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Music Investment Tide Change with Sami Forzinetti: The Big Picture

As the music industry morphs, Dmitri and Sami Forzinetti deep dive into a conversation that touches on the decentralization of income streams and the rise of direct artist-fan connections. We dissect the evolving roles of labels, the implications of platforms like TikTok and Substack on artist income, and the potential of new funding models that are rewriting the rules.

Links to events and apps that are talked about in this week's episode:

LVRN/Matt Pincus

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Episode Transcript

Machine transcribed

0:00:09 - Dmitri

Welcome back to Music Tectonics, where we go beneath the surface of music and tech. I'm your host, Dmitri Vietze. I'm also the founder and CEO of Rock Paper Scissors, the PR firm and marketing company that specializes in music innovation, and you know, on the show we talk about music tech funding, but there's a parallel universe we've never talked about on Music Tectonics how are labels and other creative companies funded? Our guest today is an artist manager who has seen lots of deals, raised money, worked in music tech, and when we met I realized well, I could learn from him. I could share our conversation with you, the Music Tectonics listeners. 

After working at English independent record label Ninja Tune, Sami Forzanetti joined London management company Pictures Management in 2013, working with electronic artists and producers like Lapalux and Sophie, visual artists like Parisian installation art duo Nanotac. 

In 2018, Sami parted ways with Pictures management and founded creative practice and management company Art Department, working with London lifestyle brand Places Plus Faces, helping them build a global events and festival business in partnership with Metropolis and Live Nation, launching projects with the likes of Boiler Room, red Bull, soundcloud, and he manages Grammy-winning Alessandro Bucciolati, canadian-based producer-writer, poter Elvinger and artist and producer Pale Jay. Sami has also become involved in the blockchain technology space, working alongside artist and designer Carl Phenom on a variety of projects with Epic Games and Unreal Engine, and Dee Goins, founder of NFT marketplace Zora, exploring the core elements of blockchain development, building new applications and online experiments. On the product side, Sami, with his wife Claire, recently helped found startup Baton, which is pioneering a new creative and collaboration ecosystem and has raised $5 million. All of that makes him an interesting person to talk with us about the state of funding labels, artists and publishers, and the impact it has on the creative people who launch and run labels. Sami, welcome to Music Tectonics. 

0:02:12 - Sami

Hi Dmitri, Thanks for having me. 

0:02:14 - Dmitri

This is a rare chance that we're actually in my Portland office. We usually do these interviews online, so this is cool to have you right here with me, that's great. 

0:02:24 - Sami

When I've done this kind of stuff before on Zoom, it's always had a little bit of a disconnect. 

0:02:27 - Dmitri

Oh yeah, exactly yeah. So let's dive right in. How are indie labels traditionally funded? 

0:02:33 - Sami

I mean there's a variety of ways that they're funded but generally they start at inception either with self-funding or with partners putting in kind of the core funding to launch the label, and then later on through the exploitation of catalog that they own or license Publishing rights. Sometimes merchandising rarely, but sometimes you do find them being involved in the live side of things, in the live business. 

0:02:58 - Dmitri

Yeah, so you're saying they're funded through cash flow? Yeah, essentially. And when they want to get to the next level, what do they do traditionally? 

0:03:12 - Sami

Traditionally what you'd find an indie label doing is I mean, at some point in their journey they've done some sort of a deal with the distributor. You know that distributor will be part of a larger label group or larger body or will be attempting to build a larger label group or body. Generally, what you find is those independent labels getting further into bed for lack of a better term with that distributor, or maybe doing a JV with a larger company or just like going at it solo, which is successful sometimes, but a lot of the time. 

0:03:57 - Dmitri

It kind of raises a lot of challenges that a lot of these creatives and business leaders who started independently aren't particularly prepared for, frankly, which is managing relationships with stakeholders, managing multiple workers, basically managing a larger company, right? So if they want to scale or if somebody is encouraging them towards growth, like you said, they'll do some kind of deal with the distributor, which starts to look a little bit like not quite a joint venture, does it? 

0:04:11 - Sami

No, not necessarily I mean. What do you mean? 

0:04:14 - Dmitri

Is it like advances that have to be recouped? 

0:04:17 - Sami

similar to what an artist is doing yeah, yeah, yeah, gotcha. 

Or so that might be like the entry level, sort of like oh, you guys want to push further, why don't we give you this advance? And then we're going to start to take a cut of your profit, moving forward to recoup that and also to make some money there. Yeah, 100%. And like the differentiator with, say, a JV, when it becomes a JV is when there's either part purchase of the company involved or some sort of a larger strategic partnership, larger ownership stakes, closer working relationships, etc. Etc. 

