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The Future of Music and Gaming (with Vickie Nauman)

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why “move fast and break things” struggles in music

This week’s podcast guest, Vickie Nauman, CEO of the music tech consulting and advisory firm CrossBorderWorks, worked on licensing and clearing music for several projects in Roblox and other platforms.

Ironically, modern genres like hip-hop, pop, and R&B are at a disadvantage in these areas. Their music is collaborative, which means more people need to sign off. If Beyonce wanted to play “Alien Superstar” in a digital environment, she would need all 24 songwriters to give their thumbs up, and that’s just for one song.

This is a challenge for companies building these platforms too. They want to attract artists who can plug and play, but it’s not that way.

“How well prepared (or how poorly prepared) are we for the world that’s coming? All of these metaverse, web3, immersive platforms are building creator tools directly into the platform assuming that artists can just be nimble.

That’s so unsustainable to harness innovation when you have 143 different rights owners who need to be harmonized.” – Vickie Nauman

With the rise of AI, the industry is pressed to make moves again. There’s fear of agreeing to bad terms that can’t be undone. As I broke down in Monday’s memo, I’m still bullish on AI and music’s potential, but it won’t be easy.

We covered a lot more about the future of music and gaming in this podcast episode. You can listen here or keep reading for a few more takeaways.

when will a video game spark a big viral hit?

Growing up, video games had a huge impact on the music I heard all the time. Crazy Taxi was the game that played The Offspring “All I Want” over and over. Grand Theft Auto: Vice City sent me down an 80s music rabbit hole. And whenever I hear Joe Budden’s “Pump It Up,” I still think of Madden 2004.

Now that gaming is bigger than ever, it feels like it’s only a matter of time until a video game can turn a decades-old hit into a viral cultural moment like Kate Bush “Running Up That Hill” on Netflix’s Stranger Things or Fleetwood Mac “Dreams” on TikTok.

“What I love about gaming is that you hear music differently when you’re gaming. There’s so much potential we haven’t tapped into. Sync license is the best way to do things in gaming. You want something specific. The artist and their team know how it’s being used. If we can get all of those things rights, that’s the start of it.” – Vickie Nauman

Sync revenue has grown tremendously. The latest RIAA year-end report shows $382.5 million in 2022 for U.S. synchronization royalties, a 24.8% jump from 2021. That growth has tracked the content explosion from TV, film, and more on video streamers.

But as streaming services begin to pull back on content, and the video streamers consolidate, there may be less shows and less traditional sync opportunities. That may pave the way for video games to be seen as a more attractive option.

reality bytes: the latest in VR adoption

Not too long ago, virtual reality seemed like the future of entertainment. Yet lately, it feels like it may fade in relevancy just like 3D TVs and Google Glasses. There will always be a mainstream adoption barrier if people have to put a device on their heads to enjoy an experience.

But Vickie has worked with some of the more successful players out there. She consulted for Beat Games, the makers of the VR game Beat Saber. The game challenges players to swing light sabers at blocks in rhythm with licensed music, similar to Guitar Hero and Rock Band. Beat Games was acquired by Meta.

We discussed two reasons for slow VR adoption:

  Wearing headsets: They’re bulky, expensive, and uncomfortable. It’s a tough sell to expect users to spend hours at a time wearing them. The friction is too high

–  Lack of human experiences: Most VR experiences have been entertainment-focused: concerts, games, sports. But there’s a huge opportunity in the workplace. For instance, employee training and work meetings could be done in VR, which could add a layer of emotion currently missing in the space.

Despite those struggles, it may be too soon to write off VR 100%. Augmented reality (AR) has had increased adoption and bigger moments so far, like Pokemon GO. Blended experiences between the two may be the way to approach this.

In the rest of our conversation, we talked about:

–  why a lot of music-metaverse experiences haven’t worked

–  how the music industry will handle AI

–  the dot-com bubble of web3 music

Listen to the episode here.

[0:32] What attracted Vickie to gaming

[1:26] The gaming moment that finally struck a chord with the music industry

[3:00] Similarities and differences between gaming and music industries 

[7:09] Why Travis Scott’s Fortnite concert clicked but others haven’t 

[9:28] Can gaming have its Kate Bush – Stranger Things moment  

[14:27] Why the music industry plays catch up to technology 

[21:38] Clearing 143 writer’s share for David Guetta’s Roblox concert

[29:40] Dot-com bubble era of web3

[31:56] Music will evolve differently in web3 experiences 

[38:18] What’s slowing down virtual reality adoption? 

[43:10] AI is coming at the music industry like a freight train

TRANSCRIPTION:

[00:00:00] Vickie Nauman: There are not an enormous number of opportunities for music and games. It’s gaming is similar to the music industry where there are a handful of huge, huge, huge gaming studios, and then there’s an inordinate long tail of small to mid-size gaming companies and, you know, very, very similar to music.

[00:00:19] So the few big studios, a lot of them are doing, you know, licensing and they get music in. But it’s been much more common over the years to gaming studios just hire a composer and they just create a song that is right for the mood and the moment in the game, the gaming studio owns it and they’re just done.

[00:00:40] You know, they don’t have to worry about licensing or business models to incorporate music into the games. But I think for the most part, the music industry always likes to get their money up front, and the gaming industry likes to get all the money on the back end

[00:00:55] Dan Runcie Intro: Hey, welcome to the Trapital Podcast. I’m your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from the executives in music, media, entertainment, and more. Who are taking hip hop culture to the next level.

