, which, of course, is the true money maker, was allowed to be able to grow, and it innovated well away from the store. And it can place a series of bets in relation to Twitch. And they’ve organised themselves not so much as a structure, but as an ecosystem, and it’s that ecosystem approach, rather than trying to implant innovation or an innovation group within a structure… You try and do that and it will not work. The antibodies are too strong. You need to have your series of petri dishes around in order to allow and enable innovation outside of the host, and at which point they can be brought in, or be brought in around it.
Dubber I’m not, but let’s say I’m a brilliant coder with a lot of fantastic ideas, and I have this romantic notion about entrepreneurship and start-up culture, and I want to change the world, and I look at music and I go “Well, I like music. Let’s start there.”. Is that a good idea? Are people making money in that realm, or should I be looking elsewhere to innovate?
Cliff Well, the real question, I suppose, is, and that’s one of the reasons why… Even I walked into the industry and thought “Why are there so many damn lawyers everywhere?”. It’s a rights business. Intellectual property rights are a monopoly, and it means that you have to cohere and defragment all sorts of rights and licensees and alliances to people.
So if you’re going to come and do a Spotify, the only way that Spotify works is doing it like Spotify, which is doing all the hard yards, all the hard work, all the licencing, and all the things that nobody else is prepared to do. So most weeks I meet a company that wants to be the next Spotify, and I say “Great. Then you have to have exactly the same attention to detail in all the stuff you don’t want to approach that Daniel Ek and his team did. It’s that simple.”, and they’re like “Oh. Actually, I don’t want to do that.”.
So if you want a quick and easy route, in relation to digital music, then it’s not, but I think that it also takes a very, very reductive view of what the music industry is. If your idea of the music industry is an all-you-can-eat service that’s on a subscription and/or freemium basis, selling out music etc. etc., there’s no point. We have Coke and Pepsi already, and we just don’t need another one of those. But is there room for innovation in those realms? Absolutely.
A lot of that can be rights technologies, some of it can be personalisation technology, some of it can be helping to solve the metadata problem that you alluded to earlier. There are companies who are using technology in order for generative music, using it to work to adaptive music. And all of these things that people tell me are never going to get licenced, these are the same people that told me that streaming would never get licenced, or UGC content would never get licenced, or TikTok would never get licenced. They’re always wrong. If they’re willing to do a deal, a deal will be done.
For anyone that wants to, and this is something that I think is special about music, if you wanted to have a health tech innovation business, they would take the time to learn, one, how the health tech music business works, and two, understand the heart of the issue that they’re trying to solve, if you’re not Theranos. If you wanted to create coronavirus tech, which will be a very big business going forward, best you learn about how the coronavirus works, best you understand the runners and riders, and best you understand the gatekeepers. Yet people saunter into music in a way that they wouldn’t dare do for almost any other business.
And the reason for that, I refer you to the answer 25 minutes ago, which is about its ubiquity, and that consumption gets conflated to expertise very, very quickly. I’ve seen all too many people, investment bankers, high net-worth, saunter into the industry, “I know how it’s done. I’ll show these fools.”, and then months later they’re like “Oh, you were right. Oh, there’s all these people… I don’t want to do that. I thought I could just sit back and it’d be like an episode of, I don’t know, Entourage, but in the music industry, and it’d all be fun, and whatever.”.
So I think there is a question with regard to “Is it music that you want to enjoy?”, at which point just get a really nice set of headphones and a really fantastic player and get a great set of speakers at home, and just sit back and enjoy it. But if you want to innovate in the music industry, get the right advisors. Understand your ecosystem. Understand what you’re looking to disrupt. And if you can, you can do very, very well.
Dubber Because I get the sense that this also happens at the investor end, as well. People want to put money into things that appear to be cool, and that doesn’t sound like the greatest investment strategy in the world.
Cliff No. And if you look at tulips, or you look at credit swap derivatives, etc. etc., the idea that people want to invest in something and then everyone piling in tends not to be a great idea. But look at the 180. Ten years ago, master rights couldn’t get arrested. People posting rainbows were basically saying “The master recording will simply be a loss leader for the tour or the brand deal or the merchandise, or you may be able to get a long tail out of music publishing. But even then, there’s these crazy guys called KKR who are buying music rights and they’re way overpaying.”. That’s what people were saying ten years ago with absolute assurance, because, do you know what? I was talking to them. I was representing catalogues, I was representing people, couldn’t get arrested. Now everyone is now doubling and tripling down, and they’re understanding.
