Optimization is Not Enough: Are You Ready for Streaming's Reckoning?

This week, we’re kicking off 2026 with our opening keynote from last year’s Music Tectonics conference: “Optimization is Not Enough: Are You Ready for Streaming’s Reckoning?" 

In this keynote, Tatiana Cirisano from MIDiA Research joins Dmitri to ask a provocative question: Is the music industry so focused on optimizing streaming revenue that it’s missing what comes next? 

Tatiana argues that streaming has removed so much friction from music that it's accidentally removed fans' emotional connection (especially for Gen Z and Gen Alpha), and that music's real competitor isn't a new format but the attention economy (social video, gaming, etc). 

We explore what the industry can learn from gaming's "productized friction," why Asian streaming services built around fandom might show the way forward, and whether platforms should actually make the experience harder, not easier. We also tackle audience questions about user-centric payment models, AI-generated music, and whether scarcity could return to digital music.

If you've wondered whether streaming is coasting on past success, this conversation will challenge how you think about music's future.

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Episode Transcript

Machine transcribed

[00:00:00] Dmitri: So now I'm gonna take a seat here. It's time for our opening fireside chat. optimization is not enough. So one of the things that. Those of you who've been to Tectonics before or listened to the Tectonics podcast, know that we're focused on the seismic shifts. There's all these things that are happening in music and entertainment and tech and society that are just beneath the surface, and that's the stuff that we're trying to explore.

We're not looking at solving all the problems of today, but we're kind of looking out. Three years, five years, and, learning from many of you who are the innovators who are inventing what the future of music and entertainment and media is gonna look like. And one of the seismic shifts that we all probably witnessed was how streaming saved the music industry.

You know, there was. We've all heard it, we've retold it. When you're telling your parents about what you do in the music industry, you're like, well, first there was physical product and then that went away, and then there were downloads, but that didn't quite work. But then this company called Spotify, came along and they finally got the first.

Money back into where people were willing to pay for what they thought was free. And so streaming saved the industry. And then we also hear all the criticisms, from artists and how the payouts work and all the complexity of all that kind of stuff as well. But have we kind of taken it all for granted?

Like, is streaming, has streaming fixed everything, right? There's like revenue coming back into the music industry. Is this the music format to survive them all? Can we stop saying what's next after streaming? I mean, isn't everything great? Oh, hey. Hey Vinyl. Thanks for coming. thanks for sticking around.

We appreciate it. Oh, what's up, cassette? It's been a while. I'm glad you're doing well. Glad you could be here as well. You know, so there's like all this shift in, formats. And before we dive into these three days, talking about new creator tools, artificial intelligence, new revenue opportunities and methods.

Let's take stock and let's prepare for late stage cap. I mean, uh, streaming, late stage streaming. That's what I meant to say. And to do that, who's better to help us with the breakdown section, but many research is VP of Music strategy. Tatiana Cirisano. Come on up, Tatiana, let hear it. For Tatiana,

[00:02:05] Tatiana: Thanks, Dimitri. Good to be here. Hi everyone. Thanks so much for joining us.

[00:02:08] Dmitri: If you don't know Tatiana, she identifies the risks and opportunities in the rapidly changing music market for leading global entertainment and tech companies. Prior to that, she began her career as a music business reporter, primarily at Billboard, where she penned award-winning features on industry developments, as well as cover stories on artists like Tame Impala, Alicia Keys, and Travis Scott.

Her key focus areas in her research include music, consumer behavior. Emerging technologies and fandom last year. How many of you were at Tectonics last year? Show of hands. So you saw Tatiana, um, speak here along with her colleague Mark Mulligan, in a presidential style debate back when presidential style debates mattered.

 mark represented a guy named Listen, the Lean Back music fan when Tatiana played the winning role of. Play the fan is creator who wanted to speed up every song she heard and who leapfrog the music industry and became a star among friends, recording hilarious new songs on her phone and posting them on TikTok.

Anyway, that's how I'm describing it. Uh, but it was a fun, debate, to talk about this. Kind of like, are people just listening or are people playing music? How is that shifting things? So this is kind of an interesting follow up to that. Welcome back to Music Tectonics.

[00:03:21] Tatiana: Thanks. It's so good to be here.

I can't believe that it's already been a year.

[00:03:25] Dmitri: I know.

[00:03:25] Tatiana: It's kind of crazy.

[00:03:25] Dmitri: It's

time flies

when

[00:03:26] Tatiana: Like are we sure

[00:03:27] Dmitri: I, yeah, I'm maybe not.

[00:03:30] Tatiana: But you know, I was just saying it's so cool to have, having spoken at Tectonics for a couple

years now, it serves for me as. Such a like marker of where we're at in the industry, because every year I'm like, oh my God, it's been a year again.

Here's what's changed, here's what's coming. And I feel like it's that way for a lot of people too. So yeah. Great. job.

[00:03:46] Dmitri: Yeah. Thank you. Thank you. No, uh, it's like we're cousin organizations or something where we're kinda like feeding this conversation. So as I said, streaming is a revenue source is doing better than ever.

 we've kind of finally come to some sort of income stability. Why should we take stock of where things are with streaming now?