[00:01:22] Dan Runcie: This episode is all about the future of gaming, and today we’ll be breaking it down with someone who understands this space in and out. Vickie Nauman. She is the founder and CEO of CrossBorderWorks, which is her consulting and advisory firm, which works with some of the biggest major record labels, streaming services, and more on the intersections of word music meets technology, gaming, and several other emerging tech platforms.

[00:01:47] We talk about what music and gaming’s challenges and opportunities are in the future, how games are monetized versus music, some of the opportunities there. We also talk about the music industry itself and why the music industry often sometimes plays catch up with regards to emerging technology, how that impacts her work.

[00:02:07] And what it can look like for gaming, to have that huge sync moment that Kate Bush running up that hill moment like we saw on Stranger Things. What could that look like for music in a video game? I think we’ve seen several successful examples over the past couple of decades, but we’ll continue to see more as gaming in the Metaverse, Web three, and AI continue to intersect and influence this space.

[00:02:29] Really great episode. It was great to have her share her insights here, and I hope you enjoy it. Here’s our chat.

[00:02:36] All right. Today we’re here to talk about gaming music and so many of the intersections it has, and wanted to talk with someone who understands this space better than almost anyone that I could reach out to Vickie Nauman, who has consulted and worked with many of these companies in music and gaming.

[00:02:53] Vickie, welcome to the pod.

[00:02:54] Vickie Nauman: I am so happy to be here. I’m a huge admirer of your writing and your work and it’s an honor.

[00:02:59] Dan Runcie: Thank you. Appreciate that. So what is it for you that attracted you to this space? It’s been an emerging space for some time, and it feels like the music industry is now starting to put more emphasis in, but you had been focusing even before the current wave has been there. What attracted you to it?

[00:03:16] Vickie Nauman: Well, I’ve always looked at gaming and I’m one of these people who for years was telling the industry. Gaming is bigger than music and film combined, you know, it is a massive, massive industry and they’re, you know, and almost all the monetization is built on low friction, high engagement in-app purchasing.

[00:03:37] And so companies are releasing games that are free and they’re making billions of dollars. There’s, you know, there’s lessons for the music industry. I feel like it all fell on deaf ears. People are like, yeah, yeah, yeah, you know, companies come to us and. We wanna license them our whole catalog, and they don’t want it.

[00:03:53] And so there’s nothing for us to do. And then, Marshmello did a set in Fortnite and got 10 million people to listen to his music, and that struck a chord in the, you know, in the industry. you know, and importantly, it didn’t necessarily resonate with the digital business people who were always, you know, under an onslaught of new companies coming to try to get rights.

[00:04:19] But it was in marketing and a and. and then there was like, it was a moment where I think everyone started to realize the power of gaming and the hundreds of millions and billions of people who are playing games as a new platform in a new way for artists to reach, fans and to break artists.

[00:04:37] And it was interesting too because at that time I was working with Beat Saber. and they were this was in 2019 that all of this happened. And, Beat Saber was still an independent studio out of Prague, brand new game. And we were trying to get some of first songs in to that game.

[00:04:55] Vickie Nauman: We had worked with Monstercat before and we had these original soundtracks in there, but we didn’t have any, huge major label acts and we were trying to license Imagine Dragons. And so I heard firsthand from labels and publishers all throughout that process of like, wow, you know, we really want to do more with gaming.

[00:05:16] And I credit a lot of that to Marshmello.

[00:05:20] Dan Runcie: And you talked a little bit about how gaming is just so much bigger than music, and part of it is because they’re not necessarily selling the content itself. They are selling what you can do on top of it from things you can buy or other things that are less friction. The frictionless, as you mentioned.

[00:05:38] Had any of that come up, especially after the marshmallow event? Did any of that come up in any discussions about like, Hey, could this be an opportunity to rethink monetization a bit more broadly? Or maybe think about the bigger picture? What have some of those discussions been like?

[00:05:54] Vickie Nauman: Yeah, it’s been really interesting actually because they’re really in aggregate. There are not an enormous number of opportunities for music and games. It’s gaming is similar to the music industry where there are a handful of huge, huge, huge gaming studios, and then there’s an inordinate long tail of small to mid-size gaming companies and, you know, very, very similar to music.

[00:06:18] So the few big studios, a lot of them are doing, you know, licensing and they get music in. But it’s been much more common over the years to gaming studios just hire a composer and they just create a song that is right for the mood and the moment in the game, the gaming studio owns it and they’re just done.

[00:06:39] You know, they don’t have to worry about licensing or business models to incorporate music into the games. But I think for the most part, the music industry always likes to get their money up front, and the gaming industry likes to get all the money on the back end. And so you know, there are these friction points that, you know, marrying a business model into a game is kind of an art because if you’ve already got an existing model and it’s free, or there’s, you know, in-game purchases, then how do, you know, do you try to incorporate music into that? Do you just pay the rights holders and get a deal for a certain period of time, or can you create a revenue share and some way to participate in the upside and, a lot of gaming companies are even huge companies are still new to this. And so they’re kind of what I would call, like dipping their toes into the pool, you know, testing the waters and trying some small things. And then trying to figure out does this work for us?