But I’m still speaking to people who’ve got no idea about the difference in relation to master rights or music publishing rights, no idea about the varying yields and the different lengths, no idea how to collect or collate the music, yet they’re massively investing on it in the hope of… Well, in one case, they might be able to get a selfie with the co-founder of one of the funds, I think. So the real question that I have to say is “Guys, do you know what you’re buying? Do you know what you’re investing in?”.
Of course music is a fantastic asset class, and of course now we’ve realised that actually for the first time we’ve been able to get a lifetime value out of music that’s beyond catalogue sales. We have now got a business model of a series of ARPUs, people have got a number of subscriptions, you’ve got a whole bunch of new services, and now the labels are open to business in relation to new deals. So that’s very, very healthy, but still there’s too much confusion and too much conflation of expertise with consumption.
Dubber Is there something fundamental about copyright law or intellectual property law that should just change now that would solve a lot of people’s problems?
Cliff I’ll give you my personal view on that. Well, actually, I’ll tell you… So I went out to lunch… Do you remember doing that? It’s been a while now.
Dubber It has been a while.
Cliff With a guy from a major service, and he said to me, he’s a technologist, and said “By the end of this lunch I’m going to convince you why copyright is the problem.”, and I said “By the end of this lunch I will tell you that licencing is the solution.”. And at the end of the lunch he went “You’re absolutely right. There’s nothing wrong with copyright, we just have to create licencing schemes.”. And that’s the issue, really, and I would like to see the default set towards licencing.
Now, a lot of people don’t like that idea, but actually… And, again, if people don’t want to pay, or people want to licence on unreasonable terms, or don’t want to play by the rules, then everything should be thrown at them that should be done. But every single time, from the first time in a London café when someone heard some music being played in the background and they agreed there should be a public performance right in relation to broadcasting, the danger of that is that perfection is allowed to be the enemy of the good. There’s a sense that “Well, because I can’t capture all of the music online then they shouldn’t be able to use it.”. It’s like “Well, that’s not how it works in gyms or pubs or clubs.”. A pragmatic blanket licencing situation is in place with all the local PROs, and if you’re a café, you can get a licence, you can do that, you don’t have to log everything, but people get paid and there is an understanding. So I think that the rights should be recognised, I think the rights should be rewarded, but I think the default should be towards licencing.
And one of the issues in relation to online is that it was never contemplated by people who drafted the legislation in the late ‘80s. Of course it wasn’t. But now what there needs to be is understanding that there’s going to be whole new paradigms now, and there’s been this huge conversation with regard to the copyright directive and what was Article 13. There’s now Article 17, where if you’re on the platform side of things, they’ll say “Okay, we like the fact that it basically says we’ve got a right to do that.”. And they’ve tried to do a muddled compromise, which is provided you’ve got the ability to be able to understand where it all comes from. And unfortunately, now there’s going to be another decade of finger pointing.
The technology people say “You can’t tell us where these rights are. You can’t point to a central repository. You can’t tell us who owns things.”, and, again, on the rights holders’ side they’re like “Oh, you don’t understand our rights and you don’t care.”. I’m going to tell any rights holder listening, this is not true. These companies have got more patent lawyers than you can shake a stick at. They understand intellectual property law, but they know how to look up a patent, and they know how to licence it, and they know that they can licence it on fair, reasonable, non-discriminatory terms. They understand trademarks, they understand design rights, they understand database rights. What they don’t understand is something like music copyright where someone can say to them “I’m giving you a covenant not to sue, but I can’t tell you definitively what I own because it’s always in flux and there’s no central database.”. So we’re getting there, Andrew. We’re getting there to a world where everyone’s realising, and hopefully that on the rights holders’ side, the sooner they get, and I’m about to use a technical term here, their shit in order, the chances are they’ll get paid better.
Dubber Sure. So the two variables are registration and price, essentially.
Cliff But, again, with regard to price, the idea that the market… I don’t like the fact that the rights holders, every single one of them, can dictate the price. But at the same time, I do believe that they should have a right that it isn’t given away and that actually people don’t use it as a loss leader. So you end up with the fuzzy compromises that we’ve got right now.
And the issue with regard to registrations and things like that, the real question is about the fact that there are so many versions, that anyone can create a cover version, anyone can rename it, and this seems to be a perfect machine learning based problem. And actually, I’m involved in a company now that’s using AI in order to be able to look at these registrations, and you can see in an instant where all of the problems are, but now there isn’t anyone to go to fix it. So we can spot the problems now, and hopefully then some really bright sparks at the rights holders will realise if they get their registrations in order it means that they stand a chance of being reported to properly by the big tech giants they profess to hate.
Dubber Tell me about what your day-to-day looks like, because this is all theoretically interesting stuff, but what do you do? What’s Eleven? What’s Tileyard? How do all of these things fit together? Is it just that you sit at your computer sending and receiving emails now, or is there more to it than that? What’s the job?
