Social media has made it easier for musicians and producers to get discovered, but they still have to impress the industry's gatekeepers to make it big -- and those executives are typically white men swayed by their own biases, whether they intend it or not.
A June report from USC's Annenberg Institute found 86% of the music industry's top executives are white and male, and under 20% of executives at the level of vice president or higher are from minority groups.
Little surprise, then, that Snafu Records founder Ankit Desai believes the music industry is overdue for a change in how it discovers, promotes and scales artists' careers — and he's using artificial intelligence to do just that.
Snafu, which launched in 2018, raised a $6 million funding round on Sept. 21 to fine-tune its AI discovery platform. With offices in Los Angeles and Sweden, Snafu will soon launch two new products -- Blurry, a platform for songwriters to find collaborators, and Fine.Art, a system that lets Snafu and its artists co-invest in funding a breakout artist's career.
Desai said the company's revenue mainly comes from taking a cut of the rights to an artist's work after they sign. Snafu has a roster of 45 artists.
Snafu uses AI to scan a million new songs per week and analyze factors that could determine the artist's success -- including song structure, overall popularity and how listeners are talking about them on social media. Right now the platform focuses on Spotify, YouTube and TikTok, but Desai said Snafu's looking to include other audio streaming platforms like SoundCloud and Bandcamp soon.
The company brought in a number of high-profile investors in the round, including Agnetha Fältskog, lead singer of Swedish superband ABBA; Hampus Monthan Nordenskjöld, who was one of the first investors in Snafu; andAcademy Award-winning songwriter Savan Kotecha.
"I'm proud to be part of what (Desai) is creating, which is not just an algorithm trying to find hits, but it's actually quite a lot bigger than that," Nordenskjöld said. "We're trying to change music from the ground up, and I think we're gonna make a solid attempt."
When it launches, Blurry will use AI to match producers and artists looking to collaborate. Desai described it like a "Tinder for musicians," where people match based on short music samples and then their identities are revealed to one another after they agree to collaborate.
The Fine.Art service will help up-and-coming artists identified by Snafu's algorithm as potential stars get advanced funding to start their projects. Desai said the AI will pinpoint potential hits and then Snafu will offer existing artists the chance to invest in an emerging artist's success.
"The good thing about streaming is that once a song has peaked, you can be relatively comfortable in predicting how much money that song is going to make in the next 18 to 24 months," Desai said, adding this is how the company will decide which artists to fund.
Shrikanth Narayanan, an AI researcher and university professor of computer and electrical engineering at USC, said AI has the potential to democratize and make the music industry more equitable.
"Personalized experiences are something that AI strives to do in a way that could be very inclusive and equitable," Narayanan said. He added that AI has "a promising potential to empower the music industry" and could "actually enhance and make it even better."
There is a potential the AI could be wrong -- something Desai and investors say they expect. It's possible Snafu could give an artist an advance and never see a return, one or two big hits could make up for it.
Narayanan said that Snafu's AI could have its work cut out for it in calibrating its selection process.
"Naturally there's going to be a lot of variability across people, and so that while we can understand that and study it, this may certainly be a challenge that AI tools will face," Narayanan said. "They have to see enough patterns to understand the range of emotions or things a particular piece of music is conveying (to) or connecting with listeners."
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When the pandemic forced entertainment to go virtual, it created a crush of rookie influencers on Twitch and YouTube looking to cash in on the creator industry.
StreamElements, an Israeli streaming services company with leadership based in Los Angeles, picked up steam by measuring that streaming content for free. The company's platform usage grew 233% over the last year, largely catalyzed by the pandemic.
On Wednesday it raised $100 million led by SoftBank's Vision Fund 2. The funds will help it to build out its platform, add to its troves of data on streaming and recruit more streamers to join its steadily growing count of users.
"Because of the quarantine mandates, entertainers flocked to live streaming platforms to connect with their fans," Hirsch said.
The pandemic spurred the growth of live streaming on platforms like Twitch, which surpassed 2 billion hours watched this year. Non-gaming content on Twitch also continues to attract more viewers, and since 2020 people have tuned into over 4 billion hours of non-gaming related content. YouTube Gaming reported it had over 40 million active gaming channels streaming regularly and surpassed 100 billion hours watched last year.