[00:07:44] Do we need to, you know, do we need to create a big stack of technology to manage the rights? Most of them do not have an appetite to do. They certainly have the skills, which is part of what’s so fun working with gaming companies is they have amazing engineers and really great minds about problem solving and coming up with these ways to engage users.

[00:08:06] But nobody really wants to dedicate engineers to building a rights management system. And so I think everyone is, you know, all the companies that I work with, they’re trying to kind of simplify things with music, try it out, find out what their users want, what their gamers want, because that’s another big thing is, you know, you have to ask, you know, gaming is such a culture and such a subculture and each game has kind of a different community in it and a different vibe, and so you really wanna make sure you’re getting that. Your assumptions of what kind of music is going to work are in line with your user’s expectations.

[00:08:45] There was one company that I worked with that was like, had a lot of underground, you know, all, their users thought of themselves as very underground and they did a music thing that their users thought was too commercial, the gamers rebelled . So, so, the best thing is to ask the people who are gaming, ,you know, and your products.

[00:09:02] Ask them what they want.

[00:09:04] Dan Runcie: Yeah, that customer base, especially with gaming, I think is huge cuz it makes me think a lot back to that Travis Scott Fortnite integration, which was almost three years ago at this point, but it was the perfect combination of so many things. At the beginning of quarantines with the pandemic, but also there’s such alignment between the type of person that’s on Fortnite with the Travis Scott fan as well, which is why I think that one worked much better than some of the other A-list artist superstar artists collaborating in a digital gaming environment.

[00:09:37] Vickie Nauman: Yeah, I think that’s a great, I think that’s a really great point, and you know, because of the dynamic of gaming and the kinds of things that we’re seeing, you know, it’s not like a service that has, it’s just music and it’s going to put out hundreds of thousands or millions and millions of songs and just saying, You know, something for everyone, you know, let the end users find the music that resonates with them with, when you’re picking and choosing a couple of artists or a couple of songs, you know, you kind of have one shot. And it reminds me of, you know, I used to work in radio before I started doing all of this, and. there was so much science to the choices that we made in radio because we knew that you know, we had one signal and we had to choose artists.

[00:10:24] You know, if we said our demographic is, you know, 18th to 34, urban men and women who are professional and make a hundred thousand dollars a year and above, if that’s your demographic, then you have to say, what kind of music and what kind of programming and what kind of announcers and events. Gotta get it.

[00:10:45] And that’s very similar to the way things are when you’re doing things in the metaverse or gaming where you’re like, well, we’re just doing, we’re picking a few things and we really wanna light them up, but we need to get them right. We need to get the user experience, we need to get the right artist to fit with the right user base.

[00:11:04] And then how we present it, how we monetize it has to also be something that fits within the gaming community.

[00:11:14] Dan Runcie: That makes sense. And I feel like that lines up with something else you had said in recent interviews talking about gaming syncs and the potential there and how there may not be as much because a lot of the game developers are doing in-house music now, but it can grow in the future. And I’m thinking about, especially this past year, we saw the Stranger Things moment with Kate Bush running up that hill and I assume like it’s only gonna be a matter of time until we see a gaming moment that is at that level or something like that, or maybe there already has been ones that have been at that level.

[00:11:45] Vickie Nauman: No, I think it is a really good point there as well that, that I think with the Kate Bush moment or Fleetwood Mac with the skateboarder and the, you know, cranberry juice that we’ve had these cultural moments in social that have, Absolutely lit up music for a new generation, which I love.

[00:12:05] I mean like kids bought tickets to see Fleetwood Mac in concert after listening to 20 seconds of one song. And that’s so exciting and I think, it will get there with gaming. and I think when you think about the limited number of opportunities and then then the limited number of artists or songs that can be integrated into every game, I think that we are really, really at the early end of the early part of that spectrum.

[00:12:34] I don’t think we’ve even begun to really let the music industry and the gaming industry come up you know, with that Kate Bush moment or the Fleetwood Mac moment. and I think that, what I love about gaming as well as you know, other kinds of audio visual is that when you hear it, you know, you hear the music differently when you’re gaming and you know, like Beat Saber, I’ve worked with them for many years.

[00:12:58] Vickie Nauman: I also work with Niantic on, they have a new NBA game and you know, with Ubisoft and some early stage gaming companies but with Beat Saber there are certain songs. that I’ve always loved. Like there’s a, you know, a bunch of Green Day songs that are some of my favorites that I’ve listened to for 20 years, but now I’ve, played them in Beat Saber, and now whenever I hear the songs, I hear them differently because of the experience of having this immersive gaming and this gaming experience.

[00:13:30] So I think there’s, I think there’s just so much potential that we haven’t yet been able to tap into. Some of it is also because there’s been so much friction around licensing, and for the most part, I think sync licensing is the best way to do things in gaming because you want something specific and then you know, the artist and their team want to know how their music is being used and you know, you, take something to rights holders and if they’re like, you know, we need more money or we don’t like that rev share, or that artist has a conflict. And then you’re like, okay, well, you know, we’ll move on to something else. And then you know, ideally you get an artist and a label and a publisher and a writer and those teams that all say, wow, this is great. I would love to have my music in this game.

[00:14:21] And that’s really where I think that, you know, if we can get those, all of those things right. that’s the start of it.

