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The State of Music (with Will Page)

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Today’s Trapital episode is our breakdown on the state of the music industry. I’m joined by Will Page, the author, economist, and industry thought leader. Last year’s episode was Trapital’s most downloaded episode of the year. I think this episode was even better than last year’s so let’s make that happen again.

the rise of “glocalization”

Will’s latest report discusses the impact of glocalization: creating products for global markets that bring local cultures together.

In several countries — Britain, France, Germany, Italy, and Poland, among others — the top 10 songs of 2022 in each country were almost entirely from local domestic artists. The same is likely true across Latin America, Africa, and Asia.

That’s the global impact of streaming. With lower entry barriers, artists and fans can more easily connect in their local languages, dialects, genres, and cultures. Technology brought us together, which is dope.

But attention is a zero-sum game. Suppose those music listeners are tuned into local artists. In that case, they spend less time tapping into Western, English-speaking artists (and the machine behind them) that have dominated the airwaves for decades.

This is significant. Music has always relied on exporting its product. Major record labels want their music to ring in the streets from Paris to Tokyo. That’s their value prop to new artists! When prospective talents walk the halls of a record label to meet with execs, they see rooms full of pictures of artists who benefitted from the old days.

But like the great Slim Charles once said, “The thing about the old days… they the old days.

Glocalization makes it harder for mega superstars to emerge, especially from established markets. Will says that Britain’s last true new superstar to emerge was Dua Lipa in 2017. It’s been six years since her debut album. That’s directly correlated with streaming’s hyper-growth phase.

The major record labels must sign and develop talent in each region to maintain market share. With increased costs (without the promise of increased revenue), glocalization will shift everything from KPIs, value props to new artists, and future expansion plans.

Will credits Amazon Music head Steve Boom with saying, “As the world becomes more globalized, we become more tribal.” All facts.

We’ve already seen this play out in Hollywood. China is much more selective with the U.S. movies it will bear. The Marvel Cinematic Universe cleaned up in China during the 2010s, but the country has since blocked several tentpole franchise films. Unless it’s an Avatar sequel or a Fast & Furious movie, good luck reaching audiences in Beijing and Shanghai.

You can listen to the full episode here or read more highlights below.

are price hikes short-lived?

Last year, Will talked about music streaming shifting from a herbivore to a carnivore market. After years of gaining market share, he predicted that the services would start taking subscribers away from each other.

Paid subscriber growth for music streaming services has slowed. In 2019, paid users were 46% of Spotify’s total user base. Today, it’s 40%. Will’s data suggests that 1 in 4 Apple Music users also use Spotify. Platform churn is inevitable, especially if economic constraints continue.

This dynamic contrasts the pricing debate that the industry has focused on. Major record labels want the DSPs to raise rates. But without differentiated content across services, price becomes an even more critical factor to compete on. As the labels and streaming services debate how the additional revenue gets split, the broader economic trends are hard to ignore.

AI music as a back catalog demand generation

The record labels and publishers are already frustrated that their music is paid the same rate as “whale music.” They believe AI music will accelerate this.

But AI can help the majors generate more demand for their back catalogs!

In the fight for attention, each impression reminds fans to listen to the music they love. That impression can be a new album, a live performance, an award, a sync placement, or an AI song that goes viral.

At Spotify, where Will was chief economist, he saw this play out with Eminem. His latest albums aren’t as highly regarded as his late 90s and early 2000s run, but each new release drives streams for all those songs.

That viral AI song with Drake and The Weeknd has the same power to drive demand. This is one reason why the industry should embrace generative AI music based on the music it holds the rights to.

It can drive demand for the assets they hold the rights to. That’s what’s in it for them.

These are just a few highlights from my chat with Will. We also covered:

–  why the music industry may be worth closer to $40 – 45 billion

–  how to improve streaming royalty rates

–  the boom in both vinyl and CD sales

Listen here:

1:10 Why the music industry is actually worth $40+ billion annually

6:10 Physical music sales on the up and up

9:28 How publisher and labels split up copyright value

16:04 The rise of “glocalisation” will impact every industry

30:18 DSP carnivores vs. herbivores 

36:00 Why video vs. music streaming isn’t a perfect comparison 

43:15 Music as a premium offering in the marketplace 

47:15 How to improve streaming royalties  

57:48 AI music benefits that goes overlooked 

1:06:30 Will’s latest mix pays homage to Carole King

TRANSCRIPTION:

[00:00:00] 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 executives in music, media, entertainment, and more who are taking hip hop culture to the next level.

[00:00:26] Dan Runcie Guest Intro: Today’s episode is all about the state of the music industry, and we’re joined by the One and Only, Will Page. He is a fellow at the London School of Economics. He’s an author of Tarzan Economics and Pivot, and he is the former chief economist at Spotify. Will’s second time on the podcast. Now, the first time we talked all about the future of streaming and where things are going in music, and we picked that conversation, backed up.

We talked about a bunch of trends including the globalization of music, which is from a new report that Will had recently put out. We also talked about how, why he values the music industry to be close to a 40 billion industry, which is much higher than a lot of the reports about recorded music itself.

And we also talk about a bunch of the topics that are happening right now, whether it’s ai, how streaming should be priced, the dynamic between record labels and streaming services, live music, and a whole lot more love. This conversation will always brings it with these conversations, so I hope you enjoy it as much as I did. Here’s our chat.

[00:01:31] Dan Runcie: All right, today we have the one and only Will Page with us who is recording from a beautiful location. I don’t know if you’re listening to the pod you can’t see, but will tell us where you are right now. 

[00:01:40] Will Page: So great to be back like a boomerang on Trapital. Dan, and I’m coming to you from the Platoon Studios. Part of the Apple Company Platoon is our label services company, which is owned by Apple. They’re doing great stuff with the artists like Amapiano music from South Africa. And the best place I can describe to you here, it’s like a Tardus.

Have you’ve ever seen Dr. Who? There’s a tiny door in this tall yard music complex in North London just behind Kings Cross. When you enter that tiny door, you enter this maze of the well class spatial audio recording studios of Apple. And it’s an honor they’ve given me this location to come to Trapital today. 

[00:02:12] Dan Runcie: Well we’re gonna make the best of it here and it’s always great to have you on, cuz Last year, last year’s episode felt like a state of the industry episode, and that’s where I wanna start things off this year with this episode.

A couple months ago, you put out your post in your Tarzan economics where you said that this industry is not a 2020 5 billion industry, the way others say. Mm-hmm. You say, no, this is almost a 40 billion industry. So let’s break it down. How did you arrive there and what’s the backstory? 

[00:02:43] Will Page: I get goosebumps when you say that you think like 10 years ago we were talking about a 14 billion business and now it’s a 40, you know, skews a slurred Scottish pronunciation, but let’s just be clear from one four to four zero, how did that happen?

Well the origins of that work, and you’ve been a great champion of it, Dan, is for me to go into a cave around about October, November and calculate the global value of copyright and copyright is not just what the record labels publish, that famous IFPIGMR report that everyone refers to, but it’s what collecting studies like ask F and BMI collect what publishers generates through direct licensing.

You have to add A plus B plus C labels, plus collecting societies plus publishers together. Then the complex part, ripping out the double counting and doing all the add-backs, and you get to this figure of 39.6 billion, which as you say, you round it up, it begins with a four. And I think there’s a few things that we can kind of get into on this front.

I think firstly we should discuss the figure. I’ll you a few insights there. Secondly, I think we should discuss the division. And then thirdly, I want to cover the physical aspect as well. So if you think about the figure, we’ve got 39.6 billion. We know it’s growing. I think what’s gonna be interesting when I go back into that cave later this year to redo that number, it’s gonna be a lot bigger.

Dan, I’ll see it here on Trapital First. I think a 40 billion business in 2021 is gonna be closer to a 45 billion business in 2022. And one of the reasons why it’s not labels and streaming, it’s a combination of publishers are reporting record collections, essentially they’re playing catch up with labels, booking deals that perhaps labels booked a year earlier.

And collecting studies are gonna get back to normal after all the damage of the pandemic. And when you drive those factors in where you have a much bigger business than we had before. So for the people listening to your podcast who are investing in copyright, this party’s got a waiter run. You know, don’t jump off the train yet cause this thing is growing 

[00:04:49] Dan Runcie: And the piece I want to talk about there is the publishing side of this. If you look at the breakdown of the numbers you have, the publishing is nearly, publishing plus is nearly 13 billion itself. The major record labels own most of the largest publishers right now. Why isn’t this number just automatically included? Wouldn’t it be in everyone’s advantage to include the fact that yes, Universal Music Group and Universal Music Publishing Group are together, part of the entity that make this, whether it’s them, it’s Warner Chapel, it’s others. Why isn’t this just the top line number that’s shared in all of the other reports? 