I mean, fundamentally, part of kind of my thesis around this is the fact that these sort of models haven't really changed in the same. You know, you find this a lot in music, where there isn't a large push towards innovation and democratization of access to money, and across the board you generally find the same kind of deals. And having done a lot of these kinds of deals with artists, but also, you know, between artist-led companies meaning my clients, starting companies that they controlled, that had rights underneath them and signed other talent, you know what I was finding was these deals generally take the same shape and form. There isn't a lot of innovation and really in 2024, what I would say is these deals are just bad. They're not good deals for the creative. 

0:05:38 - Dmitri

Let's get into that. So we're probably talking about joint ventures there. What are the pros and cons of a joint venture for a label? Who's ready to scale? 

0:05:46 - Sami

I mean pros. You have access to a greater distribution network. You have access, of course, to capital. You have access to human resources, mentorship, greater access to artists. Your sell to artists is bigger. I guess Bigger is probably a bad word for that, but bigger, let's say bigger. And on the con side, you know, in taking that money you then have other stakeholders that you have to manage the relationship with. You know other people in the boardroom, I would would say and that would mean that, like that, fundamentally changes at source the kind of business that you started with, which is just you a lot of the time in an apartment somewhere deciding that you love artist x and know exactly what has to happen. 

Later it becomes like cool, I want to sign this artist. He or she has no monthly listeners, you know and know, and your stakeholder, being, like I, have more experience, that doesn't work Right and so, yeah, there's a certain learning curve. Some people you know do really well in that scenario and situation but, like a lot of people, fall by the wayside. 

0:06:58 - Dmitri

It reminds me of the innovator's dilemma, where you have one set of business practices and then you're almost going into a different type of business right, yes, 100%. 

Like your original idea. First of all, you're starting with nothing so you don't need to do anything. Nobody's making you do anything, so you're starting with I'm gonna go look for some cool music or I'm part of a scene. I'm gonna elevate that scene, I'm gonna do deals with artists who I think are part of something that's emerging and I want to be a part of that world and expand on it. And the creative part is really both selecting those artists and helping them develop their music, their visuals, their career, their network, their audience engagement and their business network as well. 

But with a particular goal in mind. That might not be the same as what quote the investors, the joint venture folks, are doing. Is that what you're saying? 

0:07:49 - Sami

Yeah, I mean you can look at it in the emergence of the independent label, for example, versus the major label. This is kind of a very known discussion where, like, the major label cares only about money. But that's not a personality problem, that's a scale issue, because at scale, these companies have to worry about the bottom line, especially in the way that music operates now, with streaming, with a hit driven culture, with all the various income streams and social media and you know the scene changing like over a summer. Essentially, like at scale, these companies have to concern themselves with that. Versus a guy in an apartment in Brooklyn who loves punk rock, who also works at a coffee shop where you know it's relatively, he's immediately there, he understands that and sees the potential for that scene to grow globally. 

There must be other kids like me out there somewhere, but it also costs me a thousand dollars to put out this record versus, like, when you go to a major label, like business, there's 12 people in business affairs and everybody's thinking about, well, japan, how does this work with that? And we need an extra song and blah, blah, blah, blah, blah. So I think that a lot of the nuance is a lot of the nuance is lost and there's very few people who can kind of like not only find artists and understand what needs to happen and see the potential and the value of very nuanced cultural capital, but understand not only how that works at scale but how, who they're going to partner with and how they manage those relationships. Because all these people are different. You know, not everybody gets in the music to be like, hey, you know, I love techno or whatever. Like a lot of people get into it. To like, oh, this is a great company and we're bringing music to the masses. That's fundamentally different than I love this punk rock single interesting. 

0:09:35 - Dmitri

Yeah, yeah, you go from someone's specific curatorial and aesthetic view to uh, let's scale this perspective, which changes, changes a lot of the conversation. 

0:09:46 - Sami

Yeah, and I have a lot of these discussions. There's a big lost in translation problem a lot of time where people who are, for example, from the venture capital side, who know fundraising, who are music fans, learned their place in this industry which is emerging now kind of venture capital in music but only really know one way to talk about it because that's how they've understood it. It doesn't mean they're not music fans, it just knows that they don't know how to communicate with a guy in Brooklyn in an apartment releasing punk rock records. 

who's like fuck the man you're the man, you know what I'm saying and it's like and that's kind of the space I've found myself a lot in recently, democratizing, I guess, access to money and helping translate, because that's been my entire career I'm a translator, I guess. 

0:10:31 - Dmitri

Interesting. Yeah, that's a good role for a manager. I think I want to get into kind of your vision but before we do, I'm assuming there's some other contextual things happening in society and music changing in music that has people thinking about a different approach to how you go from indie label in a bedroom to expanding out and actually having a national or international reach that would be bigger than just one guy that works at a coffee shop. What's changing that has you thinking about this different approach? 