[00:14:28] Dan Runcie: Yeah, and this conversation too is making me reflect on a few things. Cause I feel like music and gaming have gone through ebbs and waves like for instance, I know that there’s always been music in games like Madden or like the NBA 2K series, for instance. But I think back to like Grand Theft Auto.

[00:14:43] I know one of the things there, they always had music. So they had this Vice City game that came out 20 years ago and that was all eighties. So I feel like for a lot of people of a certain generation, that was like their thing to go to. And then a couple years later, Guitar Hero and Rock Band, huge. Right?

[00:14:58] And then I think even those songs reintroduce, especially some of those classic rock song rock songs there. And you also had some of those Def Jam vendetta. video games as well. So now I think what’s different of course is that these are more so, okay, how do we integrate them into these digital environments, the metaverse and things like that.

[00:15:15] So I’m excited to see, I still think that there is huge potential to see one of those moments happen, and who knows? I mean, I feel like the Kate Bush moment was largely, I don’t wanna say unplanned, cuz obviously people expected it, but no one would’ve anticipated that it would’ve taken off that way.

[00:15:32] But that’s how these things.

[00:15:34] Vickie Nauman: Exactly. I know, I know. I love it. like a lightning in the bottle, you know, where you’re just like, wow, you know, we didn’t, we really couldn’t quite anticipate that things would resonate like that and, and especially reaching a gen, a new generation that probably otherwise would’ve never heard of Kate Bush.

[00:15:50] but I also think that with. you know, with music and gaming, what’s, what’s also so fun for me personally, is I’ve been doing music licensing and write based things for like 20 years now, you know? So I feel like an old lady when I say that, but I’m always the one chasing everyone, you know, I’m chasing labels and publishers and trying to put things in front of them, you know, what do you think of this? What about that? Have you thought about it? Is this approved? Is it not approved? Can we move forward? No, we can’t. gotta start over. And this is the first time in my entire professional life where I. artists, publishers, labels, and songwriters coming to me now and saying, I wanna get my music in games, you know, and I wanna get my music in the metaverse.

[00:16:36] Vickie Nauman: how can we get band in the Metaverse? And I love that because, you know, for me, like self selection in the industry is huge. It’s really frustrating when you have to drag people kicking and screaming into the future and into experiences. So I love it when people contact me and let me know which of their artists on their roster are really interested or even better, which, artists are gamers themselves and then they are already part of the community but then they want to take it a step further with their music.

[00:17:08] Dan Runcie: That’s good to hear because I often feel like the music industry is playing catch up when it comes to emerging a new technology. In so many ways, dating back 20 plus years at this point. So the fact that people are coming to you now is good. Do you feel like that is true overall? Do you feel like the industry is at the moment, like right in step with where things are going?

[00:17:29] Or do you still feel like there’s a bit of catch up?

[00:17:32] Vickie Nauman: I think there’s always a bit of catch up, just simply because, you know, technology moves at such a pace. None of us can really quite keep pace with it. And then there’s always these very similar dynamics where there will be some new technology that comes around, whether it’s, you know, on demand streaming or live streaming or gaming or virtual reality, and now metaverse and NFTs and fractionalizing rights and all of those things in web three, and there’s a very common pattern where these technologists, they look at music and they say, oh my gosh, this would be fantastic for my platform, you know, it will help me with adoption and relevance and get in, get some artists and some music in there, and fans will come and it’ll all be great. And then they start talking to the industry and they learn about how music writes work, and that you usually can’t just go to an artist and get what you need. They’re usually signed or they have some management and they publishing is probably administered by someone and they all have their ways of doing business. And there’s a moment where everybody then, you know, they have to decide, do we have an appetite to do this? Or should we just move on to something that isn’t as complicated? Because music is great when you get it right, but not all companies really wanna do things right.,You know, and so, you know, we kind of go through this every time when there’s new, you know, new user experiences that are emerging.

[00:19:06] And I think that the music industry is always, you know, takes all these things in. and then they start thinking, number one, is this a fad or is this something that’s going to last? Is it worth us spending time and cycles to really engage with the companies on this particular kind of experience? And then how can we extract value?

[00:19:30] How can we make money? How are they making money? Is our deal going to outlive the the survival time of any given platform or company? There’s a lot of people, I mean, it’s very frustrating sometimes to do licensing, but I have empathy with all of the, with all of the rights holders, because I’m in the same boat where companies come to me and I have to just like, oh gosh, you know, it’s a great idea, but you guys have never done anything before and, you know, can you build this? Can you execute you? Can you take it from a PowerPoint or a demo into a fully functioning product? And it’s hard. And so I think that, you know, the labels and publishers they have assets to protect and they’re, you know, and now increasingly artist management companies are also in the mix because a lot of things require artist name, image, and likeness rights.

[00:20:26] And sometimes that can come from the label, but sometimes it. So they’re all in a mode where they have something to protect, they want to exploit and, you know, make money, but they have a lot to lose if they do things wrong. And so there’s this inherent mismatch between how quickly things move in technology and how slow and methodical the music industry is about deciding.

[00:20:52] Whether they wanna move forward. And then there’s the other issue, which we’re faced with right now, which is all of these emerging use cases and people being kind of afraid of agreeing to the wrong terms and setting a precedent that they’re later going to regret. And so, . when technologists complain about the music industry and they’re like, they’re so slow, they’re so backwards, they don’t understand our vision.