[00:05:27] Will Page: It would be nice if it was, and indeed, I think the publishing industry around about 2001 used to do this. They haven’t done it since. But it’s like spaghetti. It’s the best way I can describe it. I mean, how do you measure publisher income? You know, is it gross receipts by the publisher? Is it the publisher plus the collecting Saudi? That is money that went straight to the songwriter and didn’t touch the publisher. So what the publisher holds onto what we call an industry, a net publisher, shares all these weird ways of measuring this industry that we have to be clear on.

And it’s, not easy. but I think what we do in the report is we try and make it bite size. We try and make it digestible to work out how much of that publisher’s business came through, CMOs, the S gaps and BMIs this X over here PS music and how much do they bring in directly? And that allows you to understand a couple of things.

Firstly, how do they compare vi to vis labels in terms of their overall income? And secondly, how do they compare when they go out to market directly, let’s say putting a sync and a TV commercial or movie versus generating money through collective licensing that is radio or TV via ASCAP or bmr. So you get an interpretation of how these publishers are making those numbers work as well.

[00:06:34] Dan Runcie: That makes sense. And then when we are able to break it down, we see a few numbers that roll up into it. So from a high level, at least what you shared from 2021, we have that 25.8 billion number from the recorded side. So that does fall in line with what we see from what the IPIs and others share. 10 billion Sure.

From the publishing. And then you do have, the next 3.5 and then a little sliver there for royalty free and for the publishers’ direct revenue that doesn’t come from the songwriters. The next piece though, within the elements of how all of the revenue flows into that. We’ve talked a lot about streaming and we’ve talked, we’ll get into streaming in a little bit, but I wanna talk about the physical side cause that was the second piece that you mentioned.

We’ve all talked about vinyl, but it’s not just vinyl. So could you talk a bit about where the trends are right now with physical sales and why this is such a huge factor for this number? 

[00:07:27] Will Page: Who would’ve thought on a Trapital podcast in May, 2023. We’ll be talking about physical as a second topic on the agenda, but it’s worth it. I mean, it’s not a rounding era anymore. It’s not chump change. in America, physical revenues largely vinyl outpaced the growth of streaming for the second year straight. It’s not as big as streaming, but it’s growing faster and it has been growing faster for two years now. That’s crazy. Here in the uk the value of physical revenues to the UK music industry has overtaken the value of physical to Germany.

Quick bit of history. For years, decades, Germans used to buy CDs. that’s fallen off a cliff. They’ve given up on CDs. Whereas over here in Britain, we’ve all started buying vinyl again. So the value of vinyl in Britain is worth more than the value of CDs to Germans, that type of stuff you didn’t expect to see.

And if you go out to Asia, you see the CD market still strong. You’ve still got people who buy more than one copy of the same cd, of the same band. Don’t ask me to explain the rationale for that, but it happens and it moves numbers. But after all this, when the dust settles, I mean a couple of observations, all the data to me is suggesting that 55, 60% of vinyl buyers don’t actually own a record player.

So I think it was Peter Drucker who said, the seller really knows what they’re selling, and I don’t think you’re selling intellectual property or music cop right here. What we’re actually selling is merchandise, you know, Taylor Swift, I got an email from Taylor Swift team saying they’ve got a marble blue vinyl coming out this week.

Now we’re talking about vinyl in the same way we used to talk about stone wash jeans, marble blue. This is like the fourth version of the same 11 songs priced at 29 99. Let’s just figure that out for a second. I’m willing to give you 10 bucks a month to, access a hundred million songs on streaming services, but I’m also, it’s the same person.

I’m also willing to give you 30 bucks to buy just 10 of them. This is expensive music and I might not even be listening to it cause I don’t even have a record player. 

[00:09:26] Dan Runcie: This is the fascinating piece about how we’re calculating this stuff because the vinyl sales and all of that has been reported widely as a great boom to the industry and it has been.

We’ve seen the numbers and in a lot of ways it brings people back to the era of being able to sell the hard copy of the thing itself, but it’s much closer to selling a t-shirt or selling a sweatshirt or selling some type of concert merchant. It actually is the actual physical medium itself. So it’ll be fascinating to see how that continues to evolve, how that embraces as well. On your side though, as a personal listener, do you buy any vinyls yourself that you don’t listen to, that you just keep on display or? 

[00:10:05] Will Page: It’s like your shoe collection, isn’t it? Yes, right. Is the answer to that. But no, I mean, I will say that I got 3000 fi funk records in the house and they’re all in alphabetical chronological order.

So if they haven’t been listened to, at least I know where to find them. 

[00:10:19] Dan Runcie: That’s fair. That makes sense. So let’s talk about the third piece of this, and that’s the division of this. So you have the B2C side and you have the B2B side. Can we dig into that? 

[00:10:30] Will Page: Sure. this is, I think the backdrop for a lot more of the sort of thorny conversations happening in the music industry is now, you may have heard that in the UK we’ve had a three year long government inquiry into our business.

We had the regulator turn over the coals, and so there’s a lot of interest in how you split up this 40 billion dollar piece of pie. who gets what? And the division I’m gonna talk about here is labels an artist on one side. Songwriters and publishers on the other side as it currently stands, I would keep it simple and say two thirds of that 40 billion dollars goes to the record label and the artist, one third goes to the publisher and the songwriter.

Now, when I first did this exercise back in 2014, it was pretty much 50 50, and when you see things which are not 50 50 in life, you’re entitled to say, is that fair? Is it fair that when a streaming service pays a record label a dollar, it pays the publisher and the songwriter around 29 cents? If you’re a publisher, a songwriter, you might say, that’s unfair, cuz I’m getting less than them.

I have preferences, issues, and I have any issues with this division. Well, let’s flip it around. If you look at how B2B world works, licensing at the wholesale level, let’s say you’re licensing the bbc, for example, if your song’s played on the bbc, you’re gonna get 150 pounds for a play. 90 pounds goes to the songwriter and the publisher, 60 pounds goes to the artist and a record label.

Now, is that fair? Why does the publisher win in the B2B market? By the record, label wins in the B2C market. And the one, the lesson I want to give your listeners is one from economics, and it’s rarely taught university these days, but back in 1938, 1939, in a small Polish town called la. Now part of the Ukraine, ironically, free Polish mathematicians sat in a place called a Scottish Cafe, ironic for me, and invented a concept called Fair Division.

And the question they posed was, let’s imagine there’s a cake and there’s two people looking at that cake getting hungry. There’s Dan Runcie over in the Bay Area and there’s Will page back in Edinburgh. What’s the best way to divide that cake up? And the conclusion they came up with is you give Will page, the knife.

Aha, I’ve got the power to cut the cake. But you give Dan Runcie the right to choose which half. Damn, I’ve gotta make that cut really even otherwise, Dan’s gonna pick the bigger half and I’ll lose out. And this divider two model gave birth to the subject of fair Division and it simply asked, what makes a fair division fairer?

How can I solve a preference? How can I solve for envy? I want that slice, not that slice. I’m unhappy cause Dan got that slice and not that slice. There’s a whole bunch of maths in this. We had a third person that gets more complex. But I just wanna sow that seed for your listeners, which is when we ask questions like, why is it the label gets a dollar and the publisher gets 29 cents?

There’s gotta be some rationale why you know who bets first? Is it the label that bets first or the publisher who commits most? Is it label that commits most marketing spend or the publisher? These types of questions do with risk, often help answer questions of fair division, or to quote the famous Gangstar song, who’s gonna take the weight?

Somebody’s gotta take a risk when you play this game, and perhaps there’s a risk reward trade off, which is telling us who gets what Share of the spoils. 

[00:13:46] Dan Runcie: Let’s unpack this a little bit because it’s easy to see. May not be fair, but it’s easy to see why the record labels get preference on the B2C side because as I mentioned before, the record labels have acquired a lot of the publishers, and especially in the streaming era, they were prioritizing that slice of the pie, their top line, as opposed to what essentially is the subsid subsidiary of their business, the publishing side.

Why is it flipped with sync? Well, how did that dynamic end up being that way? 

[00:14:18] Will Page: That’s an anomaly, which is actually blatantly obvious. You just don’t think about it. And the way it was taught to me is anyone can record a song, but only one person can own a song. So I think, let’s give an example of, I don’t know, a Beach Boy song where I could ask for the original recording of that Beach Boy song to be used in the sync.

