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  • Writer's pictureEric Doades

Music, Tech, and Investment: Unpacking the Future with Juliette Rolnick

Updated: Aug 31, 2023

Get ready to journey into the future of the music industry with our special guest, Juliette Rolnick, an astute investor at Bertelsmann Digital Media Investments.

Get insights on how BDMI is influencing the music tech sector, and discuss the upcoming Music Tectonics conference and its unique Music Tech startup competition, Swimming with Narwhals. You'll also learn the importance of establishing relationships within the media industry, and how it plays a crucial role in investment strategies.

How might AI revolutionize music creation or how the music industry could branch into health tech and gaming? Hear Juliette share her perspective on market saturation of streaming services, potential ancillary revenue opportunities, and much more in this week's episode.

Looking for Rock Paper Scanner, the newsletter of music tech news curated by the Rock Paper Scissors PR team? Subscribe here to get it in your inbox every Friday!

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Episode Transcript

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, and it's a very exciting time at Music Tectonics because our conference is coming up soon. We're seeing tons of momentum and tons of excitement, lots of partners jumping in and attendees getting their badges and confirming, lots of speakers, and we also have our pre-conference coming up on September 13th. And one of the most exciting parts of Music Tectonics is our swimming with narwhals Music Tech startup competition, which we have a bunch, a record-breaking number of amazing podcast listeners and Music Tech startups who are applying to pitch, and at that pre-conference on the 13th of September we will have our semifinals, so we'll have a handful of those competitors pitching online as part of that pre-conference. And today we have one of our jury members joining us on the podcast. Juliette Rolnick is an investor at Bertelsmann Digital Media Investments and we love bringing together the whole macro system of music innovation and music tech, and so having the investor voice in the mix at the conference, at the pre-conference and on the podcast is so important. We're hoping you get tons out of it today, Juliette.

Welcome to Music Tectonics.

0:01:28 - Juliette

Hi, so good to be here. I'm so excited to be meeting everyone.

0:01:33 - Dmitri

Yes, love it. So let's dive right in. Tell us about BDMI. What is it and what is the investment thesis?

0:01:40 - Juliette

Yes, so BDMI. We are part of a large global media service and education conglomerate called Bertelsmann, which many folks in the US probably haven't heard of but have definitely interacted with in some way, shape or form. So within Bertelsmann there are actually seven different divisions Now six since two of them merged. But the largest division within Bertelsmann is a company called RTL Group. They're a leader in the broadcast content and digital spaces. They own Fremantle, which does content like Price is Right, American Idol, some Netflix shows. There's also Penguin Random House within Bertelsmann, so that's obviously the world's largest consumer book publisher. We have BMG, which many listeners may have heard of, the world's largest music company. They own catalogs from Kylie Minogue and Rolling Stones many others as well. We also have a company called Arvato Services, which does mostly CRM solutions, it services, b2b services broadly speaking. And then we have Bertelsmann Marketing Services and Bertelsmann Investments, and BDMI sits within Bertelsmann Investments.

We focus on North America, Europe and Israel, but then we have partner funds that focus on the rest of the world. So we invest in SEED through series B stage companies. We'll write checks anywhere from 100K up to 10 million For our SEED checks. We never lead, but we're happy to lead down the road for A's and B's and we are financially driven, so we operate similar to an institutional fund in the sense that our incentives are aligned with our founders. We're comsia on a carry structure, although being part of Bertelsmann, we of course love to be strategically helpful in making the right intros, et cetera. And then, in terms of the sector areas that we look at, we love Next Gen Media. Music tech obviously falls within that realm. We also love enterprise software Vintech, and we've done a bunch of AI web through stuff. So new frontier technologies, I'd say.

0:03:27 - Dmitri

Wow, you are in a fun spot there and I think you kind of covered this. That was a lot right there in the intro, but I think you kind of covered it. But are there other ways in which BDMA differs from other VCs that our field, the music innovation field, might be following?

0:03:43 - Juliette

For sure. So from my experience I find that many players in the music tech VCE space are very strategic, so they're looking for investments that can activate their cart catalog, maybe help with artist marketing. There's some sort of strategic role that they're playing. And while we of course vet a lot of our startups through BMG and like to make those relevant introductions, we're strictly financial so we underwrite to things like TAM, total addressable market, other metrics that could give a VC style return. We look to invest in companies that would be at 10X or could return our fund. So that's sort of the primary way in which we differ, I say.

