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The Music Industry: A Tale of Two Cities

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Hey! Today’s episode is about a side of the business that doesn’t get talked about: the people who make music, but have less desire to rely on it commercially. I talked about all this and more with Splice CEO Kakul Srivastava. You can listen here or read a few highlights below.

The industry’s forgotten city

Most of the music industry wants to maximize streaming revenue. It’s the rising tide that lifts most boats for the major labels, streaming services, brand agencies, indie distributors, publicists, lawyers, artist managers, and everyone in between.

But what about the people who make music without any desire for commercial gain? They make music because it speaks to them. It’s meaningful in the same way that millions pursue photography without dreaming of working for Getty Images. Or run marathons without the desire to compete professionally.

The music industry often refers to these musicians as “hobbyists” or “middle-class musicians,” but that framing is still in the lens of commercial success. Not all hobbyists are struggling 20-somethings with multiple roommates and working side jobs, frustrated that they aren’t the next Summer Walker. Some hobbyists make a very healthy living in their 9-to-5 careers and are willing to invest time and money into their music.

This isn’t uncommon. Many well-paid execs who run the music industry (and read this newsletter) still make music or play instruments regularly! If music is a tale of two cities, then this is the forgotten city that Kakul Srivastava and I discussed in this episode.

These musicians are often overlooked because it’s believed that the market is less lucrative. In the streaming era, we’ve seen several venture-backed distributors take cuts of streaming revenue as their business model, try to serve all musicians, realize it’s less profitable to help everyone (given their business model), try to charge more for their services, receive customers complaints, then shift focus to users who generate the most streams. It’s like clockwork.

In our chat, Kakul talked about her time at Adobe, where Photoshop, a $20 per month product that generates billions, has a large customer base of creatives. Some are professional, but many aren’t.

What if other music software companies had a wider range of business models and marketing messaging? If the business model is less reliant on streaming revenue, then the incentives shift to serving customers independent of their commercial success. If the marketing shifts away from the “make a living off of your work” rhetoric, another segment can be reached.

You can listen to our conversation here or read more highlights below.

Finding the right balance with AI music

In our chat, we talked about push-button creativity. “You type a bunch of words, and poof! A song comes out.” AI can do this, but that’s not what creatives or listeners want. AI can enhance and amplify great music, but it works best when humans are at the center.

In Splice’s tool development process, Kakul said that users told them, “Hey, this kind of feels like cheating.” So Splice pulled back some of the capabilities and gave users more control.

This is a reminder that we’re still in the early days of AI. If AI is indeed the game-changer we expect, like the internet and mobile were, then we’re still early.

AI music can be anything from that viral Drake and The Weeknd song to a future masterpiece by a legendary music producer to the music maker who wants to bring their dreams to life. The definition is broad, and several companies focus on each part. I’m excited to see how it all plays out.

Increasing music’s addressable market

Splice wants to grow by inspiring more people to create music. The business already reaches tapped-in music makers who have used DAWs and other alternative tools.

The next stage of customers to acquire are those who may not see themselves as musicians. They may have played an instrument in grade school or want to try something new. The most transformative businesses often increase their total addressable market through inspiration.

Nike made the average person believe they’re an athlete. They do this by celebrating athletes—from Olympic world champions to parents who work out before their kids wake up. Shopify did the same with entrepreneurs. They made it easier than ever to spin up a store, and they celebrate everyone from Kylie Cosmetics to the pop-up online merchants. And Instagram did the same with photography.

Music can get there. It’s a more challenging job to do than Nike since being an athlete is directly tied to health and fitness. It’s harder than Instagram, which grew alongside smartphone adoption. But I believe millions of people out there want to tap in more, would love to explore, and just need the right amount of inspiration to cross that hurdle.

If you liked this breakdown, check out the rest of our episode. We covered:

– Why 90% of current AI technology is terrible
– Splice’s future plans
– Leading with empathy

Listen to the episode here or watch below on YouTube:

Dan Runcie

Dan Runcie

Founder of Trapital

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