Or I could get a cover band. So let’s say I got a hundred thousand dollars to clear the rights of that song, and the initial split should be 50 50. If a band is willing to do a version of it for 10,000, the publisher can claim 90,000 of the budget and get the option. If the record label objects and says, well, I wish you used a master.

Well, you got a price under the 10,000 to get the master in. So this kind of weird thing of bargaining power, if you ever hear. Let me scratch that again. Let me start from the top. Let me give you a quick example, Dan, to show how this works. One of my favorite sort of movies to watch when you’re Bored and killing Time is The Devil’s Swear, Prada great film.

And then that film is a song by Seal called Crazy, incredible song, timeless. That guy has, you know, timeless hits to his name, but it’s not him recording it. Now, what might have happened in that instance is the film producer’s got a hundred thousand to get the song in the movie, and he’s looking to negotiate how much you pay for publishing, how much you pay for label.

Now the label is getting, you know, argumentative, wanting more and more, and the publisher is happy with a certain fee. Well, the film producer’s got an option. Pay the publisher of the a hundred thousand, pay him 90,000, given the lion share of the deal. And then just turn the label and say, screw you. I’m gonna get a covers bant and knock me out.

A decent version of it. And this happens all the time in TV films, in commercials, you’ll hear covers of famous songs. And quite often what’s happening there is you gotta pay the publisher the lion share of your budget and then just cough up some small chains to the covers bant to knock out a version.

And then, so just a great reminder, Dan of anyone can record a song, but only one person can own the song that is the author. And that’s why negotiating and bargaining power favors publishes in sync over the record labels. 

[00:16:30] Dan Runcie: That makes sense. And as you’re saying that, I was thinking through five, six other examples of cover songs I’ve seen in many popular TV shows and movies.

And this is exactly why? 

[00:16:39] Will Page: It’s always car commercials. For some reason, every car commercial’s got cover in a famous song. You think, remember that weird Scottish guy down Ronie Trapital? Yeah. That’s what’s happened. The publishers pool the rug from under the record label’s feet at negotiation table.

Another super important observation about the globalization trend, Dan, is I’m gonna take one of those 10 countries as our spotlight, Poland. Now the top 10 in Polands or Polish, the top 20 in Poland, or Polish. In fact, if you go to the top 40, it’s pretty much all Polish bands performing in Polish, and you could say that’s localization.

But stop the bus. Most of those acts are performing hip hop, which is by itself a US genre. So perhaps we’ve got globalization of genre, but localization of language and artist. And that’s a very important distinction for us to dissect. And perhaps it’s for the anthropologist, the sociologist, to work out what’s going on here.

But it’s not as straightforward as it’s just local music. It’s local music, but it’s global genres, which is driving us forward. 

[00:17:39] Dan Runcie: And that’s a great point for the people that work at record labels and other companies making decisions too, because there’s been so much talk about hip hop’s decline. But so much of that is focused on how this music is categorized and a lot of it’s categorized solely on.

What is considered American hip hop. But if you look at the rise of music in Latin America, which has been one of the fastest growing regions in the world, most of that music is hip hop. Bad Bunny considers himself a hip hop artist. You just brought up this example of Polish hip hop being one of the most popular genres there.

So when we think about. How different genres get categorized, which genres get funding. Let’s remember that key piece because hip hop is this culture and it’s global, and that’s gonna continue. So let’s make sure that we are not taking away from a genre that is really one of the most impactful and still puts up numbers if we’re categorizing it in the right way.

[00:18:35] Will Page: Damn straight. I mean, I think genres are often like a square peg trying to fit into a round hole and in a paper published by London School of Economics, I was honored to use that line that I think I said on trap last time, which is rap is something you do. Hip hop is something you live. Rap could be the genre, hip hop could be the lifestyle.

Maybe what those Polish acts getting to the top of the charts of doing is representing a lifestyle, but they’re doing it in their mother tongue. 

[00:18:59] Dan Runcie: Well said. Agreed. Well, let’s switch gears a bit. One topic that I wanna talk about, and I actually gave a talk recently, and I referenced you from this term, and its of music, was the globalization of music and why this is happening and what it means for Western music specifically in the us. But first, if you could define that term and explain why this is so important in music right now.

[00:19:24] Will Page: Well, I’m so excited to be on Trapital talking about this because we are now officially published by London School of Economics, so I’m gonna make my mom and dad proud of me. At last Backstory, paperback of my book, guitars in Economics, retitled to Pivot. Apparently WH Smith’s Travel and Hudson Travel said books with economics in their titles Don’t sell an airport.

So we’ve rebranded the whole book to Pivot and it’s in airports, which is a result. that book, that paperback came out on the 6th of February and that night I was on the BBC one show and they had this great happy, clappy family friendly story. They wanted to bounce off me. They said, Hey, will, Isn’t it great that the top 10 songs in Britain last year were all British ex?

For the first time in 60 years, Britain got a clean sweep of the top 10 in the music charts. And I said, curb your enthusiasm because we’re seeing it elsewhere. The top 10 in Germany, were all German. Top 10 in Italy, all Italian, ditto France, deto Poland. And if you go to Spain, the top 10, there were all Spanish language, but largely Latin American.

So it’s not just a British thing that we’ve seen this rise of local music on global streaming platforms. We’re seeing it everywhere, cue some gulps and embarrassments live in the TV studio. But I made my point and I came out of that interview thinking. Well that stunned them. It’s gonna stu more people.

And I said about working on a paper called Globalization, which with a Scottish accent, it’s hard to pronounce. Let’s see how you get on with it. Not localization and not globalization. Emerging to by definition and by practice globalization. I teamed up with this wonderful author, Chris Riva, who’d be a great guest on your show.

He did a wonderful blog piece you may have read, called Why is There No Key Changes in Music anymore? It’s a really beautiful piece of music writing and there isn’t. Nobody uses key changes in the conclusion of songs. And we set out to do this academic study to explain to the world what’s been happening in music and why it’s relevant to everyone else.

And what we saw across 10 European countries was strong evidence of local music dominating the top of the charts in these local markets on global platforms. Now history matters here. We didn’t see this with local High street retailers, America, British, Canadian music dominated those charts. We still don’t see it in linear broadcast models like radio and television, you know, it’s still English language repertoire dominating those charts. But when it comes to global streaming, unregulated free market, global streaming, we see this phenomenal effect where local music is topping the charts. And you know, you look at what does it mean for us English language countries like ourselves?

It means things get a little bit tough. It means exporting English language repertoire into Europe becomes harder and harder. Maybe I’ll just close off with this quite frightening thought, which is Britain is one of only three net exporters of music in the world. The other two being your country, United States and Sweden.

Thanks to a phenomenal list of Swedish songwriters and artists. And I can’t think of the last time this country’s broken a global superstar act since Dua Lipa in 2017. Dan, we used to knock them out one, two a year. 2017 was a long time ago, and it’s been pretty dry since. 

[00:22:44] Dan Runcie: And that’s a great point for the people that work at record labels and other companies making decisions too, because there’s been so much talk about hip hop’s decline. But so much of that is focused on how this music is categorized and a lot of it’s categorized solely on.

What is considered American hip hop. But if you look at the rise of music in Latin America, which has been one of the fastest growing regions in the world, most of that music is hip hop. Bad Bunny considers himself a hip hop artist, you just brought up this example of Polish hip hop being one of the most popular genres there.

So when we think about, how different genres get categorized, which genres get funding. Let’s remember that key piece because hip hop is this culture and it’s global, and that’s gonna continue. So let’s make sure that we are not taking away from a genre that is really one of the most impactful and still puts up numbers if we’re categorizing it in the right way.

[00:23:38] Will Page: Damn straight. I mean, I think genres are often like a square peg trying to fit into a round hole and in a paper published by London School of Economics, I was honored to use that line that I think I said on trap last time, which is rap is something you do. Hip hop is something you live. Rap could be the genre, hip hop could be the lifestyle.

Maybe what those Polish acts getting to the top of the charts of doing is representing a lifestyle, but they’re doing it in their mother tongue. 

[00:24:03] Dan Runcie: Well said. Agreed. This is something that’s been top of mind for me as well because technology in general has a way of making regions and making people in particular regions closer together than it does making the world bigger. It’s like in, in a sense, technology can make the world seem bigger, but it actually makes it seem smaller, right? And I think that algorithms and bubbles that come from that are another symptom of this.