0:04:18 - Dmitri

That's interesting. So, even though there's all these connections to media music and beyond and there's these sister companies that are directly involved, you're saying you're purely investment.

0:04:32 - Juliette

Exactly, we are purely investment, except we do feel like you kind of have to win the right to invest, when the right to play in the space and the way in which we've done that is just having relationships with the folks within the media industry being part of the process.

0:04:49 - Dmitri

Oh, wow, I like that, yeah, so what are some examples of investments that you guys have made that our music tech audience should know about?

0:04:58 - Juliette

Yes, so we have four primary music-related companies in our portfolio. So the first one we have is RAPChat, which people may have heard of, Consumer App that helps bands produce rap music, make beats, et cetera. They've raised from Sony Music and some other funds. We also have four tables.

0:05:16 - Dmitri

They came out to music tectonics.

0:05:18 - Juliette

I don't know why.

0:05:19 - Dmitri

Yeah, exactly. That's great, that's awesome. Sorry, what was the next one?

0:05:23 - Juliette

Another one is a community called Forte Lessons, so they're actually a bespoke video conferencing technology for music lessons, so they're helping people find music teachers online. A lot of the teachers are actually Grammy-certified, top tier music lessons and the video conferencing technology is actually fit for music lessons so folks are able to read music on screen. There's hand views, audios optimized for specific instruments, et cetera. So we have that one. And then we have Vest, which is, you may have heard of as well, based in LA. They help fans invest in music royalties. Then we also did more recently, a company called Jukebox, which is doing something similar in the fractionalized royalty investing space, and it's founded by a former Warner executive, scott Cohen.

He also founded the word chart. I know he's on your podcast actually as well. Yeah, we had a great interview with Scott. That's awesome, yeah, so we're really excited about that one. They're launching in mid-September, so that'll be good.

0:06:23 - Dmitri

Nice. Well, there's four companies right there that are right directly in the music tech tonics kind of space. So great to hear about that. So, Juliette, what about you? How did you get into venture capital?

0:06:34 - Juliette

It's actually funny and people don't believe me when I say this, but I've actually always wanted, since freshman year college, to work in music tech, investing, and yeah.

0:06:43 - Dmitri

Oh my gosh, that's amazing.

0:06:44 - Juliette

It's kind of… it's extremely niche, but I've been wanting to do that for some time. You can find me saying this in an interview online, actually from college, so be welcome when not making this up.

0:06:55 - Dmitri

I feel like we need a carnival bell ringing there. Maybe we'll edit that in.

0:06:59 - Juliette

Like ding, ding ding, we got a winner.

0:07:01 - Dmitri

This is a music tech tonics winner, somebody who is supposed to be on this podcast because they've been talking about this from their youth and continued to pursue their careers. So that's amazing. That's so cool, so you dreamed about it from the beginning. So what were the steps to get here?

0:07:18 - Juliette

Yeah, so I can back up and say why this initially interested me. I grew up with music being a huge part of my life. I've played classical violin since I was four. I'd always just wanted to work in the music industry, but then found my courses in college to be interesting, related to business, and started to obsessively watch Shark Tank, as silly as it sounds, and I was like, is there a way to merge these two interests? And I started reading about some of the labels launching new funds and innovation teams and realized that this was a career path, albeit and each one. And so, yeah, that's how.

0:07:52 - Dmitri

I got there. I love it. I love it so much. I've always been a fan of the hybrid career, where you think about two unrelated interests Maybe one's a skill and one's an interest, or one's a passion and one's a different hobby and you figure out well, how do you put them together and it just sounds like you've been training for this for quite a while, which is super awesome, Very cool. So should we dive back into talking about the investment side of the business?

0:08:20 - Juliette

Totally Happy to.

0:08:22 - Dmitri

Yeah, I'm curious when you're reviewing an investment pitch in music, entertainment, media, what types of companies or specialties interest you most right now? Thinking with your VC hat on Like what gets you excited?