[00:04:03] Tatiana: Yeah, so I mean, I think that while there's no end to the sort of micro level fractures that are emerging, which, you know, you just mentioned a bunch in your intro and I've spoken about a bunch of them, you know, over the years at Tectonics, I do think that on a macro level, streaming is doing pretty well, right?

Streaming economics have matured and stabilized, and I think perhaps most importantly. On a macro level, the average consumer I think is pretty satisfied. And before you're like, oh my God, what didn't you just last year argue that like streaming is not good for, the current, you know, what people want today.

I think that while there's so much innovation to be had and there are so many things that you know, we can do to make the streaming experience more playful, more engaging, um, I think that, you know. for the average person, it's a pretty amazing consumer proposition that they can, you know, listen to all this music in the world anytime they want for a pretty low price.

And the problems that are emerging in the industry are more so, they're more pressing industry problems than they are consumer problems. Things like fragmentation and, you know, the attention economy and all this stuff. It keeps us up at night. It doesn't keep consumers up at night, even though they do maybe want to have, you know, better curation and things like that.

It's not as big a problem. So. So on. The whole things are looking pretty good. So you ask why should we step back? And I think, being in this, place of, you know, things are good, maybe too good, the risk is of sort of sitting on your laurels and sort of, you know, letting things. Just focusing on optimization predominantly, which I think is what I see in the industry around me today, at least in, in terms of the major DSPs and the major rights holders.

There's a lot of focus on optimizing the current model. Things like price increases and, you know, trying to get people off family plans or, trying to get people off of, you know, free plans and things like that. And all of that is important for the near term future. But what about after that? And I think about, you know, you mentioned CDs and.

Back when, in the late nineties and, and kind of like right before Napster emerged, CDs were the dominant format and the way that we were, I guess rowing as an industry was predominantly through price increases. So it's like sound familiar. And then something came and sort of. Changed everything in a way that we wouldn't have expected.

So but it's not just that, and I'll stop rambling in a minute. Um, it's not just that, we need to keep innovating because there's always something next. I think it's also that we need to be thinking about the next generation and the generation after that, because we need, as an industry, gen Z, and then after them Gen Alpha to.

Subscribe to streaming as much, if not more than millennials did, who are currently, you know, streaming stronghold. but will they, that's a question that keeps me up at night because, when I think about, what it's like to grow up in the world as it is today versus what it was like when, you know, I was, part of that transition from CDs to streaming and I remember just being.

Amazed by, oh my God, we can listen to anything we want and I don't have to, have space on my iPod anymore. Like all this stuff. That was amazing to me. But what is the wow moment for the next generation when it comes to streaming? Um, I don't think that we've hit that yet. So for all those reasons, I think, you know, the industry as a whole has been optimizing, but that's a big risk in my opinion.

I think that we need to be innovating.

[00:07:20] Dmitri: So there's a lot to unpack though. This is a great, great way to kick it off, and, and there's so many things that I wanna ask you about and, you know, let's, let's just like maybe be very clear and direct. It appears to me that streaming is the current method of listening to music.

So we got that on the table. but listening to music on your phone changes, fan behavior, it's a different experience than what people did with vinyl CDs and even with downloads. And then there was some holdouts on, there's still some holdouts on downloads too, which is interesting.

They want a specific library. There's still a crate digging collection. Component. There's still a relationship to the artist that feels different than paying a subscription. There's, yeah, all that. But how I guess before we dig into all of it, how has this, overarching streaming service interface and experience changed the way we listen to music?

I'm curious about that.

[00:08:09] Tatiana: Yeah, I mean there's again, a lot to unpack. I think that looking back over the history of formats in music, it's with every evolution, a layer of friction was removed, right? when we went from vinyl to CDs, it was like. You can now carry this with you. You can put it on your Walkman.

You don't have to lu, you know, vinyl wasn't something you could pour it around, but you still are limited by what you can carry. And then, you know, the iPod came around and what was their slogan? It was like a thousand songs in your pocket, which is hilarious now. So crazy to think about. so it was, you know, you could now have a thousand songs in your pocket, but only a thousand.

And then we went to streaming and it was, you know, unlimited and all of that. So we've always. Reduced friction with every layer. But I think that we're at the point with streaming where it's like, what friction is left to remove? there's not a lot there. And on the one hand, that's a fantastic consumer proposition.

You know, all, all we're trying to do is remove friction with, so many products. I mean, look at Apple. That's been their entire business model. but there is also something that I think friction adds to the experience. Like you talk about, you know, digging through vinyl stacks and finding a hidden gem or.

You know, waiting in line, for the CD drop or, or whatever it is, there's a bit of friction and then there's a reward that comes with it. And the current streaming experience doesn't really have any of that. And so I'm not advocating that we make the experience worse for consumers just to add friction, but I think there are, you know, we're, we're at this point where we've sort of flattened the experience and it's so easy to just.

Press play and, have the algorithm, you know, cue you up a song that you don't get the satisfaction and curiosity that comes with making it through a little bit of friction and, all of that. So, I forgot what the question was.

[00:09:51] Dmitri: No, you've got, it was about the interface and

[00:09:53] Tatiana: Yes.