0:11:00 - Sami

What's changing is the rise and prominence of independent businesses and independent artists and the want to be independent. Whether people understand exactly what that means and the want to have that are two different things, but there's still that's still part that goes on the vision board versus before. Like you would want to go and sign at Excel, people like no, I want to be independent, like artist X, like artist x, that's. That's something. The decentralization of the income streams. Before, you know, it's lcds and now it's streaming, and people are still working out the streaming model. It's not great, you know. So people are having to work out how else they can monetize content. You know tiktok, instagram. You can even monetize a backstage video now if you do it in a clever way. You know musicians are becoming more in tune with their fans, more directly in tune with their fans as well, and there's less lead for middlemen, I guess. 

0:11:51 - Dmitri

To me, that's a music tech story in a way. It's like there's all these new tools and online interactions and digital communities that are basically creating other pathways for artists and creative people to reach their audience on their own, and it's not easy, but it is. I could sort of see why you're saying it the way you're saying it, because that shift has been happening for decades. At this point and we're at a place where it's sort of like I can do it without this other help. Maybe I'll try something different. 

0:12:22 - Sami

Yeah, and labels you're seeing also labels really trending in the direction of like changing philosophically how they approach uh, working with artists and working with creative communities, meaning smaller labels or smaller gatherings of people. Um, the idea of a label less as a label and more is like. I think I've heard people refer to it as last labels, as a service. Oh yeah, I've heard that. You know, I came across that yesterday. I'd never seen it before and I was like fuck genius people are making up words to describe new things. 

0:12:52 - Dmitri

It's wonderful well, it's also like, um, like, the way we operate is kind of fractal, right. You see, the relationship between artists and labels is changing and then the labels are seeing how artists are operating. The relationship between labels and distributors or labels or their larger parent companies or joint venture companies is sort of fractally representing a similar shift as well I mean you're finding. 

0:13:16 - Sami

I mean I'll give you an example. It's like you know I came up in music during the blog era. You know pitchfork was like you know I came up at a time when you got best new music on pitchfork and it was like that was it right? You know you're popping. What's interesting now is pitchfork's been sold to condé Nast. Whatever happens with that organization, that shows a fundamental shift. A lot of people would say the soul is gone from that publication. But what you're seeing is you're seeing big journalists from that era, like Philip Shelburne, for example, using Substack and then monetizing newsletters and that, in a way, is becoming the new blog. That's how information is being disseminated. That's interesting and I think that that reflects a lot of what's been happening in music generally. 

0:14:01 - Dmitri

Yeah, yeah, yeah totally. Yeah, all right, we have to take a quick break, but when we get back, let's paint a picture of what it would look like if things were done differently. 

0:14:09 - Speaker 1

We'll be right back, eleanor, here with an update from the Music Tectonics Conference. We are so close to selling out super early bird tickets, but you could still snag one if you head to musictectonicscom slash conference. $199 is an incredible deal on a three-day conference packed full of opportunities to meet and do business with innovators, investors, thinkers and builders of the future of music. Just check out our growing speaker roster, headed by keynoter Mark Mulligan of Midia Research, to get a taste. That super early bird rate expires Tuesday, may 21st. Whether those last tickets sell or not, and ticket prices will never be this low again. The 2024 Music Tectonics Conference takes place October 22nd through 24th at offbeat venues in Santa Monica, california. Meeting by the beach helps everyone open up to new ideas and relationships, because stuffy convention centers lean to stuffy thinking. Get that super early bird ticket before they fly away. At musictectonicscom slash conference, see you by the beach. 

0:15:14 - Dmitri

Okay, we're back, Sami. This is super interesting because I've never really had this conversation on the podcast, but also I don't think I've had this conversation ever before. So it's all new to me, so it's super fun to explore. Sami, if you were to craft a new way of funding labels or these creative companies that were launched by artists or creative people or creators whatever you want to call it what would it look like? What would that funding relationship look like? 

0:15:37 - Sami

Let me caveat what I'm about to say by saying two things. A it's theoretical. Right now there are some organizations emerging that are experimenting with new models, one of them being Matt Pincus and his Songs Fund. You know I'm a big fan of that LVRN deal that he did. Regardless of what that means for that business generally. I think it created a new kind of music company in a lot of ways a new kind of music company in a lot of ways you know. 

0:16:05 - Dmitri

before you go on, explain LVRN what they do, in case people have heard as well as what that deal looked like to you from your perspective. 

0:16:11 - Sami

LVRN is a creative company focused on music. They have studios, they have, you know, they work in management and with artists. I think it emerged, I think it came out of Atlanta first but now based in LA and they've been pretty prominent kind of in the independent scene. You know they work with like summer walker and black and people like that, artists like that, and what's been interesting is they've been pretty prominent for a while now and they've been going through kind of the jv model. So you know, like for a while they you know they had a jv with intersccope and then they, they I think they just did a publishing deal with with bmg, an admin deal. I don't exactly know the details of that. But then what happened was out of the blue, matt pinkus and his song no music, that's what it's called. Sorry, the me, the me, his music fund went in and basically invested a chunk of capital in that company, based on kind of the valuation model that you would see more in tech. 