But this is going to have huge implications for Western music. You mentioned it yourself. All of these markets that are used to being export markets, when they no longer have the strength to be able to have those exports, how does that then change the underlying product? How does that then change the budgets, the expectations of what you’re able to make? Because if you’re still trying to maintain that same top line revenue, you’re still trying to maintain those airwaves you have, it’s gonna cost you more money to do that, because you can’t rely on the few Western superstars that you have to get, that you have to have equivalent of a superstar or at least a middle tier star in every region that you once had strong market share that you could export in.

And it’s gonna change cost structures. It’s gonna change focus. And a lot of these expansions that we’ve seen of record labels, especially Western record labels, having strong footprints in different regions across the world, they’re not just gonna need to have presence, they’re gonna need to have strong results.

And in many ways, try to rival the own companies that are in those comp, in those regions, the homegrown record labels, because every country is trying to do their own version of this and it’s gonna be tight. This is one of the challenges that I think is only gonna continue to happen. 

[00:25:45] Will Page: You’re opening up a real can of worms. I get it. Pardon to your listeners, we’re getting excited here. Day of publication, first time we’ve been able to discuss it on air, but I know I’m onto something huge here and you’ve just illustrated why just a few remarks. One, some of the quotes that we have in the paper were just phenomenal. We have Apple included in the paper. We have Amazon, Steve Boom, the head of that media for Amazon in charge of not just music, but Twitch audio books, the whole thing. He’s looking at all these media verticals. He makes this point where he says, as the world becomes more globalized, we become more tribal. Stop right there, as he just nailed it.

What’s happening here? It’s The Economist can only explain so much. This is what’s so deep about this topic. I wanna toss it to the anthropologist of sociologists to make sense of what I’ve uncovered, but it’s massive. Now let’s take a look at what’s happening down on the street level with the record labels and the consumers. You know, the record labels are making more money and they’re devolving more power to the local off seats. You know the headcount in the major labels, local off season, Germany, France, and Vietnam or wherever is doubled in the past five years. It hasn’t doubled in the global headquarters. That’s telling you something.

If you look at how labels do their global priority list, maybe every month, here’s 10 songs we want you to prioritize globally. So I had a look at how this is done, and across the year I saw maybe 8, 10, 12 artists in total, and there’s 120 songs. There’s not that many artists. You think about how many local artists are coming out the gate every week hitting their local labels or local streaming staff, up with ideas, with showcases and so on.

Not a lot of global priority. Then you flip it and you think about the consumer, you know, they’ve had linear broadcast models for 70 years where you get what you’re given. I’m gonna play this song at this time and you’re gonna have to listen to it. FM radio, TV shows now they’re empowered with choice and they don’t want that anymore.

They want what’s familiar. What comforts them. They want their own stars performing in their own mother tongue topping those charts. So this has got way to go. Now, a couple of flips on this. Firstly, what does this mean for artists? And then I’m gonna take it out of media, but let’s deal with artists.

Let’s imagine a huge festival in Germany. 80,000 people now festival can now sell out with just German X, no problem at all. So when the big American X or British X commanded like a million dollars a headlining fee, you wanna go play that festival. That promoter can turn around and say, sorry man, I can’t generate any more money by having you on my bill.

How much are you gonna pay me to get on stage? Price maker, price taker? You see what happens. And then the last thing, and there’s so much more in this paper for your listeners to get to, and let’s please link to it and you’ll take, I’ll take questions live on your blog about it as well, but. There’s a great guy called Chris Deering, the father of the Sony PlayStation. Did you play the Sony PlayStation back in the day? Were you’re a fan of the PlayStation. 

[00:28:39] Dan Runcie: Oh, yeah. PS one and PS two. Yeah. Okay. 

[00:28:42] Will Page: You, oh, so you, you’re an OG PlayStation fella. So he’s the father of the PlayStation and launching the PlayStation in the nineties and into the nineties. He offered us observation, which is when they launched a SingStar, which was karaoke challenge.

In the PlayStation, he says, we always discussed why the Swedish version of SingStar was more popular in Sweden than the English version Science. Intuitive enough. Let me break it down. Gaming back then was interactive music was not, you interacted with your PlayStation, that’s why you killed so much time with it. Music was just a CD and a plastic case that broke your fingernails when you tried to open it. That’s how the world worked back then and gaming offered you choice. I could try and do karaoke with those huge global English language hits where I could go further down the chart and buy the Swedish version and sing along to less well known Swedish hits. And the consumer always picked the Swedish version. So as a bellwether, as a microcosm, what I think Chris Ding was teaching us was we saw this happening in gaming long before you started seeing it happen with music. 20 years ago when there was interactive content, which gaming was, music wasn’t, and consumers had a choice, which gaming offered a music didn’t.

They went local. Today, Dan, we’re dealing with music lists, A interactive, and B offers choice. And what we’re seeing is local cream is rising to the top of the charts. 

[00:30:04] Dan Runcie: And we’re seeing this across multimedia as well. We’re seeing it in the film industry too. Even as recent as five, 10 years ago, you release any of the blockbuster movies that were successful in the us, almost all of them had some overseas footprint.

Some of them definitely vary based on the genre, but they were always there. But now China specifically had been such a huge market for the Hollywood and Box office specifically, but now they’re starting to release more of their own high ed movies and those are attracting much more audiences than our export content can one.

Two, the Chinese government in general is just being very selective about what they allow and what they don’t allow. And then three, with that, that’s really only leaving certain fast and furious movies and Avatar. That’s it. The Marvel movies are hit and missed depending on what they allow, what they don’t allow, and how, and it’s just crazy to see the implications that has had for Marvel Studios for everyone else in Hollywood as well.

When you think about it, and we’re seeing this across multimedia, I think there’s a few trends here that makes me think about, one is. Population growth in general and just where those trends are and how different corporations can approach the opportunity. Because I look at Nigeria, you look at Ethiopia, these are some of the fastest growing countries in the world.

And you look at the music that is rising more popular than ever, whether it’s Amapiano or it’s Afrobeats, that’s only going to continue to grow. And that’s only from a few regions in the huge continent of Africa. So when we’re thinking about where success is gonna come from, where that lines up with infrastructure, people have been seeing it for years.

But the reason that we’re seeing the growth in Africa, the growth in Latin America, the growth in a lot of these markets is this trend of globalization and it’s only going to increase. So if we’re thinking about where we wanna invest dollars, where we wanna build infrastructure in the future, we not just being folks that live in the western world, but also elsewhere in the world, this is where things are heading.

[00:32:08] Will Page: Let me come in down the middle and then throw it out to the side. So, Ralph Simon, a longtime mentor of mine, is quoted in the paper and where he’s actually gonna moderate the address here at the Mad Festival here in London, which is for the marketing and advertising community here, where he says, what you’ve uncovered here that headwind of globalization is gonna affect the world of marketing and advertising this time next year.

That’s what will be the buzzword in their head. So if you think about, I don’t know, a drinks company like Diagio, maybe they’ve got a globalized strategy and a globalized marketing budget. When they start seeing that you gotta go fishing where the fish are and the fish are localized, they’re gonna devolve that budget and devolve that autonomy down to local offices. So the wheels of localization, this rise of local, over global, they’ve only just got started, if I’ve called it right. We’re onto something way bigger than a 20 minute read LSE discussion paper. This goes deep, deep and far beyond economics. But then you mentioned as well China, I mean just one offshoot observation there, which is to look at education.

If you look at the UK university system, about a third, if not more, of it is subsidized by the Chinese government and Chinese students here. Great for business, slightly dubious in its business, besties, charging one student more than another student for the same product. But that’s what we do over here.

And I recently, we made a fellow of Edmar University’s Futures Institute, which is an honor to me, you know, gets me back home more often. Fine. And I was learning from them that. The quality of students coming from China to study here in Britain and across Europe is getting worse and worse. Why? Cuz the best students have got the best universities in China.

They no longer need to travel. So there’s a classic export import dilemma of, for the past 10, 15 years, universities have built a complete treasury coffer base of cash around selling higher education to the Chinese. And now the tables are turning. I don’t need to send my students to you universities anymore.

I’ll educate them here. Thank you very much. So, like I say, this stuff is a microcosm. It’s got a can of worms that can open in many different directions 

[00:34:10] Dan Runcie: And it’s gonna touch every industry that we know of to some extent, especially as every industry watches to be global to some extent. This is going to be a big topic moving forward.

Let’s shift gears a bit. One of the terms that was really big for us. That came from our podcast we did last year. We talked about herbivores and we talked about carnivores, and we talked about them in relation to streaming. We haven’t touched on streaming yet, and this will be our opportunity to dig down into it, but mm-hmm.

For the listeners, can we revisit where that came from, what that means, and also where this is heading? What does this mean for music streaming right now as it relates to the services and competition? 