0:08:36 - Juliette

Yeah. So let me just start by saying a bit about the music industry and entertainment industry and acknowledge that many institutional venture funds are not excited about the music industry, I think, given market size. So, as folks know, the US recorded music industry is like $25 billion, could be over $110 billion which we factor in live entertainment and publishing et cetera. But in comparison, if you look at the US financial services and health care sectors, these are like $3 trillion plus dollar industries. And so you kind of have to believe that there really is opportunity for market growth within the sector. To be excited about music and a lot of folks are in the sense that they view music as a commodity, which it could be. They also view the space as highly saturated. Anyone who wants to listen to music probably already does.

Streaming subscriber growth rates have been increasing. You know it didn't go beyond the US, but it's a pretty saturated market overall. So you sort of have to, if you believe that the market's increasing, you sort of have to believe that consumers are willing to and actually want to pay more for the music that they're consuming and that's somehow the product offering can get better. And so I spent some time thinking about this and kind of have come to the conclusion that music is really potentially as good as it gets. The tools that folks use to create music are increasingly cheap but increasingly good. So like, how good can the audio and the music really be? So in order to be excited about the music industry, as I've said, you kind of have to believe that there are sort of ancillary revenue opportunities, opportunities for fan engagement, opportunities to join niche communities, maybe niche streaming platforms focused on, you know, sleep soundscapes. So there's other ways to capture revenue for that same user who's likely already consuming music.

0:10:37 - Dmitri

So that's sort of my preface in saying that yeah, wow, I mean, you just said a lot right there. That I think is very sobering, and I have not heard any other VC be so direct about it. As it relates to music and music tech, I've heard a lot of VCs say we don't invest in music or we don't invest in music tech, but now you've just given us the answer why You've kind of like pulled the curtain back and just been like sorry, guys, look at what you're comparing it to, which doesn't make me any less excited about music innovation or music tech, but it definitely makes me think, wow, our startup friends definitely have a special kind of road to walk for music tech and looking for investment.

0:11:17 - Juliette

Totally but the, and what I'd say is like the most successful startups. However, like, do believe and really support the thesis that the, the tab of music industry can grow, which I do and my colleagues do, and everyone who would invest in sector does so. Super bullish on the. You know the market growth to come within the music industry.

0:11:39 - Dmitri

Got it. So, as a result, is there more to this types of companies and specialties that interest you these days?

0:11:48 - Juliette

Yes. So, you know, going off of this, this idea of like, what can actually provide additional revenues to the music industry? Obviously, you know, given all of the hype, we've been spending some time in Gen AI so for us and fans, and specifically not at the idea phase mostly focused on assisting. You know past creativity, execution that's really interesting to us. How can we help the artists actually execute? faster execute?

better so that they can spend more time creating. So that's very exciting. We believe that artists are willing to pay for this, which will obviously overall increase the market, music market within Gen AI as well, we've been looking at a lot of companies that are focused in security layering. So I think, like ethical AI helping artists like opt in or opt out of using some of their IP in public, publicly trained models that they can get properly compensated for the work that comes out of them. So that's, those are, you know, two sub sectors within AI that we're looking at, and then also really excited about sort of tangentially related sectors where music can play a role. So, in thinking, about the health tech industries.

There's companies that we've looked at that I'm excited about, like improving cognition and aging populations or, like I had mentioned previously, with spokes, sleep and soundscape apps that we believe that consumers are willing to pay for beyond their existing Spotify or Apple Music membership. Gaming's another one. Given you know the excitement around the gaming industry, companies that are enabling licensed music to be used in game, game engines are really exciting, and so, yeah, I think those are the primaries that we're excited about at this point.

0:13:33 - Dmitri

I love it and I think it's really great to hear, kind of like your perspective on sort of the overall investment market for music and then these specific ones, because it feeds back into that quote sort of perspective, that philosophy, and I also agree, I believe, that there's a lot of new opportunities. Music feels to me like it was disrupted sooner than a lot of other industries, even other media forms, and as a result it kind of had its problems earlier and longer and we're now starting to get out of some of those, some of the challenge that we're there around licensing, for example, or peer sharing and social sharing of music and all that kind of thing, all those kinds of things. It's not totally easy now, you know. It's not like obviously all fixed, but we've gone through enough rounds of it that it feels like there's now the chance to take whatever's succeeded in the traditional music industry and start to apply it to these other verticals like you're talking about, like healthcare, wellbeing, meditation, aging I love that one, that's a great one Gaming and so many other things.