You know that happens all the time and I was really excited about that, just because it kind of proved to me that people were thinking about democratizing access to capital. 

Now, what I mean by that is I kind of I've always thought about kind of fundraising, how that works within these creative companies and how there must be a better way than just doing a JV or distribution deal and kind of. When I dipped my toes in music tech and you know was with our CEO kind of going through the fundraising process, I just had a completely mind boggling experience because and it was difficult it is annoying to raise money. It doesn't mean that it's not annoying. I just had the experience where we were going through a carousel of, like different VCs from all over the United States, maybe even some in Europe. You would sit down, you would give the pitch. They would consider, they'd be like well, we're a VCX, we have this experience and that experience and this is what we represent, you know, like hundreds of these companies and representing like substantial capital and you could work with one, you could work with many. 

what are the pros and cons of doing that? What is the plan? But fundamentally, what I saw is we didn't have a product, we were in beta with Baton I'm talking about Baton, and it's not like we have no cash flow, you know but we managed to sit down with these people, with the help of Bob Mars, to basically sell them on the vision and the idea and to give us a substantial amount of money, you know. So in having that experience, I kind of looked at music and I thought imagine if that was the approach. Imagine that you had the JV and you had the more let's call them traditional approaches, you know. 

But imagine as a creative company, you know, led by an artist, let's say, for the sake of discussion, who controls how he or she makes the music and controls the direct communication with his community or her community, and they've really worked out something that works, you know. And they get to the point where they're like okay, what do I need to do? I need scale. You know, imagine when you get to that point, if they could go through the carousel of 150 different VCs who are music VCs and it's like well, you know we're very strong in Japan VCX, or we have a really close relationship with Sony Music. You know we have a strategic partnership, we invest money and you get priority service on Orchard or something like that. 

That's what was really really lacking and it's what I saw the first emergence of with the All VRN deal. That's why it's a fundamentally new kind of music company, because they raised money, I would say, in the most independent fashion that you can, from one stakeholder who was not a label guy. So it means that they're empowered to now go do whatever kind of distribution deals they want to do. Sign talent, hell. They can go build their own distribution company. You know they have the funds to do it. 

0:19:53 - Dmitri

Yeah, yeah, yeah, yeah, yeah, it's interesting. So what you're saying is like traditionally, labels would grow with the help of other labels. Typically There'd be a distribution component or a joint venture, and here you have something that the funding is significant, but also independent of a label, and feels like, because of its significance, they have a lot of freedom. Because of its independence, they have a lot of freedom. Yeah, that's what you're saying. 

0:20:17 - Sami

Yes, and additionally that it's incredibly inspiring because kids now coming up are building these companies. All I mean by companies is a structure around your own project in order to, kind of like, exploit the rights that you own. 

let's say and kids are looking at that, thinking like I don't need to go and sign to a label now Before you didn't have to, but the conversation you'd still have to work with a distributor In some way, shape or form. You always end up becoming a company. Man or woman, that's just what you had to do in music, unless you went and built your completely new structure, which I mean. Correct me if I'm wrong. 

there's very few examples of people doing that the only example I can think of is Secretly, and that's because there were four. They there were like what four partners who had four really you know, very prominent independent labels who decided to join forces and create. 

0:21:10 - Dmitri

And had had the kind of business savvy that you're talking about labels oftentimes need some from somewhere um and launched their own distribution platform that allowed them to basically leverage the um, the work processes, the relationships that they were already using to add additional revenue coming in. As well as how I understand it. 

0:21:32 - Sami

I don't know. Yeah, no, no, but already that is enough on a surface level to understand why that happens so singularly versus like, why isn't everybody doing this? That's always the discussion. 

0:21:43 - Dmitri

No, I think we've come to a really interesting moment, so so I want to understand when you were talking about the fundraising you did for baton, something clicked for you as well, was it? Were you saying that what clicked was that there was a sort of uh, creative distance from the product, in a sense, like it didn't feel like they were. They were just looking at the quote, the bottom line line, the potential and so forth, but tech companies could kind of raise money without their create, that that creative part, that labels have being compromised. Is that, is that what you're saying? Or were you saying it opened your eyes to the idea that if you can raise money for a tech product, you could raise money like a tech product for an artist-based company? That's the question. I'm trying to understand what you're what was the moment. 

Yeah, what was it about that fundraising for Baton? That added to your thinking about this potential. You saw the LVR deal. You did this tech raise. Something about both of those two experiences in your life and observation, I think, is leading you to say, hey, there's another model that's possible, okay. 