[00:34:54] Will Page: Well, when I first came on Trapital, that was in a small Spanish village of Cayo De Suria and I didn’t think I’d come up with an expression that would go viral from a small village in Spain to be, you know, quoted from in Canada, in America.

And Dan, this is quite hilarious. we have a new secretary of state of culture here in the UK. The right Honorable MP, Lucy Fraser KG, Smart as a whip. Brilliant. And when I first met her, you know what the first thing she said was, I listened to you on Trapital. I wanted to ask you about this thing you’ve got going called herbivores and carnivores.

So right the way through to the corridors of power, this expression seems to have traveled. What are we talking about? Well, the way I framed it was for 20 years we’ve had these streaming services, which essentially grow without damaging anyone else. Amazon is up. Bigger subscriber numbers. Apple’s got bigger subscriber numbers.

YouTube and Nancy’s bigger subscriber numbers. And then Spotify. Nancy’s bigger subscriber numbers. Everyone’s growing each other’s gardens. That’s fine. That’s herbivores. What happens when you reach that saturation point where there’s no more room to grow? The only way I can grow my business is stealing some of yours.

That’s carnivores. And the greatest example is simply telcos. We’re all familiar with telcos. We all pay our broadband bills. How do telcos compete? Everybody in your town’s got a broadband account, so the only way you can compete is by stealing someone else’s business. The only way here in Britain Virgin Media can compete is by stealing some of skies.

The only way that at and t competes is by stealing some of com. So that’s carnival competition. Now, the key point for Trapital listeners is we don’t know what this chapter is gonna read like cuz we’ve never had carus pronounce that word correctly. Carus behavior before. We’ve never seen a headline that said, Spotify’s down 2 million subs and apple’s up 2 million, or Amazon’s up 3 million and you know, YouTube is down 3 million.

We don’t know what that looks like. So I think it’s important for Trapital to start thinking about logical, plausible scenarios. You kick a one obvious one, which is again, a lesson from the telcos. When we do become carnivores, do we compete on price or do we compete on features? Let me wheel this back a second, you know, we’ll get into pricing in more depth later. But downward competition on price tends to be how carnivores compete, and that’ll be a fascinating development given that we’ve not seen much change in price in 22 years in counting or as we saw with Apple, they roll out spatial audio, they charge more for it, they’ve got a new feature, and they charge more for that feature.

So do we see downward competition blood on the carpet price competition, or do we see. Upward competition based on features. I don’t know which one it’s gonna be. It’s not for me to call it. I don’t work for any of these companies. I’ve worked with these companies, but I don’t work for any of them directly.

But we have to start discussing these scenarios. How’s this chapter gonna read when we start learning of net churn amongst the four horseman streaming services that’s out there. It’s gonna be a fascinating twist, and I’m beginning, Dan, I’m beginning to see signs of con behavior happening right now, to be honest with you.

I can see switchers happening across the four, so I think we’re getting there in the US and the UK. What are those signs you see? I’m just seeing that in terms of subscriber growth, it’s a lot bumpier than before. Before it is just a clear trajectory. The intelligence I was getting was, everyone’s up, no one needs to bother.

Now I flag, you know, I signed the siren. I’m beginning to see, you know, turbulence in that subscriber growth. Someone could be down one month, up the next month. Maybe that’s just a little bit of churn. The ending of a trial period, you don’t know. But now for me, the smoke signals are some of those services are seeing their gross stutter.

Others are growing, which means we could start having some switching. I can add to that as well. Cross usage is key here. I really hammered this home during my 10 years at Spotify, which is to start plotting grids saying, who’s using your service? This person, that person, and next person now ask what other services are they using?

And some data from America suggests that one in four people using Apple music are also using Spotify. And one in four people using Spotify are also using Apple Music. Cross usage confirmed. So if that was true, what do you make of that? With a public spending squeeze? With inflation, with people becoming more cost conscious in the economy with less disposable income, maybe they wanna wheel back from that and use just one, not two. And that’s where we could start seeing some net churn effects taking place as well. So, you know, imagine a cross usage grid in whatever business you’re working on. If your Trapital listeners and ask that question, I know who’s using my stuff, what else are they using? Um, that’s a really, really important question to ask to work out how this carnivore scenario is gonna play out.

How are we gonna write this chapter? 

[00:39:54] Dan Runcie: This is interesting because it reminds me of the comparisons that people often make to video streaming and some of the dynamics there where prices have increased over the years. I know we’ve talked about it before to tend to a 12 years ago Netflix was cheaper than Spotify was from a monthly, US price group subscription.

And now tough, tough. It’s right. And now it’s nearly twice the price of the current price point. That it is. The difference though, when we’re talking about when you are in that carnival, when you’re in that carnival market, what do you compete on? Features or price? Video streaming, you can compete on features essentially because the content is differentiated.

If you want to watch Wednesday, that Netflix series is only one platform that you can watch it on. Yeah, you need to have that Netflix subscription, but in music it’s different because if you wanna listen to SZA’s SOS album, that’s been dominating the charts. You can listen to it on any of these services.

So because there are fewer and fewer limitations, at least, if your goal, main goal from a consumption perspective is to listen to the music, how do you then differentiate, which I do think can put more pressure on price, which is very interesting because there is this broader pricing debate that’s happening right now about why prices should be higher.

And we’ve seen in the past six plus months that Apple has at least raised its prices. Amazon has done the same, at least for new subscribers. Spotify has announced that it will but hasn’t yet and this is part of that dynamic because on one hand you have these broader economic trends as you’re calling them out, but on the other hand you do have the rights holders and others pushing on prices to increase.

And then you have the dynamic between the rights holders and then the streaming services about who would then get the increased revenue that comes. So there’s all of these fascinating dynamics that are intersecting with this her before shift to carnivores 

[00:41:54] Will Page: For sure. Let me just go around the block of those observations you offered us. All relevant, all valid and just, you know, pick off a few of them. If we go back to Netflix, I think Netflix has a, not a herbivore. I’m gonna talk about alcohol here cause it’s late in the day in the UK. A gin and tonic relationship with its competitors. That is, if Dan Runcie doesn’t pay for any video streaming service, and let’s say Netflix gets you in and I’m the head of Disney plus, I say, well, thank you Netflix.

That makes it easier for me to get Dan to pay for Disney Plus too. They compliment each other. They are genuine complimentary goods. They might compete for attention. You know who’s got the best exclusive content, who’s gonna renew the friends deal, whatever, you know, who’s gonna get Fresh Prince of Bel Air on?

That could be a switch or piece of content too, but when you step back from it, it’s gin and tonic. It’s not different brands of gin, that’s really important technology, which is they’ve grown this market of video streaming. They’ve increased their prices and the same person’s paying for 2, 3, 4 different packages.

If I added up, I’m giving video streaming about 60 quid a month, and I’m giving music streaming 10 and the sixties going up and the music’s staying flat. So it’s bizarre what’s happened in video streaming because the content is exclusive. Back to, how do music carnivores play out again? Could we see it play out in features?

I listen to airport cause they’ve got classical and I listen to Spotify because it got discovered weekly. Is that plausible? Personally, I don’t buy it, but you can sow that seed and see if it takes root, as well. I think just quick pause and Apple as well. I think two things there. They’ve launched Apple Classical. That’s a very, very good example of differentiating a product because it’s a standalone app like podcast as a standalone app. The way I look at that is you can go to the supermarket and buy all your shopping. You can get your Tropicana orange juice, you can get your bread, get your eggs, get your meat, get your fish or you could go to a specialist butcher and buy your meat there instead. Apple Classical for me is the specialist butcher as opposed to the supermarket, and they’re offering both in the same ecosystem. It’d be incredible if they preload out the next iOS update and give 850 million people an Apple classical app.

Imagine if they did that for Jazz, my friend. Imagine if they did that for jazz. Just if Apple’s listening, repeat, do that for jazz. So there’s one example. The other example from Apple is to go back to bundling. You know we talk about 9.99 a month. I chewed your ear off about this topic last time I was on your show.

Just to remind your listeners, where did it come from? This price point in pound Sterling, in Euro in dollar that we still pay for on the 20th of May, 2023. It came from a Blockbuster video rental card that is when reps, he got its license on the 3rd of December, 2001. Not long after nine 11, a record label exec said if it cost nine 90 nines, rent movies from Blockbuster.

That’s what it should cost to rent music. And 22 years plus on, we’re still there, ran over. But what does this mean for bumbling strategies? How much does Apple really charge? If I give $30 a month for Apple One, which is tv, music, gaming news, storage and fitness, all wrapped up into one price. Now, there’s a famous Silicon Valley investi called James Barksdale.