[00:09:53] Dmitri: And how it shifted Fan behavior

[00:09:54] Tatiana: Yes.

[00:09:55] Dmitri: And listening behavior.

[00:09:56] Tatiana: Yeah. So I mean, obviously what, that boils down to is things have gotten a lot more passive, but I think that lack of friction element is really interesting and it almost feels like. Now that we've gotten to the bottom of that or sort of an evolutionary dead end in that friction removal, the only way to go is back up.

[00:10:14] Dmitri: Oh, interesting. I got you. Yeah, I mean we used the word friction, which kind of has a negative connotation, but I think you're sort of saying like, when we removed friction, we simultaneously removed some of the relationship. We removed some of the community, we removed some of the work it takes. To say this is who I am, this is what I listen to, this is what I like.

This is what I found, this is what I wanna share with you. Because everybody kind of had this equal experience in a way. Like it didn't matter how much work you put into it, you still got served up something from the algorithm in a way. I'm curious, are there things that are happening outside of music?

That could disrupt that, that are giving you the hints of that. you talked about how Gen Z and Gen Alpha maybe aren't gonna be future subscribers to streaming services as they are. Are they engaging with media differently and are there implications for what the future of music listening could look like?

[00:11:07] Tatiana: Yeah, so I mean, again, to sort of compare and contrast with past disruptions in the industry, I think. In the past, a new format, disruption, it's always come from within the industry, right? It's always been the call coming from inside the house. It's been, you know, something, a new way of listening to music, coming to disrupt the old way.

And I think that. you asked at the beginning, you know, is, is streaming the final format? And I don't know the answer to that. I have to think no, because there's always something else. But I think even before something else comes around, the even bigger sort of threat is coming from outside of the industry.

It's that people don't have any extra time left in their days. And all types of entertainment now are competing with each other. and. We see this in, in our consumer surveys and in our data at MIDiA, we've been tracking it is user reported. So there's, you have to kind of take it with a grain of salt, but what people, tell us how many hours they're spending per week on all these different entertainment types.

And what we find is that although music streaming continues to grow in, time spent, other formats are going faster and are taking up more time, such as social video, which by the way, didn't, social media didn't always compete with music streaming because. You used to be able to listen to music while you were scrolling through Instagram, but now that it's often a sound on experience, you can't.

So I think that the way that I would kind of like boil that down is, it's music's sort of strength in the attention economy and sort of like the first phase of it was being background able, it was a good thing that music was something you could do while doing other things. 'cause it sort of insulated music streaming from competition from these other formats.

But now we're at the point where. It's really the immersive things that require your full eyes and ears that are taking up the most attention at the expense of music streaming. So if we don't, if we don't get music out of the background, just gonna keep losing share of time to these other formats.

 or I mean, maybe, at a certain point it will reach an equilibrium, but I think that that's the biggest thread is not even something from inside the music industry. It's that. Uh, people's attention is, going elsewhere, and that as a consequence of the passivity and all of that, I worry that the next generation isn't connecting music to their identities the way that I did, the way that millennials did.

 and, you know, everyone before that, and sorry if this sounds very, you know, doom and gloom. Um, I hope that this will, This conversation, and I know that it will take a more uplifting note, but I think this is the reason that I, you know, feel so strongly about, this stuff is it is a big risk.

[00:13:33] Dmitri: I've just, in the past 24 hours, I've already heard of some brand new streaming services that are trying to solve some of the things. So I don't think it's doom and gloom.

[00:13:40] Tatiana: Love that.

[00:13:40] Dmitri: You know, I think it's, it's taken a couple of years where I think we're getting into that optimization position that you're talking about and there's like, it's felt like the last couple years, a lot of streaming stuff, innovation has sort of.

I mean, you called it flattening of the interface. It also seems innovation was flattened too. In a way. It's like, nope, can't do that. We gotta optimize for revenue, optimize for profit. It's tight, it's tech, we gotta scale it, et cetera. And now people are saying, well, wait a second. The experience, there's another opportunity there.

Are there models from other niches, other industries, other verticals, other regions of the world that kind of shed an alternative path for how to avoid The potential departure from streaming as, a migratory economic flight. Yeah, that could,

[00:14:24] Tatiana: I mean, yeah, I mean, we talk a lot about, Asian streaming services, particularly in China, which have sort of productized friction in a way because they're really built around.

Fandom and identity and sort of, I don't know, reaching new milestones in that fandom and being rewarded for them rather than, well that first and then consumption maybe second, rather than being built first around consumption, which is how streaming services in the west have been built. so I think.

Companies like Tencent and Netties. That's always a really interesting contrast with what we have in the West. But I think also a big element to all of this, and another sort of fuel to the fire of we need to be innovating streaming is that, you know, the vast majority of new streaming subscribers will come from outside of the west, and that means that consumers sort of preferences and expectations in other regions of the world will increasingly shape the streaming landscape.

Right. I mean, there's, it differs so much regionally, but just, you know, some examples I think of are, of course, you know, in Asia, these platforms being more built around fandom and that being an expectation, them being a little bit more social, I think about the popularity of YouTube in places like Latin America and Africa, where.

 when you bring that up, the first thing people say is, well, yeah, it's really popular in part because it's free, which is true, but I think a lot of it is also that these are audiences who sort of expect all their formats and all their entertainment to be in one place. They don't think about, you know, music in this bucket and film in this bucket, and content creation in this one.