0:22:47 - Sami

So I'll answer that question by taking a step back, okay, and looking at fashion, for example. 

Okay, so I worked with Places and Faces. Cease is an incredible, incredible generational creative. You know he's built an incredible business for himself, for himself and kind of coming in as a music manager. As a music manager, you have to just it's just about striking deals and translating what the artist is attempting to say to potential stakeholders. That's what you're doing at base and generating assets that you monetize. 

Xyz, and you know what was interesting about fashion is fundamentally different. Business, of course, but you still find the structure of these independent companies led by creatives who, in one form or another, had created companies that were exploiting assets that they controlled and owned and monetizing community, basically by selling t-shirts or by creating parties or by monetizing a very nuanced sort of cultural capital, let's say. But the problem with fashion, even though it's product, which is different to music, which is not product, it's far more nuanced Fashion. They faced a very similar issue. It was more developed, but you still had a handful of options for fashion-focused VC companies that you would be able to go and raise money with and hopefully kind of scale your business. The issue that emerged from that was that I think when you look at fashion, you see it homogenized across the board, where a lot of these independent companies end up looking the same or chasing the same ideas Because structurally, they're going to like four or five different company, funds essentially, or companies, LVMH being one of them where you know those four or five companies aren't competing with other organizations. They have their way that they do this well. So therefore, they apply that way to as many different opportunities as possible. 

You know, and I, and I thought I thought that was really really interesting because, like, in the same way that the indie label emerged under the major label that was, you know, more artist focused at the time and more, you know, had had closer contact with communities, was better at kind of, was more artist friendly, I think that there's a way and there's a space in fashion and in music and in all these businesses that create more nuanced products, let's call them, and assets, to kind of come in and have a gentle touch and be able to kind of like translate what that business could look like at scale, Specifically bespoke, per opportunity to potential stakeholders. Is this, is this? That, because that was kind of the idea that was emerging. And then, you know, to the baton thing it's, we actually successfully raised money and I was like, oh, this. I get it now. It's the same. You sit down with people. You say, hey, I have an idea. X. This is my background. 

This is why I can do this. These are the people involved. 

0:25:52 - Dmitri

That these are the people involved. That's how we're going to achieve it. Well, what you were just saying before was really clicking for me about the impact this could have on artists and creative led companies, labels, for example. How do you see these types of music organization operating differently once they have a different approach to funding? You started to hint at it in that last response, but I'm curious if you could flesh that out a little bit more about what will be the result if there was this type of funding that's different than the traditional joint venture or distribution advances, things like that. 

0:26:17 - Sami

I think that we can answer this simply because we can have a four-hour discussion about this specifically. 

As you know, I will talk a lot about this sort of stuff, but I mean to answer the question simply. 

If you look, if we go back to the way that creatives independent creatives are finding different ways to monetize their content, it's content now, it's music, it's videos, it's live, it's merchandising, all that, I think that understanding that from a music management perspective, understanding that you need to generate all these different fundamentals to make it work, because music won't make a lot of money because the streaming deals aren't great for us, I think that, with this idea, if you control your creative company, whether it's a label, or you're an artist who controls his or her business, or you even make t-shirts or sell tickets, like whatever that may be At some point, if you want to achieve a bigger and bigger business because a lot of people don't, you know, a lot of people are quite happy in their jungle let's say, you're going to have to face the problem of scale. You know At you know answer to that problem. Before you would do a JV on the music side, you would take investment. You X, y, z, I think what changes? Now is the alternative check, as I've been calling it. 

So it means that you can go and sit down with people who have a specific but a lot of kind of cross-media solid business chops, cross-media experience, who can talk the language of a successful small business. 

That scales not infinitely, but can scale, who is then able to kind of justify that to potential stakeholders and investors? And not only that, manage that relationship as well, so that you don't have dudes in the boardroom. Stakeholders and investors. And not only that, manage that relationship as well, so that you don't have dudes in the boardroom who, like, have no concept or clue, haven't been with you for the five years. It's taken to kind of understand that. 

You know, and I think what happens at that point is kind of the dream that I've had for a while, which is like being able to build good investment deals using independent money independent, meaning, not from one of the major corporations being able to build not just a capital investment but a human resources investment, meaning you find the right investor with the right set of skills, who is passionate about the company, who can provide something more than just money, because at the end of the day, money is just money. 

You need mentorship and guidance. You know, and in doing that and in working with someone like me or whoever it might be, that creative, is able to kind of achieve that situation, achieve a business plan that long term will provide scale and a healthy business. But then isn't really and mentorship and then and then and network and resource and then, at the end of the day, isn't changing very much about what they do on a day-to-day basis, because that's the magic right. These people have arrived at that point by hitting on something very special. In the same way that with tech, the founder has created, has a vision and has created a really special idea. And I think that you don't go and invest in a tech founder to be like, no, you run a business, now you know, or I mean that happens a lot, but like your business affairs, now you know you need to go do X you need to worry about, like X. 