Cliff Well, I think I’ve probably been more desk space in the last three months that I’ve been in the last 20 years or so. So my day jobs, as it were. So I’m a partner at a law firm, Lewis Silkin. And I founded the digital media practice there, and I’m on the board of the firm, and also in charge of internal innovation and external innovation, because, strangely enough, legal services was being disrupted in exactly the same way that I’ve seen over and over again. The future doesn’t repeat itself, it rhymes. So that’s my day job with the legal hat on.
And Eleven is an advisory firm which is wholly owned by Lewis Silkin, that I run, which is where I work with digital media companies, incumbents and insurgents, on their digital media strategy. And some of them are big incumbents looking to understand their disruption, understanding who to buy, understanding how they should develop and grow and deal with things like pricing and acquisitions. And then on the flip side, I work with a whole bunch of insurgents who want to become the new incumbents.
And, strangely enough, having seen so many people do it badly in the past, a lot of it is actually “How do you disrupt whilst knowing all of the ecosystem you’re looking to disrupt?”, and more importantly “How do you look less like a troublemaker and more like a problem solver?”. And then the moment you’re a problem solver, oddly enough, you’ll get bored very, very quickly. So the majority of my time is working with those clients on these big, strategic, ongoing projects, or in relation to if we’re selling a company or we’re buying a company, helping to manage that process as well.
Dubber If somebody was getting started in law, would you say come this way, or stay the hell away?
Cliff What an excellent question, Andrew. It depends on how you’re fixed. So if you’re like me and you run towards the sound of gunfire, come and learn it, and then prepare to be disrupted. I think that people who have got a coding background, who understand algorithms, who understand business models, who understand businesses, and then can be taught the law, the future will be theirs, because, like tailors, they won’t get wiped out, it’s just the shape of the services and the businesses will be very, very different.
If you’re coming into the law expecting to have the cushy entrance of “Hey, once you get in, you get overpaid as a trainee to basically photocopy. And then just surf it for a few years, and then make your way down to partner, and then the riches will come in.”, that world is not coming your way. And I see the same people in the music industry as well, frankly.
Dubber Right. You alluded to the fact that the world is a bit complicated right now, what with you sitting at a desk more than usual recently, but there are other things going on in the world politically, socially, economically. Is this a good time for innovation?
Cliff It is the only time for innovation. The only way that we’re going to fix… Look, a very wise client of mine said to me “The thing about COVID, Cliff, it’s deadly in the face of underlying conditions, and that’s as much for business models as it is to people.”. And what it is is that it’s exposing some of these businesses that have barely had any margin. There are some businesses that have been thriving without that. Now, of course there’s things like, I don’t know, music touring, which no one could have understood and was massively profitable for some, but there are other areas where it’s completely and utterly exposed the issues underlying their business.
The companies that are innovating are the companies that are going crazy. I’ve had companies in the last couple of months who’ve had investment brought forward because they’ve been about AI, because they’ve been about machine learning, because they’ve been about distributed systems, because they’ve been part of the tools that are going to allow people to be able to collaborate remotely. So I think that COVID has been an accelerant rather than a precipitant.
Dubber Because the start-up world’s full of incubators, and accelerators, and coworking spaces, and the idea that the way that you make entrepreneurship better is you stick entrepreneurs together. Is that a problem?
Cliff Clearly, the idea about the ecosystems thriving is on the basis that things will interact, that things will essentially operate in a more cellular rather than structural basis so that one good thing happens over here, they speak to someone over a lunch and then they go away and collaborate. And that’s as much of music ecosystems as tech ecosystems and music tech ecosystems so all of those things would be better, and that’s one of the reasons why that will not disappear. But the buildings that they are based in are based upon long-term leases that are based upon certain predicted yields and in relation to loans and/or underlying freehold rights that are completely immovable, and that’s what can kill a business. So I think that what’s going on will be very, very healthy, but the structures that they’re in, in literal and metaphorical terms, are looking a bit dicey.
Dubber And, similarly, one of the main ways in which I know you is from all of these music industry conferences around the world that we both ended up talking at or intersecting at. How important is that to the music industry, and how important is it that that’s gone away?
Cliff Yeah. It’s something that will be very, very interesting. Of course, a lot of the ones that have gone on, the cast list has gotten better because you can kind of get anyone. Most people are free and available, so the bottom of the barrel has to be less scraped. Look, the main reason that people go for these conferences is networking, really, let’s face it. They do not go to listen to me, that’s for sure.