They sort of think about it all in the same place, and that's why YouTube is so popular. yeah, I know you asked like what are the examples from other places that can be used? I think it's also that it's not just that they're examples, it's that they, these are consumers that we need to be building for, for the future because they are the next, wave of, subscribers.

[00:16:15] Dmitri: I'm so intrigued that we're talking about where Gen Z and Gen Alpha might go or are going, or how this will impact it. And you talked about, the immersive experiences and it comes down to social video. We haven't talked about gaming very much. Yeah. Is there, is there something in the gaming realm and the mix that you think plays into this

[00:16:34] Tatiana: Definitely

[00:16:34] Dmitri: un flattening

of music listening.

[00:16:36] Tatiana: Oh

yeah,

definitely. I mean, I think gaming has. Productized friction. It's built a a hundred billions of dollars, you know, annually business out of, Get through this game, get through this obstacle and the, joy that you get from that. Right.

[00:16:50] Dmitri: Wow, that's a great point.

[00:16:51] Tatiana: So it's an interesting example in that way.

I think, the only reason I, I hadn't brought it up sooner is when we think about like the attention economy so far, although gaming plays such a big cultural role, the actual percentage of global consumers who game regularly is still small enough that it's not competing directly with streaming as much yet.

If that makes sense.

[00:17:10] Dmitri: Yeah.

[00:17:11] Tatiana: It's social video is like the bigger. competitor and I think is the most hours weekly that people spend on anything. I think about my own use of these apps and I'm like, yeah, that, that makes sense. but yeah, I think, you know, gaming is also a, a really good, example here and has, been I think, a source of inspiration for the entertainment industry for many years now.

[00:17:30] Dmitri: So we're at a place where we're saying, yeah, everyone wants to optimize around streaming. it kind of creates a paradox for the music industry and for the streaming services. They've invested a lot in building audiences and technology and changing behavior. They can either finally cash in on decades of investment on this switch to digital music, or they can say, oh, wait, look, three, five years from now, there's a future generation, which is sort of what the MIDiA research and what you're sort of saying out here is.

So it's a paradox. How can we do both? how should the industry think about this? It's a great,

[00:18:03] Tatiana: it's a great question, and we get this question a lot from streaming services that we work with about, you know, how do we innovate and change the experience for a new generation?

 while not alienating the people who like the service as it is. I think there's a couple answers to that. I think one is that, we need to realize that consumer behavior with music, it's a spectrum from passive to active. I think that sometimes a tendency is to think of active streaming users or music, I don't know, fans in one bucket and, and passive ones in another when actually.

You know, I, in the same three hours of, of listening switch from being totally passive, just listening to music as I'm doing something else, to looking up the lyrics for a song to, you know, going on YouTube and finding the tiny desk performance of a song that I like, like it's a spectrum.

So it's, we don't wanna, we don't want the, full experience. We don't want the options to only be passive, but we also don't wanna force people to always be actively engaging. I think that it's about surfacing opportunities to go deeper at, the right time in the user journey. And people who work in product are, can do that better than, I guess I can explain it.

 but I think that's a big part of it. What was the other thing I was gonna say? Remind me of the question.

[00:19:15] Dmitri: It was just about the paradox of

[00:19:17] Tatiana: Yes.

[00:19:17] Dmitri: Of, uh, tackling, both optimizing

[00:19:19] Tatiana: Yes.

[00:19:20] Dmitri: Generating revenue profit from everything that's been built and Oh, but you gotta look ahead and, disrupt your very business.

Right.

[00:19:26] Tatiana: Okay. I think the other thing is that, differentiation important and I think should be encouraged. So, you know, for streaming services for the past 10 years, the experience and the catalog everywhere is pretty similar and, you know. When innovation has happened, it's happened pretty uniformly across the services.

If Spotify launches a feature, you see it on Amazon music later and vice versa, like things are pretty similar. but I think that a big part of this future is. Encouraging and enabling services to differ in the experience. so I think part of the answer, I guess is that you know, you ask how do you build for the new generation, but also maybe, cash in, on, on the old, maybe you do actually make a choice for some of these streaming services.

Maybe you do decide to go a different direction. Um, and I think that rights holders should be more encouraging of platforms being, you know, being able to do that.

[00:20:18] Dmitri: Hmm.

So the, I want to dig in a little bit more on what else streaming services can do. 'cause you talked about this idea of friction, which is so intriguing to, it's like the opposite of the way that most, I think, tech companies build and scale.

[00:20:30] Tatiana: That's the hot take,

[00:20:31] Dmitri: or the di or the distribution, you know, like, it's like, oh no, we wanna remove this. We wanna grow this as big as possible. What's the total addressable market? How do we get everybody in by reducing all the friction? One of the things I've heard you talk about is setting rate limits.

[00:20:44] Tatiana: Yeah.

