AI and Music - Trapital Summit

AI and Music

Today’s episode and memo is about AI, music, and the balance between innovation and regulation. At our summit, Warner Music Group’s chief digital officer Carletta Higginson, and MIDiA Research’s Tati Cirisano talked about all that and more.

You can listen to our talk here or read below for more on the startup tradeoff between asking for permission or forgiveness.

The concept for this talk at our summit came from a popular memo from May about the inevitable tension between startups and major labels. Here are a few highlights from it:

“If your company is built to shake up an industry, is it better to ask for permission or forgiveness?

Startups operating in music face additional scrutiny from the industry given music’s turbulent history with disruptive technology. No music executive wants to deal with another Napster. But Spotify and YouTube, two of the largest revenue contributors to recorded music, ruffled their fair share of feathers over the past twenty years. There's nuance in those relationships.

But “playing nice” and asking for permission isn’t straightforward either. I’ve talked to many startup founders in music who try to do things the right way. They sometimes get ignored because they’re too small. Other times, the major labels want so much control that it would hinder growth.

If you’re a venture-backed founder, what sounds more attractive? Do you do things the right way, build slowly, and hope that the industry’s blessing pays off in the long run? Or take money from VCs with opinions that conflict with the copyright owners, especially when those same VCs have a track record of billion-dollar exits?

…This isn’t advocacy for breaking the rules. Instead, it’s a lens inside reality. Until the incentives shift, this dynamic will likely continue.”

That’s life for many startups in the industry. But the reality for the rights holders is arguably just as nuanced.

Yes, some may ignore early-stage startups until there’s more traction, but it’s also understandable. Licensing deals take a lot of time and money. No label or publisher wants to go through tense negotiations with a startup that has limited runway and a questionable product. Reputation matters. Look at Triller. I’m sure the industry wished it had the time back it spent fighting those battles.

On our summit panel, Warner’s Carletta Higginson spoke from experience at all sides. She was a litigator during the peer-to-peer file-sharing era, worked at YouTube, and now leads digital for WMG.

Part of the challenge startups face when partnering with majors are the internal silos. The recording and publishing sides don’t always talk to each other, which leads to conversations that can feel duplicative for all sides. Higginson’s role integrates both which allows for more efficiency externally and internally.

Another crucial piece is how deals are structured. Higginson said it’s best to make deals that foster long-term growth for both sides instead of immediate financial gain.

She referenced Warner’s deal with YouTube’s Dream Track partnership, which allows fans to create 30-second generative AI song clips that use the voice of several well-known artists including Charli XCX, who is signed to WMG’s Atlantic Records. It’s a restrictive license that can grow if successful. It’s worth noting that YouTube already has a global licensing agreement with the majors, so it’s not the same as a young startup. But the approach would like lot be the same. Listen to the rest of the conversation with Higginson and Tati Cirisano here. We’ll share the rest of the conversations in the next few weeks!