0:29:37 - Dmitri

Y, Z, To define it too specifically. 

0:29:39 - Sami

To define it too specifically you want to leave that founder to like continue doing exactly what they're doing? 

0:29:44 - Speaker 1


0:29:45 - Sami

And I think it's the same for the creative who has a company. 

0:29:48 - Dmitri

I think this is clicking for me, Sami, because you've not only managed musical artists, but visual artists have worked with clothing and fashion as well. You're sort of seeing some parallels but also some differences, but also some differences. But really, what I'm thinking, what I think I'm hearing from you about why a different funding model could change things for somebody who started as a creative person in a business, is the agility that this opportunity would give them. You're talking about the investor both letting them be the creative person they are, but also giving them access to new verticals or to transmedia or trans media or you know other sectors to help them translate their artistic vision into a place where the investor already has business relationships, networks or practices that can help basically translate what they're already doing in other spaces, which is super interesting, 100%, you know we it depends what you're driving forces and where you are. 

0:30:48 - Sami

But taking me as an example, I'm agnostic to structure and what I mean by that is the difference with music is in music there's very set fundamentals that people exploit. It's like catalog and they get lost in this idea. If you look at, for example, what's happening with hypnosis, you know hypnosis sold an idea, whatever. I don't know enough about the inner workings of that business to comment on it. But I think that what we're seeing with the emerging news that's coming out around that is that they kind of sold an idea that catalog was an infinite growth paradigm of value which maybe they should have thought about a little more. You know, and I'm not talking even about hypnosis, I'm talking about, like all the people that ran kind of the catalog race. And you know, I think that for people like me and for people who are interested in this idea and democratizing access to fundraising, we're agnostic to structure. You know, a company presents itself and we can look at that opportunity and say, no, this is a music company, but this is also a fashion company, this is a live company. 

How do we? You know, labels, for example, traditionally are not very good at the live business because they've been so focused on like how do we make the most amount of money exploiting these music rights? But like, for example, for us being a manager, I've been touring for 10 years. I know how to build touring businesses. I can look at a label and be like well, it's really interesting, this is a punk label, you release great artists. But like, have we ever thought about building like live IP that the label can own? On the live side, it's very easy now to kind of like do deals. It makes sense, it's selling. You're selling records or selling tickets. You know, there's not that much of a difference. It just involves experience and, like, a little bit of confidence and understanding how to build that business and who to work with. You know. 

0:32:31 - Dmitri

Yeah, yeah, cool, awesome. Well, we have to take one more quick break and when we come back let's talk about the other side. Can you get investment for this kind of thing? We'll be right back. Well, hello, listener. Did you know that this podcast is just one way? 

Music Tectonics goes beneath the surface of music and tech. We know that innovation thrives on community and connection, so we bring innovators together in a variety of ways. We've got a free online event series we call Seismic Activity. We've got the Music Tectonics Conference every October in Los Angeles. We've got meetups at major industry events like the NAMM Show South by Southwest. We're back, and I think I've really started to understand where you're going with this, Sami. I do think it's really interesting to think about the impact that the joint ventures, the partnerships and the funding can have on how a creative person who starts a company around music could get limited by that, and you've painted an interesting picture of what's possible, which is super cool to hear about. But I'm curious on the investment side do you think investors will go for this? 

0:33:45 - Sami

It's an interesting question, just because anybody who's raised money for a tech startup knows that it is a. I mean, gabe, the CEO of Baton Bleu, is the first person to tell you it's soul-sucking to do it. There's a lot of cons around that as well, but I think that, setting that aside, I think that there are always people in these different communities who kind of are looking, soul-searching in a way, for, on the one hand, a new way of doing things and, on the other hand, philosophically, what it is they are looking to contribute to the wider scene the world. I guess it's going to be very dramatic with it. The world, I guess you know it's going to be very dramatic with it. 

0:34:27 - Speaker 1

So what am I? 

0:34:27 - Sami

trying to say. I'm trying to say that I think that you will find people that will share that vision on the investor side and I've met some of them and, additionally to that, it's the job of the bridge someone like me, I think, who would work with a creative in order to build an actual, intelligent, investable package from there. Cash flow, like what's the plan. We can do that, and it doesn't mean that we have to change anything about the dignity. Dignity might be too much of an intense word, but the soul of that operation. I've worked with artists. I look at what you're doing. We're going to talk about it. You're interested in XYZ? We can build a business from that. 

0:35:09 - Speaker 1

We can or we can't. 

0:35:09 - Sami

Why? Because it makes money or it doesn't make money. Can it grow? What are we going to do? You know that's investors, at the end of the day, care about the bottom line and it's kind of finding that perfect, perfect sort of synergy between vision, legacy and mission and a good business yeah, you know, it reminds me about a decade ago there was all this talk about. 