[00:20:45] Dmitri: what exactly does that mean? Is that having a curated, catalog on, one service, or is it you pay your subscription to stream, but you can only listen to certain things, or maybe you have to put more money in, or you have to earn the ability? What, what does that look like in streaming?

[00:21:00] Tatiana: Yeah.

No, it's a great question. I think there's a lot of directions it could go, but first I'll take a step back and talk a little bit about why, because. It, it's another sort of hot take. Another thing that could be controversial to say that we should, you know, not necessarily make it harder for music to be on streaming services, but create some level of different lanes for different music to go in or, or more curation.

And I think the reason that we are advocating for that is the way that, you know, you have. 120,000 tracks a day. And everyone's sick of hearing that, stat, the way that

[00:21:30] Dmitri: getting uploaded 120,000 tracks uploaded.

[00:21:32] Tatiana: Yeah. Getting uploaded, sorry. Just streaming services every day. Um, the fact that, you know, all songs, all music is sort of treated the same on these platforms for most of streaming's history.

That's been this really amazing democratizing force. Right. But I think we're at the point where. There is so much going on that the system is no longer actually even benefiting the artists. It was meant to benefit in the first place, because you're not getting discovered, you're not able to connect with your audiences.

So what was really democratizing in theory, has actually just become a bit too chaotic to navigate. And then I think even on the consumer end, it's no longer working as well because in theory, consumers have more choice than ever over what they wanna listen to. But. How many are actually exercising that choice?

I think that there's sort of this decision fatigue and there's this overwhelming sense of, if, if I don't feel like there's an easy path for me to figure out what to listen to, let me just let the algorithm do it. So we got rid of gatekeeping, but now the algorithm is the new gatekeeper and.

So I don't pretend to have a solution to what rate limits would look like in streaming, but I do think that we're finally at a point where the current system isn't even working. For those, it was intended to benefit. And I think that one interesting idea to put out there is that, curation, because we're advocating for curation, not gatekeeping, we're, we're advocating for like more taste making, I guess.

I think that that could come from users themselves, I mean. The tens of millions of playlists that users contribute to platforms don't really get recognized by the platforms. Why don't we have a leaderboard of top user generated playlists on Spotify? Like, I think that, you know, audio Mac is a great example of this.

They recently introduced a tastemakers program where, you know, users on the platform that have playlists that, you know, have generated them a big following, get an official badge and get support for doing that, for taking that role. So I do think There needs to be more of that.

So that's what we mean by setting rate limits.

[00:23:25] Dmitri: Yeah. Interesting. Okay. Let's flip it, because the streaming services aren't the only ones that are wanting to optimize revenue right now. What about record labels, publishers, managers, artists? How does this impact their strategies right now? And is there something else they should be doing?

[00:23:40] Tatiana: Yeah, I mean, they play a huge role, right? Because, the platforms can only innovate so long as they're able to secure the licenses to be able to use music in these new ways or change the platforms in these ways. They need the support. And so I think that a big part of the directive for labels and, and publishers is to encourage and enable that innovation and experimentation, not just from the smaller players like Audio Mac, but from larger players as well.

 and again to encourage differentiation. And then I think the way that sort of boils down to managers and artists is that if platforms are enabled to become more differentiated, you are able to tailor your approach better to them. you know what? The way that you market yourself or try to reach people on Spotify will become different than how you reach them on Apple Music or Amazon music.

And I think that's a good thing. You might even get to a point where we have like. You know, YouTube artists or Spotify artists, people who sort of fit better in, whichever of these, the feature differentiation that, that we're seeing. So I think that's sort of the way that it boils down.

But it really, for right now depends a lot on the DSPs and the rights holders.

[00:24:47] Dmitri: Are you saying that this is a moment because of a generational shift in user behavior? This is a moment where newcomers. To the music listening experience might get traction with the generation that the existing big players in streaming aren't paying attention to.

Is that what we're gonna see here?

[00:25:06] Tatiana: Wait, say that again?

[00:25:07] Dmitri: Newcomers are the audio mac's and the vocana's, do they have a new opportunity because they're paying attention to a different generation? Then the Spotifys and the Apple musics. And are you, is that what you're sort of, I know you don't necessarily wanna be on stage and predict what's gonna happen in the future, but is this creating a, that kind of, origin opportunity for a brand new player to come in and actually get market share?

[00:25:28] Tatiana: Potentially, yeah. I mean, I think, it's hard for the same sort of attention economy reasons we've talked about getting people to. try something new. Try a new app is always hard. So if someone you know is brand new player, trying to launch a streaming service I think faces a lot of challenges.

But not impossible because I do think there is, you know, new generations have different expectations from streaming and they may not find that they're getting what they need from a Spotify subscription. They might seek out an audio Mac or a SoundCloud or, you know, one of these smaller players.

Or they might, they might do both. They might have a free Spotify account and they might have a paid SoundCloud one. it might be a case where with the differentiation, there's more opportunity for that sort of layering of services rather than choosing one. Yeah.

[00:26:12] Dmitri: But

[00:26:12] Tatiana: yeah.

[00:26:12] Dmitri: Yeah. Alright. So we've talked about it.

We've talked about, it seems like everybody's optimizing around the current model of streaming because they've invested so much in it. But if they're not looking towards what future generations or emerging generations are gonna do with their credit cards and their wallets, they might miss an opportunity.