So that's super interesting. I mean I'm sure it's a blast for you doing this. Like us as a you know, my PR company, we feel like we get to dive into a lot of different things, really understand the business models. Like you, I'm very interested in both music and business, and so it's really fun to sort of like try on these different hats and do problem solving and also help people along the way towards doing really cool, creative and innovative things in music. But I'm curious, what's your favorite thing about your job?

0:15:13 - Juliette

Yeah, I mean so many things. I'm happy to say that I love my job, but I guess my favorite part of it is just to be able to meet awesome people who are excited about making the world better and making it maybe more efficient, more fun, especially as it relates to the entertainment sector and then beyond that, I actually particularly like meeting music tech founders, given their entire passion about the industry.

No one would, you know, choose us to work in the music industry if they're not truly passionate about music. So the passion that I get from having conversations with new folks all the time is always exciting.

0:15:49 - Dmitri

Yeah, awesome. All right, we have to take a quick break and when we come back I'd love to ask you about the swimming with narwhals pitch competition. We'll be right back.

Okay, we are back. And, Juliette, I'm curious what aspect of the swimming with narwhals pitch competition interests you most. I know you. I don't know if you can say too much, since you're a jury member, but you know we like to connect everybody with their passions and with each other, to understand, kind of like what you were saying before the break, about enjoying hearing about the, you know, hearing from the Music Tech startup founders, their passion and so forth. But what interests you most about participating in this competition?

0:17:32 - Juliette

I'm personally super excited about meeting new companies, new founders, seeing if there are areas that you know BDMI can be helpful with.

Following the pitch competition, I also you know, particularly like the collaborative nature of the competition. I think in music especially, everyone's looking to expand the music market and so if one person can expand the overall team of the industry, that helps every subsequent founder in the industry. So it truly is. You know, it makes sense that the competition is so collaborative but also no-transcript fun. There's still some competitive edge to it, so really excited about that. I also, you know, I know Jessica from Audio Shake who won last year, and they're doing some really exciting things in AI, so excited to see who the next winner will be.

0:18:15 - Dmitri

Yeah, it's been fun to see who comes out each year. Each of the winners has been amazing and actually a lot of the semifinalists and finalists. We continue to see their growth and watching their trajectory is super awesome and it's funny. As you're talking, I'm remembering you mentioned that Shark Tank when you were growing up was the thing that really caught your imagination, and we specifically named this competition Swimming in Narwhals because we didn't want it to have that kind of sharky vibe. And you mentioned this collaborative aspect. It really is a friendly competition in a way. I mean the stakes are not super high, but we have seen some great springboarding coming out of it as well. But I love that connection between us all. You know learning a lot about investment through Shark Tank and now you get to swim with narwhals. They're not exactly unicorns, but they're pretty unique.

0:19:03 - Juliette

So they could be unicorns yeah exactly Awesome.

0:19:08 - Dmitri

So what tips do you have for any first time music innovation startup founders as it relates to pitching investors? This may be for some folks who are at our competition, but also in general, even if folks aren't in this competition or they don't make it to the semifinal, I'm sure it'd be helpful for them to hear what your tips are.

0:19:25 - Juliette

For sure. I think. Generally I find that a lot of folks kind of start with the solution and just jump into their product, what they're building, why their product is better than anything up there on the market, or sometimes the only thing out there on the market, which we know is never true. But I think one of my primary recommendations would be to start with the problem, especially when pitching non-music industry investors why is what you're building necessary? And then, why is the way in which you're doing it necessary? You can't really get to those answers without starting with painting a picture as to what's the problem is in the industry.

I'd also say timing is super important. So just making sure you're getting through the high level beginning to end, because running out of time, even on like a 30 minute Zoom call, does hurt you from an investor perspective. Investors are also always looking for traction numbers or any early signs of product market fit. So make sure you sort of drop those proof points, however small or however minor. And then the last thing I would say is, when you're asking for dollars, try not to frame it as I need this money to build my business and make hires, et cetera, although that very well might be true you should rather frame it as give investors the impression that you're going to be building this thing, no matter what.