[00:21:20] It’s like, well, they have a lot to lose. You don’t have a lot to lose cuz you’re a startup and you have a big idea. But these guys have, you know, they’ve been, you know, 20 years of companies just like you that have come before. And so I always try to encourage, I always try to encourage people not to just, you know, get so frustrated with music that you know that they abandon it because a lot of great Id great ideas die on the vine because of these mismatches. But to be patient and to also, you know, maybe you think you need Jay-Z. But I would challenge most early stage companies, you’re probably not ready for Jay-Z.

[00:22:00] You know, like let’s, you know, maybe find some earlier stage artists that might be more appropriate to your size and budget and a little bit more forgiving. And then you get product market fit and then start expanding and, you know, might end up with Jay-Z, but maybe you might find you don’t need, you know, you don’t need that to resonate with users.

[00:22:24] Dan Runcie: Right. The break thing things fast mentality of startups just doesn’t always line up. And that’s a good point too. You get approached by so many companies, you don’t know who’s gonna be there. And obviously that probably requires some level of evaluating these startups to see what makes sense. That’s just one side of it.

[00:22:42] The other side of it is the patience to be able to see these things through. And I know you’ve seen this yourself with David Guetta and making sure his music can be cleared. Can you talk a little bit about that process?

[00:22:54] Vickie Nauman: Yeah, it was really crazy. I mean this was a project I did with Warner Music Group and I love what they’re doing cause they’re really trying to create a pipeline to get their artists into metaverse and new web three based experiences. And so, this was a year ago, David Guetta was doing a DJ set as an avatar in Roblox, and he originally had chosen 26 songs and then we narrowed it down to 20 songs.

[00:23:23] but you know, what I found was that those 20 songs represented 143 shares on the publishing Plus, almost all of them had shared masters. And what many people don’t realize is when you’re listening to music and you see, you know, here’s a song featuring, you know, Shakira or somebody else, that featuring usually means that artist is probably on a different label.

[00:23:50] Vickie Nauman: And so even the sound recording can end up having multiple owners. and there was a certain point in the process where I start looking at these songs and I quickly saw like, wow, there are, you know, 10 of the songs that had, you know, all these writers who are not on a PRO, so they’re non society, they don’t have a publishing administrator.

[00:24:18] They may own one or 2%, which if you’re in streaming and on-demand audio streaming, it doesn’t really matter, the services can still use the music, even if you can’t find the person who has one or 2% but if you’re doing sync licensing, you need to have a hundred percent of the publishing at a hundred percent of the master recordings or the sound recordings cleared in advance.

[00:24:42] So I chased down. All of these people, these writers and people who had small shares, you know, they weren’t registered anywhere. I found them on social media and got everything, got everything in there and approved. But for me, it was kind of an exercise in how well prepared or how poorly prepared are we for the world that’s coming, which is all of these metaverse, web three-immersive platforms that are building creator tools directly into the platform, assuming that artists can just be nimble. And then you look at this, it’s like David chose these songs, he wanted to mix these songs. And that’s so unsustainable to think of, you know, being able to harness innovation.

[00:25:38] When you have 143 different rights owners that all have to be harmonized around the same deal, and then a third of them are people who are not even, you know, technically in the ecosystem of music, but they still have shares. And that’s true for hip hop and electronic music. Pop music also has an enormous number of writers, but they tend to mostly be with pros and have publishing administrators. But in hip hop and electronic music, there’s just a ton of people who are contributing to big songs, but they’re completely outside of our ecosystem.

[00:26:16] Dan Runcie: That point reminds me of the news that had came out when Beyonce released her album, The Alien Superstar song had 24 songwriters on, and people were like, oh, well how does this happen? And I think for some people it became a bit of an eye-opening. Well, this is how a lot of this music gets created, and these are the people that either had a hand or they helped sample.

[00:26:35] There’s so many things. And then if someone goes and samples, they only have superstar in the song that’s gonna have all those same 24 writers, plus whoever helped them with that new song.

[00:26:44] Vickie Nauman: Exactly. I know, and like when you watch the Grammys and they go through the , the awards for composers, you know, and there’s a paragraph, all these names that have contributed to each of these songs. and I think about it a lot though, like, you know, we’ve kind of, if you go back in history to the olden days, you know, fifties, sixties, seventies, you know, like in the fifties and sixties, most artists, it was very common to have a songwriting group and then an artist, someone performed someone else’s songs.

[00:27:20] And then when the rock music came around, we had bands that it was like a big deal. Like we write our own songs. And so in that era, like if you’re licensing rock music from the seventies, eighties, or nineties, it’s great because there’s like one or two writers on every song and it’s usually the band and they’ve written every single thing.

[00:27:43] So you, you know, you wanna license one Green Day song, you’re pretty much going to have the same mix across all of their music. And then you fast forward to the way people create now, and we have this incredible fragmentation where we have on average seven writers per song, but it’s outsized in electronic music and hip hop.

[00:28:05] And so we have 10, 15, 20 writers on every song with these tiny shares and that just a trend of how people collaborate and how they create and samples and you know, people in the studio and people all, you know, collaborating all over the world. But I think a lot about where the industry is going. And Metaverse and NFTs and Web three and, you know, where you know, again, all of these platforms are assuming that you as an artist can come in and bring all the rights you need to be able to do something interesting with your fans and whether or not this is going to drive a different kind of creation because, it will definitely the artists who have just a one writer or a couple of writers.

