'More Songs, But Not More Streams': Former Spotify Executive on the Future of Music Technology

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

'More Songs, But Not More Streams': Former Spotify Executive on the Future of Music Technology

dot.LA sat down with Will Page, former chief economist of Spotify, and Ed Buggé, partner at leading L.A. entertainment law firm Hertz Lichtenstein Young & Polk, to discuss the future of music tech. The two explore livestreaming post-pandemic, the growing glut of music fighting for attention and potential new streaming regulations.


Assume the pandemic is over and we're all waking up to whatever resembles business-as-normal in the world of music and tech. What jumps out to you?

Will Page (WP): Live Nation's stock price has already reached its pre-pandemic peak, suggesting the market's mood is that we're indeed well on our way back to normal. But all the advancements in livestreaming won't go away once live music returns. The question is, how do they coexist?

Ed Buggé (EB): The sense of what's "normal" in music and wider media is constantly being challenged and disrupted, with the pandemic accelerating much of that change. That's what's so exciting about where we are now: There won't be a return to old ways of doing things.

Returning sectors like live concerts will coexist alongside new developments like the increased volume of livestreaming, which proliferated as artists used them to connect with fans during lockdown. Which livestreaming companies thrive once things normalize will depend on the quality of their tech, including VR and AR components that offer fans an immersive experience worthy of their attention in a world where physical shows are once again an option, (and) how well they enable artists to reach audiences on a previously unprecedented scale.

Will Page

Will Page was Spotify's chief economist.

How does music's battle for attention look coming out of the pandemic?

EB: Competition for attention is only going to increase as post-lockdown life returns. Livestreaming and live concerts is just one example. There will be more songs, as independent distributors and service providers continue to grow. Social media, gaming and fitness industries will likely increase their power to dictate viral hits. And artificial intelligence will keep shaping music discovery and listening experiences – including "lean back" listening while other activities command our attention.

WP: Audio streams flattened in the second half of 2020 - that's a trend worth watching in 2021. We can expect more subscribers and more songs, but not more streams. The constraint of attention — only 24 hours in a day — will keep biting as kids game, teens TikTok and adults podcast.

Given that constraint, what's your take on whether 2020's flurry of investment into music copyright will continue?

Ed Bugge

Ed Buggé is a partner at L.A. entertainment law firm Hertz Lichtenstein Young & Polk.

EB: Publishing catalogues are now firmly established as an asset class. The eye-catching prices being paid for them, with some acquisition multiples above 20-times annual earnings, is a long-term investment relying on the assumption that hit songs will continue to command attention for decades. Given the competition between potential purchasers right now, it's a great time to be an established songwriter with a catalogue to sell.

WP: I think there's too much trajectory logic at the moment. It's worrying that some people think that as the pie gets bigger, a given catalog's share of the pie will remain the same. There are too many variables (and not enough equations) for past performance to be a good indicator of the future. The next cohort of listeners could have a completely different demographic, geographic and cultural makeup from the last.

How can talented musicians get ahead of the curve when it comes to technological trends and position themselves for success?

EB: In such a crowded marketplace there needs to be something remarkable about what you are doing. The music, your story – the creative needs to stand out.

Once you've leapt that hurdle, the artist teams that will stay ahead are those who are prepared to embrace change. At the start of the year, breaking tracks through TikTok or gaming collaborations were innovative strategies; now they've quickly become established methods. That's the pace of change that we are seeing at the moment. So the question is - what's next and how can you be a part of it?

WP: Here's one example: I'm obsessed with the 'early access' model in gaming, where you monetize a new game whilst it's still in development. Minecraft is an early example, but to date, it rarely happens anywhere outside gaming. I think that may be about to change. Music can't afford to disappear into the studio for two years any more. It'll need to pivot and monetize whilst still in the studio.

The British government is currently examining whether the streaming economy needs reform. How might that ultimately ripple into the broader world of music-tech?

WP: This is a big one. Expect contagion as many more major music markets are called up in front of their respective governments in 2021 as politicians seek to establish (a) whether the streaming model is fair and (b) if it's not, whether intervention is merited. What's been made clear is there's a problem with the 'trickle down' economics of streaming. The UK government has a first-mover opportunity to explore ways of fixing this.

EB: With the pace of change in music and media, you inevitably have a legal and regulatory framework that has to play catchup. If the British government looks to enact legislation to alter the economics of streaming in favor of the artist, then it may act as a standard that regulators in other territories follow.

WP: Radio and television are heavily regulated, but streaming is not. The U.K. is taking steps to work out the 'if' and 'if so, how?' and the U.S. should be tracking developments here closely.

Beyond what we've covered, what else will you be watching for in 2021 music tech?

EB: Technology will continue to enable an increasingly direct relationship between artists and their fans. For example, providing access to exclusive content, physical and virtual merch drops and livestreaming concerts, as well as the ability for fans to communicate more directly, both with artists and with each other.