Dunno if you’ve heard of him from the Bay Area where you’re based. And he had this famous quote where he said, gentlemen, there’s only two ways to make money in business. Bundling and unbundling. What we’ve had for the past 10 years is herbivores. Unbundling. Pay for Netflix, don’t pay for Comcast. Pay for Spotify. Don’t pay for your CDs, fine. What we might have in the next 10 years is carnivores bundling, which is a pendulum, swings back towards convenience of the bundle and away from the individual items. So Apple, take 30 bucks a month off my bank balance. Please take 40. All I want is one direct debit. I don’t care about the money, I just want the bundle.

And I don’t want to see 15 direct debits every month. I just wanna see one. I think that’s a very plausible scenario for how the next 10 years it’s gonna play out as we shift from herbivores to carnivores 

[00:46:02] Dan Runcie: And the bundle benefits, the companies that have the ability to do that, right? You can do that through Amazon Prime and get your video, your music, your free shipping or whatever is under that umbrella. You could do that through Apple. You mentioned all the elements under Apple one. Spotify has some element of this as well, whether it’s exclusive podcasting and things like that. So you’re starting to see these things happen, one thing that you mentioned though earlier, you’re talking about going through the supermarket and all of the items that you could get there versus going to the specialty butcher.

One of the unique aspects of the supermarket thing though, is that. You go into the supermarket, yes, you can get your high-end Tropicana, or you can get the generic store brand, but you’re gonna pay more for that high-end Tropicana because you’re paying for the brand, you’re paying for everything else that isn’t gonna necessarily be the same as the generic one.

That may not necessarily be the same quality or the same taste. We’re seeing this a bit in the streaming landscape now and some of the debates that were happening. You’ve heard the major record label executives talk about how they don’t necessarily want their premium music. They see their content as HBO level and it’s being in a playlist next to rain music, or it’s next to your uncle that is playing some random song on the banjo and they’re getting essentially the same price going to the rights holders for that song.

And in the supermarket that’s obviously very different, each item has its own differentiator there, or econ has its own price point there and its own cost, but that isn’t necessarily the same thing in music. Of course, the cost of each of those tracks may be different, but the revenue isn’t. So that’s gonna be, or that already is a whole debate that’s going on right now. Do you have thoughts on that? 

[00:47:52] Will Page: Well, you tossed top Tropicana, let me go grab that carton for a second. It’s one of the best economic lessons I ever learned was visiting a supermarket in America cuz it’s true to say that when you go into one of your American supermarkets, an entire aisle of that precious shelf space, it’s dedicated to selling inferior brands of orange juice next to Tropicana.

Just very quickly what’s happening there, the undercover economist, if you want, is a bargaining power game. Tropicana knows The reason Dan Runcie pulled the car over, got the trolley, went into that supermarket is to get a staple item of Tropicana and other stuff. By the time it gets to the till, Tropicana could be $5.

By the time he gets to till he spent $50. So here, subscriber acquisition cost contribution is really high. They’re getting you into the mall. What you do once you’re in the mall is anyone’s business, but they got you in. Otherwise you would’ve gone to the deli across the street. So they could say to the supermarket, I’m gonna charge you $7 to sell that Tropicana for $5 in my supermarket.

Supermarket knows this, they know that Tropicana’s got the bargaining paris. They counter by saying, here’s an entire shell space of awful brands of orange juice to curb your bargaining power to see if the consumer wants something different. Now is this Will Page taking a stupid pill and digressing down Tropicana Alley. No. Let’s think about this for a second today, Dan, there’s a hundred thousand songs being onboarded onto streaming services. Is there anybody what? Marching up and down Capitol Hill saying We want a hundred thousand songs. No, the floodgates have opened them. It’s all this content. Two new podcasts being launched every minute.

All this content, all of these alternative brands to Tropicana. But you just wanted one. And I think the record labels argument here is that one Cardinal Tropicana is worth more than everything else you’re offering by its side. So we wanna rebalance the scales. Now this gets really tricky and very contentious, but what is interesting, if you wanna take a cool head on this topic, it’s to learn from the collecting studies, which is not the sexiest thing to say on a Trapital podcast, but it’s to look at your Scaps and your BMIs and understand how they distribute the value of money for music.

Since their foundation in the 1930s, scap has never, ever treated music to have the same value. They have rules, qualifications, distribution, allocation practices, which change the value of music. And they don’t have data scientists then. And to be honest, I don’t think they have data scientists now, but they always have treated the value of music differently.

When they were founded, they had a classical music distribution pot and a distribution pot for music that wasn’t classical music. Ironically, their board was full of classical composers, and I think that’s called embezzlement, but we’ll leave that to the side. What we have here is a story of recognizing music as different value in the world of collecting Saudi.

I call that Jurassic Park, but in the world of music streaming with all those software developers and engineers and data scientists, 22 years of 9.99 money coming in and the Prorata model, which means every song is worth the same for money going out, and that’s your tension. That’s your tension. How do you get off that?

Tension is anyone’s business. We got some ideas we can discuss. User-centric is one, autocentric is another. I’ve got a few ideas for my own, but I want your audience to appreciate. In straight no chaser language we call it. That’s the undercurrent of what’s going on here. How do you introduce Trapitalism to communism?

[00:51:09] Dan Runcie: You mentioned there’s artist centric, user-centric, but you mentioned some ideas you had of your own. What are those ideas? 

[00:51:15] Will Page: Can I bounce it off? Use my intellectual punch bag for a quick second. Yes, and I’ve worked ’em all. I’ve worked on the artist centric model. I’ve worked on artist growth models. That’s up on YouTube. I’ve worked on user centric, but I’m just, I’m worried that these models, these propositions could collapse the royalty systems that these streaming services work under. The introduction of user centric or artist centric could become so complex, so burdensome, the royalty systems could break down.

That’s a genuine concern I have. It’s not one you discuss when you talk about your aspirations and the land of milk and honey of our new streaming model that you envisage. Back in the engine room when you see how royalties are allocated and calculated and distributed out to right holders, I mean they’re under stress anyway.

Any more stress could snap it. So I come at this model, my proposition from the one that’s least likely to break the system. I’m not saying it’s the best model, but it’s the least like least likely to have adverse impact on the system. And it came from my DCMS Select Committee performance in the UK Parliament, which your listeners can watch, we can give the link out, which is I said to the committee in terms of how you could change the model.

What about thinking about duration? This wheel back since 1980s when B BBC radio plays, let’s say Bohemian Rhapsody, it will pay for that song twice what it would pay for. You’re my best friend, members of Queen wrote both songs, both released within three, four years of each other, but one lasts twice as long as another.

So duration is not new. We factor in duration a lot in our music industry. We just never thought about it. If you look at Mexico, the Mexican collecting Saudi, which is so corrupt as an inside an army barracks, if you look there, they have sliding scales, duration. They factor in time, but they say the second minute is what?

Less than the first. But I’m giving you more for more time just adding, decreasing scale. Germany, they have ranges in your country. America, mechanical licensing collective, the MLC in Nashville, they have overtime songs that last more than six minutes get a 1.2 multiplier. So I’ve been thinking about how could you introduce duration to this business?

And the idea I’ve come up with is not to measure time. That’d be too complex, too burdensome. Every single song, measuring every second of consumption. How do you audit there? If you’re an artist manager, but I wanna measure completion, then I think this is the answer. I want songs that are completed in full to receive a bonus and songs that are skipped before they end to receive a penalty.

Not a huge bonus, not a huge penalty, but a tweak. A nudge that says, I value your attention. I value great songs, and you listen to these great songs and it captures my entire attention. You deserve something more. But if I skipped out after the first chorus, you deserve something less. I think that small nudge is a nudge in the right direction for this industry, and it wouldn’t break the systems.

So there it is. Tell me now, have I taken a stupid pill? 

[00:54:13] Dan Runcie: What I like about it, and I’ve heard other people in the industry mention this too, you’re able to get something closer to what we do see in video streaming. I forget which app is specifically, but their threshold is 75%. So they acknowledge that yes, if you don’t wanna watch the credits, you don’t wanna listen to the closeout, that’s fine.

But if we at least get you for 75%, then we are gonna count that, and then that then can get used internally. That can then get used in different areas. But I think it provides everyone better data and analysis, much better data to be able to break down than. Whether or not you listen to the first 30 seconds, that’s such a low threshold, but that’s essentially where we are today.