This is a problem that someone will be solving. You will be solving and their dollars will just take it further and make the execution quicker.

0:20:56 - Dmitri

Wow, I love that. Those are great tips. Again, I feel like you're really pulling the curtain back and letting folks know what's in your mind when you're hearing from them, so I think it's super valuable, and I'm sure there's so many other tips as well. I'm curious what would you say to the folks that actually are pitching when you're going to be there as a judge on September 30? These semi-finalists might be listening to this episode. What other things would you like to share with them?

0:21:22 - Juliette

For sure. I mean, I love a founder who's excited, so showcasing your excitement is really important to any investor, I'd say. And then also make sure you're discussing some milestones that you want to hit before your race, especially because a lot of the folks on the panel might seek to put money behind your product at some point. What milestones will you hit before?

actually going out to raise a full round and what will you be going out and doing next? And then also just being clear about the this speaks to my excitement point, like being clear about what lofty outcome you seek, Like do you want to be straight for the music industry or how big can this get again? The TAM issue is probably the primary issue in music investors' mind, so speaking to that is important.

0:22:08 - Dmitri

Well, I've heard an investor once say that sometimes your first pitch to investor if you don't have traction. You have two choices basically. One choice is to paint something that's so big and that the potential is so large for return on investment, and that there's. You know, you can't really talk about traction yet when you first get started, right. So one option is to make it look insane and make it feel like you got to jump on this because somebody's going to do this. If it's not us, it's someone else. You might as well get on board with us. But then the other one is to sort of think about just like a point A, like, say, my first pitch. I'm not expecting you to invest in me, I just want you to know who I am and what I'm up to so that when I talk to you again in three months or six months or 12 months you will see what I did between now and then. Do you think about those two different options and whether that point A actually is valuable for you with your time?

0:23:07 - Juliette

For sure. No, it's definitely important. But I say, even if your approach is the latter, like there's always some sort of proof point that you can provide an investor just to give them confidence that you're solving a problem that actually exists. So even if your proof point is, you know, I've spoken to 20 artists and they all have this problem and you know what they use currently isn't good enough, like that's enough quote unquote traction to get an investor excited about a potential investment down the line, but these informational or conversational, you know chats are definitely definitely valuable to me and hopefully to them.

0:23:41 - Dmitri

Yeah, I'm curious. You've mentioned a couple of different things. Some of them are fan facing and some of them are artist facing. And in my work with music tech companies and startups there's always this conversation like the fan side is so saturated, so how can you stand out when it's already so saturated? And then the artist side can be tricky. It's like well, there's a lot of artists out there and it's not as saturated, but they don't have as much money. Do you lean towards? I mean? The other thing is people talk about, is it B2B or B2C? And music. Sometimes B2B is B2A, b2artist business to artist and sometimes artists are a unique kind of business or they're a unique kind of consumer. Some people say they're prosumerous. I don't know, but when you're thinking about this B2B, b2c, business to artist, where's the potential and do you think about both sides of it?

0:24:29 - Juliette

It's a really, really good question. I think every investor is different. I think, being so close to the media industry and sort of the incumbent music industry, you're able to see how fragmented the industry is, which relates to how sometimes slow sometimes the incumbent players are in executing. And so I do lean B2C and thinking it versus B2B. I also lean B2A, but like B2CA, like consumer artists, so aspirational artists, because these folks actually do spend more on tools, on production tools. They're willing to try new things more readily. So I think the best approach in my view, is like how do we convert the fan to a potential bedroom producer, potential semi-artist, how do we get them more engaged in their fandom? And that could be by enabling them to sort of be in that in-between consumer artist phase.

0:25:30 - Dmitri

Yeah, cool, it's interesting. As you're talking, it makes me curious about what you're, and you probably can't give everything away. But where do you go to to track this information? There's so much of this is unknown, so much of this is not spoken about publicly. Where are the best places to track things like what you're talking about?

0:25:48 - Juliette

Like spending and sort of marketing data yeah, exactly. Yeah, I think your keynote speaker, I think from a MIDiA research right.