So “How do we network in a world that is not a network but is actually a more distributed system?” is something that we’re all going to have to think about. What are we going to do when people realise that, actually, business travel is going to become like it was in the ‘70s and only preserved for the rich and be done a couple of times a year? So it’s not going to eliminate it, but it means that people are going to be far, far more exclusive. And I think that you’ll easily see a room at Midem which is perhaps a third as full of people but will have 10,000 people joining online at the same time, and it’ll become a lot more integrated. So hopefully that means that there’ll be more of these things, but the underlying business model, the rooms, the hire, etc., that’s all going to have to change.
Dubber Right. I’m curious how you know that your job is done well. When you go home at the end of the day and go “That was a good result.”, what was the result?
Cliff The result is usually cutting the Gordian knot of some description, where there’s been some knotty problem. I’m an optimiser and I’m a problem solver, and I love cracking these difficult problems, so it’s like “Yeah, we actually got everyone to align, we got people to coalesce, and we got people to actually work together to build something.”.
There are several breeds of lawyer, like dogs, and I’m not a litigator. I’m not someone who has to have the blood and lamentations of my enemy on my hands. And it’s not through a people pleasing thing. Actually, what I want to do is move the needle. I want to shift the ball forward. I want people to be able to do something more innovative. So it’s pulling off some of these partnerships and pulling off some of these deals or these sales where you say “One plus one can equal more than two. It can equal Eleven.”.
Dubber Good plug. And so what’s the big disruptive tsunami that you do see coming? Is it AI? Is that what we’re standing by for?
Cliff I think the issue is that people are always looking for one bullet, and we’ve got a hail of bullets coming at us. If we were a society that was just looking at AI, or just geopolitical shifts, or just a rise in nationalism, or just a rise in distributed systems and peer to peer systems, we could probably take one of those, each, but when you’ve got all of those coming at you, you’re going to have to have a whole different sense of agility and ability to innovate in order to be able to navigate all of those. So don’t look for that one thing that you can’t see. It’s a hail of things you can’t see.
Dubber And the people who do more or less what you do, are they restricted to the commercial realm, or can it also impact upon politics, society, those sorts of things as well?
Cliff Oh, totally. Again, for most of the disaffected people that voted for Brexit, it wasn’t a European stealing your job, it was probably a machine. The same was true in relation to Trump using Mexicans or Chinese or whoever he’s trying to blame this week. It’s always someone else. It’s funny, that. So this whole othering, which is a tale as old as human beings have been alive. But actually the real question is, it’s not another person, it’s actually usually a different business model or a new technology, one or one that’s driven by that. So I think that’s totally having a massive geopolitical issue. And then if you can see how, again, whether or not you believe it’s due to Russian interference, etc., but what happened in the 2016 elections in the UK and in the US, or what’s happened in relation to… Essentially, if your role is to sow descent, then social media’s a really, really good way of doing it.
Dubber Ultimately, are you an optimist? And will tech save us?
Cliff Tech can save us. There used to be this old nerd’s thing that there are two futures, you might have got Star Trek or you got Blade Runner. It’s looking a bit Blade Runnerish right now, I have to say. But then if you’re a real nerd, you’ll realise that actually the Star Trek utopia of man coming together and the like only came after some nuclear wars and some planet nearly tearing ourselves apart, so perhaps it’s going to be Star Trek after it.
Dubber And it is a colonial mission, really, isn’t it?
Cliff Exactly. And they’re essentially… It’s human saviour syndrome rather than white saviour syndrome.
Dubber Right, yeah. Okay. So broadly speaking optimistic?
Cliff Broadly speaking. Look, if you are excited and/or stimulated by change and innovation then it’s not going to be boring, so that’s why I smile. That’s why people go “You look so calm. You look so happy.”, because, yeah, because I’m doing what I like to do. But if you like certainty and you like knowing exactly where things are going to be the next day, or how things are going to be the next day, it’s not for you right now.
Dubber Right. Cliff, thanks so much for your time. It’s been really interesting.
Cliff Thanks so much for the invitation. Take care.
Dubber That’s music tech lawyer Cliff Fluet, and that’s the MTF Podcast. You can find Cliff on Twitter @Fflic with two Fs and no K. That’s F F L I C. I’m Andrew Dubber, you can find me @dubber. Music Tech Fest is @MusicTechFest pretty much everywhere. The show’s out every Friday, so hit the subscribe button, and don’t forget to share, like, rate, and review. Much appreciated.
This week’s episode was edited by Jake Dubber, with music by I Am Fowler and airtone, and the MTF audio logo is by Run Dreamer. Have a great week, stay safe, stay legal, and we’ll talk soon. Cheers.