0:35:33 - Dmitri

I think that's what it was about 360 deals labels doing 360 deals and there was a credit. 

you know it's criticism of it because it some some, some people from the artist and management community felt like that was asking for too much. You make this investment and, yeah, we were already planning to collect some of that revenue ourselves. That wouldn't necessarily be inside the record deal. In a way, you're talking about the artist's side as it comes to the investment table to say, this 360 concept is value we bring to the table and so it changes what the conversation is about who owns that, for example? So it's kind of interesting. It's almost like a decade later response to how record label deals shifted. 

0:36:15 - Sami

I mean, I mean as a manager, I would rarely do a 360 deal Conceptually at base. The 360 deal on paper theoretically should be great, actually, because we're all coming together and we're investing in your business and blah, blah, blah. The problem again comes. It's the problem comes from. Where is the money coming from? How do the people who are investing the money view the scene and like is there interest in continuing the status quo? You know so what that means is like if you don't get a hit, I'm not interested in this 360 situation that we have, and like you can frankly go over there until you make a hit. 

You know right, I mean I'm, I'm I'm butchering it a little bit but, like you know, I think when you deal with ideas like this you have to kind of like look at things like super macro, you know, and make general statements. 

0:37:11 - Dmitri

You'll have to get dirty to really sort out how it's going to work out Exactly. But but yeah, we're. 

0:37:16 - Sami

We're talking big picture here, so yeah no-transcript it you don't want to think that, like you've come to some like idea. You don't want to think that you've invented the wheel. You know, I think that there's a lot of issues that need to be sorted out for something like this to kind of happen. Let's call it on a mass scale, like it's, like it's something conventional. You know, I think the people who come from a vc background still haven't understood the fundamentals of, like, very specific, nuanced music businesses. I think that there's a lot of bad rap that needs to be unlearned. That can only be unlearned by experience and by having other people kind of lead from the front. So what I mean by that is, like to a VC person, music investments are not good. It's a shitty business to get into. You know, because you're trying to like I don't know seed Facebook that makes you like $40 baj dollars after like a year's time. 

You know that's they're addicted to this drug of fast, fast, fast you know, yeah, I think that music is a really hard sell to an investor because it's, you know, a it doesn't make a ton of well, it has this, there's this idea attached to it that it doesn't make a ton of money. And B it's really hard. And C you know, the fundamentals aren't strong, you know. So I think that, like it's going to take time for the investor types to kind of understand, on a nuanced level, what working in this business means. You know they need to do their 10,000 hours. I would love to give you a timeframe for that, but I have no idea. 

You know, frankly, I you know what I'm conscious of as well, as there aren't a lot of people with this understanding of the different sides of the coin you know, and that you know, I think that managers, in a way, are the only people in music who kind of see all these different sides, and I don't know how long it's going to take for manager managers have different reasons why they work with artists. You know, I don't know how long it's going to take for them to be like look at something and be like, well, I can go work with artist X and I can go and like find the money to invest directly in this artist and like manage that relationship because new things are scary, you know new things are scary, you know. 

So I think managers also need to see see this happen successfully, to understand that it is a new and conventional way to to do it. And the reason I say successfully is because it's going to take time for these investments to show fruit. That's why, you know, I don't, I don't comment, I don't know anything about lvr's, lvrn's business and I can't comment on how that investment is going because I don't know anything about it and not enough time has passed. But what I can say is that it really inspired me conceptually. 

But I don't know the business fundamentals. I have no idea. Does that make sense. 

0:40:32 - Dmitri

Totally makes sense. 

0:40:34 - Sami

The flowers have to blossom before anybody's going to be like. 

0:40:36 - Dmitri

I think the point of this conversation is just there's an idea you've got here that we're putting out there in the world, and I like to talk to people who are in different positions within the music industry, music innovation space to push my own thinking, but I think we're also pushing the industry and the field forward, as people are listening to you talk about this idea, they'll iterate on it as well and it might actually make it happen faster. No, 100%. 

0:41:03 - Sami

I think that what we can look at, just to kind of tie this question up, what I think I can say is this, and I don't want to be like death and gloom, but I think it's important to say, it's important to say right now that the structures don't work, it works for very few people and that decision-making, true leverage, true, true decision making, happens at the very, very tippy top, you know, by a handful of people. 

And you know, aside from artists having a really hard time, which they are in the new streaming paradigm, or songwriters, you know, we see, see this constantly in the greater consciousness of music and art. 