[00:28:55] And who really have tight control over everything are at a much bigger advantage to be able to be nimble in the, in this next iteration of music experiences than writers, than artists who have 20 writers. And some of them they don’t even know. And so, you know, I’m going to watch this because like, there’s a producer, Poo Bear, you know, contributed to a lot of big songs, but he’s doing an NFT project and he’s just made a decision. I’m gonna write, perform, do everything on these songs that I’m doing in the NFTs. Cause I don’t want to, you know, have to pull in an entire army of people to get them to approve.

[00:29:36] So I feel like, you know, thinking creatively about how you can take advantage of things without having all of this, administrative burden. It might drive and change some of how we see music being created.

[00:29:50] Dan Runcie: That’s a really interesting point because I think broadly, everyone’s been trying to figure out specifically with Web three and what’s ahead, how do we best make this work? How do we make this into a real business vertical that can drive real revenue. It isn’t just a fad. And I know you’ve spoken about this in the past, how felt like we were at this .com bubble era of Web three and where things are now more proof of concept, but not actual businesses, like more features, not necessarily companies, but where do you feel like we are now and if any of the things that have been good examples, does anything stick out to you to be like, okay, like that’s generally how this could be done and how we could approach Web three.

[00:30:33] Vickie Nauman: Yeah, This does really remind me of the early two thousands, because. There are so many things that, like in back then, we would do things like order a pint of ice cream to be delivered by someone and no markup. And it’s like, that’s ridiculous. That’s not a real business. But it was a proof of concept that you put your name in, put a credit card in, you order something and they promise to deliver it and it, comes to you.

[00:31:02] And so, I feel like, you know, and then out of the ashes of all the companies that burn through venture capital, you know, inflamed out or had some great idea, but there was no business model to it. And somebody else then saw it and said, if we do what they did, but we do it this way, you know, we’re in the midst of that process.

[00:31:25] And back then out of the ashes of everything grew, companies like Amazon you know, and there were certainly lots of casualties, but I think we’re kind of in that phase right now with Web three, and I’m still really bullish about it, but I think that we’ve, I think that we have now because of crypto and what people saw with FTX, you know, their eyes have been open a bit.

[00:31:51] and a lot of the companies that have been doing things with music and NFTs and, you know, some of them have been really lucrative and successful, others haven’t, but it’s all part of the process. but I think that some of the things that I see I think that music is going to evolve slightly differently in all of these web three experiences than maybe, non-musical, activities.

[00:32:14] Like, especially in NFTs. I think the dynamic of, you know, of buying and collecting. Visual art is going to have its own trajectory. But I think, music in token based communities, I mean, I think there will be a point where we’ll probably look back and be like, damn, remember when we talked about NFTs, non fungible tokens?

[00:32:35] Sounds this ridiculous name. But I think that what we will see is these artist communities that are artist centric, that are token based, and it’s like fan clubs 2.0, you know, interactive fan clubs with different ways to, you know, limit membership. Maybe you can co-create with the artist. Maybe you are getting a access to ticketing or the artist in some way.

[00:33:04] that there’s benefits and ways to pull a small community of people around an artist together. And then We’ve had a lot of these artists direct to fan initiatives for many, many years that most have failed because they required the artists to do too much. The artists are artists, you know, they wanna be artists.

[00:33:23] They don’t want to spend all their time, you know, on 20 different platforms. But I think these are different because I think there’s something inherent about, you know, artists and fans that is the most golden connection that you can possibly have in music. And we currently have artists and fans and then, all the different platforms and labels and publishers and, algorithms and transaction engines and, you know, followers and all of these things that are keeping many, many, levels separate of separation.

[00:33:58] And now I think we can bring them much closer together. So I think that’s one experience that I think is going to have an enormous and outsized, positive effect for music. And I think some of these will have music in them and some of them won’t. And, some of them will be more about the artist’s brand and their likeness and you know, their personality, their identity.And then I think another, use case in web three is, this fractionalizing rights and allowing users to invest in music. because this requires, you know, SEC, you know, this is like full investment, you know, you have to really, really get that right. I think there will be very few companies that end up in that space.

[00:34:44] I think it’s 

[00:34:45] Vickie Nauman: just you know, the lift is too much for the average, but I think there will be a really viable marketplace. And I’ve talked to writers and performers who are also even signed, cuz if you’re signed to a label or a publisher, you know, you’re not gonna fractionize their share.

[00:35:01] Dan Runcie: Right.

[00:35:02] Vickie Nauman: And that’s also something I always have to tell the companies that want to do this.

[00:35:05] Like I’m going to now tell you some really disappointing news. but they’re interested in doing some fractionalization of maybe just their writer’s share or their performers share. And that’s super interesting. And so, you know, how can we make that another income stream.

[00:35:22] And then I think the third area that I’m really bullish about is the experiential side of, you know, we, we’ve seen during the pandemic, you know, and starting with starting with these things in Roblox and you know, Fortnite and you know, having these kind of pop-up experiences. Again, that’s a proof of concept that if you put an artist in as an avatar and create some sort of activation, that people will come and they will buy virtual goods and they will have a great time.