WP: Kevin Kelly (co-founder of "Wired") penned his 1,000 True Fans essay back in 2008, predating the launch of streaming. Now, it feels like we're subconsciously revisiting it. After all these years of success in music streaming with Amazon, Apple and Spotify, it's still largely impossible to directly pay for your favorite artists, nor can you communicate with them. You're seeing companies like Twitch make impressive moves into this space; MixCloud is also fostering direct relationships with curators. There's going to be more of that in 2021. Fans want to express their love to their artists directly, not via a platform.

Finally, what's in store for the Los Angeles music tech world in 2021?

EB: In L.A. we're seeing a wave of media and technology startups that will continue to disrupt and drive change in the industry. The high activity levels across fundraising and M&A also seems set to continue, as new players enter the market and incumbents focus on future-proofing their business models in such a fast-evolving landscape. There are few more exciting places to be right now.

WP: I'm not a native of Los Angeles, (as much as I want to move there), but what always strikes me about the city is the diversity of its people: Little Tokyo, K-Town, Tehrangeles, even one or two fellow Scots. Yet what I still don't see is media serving these expat populations. This is a universal problem and it leaves money on the table. I'd be hopeful that we'll see a new startup solve for curating to the diaspora in 2021.

This interview has been edited for brevity and clarity.

https://twitter.com/hisamblake
samblake@dot.la

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AI Is Rapidly Advancing, but the Question Is, Can We Keep Up?

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
AI Is Rapidly Advancing, but the Question Is, Can We Keep Up?
Evan Xie

One way to measure just how white-hot AI development has become: the world is running out of the advanced graphics chips necessary to power AI programs. While Intel central processing units were once the most sought-after industry leaders, advanced graphics chips like Nvidia’s are designed to run multiple computations simultaneously, a baseline necessity for many AI models.

An early version of ChatGPT required around 10,000 graphics chips to run. By some estimates, newer updates require 3-5 times that amount of processing power. As a result of this skyrocketing demand, shares of Nvidia have jumped 165% so far this year.

Building on this momentum, this week, Nvidia revealed a line-up of new AI-related projects including an Israeli supercomputer project and a platform utilizing AI to help video game developers. For smaller companies and startups, however, getting access to the vital underlying technology that powers AI development is already becoming less about meritocracy and more about “who you know.” According to the Wall Street Journal, Elon Musk scooped up a valuable share of server space from Oracle this year before anyone else got a crack at it for his new OpenAI rival, X.AI.

The massive demand for Nvidia-style chips has also created a lucrative secondary market, where smaller companies and startups are often outbid by larger and more established rivals. One startup founder compares the fevered crush of the current chip marketplace to toilet paper in the early days of the pandemic. For those companies that don’t get access to the most powerful chips or enough server space in the cloud, often the only remaining option is to simplify their AI models, so they can run more efficiently.

Beyond just the design of new AI products, we’re also at a key moment for users and consumers, who are still figuring out what sorts of applications are ideal for AI and which ones are less effective, or potentially even unethical or dangerous. There’s now mounting evidence that the hype around some of these AI tools is reaching a lot further than the warnings about its drawbacks.

JP Morgan Chase is training a new AI chatbot to help customers choose financial securities and stocks, known as IndexGPT. For now, they insist that it’s purely supplemental, designed to advise and not replace money managers, but it may just be a matter of time before job losses begin to hit financial planners along with everyone else.

A lawyer in New York just this week was busted by a judge for using ChatGPT as part of his background research. When questioned by the judge, lawyer Peter LoDuco revealed that he’d farmed out some research to a colleague, Steven A. Schwartz, who had consulted with ChatGPT on the case. Schwartz was apparently unaware that the AI chatbot was able to lie – transcripts even show him questioning ChatGPT’s responses and the bot assuring him that these were, in fact, real cases and citations.

New research by Marucie Jakesch, a doctoral student from Cornell University, suggests that even users who are more aware than Schwartz about how AI works and its limitations may still be impacted in subtle and subconscious ways by its output.

Not to mention, according to data from Intelligent.com, high school and college students already – on the whole – prefer utilizing ChatGPT for help with schoolwork over a human tutor. The survey also notes that advanced students tend to report getting more out of using ChatGPT-type programs than beginners, likely because they have more baseline knowledge and can construct better and more informative prompts.

But therein lies the big drawback to using ChatGPT and other AI tools for education. At least so far, they’re reliant on the end user writing good prompts and having some sense about how to organize a lesson plan for themselves. Human tutors, on the other hand, have a lot of personal experience in these kinds of areas. Someone who instructs others in foreign languages professionally probably has a good inherent sense of when you need to focus on expanding your vocabulary vs. drilling certain kinds of verb and tense conjugations. They’ve helped many other students prepare for tests, quizzes, and real-world challenges, while computer software can only guess at what kinds of scenarios its proteges will face.