Something's happening culturally with music in a sense that other generations have had their identity tied to music. More and more people are spending time watching social video, doing gaming, watching Netflix, Hulu, Amazon Prime, et cetera. Their identities, their youthful and identities are no longer hooked to music the way they were before.

'cause there's not as much friction and we put it out there. Did we leave anything out? 'cause we have time for questions too.

[00:26:57] Tatiana: did we leave anything out? I don't know. Maybe we'll see when, if people ask questions. You, tell me. What did I leave out?

[00:27:03] Dmitri: Dmitri is this year. Five,

seven.

Seven.

[00:27:07] Fabian: Jesus Christ.

[00:27:07] Dmitri: We've had five.

[00:27:08] Fabian: It's been seven.

[00:27:08] Dmitri: We've had five in person. We had two online during a certain, uh, seismic shift known as the pandemic. Right?

[00:27:14] Tatiana: That's lucky number seven. Yeah, let's go.

[00:27:16] Fabian: Congratulations.

[00:27:17] Dmitri: Thank you.

[00:27:18] Fabian: And your, how many people have been here for seven years? Five years, six years. Alright. I, I've been to every one. Thank you for putting this together. Thanks, Fabian. Um, my question is. Post streaming. What platforms are you seeing out there? You mentioned, audio Mac. I'll check that out, but what other platforms are you seeing that's allowing for a higher level of engagement in streaming interactivity, immersive experiences?

What's after Apple? Amazon, Deezer Tital, Spotify.

[00:27:48] Tatiana: Yeah, I mean, we haven't, we haven't talked about something that I spent a lot of time talking about last year, which is audio modification. And I think that that is something that a new generation that has grown up sort of expecting to be able to participate in the entertainment they're fans of.

 Will maybe expect, expect the ability to use especially with, you know, generative AI and, and growing up in, in this world. So there's,

[00:28:11] Dmitri: that's the first time we mentioned ai. Yet, yet today

[00:28:13] Tatiana: we should got like a medal. Thank you. Thank you, thank you. Right. Like I was wonder, I I'm sure somebody's,

[00:28:19] Dmitri: it will get mentioned tomorrow.

[00:28:20] Tatiana: Somebody's got a question. That was, somebody's question is how

does AI fit

in?

Um, but, but yeah, there's a number of really interesting startups, I think, and that's. Space, hook is one of them. there's many others whose names are escaping me right now. But I think, when you think about, you know, what a new music listening interface could look like, I wonder if it will be, you know, here's your, favorite songs and here's the ability to change them and share those changes with others.

I think that that's something that fits really well in line with the direction that we've seen consumer behavior going not just in the last year, but in the last 10 years. there's this really interesting. ad that I like to bring up. That was, um, an ad for Apple, back in the day. And, it was a, basically, it's funny, they probably would like to strike this down from the internet now, but they were sort of encouraging people to burn CDs.

 and it was like this stage where there were all these different artists up there. It was like Missy Elliott was up there and like all these other artists, and it was if someone's sitting in the audience and they were saying, oh yeah Missy, I want you to go first and then I want you to go here. And it was showing how you could remix.

The songs, or not remix the songs, but remix the order.

[00:29:24] Dmitri: Yeah, like a playlist,

[00:29:25] Tatiana: like Right. So this is what I'm saying is like we think about the audio modification trend as something really recent, but it's not, I think it's just the latest step in a trend that we've been seeing for a really long time. And now I'm rambling about audio mod, but I hope that answers which audio your question

[00:29:39] Dmitri: Audio Mac has, on your streaming service.

You listen, but then you can also remix it and share it with other people on Audio Mac, which is. And I, you know, Spotify's talked about having, so that

[00:29:47] Tatiana: Exactly.

[00:29:48] Dmitri: And Spotify like talked about it as well. Yeah. Yeah.

[00:29:50] Tiffany: Hi, my name is Tiffany Solis. I'm a graduate student in a Master's in Music business program with Berkeley College of Music.

 I was attending the music managers forum last night. Saw Dmitri there. We haven't connected yet, but

[00:30:03] Dmitri: Hi.

[00:30:03] Tiffany: Hi. Love your pants.

[00:30:05] Dmitri: Thanks.

[00:30:06] Tiffany: Essentially what I wanna know, I heard about Vocana. While I was there. And what I love about their platform that I'm, I'm hearing is that when you go into streaming, you don't just have your money that you are putting into the subscription, going to the people that you are listening to, independent or popular artists regardless.

And so Vocana is wanting to jump on the scene, get. In front of Spotify where like if I go in and I listen to independent artists or even friends at Berkeley, like my subscription goes more to them than Taylor Swift for example. I think that's really helpful because when I go to the store and I buy a brand of milk, the company that made that milk is actually getting the money.

So my question is to you. Why hasn't that been done before? Like in your experience with streaming, why is that model still in existence? Because I think that's one of the reasons why CDs were, you know, so popular is that all the songwriters on that cd, all of the people, like they got paid for that purchase.

Yeah. So why did that never happen? Yeah.