[00:35:56] So I think you know, that’s, again, we’re just barely scratching the surface of where these more experiential things will go with AR VR. Just, you know, web-based and mobile-based and, you know, avatars, you know, live streams I think fit in there as well. And I also think that the way the internet and even websites, the way that they work now, where you are, kind of view, go to a menu and you click on things and you get a flat page that tells you this is, you know, who the people are, this is what the products are, you know, like even the most basic things about how we engage online I think are going to change. And so I think there’s going to be much more, you know, immersion and interactivity and real, you know, real time engagement. And to me that’s just feels like that’s just so perfect for. You know, small artist, activations where you don’t need 20 million songs.

[00:36:52] You just need a couple of artists who really want to do it. And I think that we will have just a really, really wide range of ways for people to enact more meaningfully with artists performing online.

[00:37:03] Dan Runcie: Yeah, I think the collectible piece was a key point, and I also think that artists just being able to have communities around this too. I think we probably overestimated the investing piece just because I don’t think that the average fan is going to be as interested in that piece, and I think that was a big selling point.

[00:37:21] It’s almost in the same way that like we all may have Apple devices, but how many of us are owning stock in Apple as a result of us wanting to see the thing right. But I do think that the collectible piece is huge. Obviously you see it in people wanting to have physical media, whether it’s cassettes or vinyls going up.

[00:37:37] So there’s an aspect there that I think will continue to be tapped into, but it’ll be fascinating to see how that plays outthe other emerging technology space that I know you’ve done some work into is VR itself. And I know that one of the companies that you worked with extensively was acquired by Meta and although you know, from my purview, they seem to be one of the more successful companies in a landscape that I think has been a bit slower to have that mainstream adoption than a lot of people thought with VR more broadly. So where do you see with that space right now?

[00:38:10] Vickie Nauman: Yeah, it, you know, VR at the beginning, you know, it had so much promise of, you know, being, you know, being transported to, other worlds and having, you know, having this 3D environment around you. But I always felt like it’s going to be gaming, that would be the catalyst to this because I think there’s also, you know, there’s also something like how much time does anyone want to sit in a headset?

[00:38:39] And you know, you generally, it’s kind of like, you know, remember when 3D TVs, we’re huge, and everyone’s like, no, we’re not gonna sit around our house with these funny glasses on for hours at a time. It’s just not going to happen. But I think that gaming has really been an enormous entry point in, and, you know, Beat Saber is the VR game that was acquired by Meta and continues to do extremely well with this customized gaming rhythm But I think that, you know, part of it is we need the headsets and things to shrink and we need them to be, a little bit more, you know, a little bit more comfortable. We need to be able to spend more time in them, and we need to have more experiences than we have right now.

[00:39:28] And I think that there are things, you know, there are lots of companies that are starting to build even like, you know, meetings and,you know, are we going to have meetings with people in the metaverse and in virtual reality? There are companies that are doing enterprise-based training for employees that are using VR you know, and using these technologies in ways that I think is not gimmicky, but it will actually lend, it will actually lend to human emotion and feeling close.

[00:40:00] but I think with everything with web three, we’re going to have a blend of, these things, you know, AR is generally considered to be more accessible than VR because you know, you don’t need as much equipment. But I think as, all of these things grow and we start to get more platforms and you know, more variety of use cases that we’ll probably see a blurring between AR and VR and lighter weight.

[00:40:28] hardware and more cost effective hardware, and that will just help to grow. That’ll help to grow the market.

[00:40:36] Dan Runcie: Yeah, I think for a while VR kind of had a bit of that sharper image vibe, I would say where, Yeah, you know, you go in the store, there’s these cool forward technology things, but not necessarily something that I would wanna have in my house, right? And I think over time, to your point, the headsets get smaller, gets a bit more accessible.

[00:40:54] We’ll eventually get there. It’s just a matter of the use case said, Yeah, to your point, I think gamers, if anyone, you think about the people that are gonna be wearing a headset while they are playing Call of Duty or whatever it is, they’re probably the audience that’s more likely to have another device over their head as they are interacting with game.

[00:41:13] Vickie Nauman: Exactly. Exactly. And I think, you know, fitness is another area that, with VR originally was like, oh yes, you know, are there ways to simulate, you know, downhill skiing and hiking and cycling and, you know, being in this expansive different world than being in your house. but you know, you don’t really wanna just be sweating, you know, sweating in your, headset either. And so I think the only, like, there probably needs to be some evolution, if that’s a big enough market to support specific hardware of fitness, you know, then there probably are people who really want to do that. but you know, we’re still kind of trying to figure out what this entire next iteration of the internet is going to be, and I can’t imagine that VR won’t be a part of it.

[00:42:05] Dan Runcie: And I think the other emerging platform that’ll likely or emerging medium, that might likely be a part of it somehow is AI and that’s the one thing we haven’t talked about deeply yet today, but where are you at right now with AI and let’s fast forward five years from now, 2028. What role does AI have with music, and specifically with what the major record labels and their artists are doing?

[00:42:28] Vickie Nauman: I know. I mean, it’s just like, I feel like web three is, we kind of have some time because I feel like you know, companies are building infrastructure, there’s lack of, you know, horizontal integration and interoperability. We have time to kind of keep experimenting and figuring it out. AI is coming at us like a freight train right now, and I think maybe five or six years ago when.