I think the biggest thing, regardless of what path is chosen, because as you and I both know, there’s trade-offs to everyone. So instead of going through all the negative parts about it, I think it’s probably more helpful to talk about it collectively, you accept the fact that there are trade-offs. You accept the fact that people are gonna try to game the system regardless of how you go about it.

Because we have seen duration work elsewhere and it does get at that particular thing that we’re trying to get at there is help there. And you mentioned other things such as, yes, if you’re listening to the Bohemian Rhapsody, you, which I think is at least seven minutes and 15 seconds, most likely longer versus two minute song that is clearly idealized for the streaming era.

There still should be maybe some slight difference there because listening to a minute and 30 seconds is very different than listening to five minute and 45 seconds to be able to hit that 75% threshold. So between that and then I’ve heard other topics such as which artists you start your session with should have some type of multiplier on there, and as opposed to someone that gets algorithmically recommended to you to be able to put some more onus on the on-demand nature of music streaming.

The tough thing is that these things do get tough in general. Anytime there’s any type of multiplier or factor in, there still is a zero sum pot that we’re taking the money out of. So accepting the trade-offs, I like the direction, I think that there’s a few ways to go about it that could make it more interesting, but in general, I do think that any of the proposed options I’ve seen at least, allow a bit more of a true economic reflection of where the reality is as opposed to where things are today.

And I understand where things are today. It’s easy. It’s easy to report, it’s easy to collect on and pay people out, relatively speaking. But like anything, there’s trade offs. 

[00:56:44] Will Page: Yeah, it’s really easy today. Even drummers can work out their royalties and no offense to drummers, but that’s telling you something.

But two points on my duration proposal. Firstly, you mentioned the word threshold there. That’s crucial because we already have thresholds. Music, every streaming service has to measure 30 seconds, one interrupted play in order for our royalty to be crystallized. So I’m just adding a second threshold.

I’m not reinventing the wheel. It’s low marginal cost. Here I’m just saying, gimme the threshold of completion. I don’t care how long the song is and how much of that song was consumed. Just tell me did it get to the finishing line, yay or nay. And remember that threshold has anomalies, as I tell in the book Pivot, and previously is a hardback tar in economics.

That 32nd threshold is like the tail wagging the dog. You’re seeing songs are getting shorter and the choruses are moved to the front. Why? Cause I got a hook you for 30 seconds. I don’t care what happens after 31 seconds, just get me 30 seconds. And why should I write a longer song when I’m not incentivized to do so?

So the grass isn’t greener back on the other side of the fence. There’s problems with our current model, and I think a way of like, Steering it back towards an attention economy is gonna help music win. Kevin, Netflix says that sleep is their biggest form of competition, but also valuing the art of songwriting.

Let’s get back to the song. Let’s put the artist back in the haystack and focus on the art, the creative process a bit more too, and reward that when it’s consumed, it’s an entirety. Second thing and final thing to wrap up on, Dan, can I quickly tell you about a wedding I was at recently? Yeah. Well I love weddings cause you get to wear your kil.

That’s always a nice talking point. But I also love them because you get to speak to bands. I always forget to speak to the bride and groom. I just drift over to the band after the reception’s over and chat to the band instead. And I was at a wedding recently and the band was there and they played celebration by Cool and the gang for the bride and the groom.

They played a second song for their parents to come and join on the dance floor. Then the band went into a two hour, 50 minute medley, nonstop right away through the evening didn’t stop. It’s like, wow, the band were tight. Went over to them at the end of it, said Drums, bass, you are in syncopation. I could see like, you really are a tight band, but what earth were you doing?

Doing a two hour, 15 minute medley. And they said, it’s TikTok. Nobody wants to hear complete songs anymore. And my Pint Glass dropped the floor and they said that. I was like, Scott’s people don’t drop their drinks. But I dropped on this occasion because, what did you say? It’s TikTok. Nobody wants to hear a full song.

They just want snippets. So we just do mes instead. Now forget the economics and the legal arguments. That makes me worried about which path music is currently on. Right there we are in an attention economy and I think it’s got a little bit wared. We’ve got a straight up on the tracks. So I think this proposal’s got legs.

[00:59:27] Dan Runcie: That’s that story. That wedding from that, that story from that wedding you went to, that’s like the Steve Lacy example, right? He went to his concert. His concert has been doing very well because of his song, bad habit. But then the people that are. At his show, the fans that are there, they could only recite that one instance of the song that’s on TikTok.

I don’t like, not even the whole song, just that one instance of the song that are on TikTok. Granted, Steve Lace has been making music for a while. It wasn’t all the fans that were there, but with this influx of him not being able to perform in bigger venues, people wanna hear this song. It’s one thing for years we’ve become accustomed to musicians performing for audiences that only know their hit.

Singles are the one that got the music video, but now a lot of them are experiencing hearing their fans only repeat back. That one moment that went viral on TikTok. 

[01:00:19] Will Page: What’s this? It’s called verse two. If you stick around long enough, you’ll hear a third one as well. You know what? It made me also just play that one off with me here, which is that famous Fleetwood Mac clip that blew up on TikTok.

Guy hanging off the back of the truck drinking a bottle of soda Singing Dreams. A 1981 song by Fleetwood Mac. It’s 34 seconds, couple of things, firstly, that had about 90 million views, but had 843,000 impersonations on TikTok of people hanging off the back of a truck pretending to sing a Fleetwood Mac song.

But secondly, could you have a Gen Z millennial go and pay like 120 pounds to see them at Wembley Stadium, the cost of a streaming service for a year who’s only ever consumed 34 seconds of their repertoire? I mean, that’s not implausible, right? What type of world are we living in , albums anyone? Sometimes, 

[01:01:06] Dan Runcie: And sometimes that’s all it takes, sometimes that’s all it takes, right? In some ways, the fact that we saw that much user-generated content from it, hundreds of thousands as you’ve just shared in that example, is huge. But it’s crazy and this is actually a good transition to talk about AI because so much of the AI music that is relevant and has been top of discussion has been based off of popular artists.

We know we’re talking about the AI that’s based on a viral song from the Drake and the weekend. Granted, that song got a lot of buzz, especially when it first came out. I don’t know how many repeat listens it’s gotten since, but that’s not necessarily the point. None point more so none. Exactly, exactly, right?

[01:01:50] Will Page: 20 million streams from 20 million listeners. Nobody streamed it twice, trust me. 

[01:01:56] Dan Runcie: You gave in at least one stream though, right? You gotta give it a blessing, right? What was your thought? 

[01:02:04] Will Page: Well, I’m gonna hand the torch over to Jessica Powell, the founder of Audio Shake, who I think is the most exciting company in music tech right now. And point your listeners towards her CK blog posting, which is this whole Drake Week weekend thing. Isn’t it just a fuss over a remix? Paraphrasing the title, and it’s a beautiful, that woman is inspirational, but she can write. She can write, which is like grabbing you by the luquette lapels and shaking seven shades of shit out of you.

She really uses the power of the pen to express her words, to go back to remix culture. So I think inspired from her work. I would say two things here. I think the thorny legal issue that’s going on here is consent. We’ve had remix culture for years. We’ve had computers involved in music creation for years.

We need to see that in a continuation. But if you think about language of deep fakes, if I could manipulate the voice of Dan Ronsey and put that over a record without his consent, that’s a red light, you know, I’m not being paranoid here, but there’s a line that cannot be crossed. Dan once did not say those words, a computer generated those words. You could be liable for those words. How do we solve that? That’s not just music, there’s a whole, that’s a whole spectrum of issues out there in society today that are gonna be affected by that. Music is a bell weather. That’s a microcosm. It’s the one that always gets hit first, but the rest are reaction stacked and ready to tumble.

But on the positive side, you flip it from risk to opportunity. We think about catalog uplift for a second. That is how can release of new content drive demand in all content? As I’ve been saying, to record labels since 2018. That’s a secret source. That’s what you’re trying to correct. The purpose of a new album is not just make that new album a splash.

Get it to the top of the charts. Make sure you’re in today’s top hits. It’s can you get the new fans to go back and listen to the old content? For some artists, it works. For others it doesn’t. Do you fix what’s broken or work with what’s fixed? The greatest example is an artist that would love to hear on Trapital , Eminem, needs no introduction.

When I look at his streaming data, All he needs to roll outta bed fart and burp on Spotify, and his catalog goes through the roof. His new content has got nothing to do with new content. It just inspires people to go back to the late nineties and early nineties and all those releases, which were so big back then.

The new content’s great. No disrespect, but it’s like a reminder that there’s this amazing catalog that you want to hear again and again, and it’s a valuable catalog because that stuff is already recouped. A catalog dollar is worth way more to the bank account than a frontline dollar. There are other artists who can’t make it work, and it’s just for me.