"One of the other big changes is that brands are now coming to us to coordinate sponsorship activations rather than us having to educate them about the market and our role in it," he said.
StreamElements reported that 1.1 million creators use its broadcasting and monetization services, up from "a couple hundred thousand users" a year ago. The company added that 60% of its top creators (people with over 20,000 views) use its broadcast tools but none of them pay to do so – the service is free. Instead, the company makes money by taking a cut once it connects brands to influencers for sponsorships.
But its fate is tied to the success and strategies of streaming platforms like Twitch and YouTube, where it measures content.
And it's not alone. Texas-based Restream operates a similar model for creators to get monetized, and so does San Francisco-based StreamLabs. Santa Monica-based Mobcrush is also a player in this space, but it focuses on gaming and live streaming exclusively on mobile devices, contrary to StreamElements' focus on all devices.
StreamElements offers its streamers the ability to earn donations through its platform while they're live, and it doesn't take a cut – though they do take a percentage of merchandise sales facilitated through the platform.
"As a creator-first company, our goal is to help them make money rather than making money off them," CEO Gil Hirsch said. "We never take a cut from their tips when they use our tipping service."
The round brings StreamElements' funding to roughly $111 million since its 2017 launch, according to PitchBook Data Inc. New investors MoreTech Ventures and PayPal Ventures also joined the round, along with existing investors State of Mind Ventures.
The raise also comes with a shake-up in the executive suite. Co-Founder Hirsch took over as CEO from co-founder Doron Nir, who will now serve as the company's president and focus on building out the U.S. business.
StreamElements also named Yuval Tal as chief operating officer, Jason Krebs as chief business officer, and Udi Hoffmann as CFO. The company has offices in Culver City, but is operating remotely for now.
Hirsch said the funding will mainly be used to expand StreamElements to other platforms and focus on analyzing the video-on-demand market, a newer area of focus for the company.
"This type of focus requires a larger workforce so extensive recruiting comes with the territory, including ensuring we have best-in-class executives to lead the charge," Hirsch told dot.LA.
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Disney CEO Bob Chapek acknowledged the ongoing tensions developing among high-profile talent and studios that have put their blockbusters on streaming channels instead of releasing them first in theaters.
"The talent deals going forward will have to reflect the fact that the world's changing," Chapek said, speaking virtually at the Goldman Sachs Communacopia Conference. "There's a bit of a reset going on right now."
"Black Widow" star Scarlett Johansson sued Disney in July for releasing the film directly to Disney Plus instead of theaters, and argued that was a breach of her contract. Chapek didn't reference the lawsuit or name Johannson directly, but he implied it could change how Disney does business.
Johannson was to be compensated based on box office performance and could have lost up to $50 million from the movie skipping theaters, according to the Wall Street Journal.
Chapek said that many of the deals brokered with stars were done so before the pandemic altered the theatrical window.
"So we're sort of putting a square peg in a round hole right now, where we've got a deal that's conceived under a certain set of conditions," he said.
"We'll think about that as we do our future talent deals and plan for that, and make sure that that's incorporated. But right now we've got sort of this middle position where we're trying to do right by talent," Chapek added.
The dispute is unfolding amid larger concerns for Disney. Chapek warned investors that Disney Plus subscriber growth is likely to slow in the fourth quarter adding users in the "low single-digit millions" as pandemic-fueled production delays limited their movie debuts.
Coronavirus pandemic lockdowns and regulations put a massive strain on Disney's ability to churn out content for its streamers at the rate it typically targets and it has also thrown a wrench in their theatrical release schedule.
"COVID-induced production delays is a kink in the supply chain for new content," Chapek said, adding that "this is short term."
He reported Disney has 61 movies and 17 shows in production right now. The Disney TV division has over 200 active productions globally.
Former NBC Studios president and UCLA School of Theater, Film and TV Lecturer Tom Nunan said production delays are standard for an industry reeling from the pandemic.
"The production footprint around the world has been forever changed by COVID," Nunan said. He added there's a sort of post-coronavirus "hangover from just the obscene kind of buying that consumers went on (subscribing to streaming services) during the height of the pandemic, here and abroad," as people begin to resume normal life.
Nunan said it was surprising Disney only had 200 global TV productions active given the number of properties they own across film and television.
Disney shares closed down 4.17% on Tuesday.
The company reports fourth quarter earnings Nov. 11.
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