A recent Forbes editorial by academic Thomas Davenport suggests that, while AI is getting all the hype right now, other forms of computing or machine learning are still going to be more effective for a lot of basic tasks. From a marketing perspective in 2023, it’s helpful for a tech company to throw the “AI” brand around, but it’s not magically going to be the answer for every problem.

Davenport points to a similar (if smaller) whirlwind of excitement around IBM’s “Watson” in the early 2010s, when it was famously able to take out human “Jeopardy!’ champions. It turns out, Watson was a general knowledge engine, really best suited for jobs like playing “Jeopardy.” But after the software gained celebrity status, people tried to use it for all sorts of advanced applications, like designing cancer drugs or providing investment advice. Today, few people turn to Watson for these kinds of solutions. It’s just the wrong tool for the job. In that same way, Davenport suggests that generative AI is in danger of being misapplied.

While the industry and end users both race to solve the AI puzzle in real time, governments are also feeling pressure to step in and potentially regulate the AI industry. This is much easier said than done, though, as politicians face the same kinds of questions and uncertainty as everyone else.

OpenAI CEO Sam Altman has been calling for governments to begin regulating AI, but just this week, he suggested that the company might pull out of the European Union entirely if the regulations were too onerous. Specifically, Altman worries that attempts to narrow what kinds of data can be used to train AI systems – specifically blocking copyrighted material – might well prove impossible. “If we can comply, we will, and if we can’t, we’ll cease operating,” Altman told Time. “We will try, but there are technical limits to what’s possible.” (Altman has already started walking this threat back, suggesting he has no immediate plans to exit the EU.)

In the US, The White House has been working on a “Blueprint for an AI Bill of Rights,” but it’s non-binding, just a collection of largely vague suggestions. It’s one thing to agree “consumers shouldn’t face discrimination from an algorithm” and “everyone should be protected from abusive data practices and have agency over how their data is used.” But enforcement is an entirely different animal. A lot of these issues already exist in tech, and are much larger than AI, and the US government already doesn’t do much about them.

Additionally, it’s possible AI regulations won’t work well at all if they aren’t global. Even if you set some policies and get an entire nation’s government to agree, how to set similar worldwide protocols? What if US and Europe agree but India doesn’t? Everyone around the world accesses roughly the same internet, so without any kind of international standard, it’s going to be much harder for individual nations to enforce specific rules. As with so many other AI developments, there’s inherent danger in patchwork regulations; it could allow some companies, or regions, or players to move forward while others are unfairly or ineffectively stymied or held back.

The same kinds of socio-economic concerns around AI that we have nationally – some sectors of the work force left behind, the wealthiest and most established players coming in to the new market with massive advantages, the rapid spread of misinformation – are all, in actuality, global concerns. Just as the hegemony of Microsoft and Google threaten the ability of new players to enter the AI space, the West’s early dominance of AI tech threatens to push out companies and innovations from emerging markets like Southeast Asia, Subsaharan Africa, and Central America. Left unfettered, AI could potentially deepen social, economic, and digital divisions both within and between all of these societies.

Undaunted, some governments aren’t waiting around for these tools to develop any further before they start attempting to regulate them. New York City has already set up some rules about how AI can be used during the hiring process while will take effect in July. The law requires any company using AI software in hiring to notify candidates that it’s being used, and to have independent auditors check the system annually for bias.

This sort of piecemeal figure-it-out-as-we-go approach is probably what’s going to be necessary, at least short-term, as AI development shows zero signs of slowing down or stopping any time soon. Though there’s some disagreement among experts, most analysts agree with Wharton professor and economist Jeremy Siegel, who told CNBC this week that AI is not yet a bubble. He pointed to the Nvidia earnings as a sign the market remains healthy and not overly frothy. So, at least for now, the feverish excitement around AI is not going to burst like a late ‘90s startup stock. The world needs to prepare as if this technology is going to be with us for a while.

What the Future of Rivian Looks Like According to CEO RJ Scaringe

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

What the Future of Rivian Looks Like According to CEO RJ Scaringe
Rivian

Rivian CEO RJ Scaringe took to Instagram last weekend to answer questions from the public about his company and its future. Topics covered included new colors, sustainability, production ramp, new products and features. Speaking of which, viewers also got a first look at the company’s much-anticipated R2 platform, albeit made of clay and covered by a sheet, but hey, that’s…something. If you don’t want to watch the whole 33 minute video, which is now also on Youtube, we’ve got the highlights for you.

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From AI to Layoffs, Here's Why College Grads No Longer Want Tech Jobs

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
From AI to Layoffs, Here's Why College Grads No Longer Want Tech Jobs
Evan Xie

A new report in Bloomberg suggests that younger workers and college graduates are moving away from tech as the preferred industry in which to embark on their careers. While big tech companies and startups once promised skilled young workers not just the opportunity to develop cutting-edge, exciting products, but also perks and – for the most talented and ambitious newcomers – a relatively reliable path to wealth. (Who could forget the tales of overnight Facebook millionaires that fueled the previous dot com explosion? There were even movies about it!)

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