[00:31:12] Dmitri: do you not know the answer or do you just want to hear it out loud?

[00:31:16] Tiffany: Maybe I'm, ignorant.

[00:31:17] Dmitri: I'm not being sarcastic.

I'm just, because it's a, a funny, it's a funny topic and it's not a funny topic. It's a topic that comes up a lot in the music industry and I think as you get yourself more and more engaged into the music industry, you start to catch more and more nuance about what's actually happening.

[00:31:32] Tiffany: No, so,

[00:31:32] Dmitri: so I wasn't being sarcastic and I wasn't being mean. I was literally like,

[00:31:35] Tiffany: not at all.

[00:31:35] Dmitri: You wanna know why? You really wanna know why

[00:31:37] Tiffany: I really, okay. I really do. And here's the reason.

[00:31:38] Dmitri: Do you wanna talk about this?

[00:31:39] Tiffany: Here's the reason is because when I was interning with Sony Music Entertainment in my undergrad, we actually worked with Spotify.

Like I had my report like getting Spotify out into the market, like when nobody knew about it. And I literally thought, this makes no sense in this one way, but I was a student again, student. So I would love this answer.

[00:31:59] Dmitri: Yeah. Cool.

No problem,

[00:32:00] Tiffany: my ignorance

[00:32:01] Tatiana: and when I, when I explain this to my friends, it like blows their mind that this is the way that streaming royalties are paid out.

'cause it is so nonsensical in so many ways when you, with your milk example and all that. I mean, I think the most simplistic answer is that the dominant pro rata model is dominant because it is the model that benefits the biggest labels and publishers in the world. And it doesn't. Behoove them to change it.

So that's, that's the number one, that's the number one answer. But I think that, something also interesting that you brought up is the potential to rally consumers around, Hey, use this platform because it's the one where your money is really going to the artists. And I think that, platforms like Vocana and like SoundCloud, which has fan powered royalties, could and should be more vocal about that.

 I think that should be like in the advertising to fans is like, this is why you should use our platform. However, I am skeptical that, Not that enough people care. I think enough people would say, yeah, you know, I, I would like my money to go to my favorite artists, but that it would motivate them enough to change.

So I think that that's the challenge. And this goes back to what I said earlier about how a big challenge that we're facing as an industry now is that the music industry's problems are not consumer problems. And those two sets of problems do not align. We, you know, so. It's great to have a platform that has the alternate monetization model you described.

The hardest part though is that it will only work if we can get a sizable majority of people to sign up for that and actually pay using that system. And that's the hardest challenge.

[00:33:26] Dmitri: And what's interesting about that user-centric model that Vocana and some other services are, testing out is that artists are frequently driving their fans to streaming services in order to get paid.

They're saying You should subscribe to this thing. So that I can get paid. And so over time, if artists and labels adopt user-centric models more, they'll get higher payouts per fan, and way higher payouts per listen as well, but. Somebody has to drive fans to go to those services to use them, which is sort of what I think Tatiana.

So anyway, cool. Question. thank you for your transparency, your openness, and your vulnerability in asking that even after I asked you a question back. So we got more questions.

[00:34:11] Sheba: So almost a follow up. Hey Tati. Hey Dimitri.

[00:34:13] Dmitri: Hi Sheba.

[00:34:14] Sheba: Great to see you guys. almost a follow up actually. So now if you consider that fully gen ai and I wanna make just the distinction between fully gen and like AI assisted, which I know is the future.

 just to give the analogy around, you know, like creating music on a computer 20 years ago was like frowned upon or looked down upon somewhat. but now everyone does it and we all consider it to be normal. I think actually as AI assisted is gonna be similar. so that not going away. I think there's a huge distinction between that and fully gen.

Ai, which is, you know, just text prompted music. So if we throw that in the mix of, you know, 120 songs getting uploaded a, a day, my question is ethically, does it have any business competing with music that's fully human made or, or even human in the loop made right. like on the same platform. And are we maybe headed towards a future where.

 I don't know, maybe like a Spotify for example, creates a separate avenue for fully gen AI music to be heard so that it doesn't compete with the market share for human made or human in the loop made, music. So just curious.

[00:35:21] Dmitri: Okay. So, so lemme make sure I'm clear. So you do want to talk about ai?

[00:35:25] Sheba: Yeah.

[00:35:25] Dmitri: Okay. Okay, cool. So, as it relates to this topic of optimization, is there the ultimate question, Sheba had. Is, are there two different streaming services? Is there one for human created and one for AI created? We're seeing something that happen in video.

[00:35:40] Tatiana: We're, mean, and we're seeing that happen in AI and, with Udio and, Universal.

I mean, that settlement was. To create sort of a walled garden for ai, generative AI music. and I think

[00:35:51] Dmitri: meaning if you generate music on Udio, you can only listen to it on Udio. Yes. You can no longer download it and post it on socials or upload it to a distributor.

[00:35:58] Tatiana: Yeah,

[00:35:59] Dmitri: yeah.

[00:35:59] Tatiana: Yeah. So that is, in a way sort of creating those two lanes that, that you talked about.