Frankly, you know, the middle managers, the managers, the people, the project managers, the people who have to go make this stuff happen, you know, feel like they're drowning, they have no, there's no purpose really, because it's so very difficult to create these music businesses in a way that in the current structures, in a way that in the current structures, in a way that, like you know, you have a good chance of succeeding. I think you could say that about everything, but I think that if you look at tech, you know, I think that I don't know the numbers, I don't want to speak to this, but, having experienced working in tech and fundraising myself, it was actually much easier to raise money. This is what it is. It was much easier to raise a large amount of money on a company that hadn't made anything than to get a label to sign an artist who was doing something exciting. Think about that. 

That's crazy if you think about it you know and I don't care what people understand about the fundamentals involved with an artist, like that's an issue. You know it's a sickness really. 

0:42:39 - Speaker 1

Yeah, no, I get it. 

0:42:40 - Sami

You know, I know it's very dramatic, but like it's the truth. I was talking to a label friend of mine the other day and both you know he runs a seminal independent label in New York and I picked up the phone and I was like hi, and he sounded bummed out, I'm like you good, and he was like I feel like I'm drowning and I was like me too. You know, like this is really fucking hard. 

0:42:59 - Dmitri

So yeah, yeah, interesting, well, cool. This has been really interesting to explore this idea with you, to get your expertise around. What is and what could be, Sami, I've got one last question. I frequently ask guests to help us grow our network as we build the Music Tectonics community. Shout out or identify a few music innovators or music tech companies that you would love to share with our listeners and that we should continue to follow, and why you think they're interesting. 

0:43:28 - Sami

There aren't a ton of people doing stuff in this kind of intersection, just because it's emerging. But one person that I've looked to and has inspired me a lot, without knowing him personally or being involved in any of those deals, is Matt Pincus. And what he's done with music, without knowing him personally or being involved in any of those deals, is Matt Pincus and what he's done with music. I think that he grew up in a VC environment. I think his dad was involved in that sort of stuff, so he comes from like and then went on and founded a publishing songs, founded a very successful publishing company, sold that company to Cobalt and now has decided to use that expertise to kind of launch a music specific venture capital fund. 

Essentially, I mean it's not really venture capital just because, yeah, anyway, I think that's really interesting, the lvrn deal. He's invested in a bunch of other stuff. I think there's a lot to learn from watching matt you know he's a pioneer in his own way. 

um, another company, a company that is brand new and that I think is really interesting, is a company in la called Dream Street that the founders, chad and Brendan, are good friends of mine. They do business with Matt. They do business with a bunch of people, but they're guys who come from without talking too specifically about their backgrounds. They're guys who come from the venture capital side, left their respective companies and decided to set up a financial advisory forum for music-specific stuff. They do other stuff, but that's kind of like the space, because they looked at music and they said a company like this doesn't exist, whereas in like tech, you have like a thousand people you can work with. But what they're doing is they're working with larger companies. They are analyzing potential purchases and mergers. They're making things investable and intelligent in music, which, on the fundraising, on the fun side, we have lacked. 

0:45:10 - Dmitri

We've never had something like that. That's a useful shout out. Appreciate that. 

0:45:14 - Sami

Another company that I really like, just because I like the way they move, is Concord, and I know that that's a larger company. They are theoretically independent but I really feel that you know, they kind of went headlong into the catalog game and did really good business doing that. 

They have a really good approach and the reason I would watch them is because you know they just did a really interesting. It is a JV, but they did a really interesting JV with Pulse and Brent Fies' company, whose name I can't remember. But you know they did a JV with Alamo way back. I know that that I don't know the specifics, but on the surface that seems to be going really well right now, just because the catalog game isn't what everybody thought it was. So you know, if you have a billion dollar credit line and you have a very specific expertise running a network of labels and you know that, have assets and catalog like, what are you going to do next? You know, and I think that that's really, really interesting. You know, I think they're really soul searching. 

0:46:16 - Dmitri

Sami, this has been great. Thanks so much for coming on to Music Tectonics. It's been a blast taking this deep dive into an area that's new to me and to really get your perspective. I love not only that from a management perspective you know you've you've brought a lot to this conversation but also not only in music, but also in fashion and in art and so forth too. This has been great, thanks. Thanks for joining us. Thanks for having me Appreciate it. Look for the latest about our annual conference and sign up for our newsletter to get updates. Everything we Do explores the seismic shifts that shake up music and technology, the way the Earth's tectonic plates cause quakes and make mountains. Connect with Music Tectonics on Twitter, instagram and LinkedIn. That's my favorite platform. Connect with me, Dmitri Vietze, if you can spell it. 

We'll be back again next week, if not sooner.

Music Tectonics at NAMM 2024

Let us know what you think! Tweet @MusicTectonics, find us on LinkedIn, Facebook and Instagram, or connect with podcast host Dmitri Vietze on LinkedIn, Twitter, and Facebook.

The Music Tectonics podcast goes beneath the surface of the music industry to explore how technology is changing the way business gets done. Weekly episodes include interviews with music tech movers & shakers, deep dives into seismic shifts, and more.


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