What happens if AI music solves that secret source of catalog uplift? So, here in the UK, we here at Platoon Studios are next door to Noel Gallica from Oasis, and there was recently an AI generated oasis, which is getting Noel Gallica Liam Gallica back together again. Artificial intelligence achieved this.

Human beings can’t achieve this. The two brothers don’t get along, but AI sold it. That’s cool. And Liam gave it a thumbs up. He’s like, I love this walking. Good stuff. I’m not offended by ai. I embrace this. What did we see? No, a small spike in the AI version. A big spike in Oasis catalog. So for all the fear and paranoia on this topic, once we realize it can regenerate interest in catalog, I think you’ll see the tables turn the sentiment change in our New York millisecond. Literally, they’ll be like, I can make bucks out of this. This is a force of good, not a force of bad. 

[01:05:36] Dan Runcie: I would hope that that’s what people take away from this whole narrative is that if you are the owners of the back catalog of Drake in the weekend, you probably saw some type of noticeable bump.

Because even if people don’t want to hear that song, they’re still gonna go back and stream worse behavior, which in my opinion, is one of Drake’s best songs because they want to hear that time and time again. Mm-hmm. And I think too, I’m glad you brought up Jessica and Audio Shake. I’m a small investor in the company and one of the things that I think she did well in that piece and others she’s done is just laying the table stakes for where we are because.

Even if the song itself isn’t that good, A, I don’t think we’re at the point yet. We may get there eventually with AI, but I don’t think we’re at the point yet where people will listen to this music as a replacement. But if it could remind you of what’s already there, that’s what’s valuable. If you let fans experiment and get them to play around with the tools that are available and upload their music as long as it can fit within certain parameters and isn’t violating anything or trying to impersonate the artist itself, you can let them freely create in a way that even 10, 12 years ago, there are all these questions about people putting their songs on putting artist song on YouTube as user-generated content in a video.

And over time you two was able to figure out how to get tagging properly so that artists could still be compensated for problem. Exactly. So that is possible, and I do think that eventually we can hopefully get to that point and I’m glad you mentioned Eminem. Two stats that always blow my mind, I’m sure you probably saw this one, but his 2005 Greatest Hits album was the sixth bestselling album, or the sixth bestselling hip hop album.

I forget the exact stat, but it was one of the bestselling albums in the UK last year. And Lose Yourself is the most streamed song on Spotify from the two thousands. So when we talk about longevity and we talk about him, I mean, people already knew him as the bestselling artist of the two thousands, but when we see those numbers and you see these catalog sales and all of that, if he ever made a decision, I don’t know what his ownership structure, what share he has looks like, but if he ever had a decision, the amount of people that go back to his music to work out and everything else, it’s one of the most valuable catalogs of music.

[01:07:55] Will Page: And he owns it all right? The rights are reverted back to him. So he’s got a hundred percent ownership on that. 

[01:08:00] Dan Runcie: Oh, wow, I didn’t know that. Wow. 

[01:08:02] Will Page: So, but the bigger point, and I know that the Trapital has a huge audience. It’s an honor to address them here and now. And it’s a broad church. I mean, the Secretary of State for media and culture in the UK Parliament, it’s a big listener, obviously.

So I wanna land that point, which is don’t hand this off to the lawyers to solve because they’re gonna be too risk averse and they can’t see the wood from the trees. There’s a huge opportunity here. And those same balanced voices like Jessica Powell from Audio Shake, I want them to be rise up so we can counter the risk aversion from the lawyers.

Lawyers will do what they do best, but I describe in any workplace, there’s two types of people. There’s a yo squads and there’s a no squads. And lawyers more often than not are no squads. They think of reasons why you can’t do something. So I just wanna make sure we balance it with some people from the Yo squad so that we don’t choke this off before the party can really start.

There’s so much opportunity and let me remind your listeners as well, Jimmy Hendrix, the greatest export from America to Britain of all time. He came here in 1966, I believe, maybe 65, 66. And the label that first did a deal with him, the label owner, who I won’t name, but I’ve seen the picture, had a plaque above his office.

So this is 1966. Okay? And the plaque said, the day that we can get computers to replace drummers is when we can have a proper music industry. And just keep in mind historical context. Music’s a ride and we’re on this trip forever. We’re not getting off anytime soon. This is just part of that ride, and that’s what I loved about Jessica’s essay.

It’s just a reminder that we’re just on a ride here and AI is just the next stop on the train line. There’s more stops to come. 

[01:09:43] Dan Runcie: Agreed. Music is always gonna be there. It’s like water, right? We have to understand where the technology’s heading, but that’s where it is. Well Will, before we close 

[01:09:53] Will Page: Along with the typewriter.

[01:09:55] Dan Runcie: Exactly. Exactly. Well Will, before we close things out, it’s great. This podcast, the base of it is the business of music, but you yourself are a dj and you have this incredible mix that you put out every year. It was an honor to provide one of the drops forward, but tell us a little bit about the mix and what to expect this year.

[01:10:14] Will Page: I’m so excited to, uh, launch this mix that’s going out on Friday. Friday is an important day on the calendar. It’s gonna be 50 years since Carol King performed in Central Park to a hundred thousand people for free 50 years since release of our album fantasy. And this year’s mix is called 2023. Believe in Humanity and That word, you know, believe that expression, believe in Humanity, is the name of one of the songs on that Carol King album. Now, just wheel back for a second, you say, Carol King, most people think of tapestry, a Willie jumper and a cat, and you need a friend with James Taylor. Get it?

I mean, that song got me through my third year at university. But if you listen to fantasy, she does funk, and she doesn’t just do funk. She does funk better than anyone. You think you’re in the song Cho Rathon, and she’s doing deep, dirty, aggressive funk. You know me and you, our music tastes are similar. We don’t drink tea without sugar.

This is tea with lots of sugar. This is incredible funk music, and she just knocks it out the park like, touch me if you can. Best funk record I’ve heard is Fantasy by Carol King. So I’ve named the song The Mix 2023 Believe in Humanity. After that song, the mix opens with that, but more importantly, Dan, it opens with a speech from Carol King exclusively to me.

And that’s for a kid from Edin Pro. He’s been doing mixed tapes out of his bedroom since he was going through puberty. I’ve now got Carol King opening my mix. Do I need to say more? I gotta say more. There’s so much more. Nile Rogers is in the mix. Anderson Peck is in the mix. Dan Runcie’s got a shout out in the mix, and we’ve got Kyle O’Leary, who I think is the most promising hip hop artist out there today.

We have her and we’ve messed around with her track players. We’ve given it the edge of, you know, Dave MacAllum’s music. We’ve given it the edge. There’s a hint to your listeners, we’ve got it all. So, I mean, I put so much emotional time and effort into making these mixes happen and going out for free.

They get your DJ slots, but more importantly, it goes back to what makes me wanna work in music, which was a lyric from Mike G and the Jungle Brothers from that famous album done by the forties of Nature, where he said, it’s about getting the music across. It’s about getting the message across. It’s about getting it across without Cross Nova.

How can I get art across an audience without delegating its integrity? And it’s such an honor to have this mixed drop in this Friday to do just that and to have Carol King open it. I mean, that’s, made my year and we’re not even into June yet. 

[01:12:38] Dan Runcie: That’s special. That’s special. Well, we’re excited to drop that and share it as well, especially around the time this episode comes out.

So please share that link once it’s ready. And Will, as always, it’s been a pleasure. We covered so much in this episode. And before we let you go, where can people follow along to stay tuned with you for the next post that you put out for the next thing that you publish? Where can they, stay to follow along?

[01:13:02] Will Page: Sure, I mean a couple of of tags. Firstly, the website, tarzaneconomics.com. I mean, I built that to be a resource for industry professionals, for students alike so they can navigate the spaghetti of this music industry. 

[01:13:14] Dan Runcie: Well soon be pivot.com though. Check me there. You gotta have a website that does well at airports.

[01:13:18] Will Page: I got the dopple ganger pivotal economics.com gets you to the same place, so I Oh, nice to resurrect it for the paperback. Lucky I got that too, just in the nick of time. very active on LinkedIn. will page on LinkedIn, you’ll find me there. and then also on Twitter it’s Will page as well. But yeah, when this mix drops, it’ll be great to get feedback from chapter listeners. So please comment and please, please, please share, get the music across without crossing over. 

[01:13:44] Dan Runcie: Thank you Will, it’s been a pleasure. 

[01:13:46] Will Page: Thank you so much, Dan.

[01:13:47] 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 travel continues to grow and continues to reach the right people. 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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