[00:42:54] AI and music first came on, the first came on the horizon. A lot of people were freaked out by it. Then they listened to the music and said, that’s pretty bad, you know, now, we’re not worried anymore. But now music’s getting way better. and I think that, I kind of look at it in a couple of different, you know, avenues because I feel like the first thing that I see is artists. And artists are always the first to embrace any kinds of creator tools. You know, they’re not afraid of technology, they’re not afraid of tools, you know, you think back to drum machines, you know, my God, the drum machine’s gonna eliminate drummers, you know, we don’t need drummers anymore. Well, we didn’t, you know, we still need drummers.

[00:43:41] But it did serve a purpose. Practicing and, you know, don’t need to have you know, a drummer there to practice your songs. Don’t need to always take a drummer on tour if you’re doing some sort of small, intimate shows, but we still need great drumm. so I think that artists are probably going to be the first ones to embrace and use technologies that are like, think of plugins to DaaS and, you know, and that you’ve got a writer’s block and you want to have something kind of help pull some things out of your head and break through that.

[00:44:13] So I think like that is going to be a really, really robust market. And those are still very much human creations. They’re just tools that are now a little bit more advanced.

[00:44:25] you know, the opposite end of it is text to music, 

[00:44:29] and that’s where I think like, we have no idea how that is going to play out and who owns it either.

[00:44:37] I think that electronic music is kind of the first use case because it’s easiest to replicate and come up with, you know, a new electronic mix that’s AI generated as opposed to something that is, you know, got, you know, 12 instruments in it. But, I still feel like there’s a line there around what are the areas where it’s, music is still kind of human created and you can never get it away.

[00:45:03] Vickie Nauman: And live music for sure, you know, there’s nothing that replaces being in a room and you’re waiting for your favorite band to come on stage. And we’re all human and we’re all there in this shared experience. and I also think that there are things about human creativity and music that surprise you and that, you know, kind of, you know, a human can take you down an emotional path or a musical path that you never, ever would’ve anticipated.

[00:45:32] And that’s something that, that seems inherently human. But I think there’s a lot of things, like a lot of background music. A lot of music that’s kind of music for sleeping, music for concentration, you know, non-descript, you know, unknown artists production. I think that area is probably ripe for disruption by AI.

[00:45:57] , you know, but it just still doesn’t answer some of these fundamental questions about the copyrights of, if you fed an AI engine, millions of songs and it can now reproduce music based on a text command, you know, who owns that? You shouldn’t t he music that was fed into the AI participate in that.

[00:46:20] Dan Runcie: right. Because right now there’s nothing that’s necessarily pulling them, that they’re pulling these from whatever, lyrics, websites that are there, but the lyrics, websites aren’t, you know, pulling from those. So a lot of issues to sort through.

[00:46:32] Vickie Nauman: Yeah. what do you think about?

[00:46:34] Dan Runcie: I mean, I’m excited for the potential because I do think that if the industry is able to get it right in some way, if there’s a way to fairly compensate people, like let’s say that whether it’s open AI or one of these companies has some way that they have a licensing agreement, no different than the record labels have licensing agreements with the streaming services or the dsbs. If you have something there that attributes some level of, okay, how much was pulled from here, and even if it ends up being some fractional aspect or whatever it is, obviously it would most likely all be some fraction, some way to attribute that back, especially if that becomes the next viral TikTok hit.

[00:47:14] If that then spawns the journey for the next person to release the next big song, and you think about, whether it’s the next Billy Eilish or whoever is creating music in their bedroom that’s gonna release the biggest album of the year, like that’s likely where this is gonna come from. I do think that’s some of the things that we discussed in this conversation about how.

[00:47:32] because the industry is more likely to not be in this break things fast mentality, to make sure that things are right. It’s more likely to play catch up on some of those things, which I think, you know, could be frustrating to see it play out, but it’s completely understandable just given how these things play out.

[00:47:49] So maybe we’ll see some more, of this happen from independent artists or those that are doing more things where they own everything themselves, kind of to your point with whether it’s Poo Bear or other people like that, experimenting. Okay, what could that look like? So I think we’ll probably see some type of innovation there.

[00:48:06] Or maybe there’s even a solution where some company has more rights to more of the royalty free or independent artist owned music where that can then be used as something derivative from where the OpenAI or chatGPT three or some of these companies can pull from. But I think we’re a little ways away from that.

[00:48:27] Vickie Nauman: But there’s clearly no stopping it.

[00:48:29] Dan Runcie: Yeah, no, this is a train that is gonna continue to go on for sure. But Vicki, this is great. I feel like we covered a bunch of stuff, especially with gaming and so many of its intersections. And if people wanna follow along with you and the work that you’re doing, where’s the best place that they should follow Thank you so much.

[00:48:47] Dan Runcie Outro: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat, post it in your Slack groups. Wherever you and your people talk, spread the word. That’s how Trapital continues to grow and continues to reach the right people. And while you’re at it, if you use Apple Podcast, go ahead, rate the podcast, give it a high rating, and leave a review. Tell people why you like the podcast, that helps more people discover the show. Thank you in advance. Talk to you next week.

Dan Runcie

Dan Runcie

Founder of Trapital

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