And there was another deal that's escaping me that was for a similar thing. So it feels like the direction that, AI partnerships and deals and licensing is going, is to create those walled gardens. But I wonder how long that can sort of last because I think that it's one thing to talk about the ethics of, you know, fully AI generated songs versus human generated songs.

I will disappoint you with, I do not know the answer to that ethical question. I think it's a really good one that, you know, there's, many people that would have better answers than me. but what I do think about a lot is how, it's. I not gonna be that like think that we're very quickly gonna get past the point of it being a clear distinction.

I think that. AI is no longer, um, water and Music had a really good article about this recently where it's like you can no longer put AI music tools as a category because AI is just a function that is layered through everything now. And, um, to the extent that musicians are using it, you know, we're gonna have this very blurred line between what should be labeled as you know, generative and what should not.

And so. I think that we are starting to see that walled garden approach now, but I'm not sure that that can sustain itself for the, the gray area that is only going to grow.

[00:37:15] Dmitri: Awesome. Uh, we have another question.

[00:37:17] Graham: Hello there. Graham Harrison here.

[00:37:19] Dmitri: Hello there.

[00:37:19] Graham: Yeah. Yeah. how about a service like, Marine Snow that gives micro loans to artists in return for exclusive use for.

90 days and creates an environment where you can come and see the new hip stuff before it ends up going onto other streaming services. Do you think that's a good way of different,

[00:37:37] Dmitri: have you heard of them? Marine Snow?

[00:37:38] Tatiana: I have actually. Yeah. And I think that, it does bring up the idea of scarcity, which is another thing that's been sort of missing from, you know, the streaming landscape that I think we could bring back.

I also think, it's sort of almost like a windowing approach, right. And I think that's also interesting because, you know. Windowing is like a, topic that I feel like sometimes I bring that up and people roll their eyes. They're like this again. We tried it, it didn't work. but I think that some of the risks that were associated with windowing in the past where it would be, you know, it's gonna get leaked and all that are sort of dissipating as listening is so fragmented anyways.

 and the incentives for fans are to keep things to themselves, especially if they paid to get access to it. So I definitely think that's interesting. I, I am on a surface level familiar with Marine snow. I, I haven't used it in a while. but yeah, I think it does bring up, the scarcity element, which is another thing that.

Is missing. I mean, everything about digital entertainment right now is the opposite of scarce. And I think that's also part of the reason why we're seeing a movement towards more shared in-person experiences. It's not just that people want human connection, which they do, it's also that those are the only entertainment experiences that are scarce anymore.

 so I think the more that we can bring to scarcity back into the digital experience, the better.

[00:38:50] Dmitri: It's interesting when you talk about windowing, if you look at television and film on video streaming. it's the thing, you know, there's always exclusives on, on different services and yet in music it just didn't e evolve that way.

So, um, one more question.

 Derek: Derek Hoiem, I'm from Seattle. Good to see you guys. with the attention economy, Tatiana, you were talking about music compete. Music is competing with all forms of media now, but at the same time, there's more music than ever that I'm hearing throughout my life, throughout my day. Right. What would be your suggestion to those of us who work with artists?

And like starting with new artists? Yeah. Or young artists. Is it better to go like open wide or narrow and deep like they say on YouTube? You know, the riches are in the niches. Do you wanna focus on small community or do you want to like go big and wide to be on as many platforms as possible?

Tatiana: Yeah.

Derek: What do, what do you think?

Tatiana: I think it's really hard to go top down anymore. I think that when I do hear, I have this conversation with managers all the time and marketers, and when I do hear successes, it's usually when you go the opposite way and you start with the niche and sort of let it build outward from there. I think that, you know, the very notion of what it means to break an artist, I'm often like, what does that mean anymore?

 when, you know, there's artists will have their breakthrough moment and still the vast majority of people won't know who they are because things are just that fragmented today. So, yeah, I think that, top down is increasingly being, you know, put aside for, instead starting with the most engaged people.

And I, I heard the quote, I can't remember who said it, which. Is annoying because I would love to credit them, but it was, advice to managers and it was focus on your smallest number. So we're so used to looking at the biggest number, like what is the total number of streams we got or the total number of followers or likes?

And he said, no. Think about your smallest number. Who are the five people who like, wait, I don't know, showed up to your live stream? Who are the. 10 people who you know, I don't know, and open your newsletter first, or whatever that means to you. And I think that, yeah, focusing on the small and then going from there is increasingly the approach that I'm seeing.

But I don't manage artists. I don't, you know, I don't market, but that's what I'm hearing in the, in the industry and I think it makes sense.

Dmitri: Tatiana, it means so much to me that you come, come back to Music tectonics and share kind of your, your pulse check on the industry, on innovation, on tech. Is there anything you're excited about this week?

What's, uh, what do you come to music tectonics for?

Tatiana: I mean, I'm excited to check out all the startups that you've got. I'm excited to not be in cold to New York. Um, I'm excited to connect with all of you. If anyone has questions that we didn't answer, I'm happy to chat after just, um. And yeah. Great. Next year,

Dmitri: MIDiA research

has a great blog.

You can follow. Find out all the research they do. Um, thank you Tati. Thank you so much for Thank you Tatiana. Cirisano, MIDiA research. Appreciate it.

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.