0:25:57 - Dmitri

Oh yeah, Mark Mulligan spoke at our first conference and he'll be at our pre-conference in September. Yeah, he's great.

0:26:03 - Juliette

So love those research reports, absolutely. Traction data you see, look at pitch book data, traction data, crunch-faced stuff. There's a bit of a lag there, for sure. So, moreover, it's just having these conversational, you know, these more casual conversations with potential founders, or artists, even, or folks at labels I think we're pretty close with a lot of the label innovation funds that we're able to kind of get multi-viewpoints to help us build these things.

0:26:31 - Dmitri

Yeah, yeah, makes a lot of sense, awesome. All right, we're going to take one more quick break and we've got maybe one or two more questions for you. We'll be right back.

Okay, we're back. Juliette, I want to ask you. I mean, we've talked a lot of different things here, packed it in in the last 25 minutes, but I want to give you one more chance to talk about kind of what innovations are emerging in music that interest you most, maybe personally as well. You've talked about some of the investment areas, but I'm just curious are there any other areas we should touch upon before we part ways for today?

0:28:04 - Juliette

Yeah. So personally, I'm really interested in the intersection of wellness tech and music tech, so any tools that are helping you live and think and overall actually increase efficiency in someone's personal life through music is super valuable. I actually have this vision and no one's executed on this yet, but if you're building in the space and you're listening to this, please reach out, because there are worlds in which you're oaring and you know a startup that would ingest data from your messaging and your Outlook calendar and all of that would be able to say hey, this is the type of thing you need to hear right now to set you up for success today and like. These are the sorts of messages you should be sending. These are sorts of the sorts of interactions you should be having. This is what you should be eating, but, moreover, this is what you should be listening to to enable you to be, you know, your best self that day. So that's sort of where I want the market to be going.

0:29:01 - Dmitri

Oh, I love it. And actually, you know, with the smart speakers and stuff, it doesn't have to tell you, it can just start playing. Exactly as long as you trust all these devices to send you in the right direction.

0:29:13 - Juliette

Yeah, trust is the privacy is the bottleneck there.

0:29:17 - Dmitri

But oh, that's, true, yeah, yeah.

0:29:20 - Juliette


0:29:20 - Dmitri

Well, of course, the recommendation to the recommendations would allow for it to where you get to choose, not just have it play. And all of a sudden you realize, wait, I feel different as a result of this music that's playing, or these lyrics For sure, for sure.

0:29:32 - Juliette

There's only choice.

0:29:34 - Dmitri

We'll have at the conference. We'll have Lyric Find will be there and they do a lot of interesting stuff with lyric data and how you can kind of capture information about songs and then use it in these kind of ways as well, so I could see them in the mix for the kind of thing that you're suggesting there. I love that one. Did you have another one and any other ones we should talk about before we go?

0:29:56 - Juliette

I think you know I mentioned this briefly. The security layers for LLMs and other models in the AI space is really interesting just preventing, you know, artists' hard work from being copied and enabling them to be compensated via AI. So how do we ensure that AI is actually helping versus hurting the artist? Pretty excited about that and that's actually happening today, so less far out in the future, I'd say yeah, I agree Totally Well.

0:30:23 - Dmitri

This has been super fun. I feel like you've shared so much knowledge in such a short period and the cool thing is podcast listeners. If you have questions for Juliet, she's going to be part of the Q&A after our swimming with Narwhal's pitch competition online September 13th 2023, I guess I better say that this is going to be online for many, many years, but yeah, that's our pre-conference. You need to get a badge at and you can be a part of that. You can have fun with me and Juliet and our other judges and speakers Mark Mulligan from MIDiA Research as we listen to some very passionate music tech startups finalists pitching us for the swimming with Narwhal's competition. But you've got to have a badge to do it. But, Juliette, I'm so excited you're going to be there with us to listen, to support these startups and egg them along, ask them hard questions and push them down the road to the next level of the competition. So thanks for jumping in on the podcast, Juliette.

0:31:18 - Juliette

Thanks so much. So just so you can see it.

0:31:21 - Dmitri

Sounds good.

Music Tectonics at NAMM 2023

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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