Bill Gurley and Tom Gimbel: Helping Artists Navigate the Modern Internet | SXSW 2022

Hey, good morning and welcome to day five, day six of SXSW 2022. My name is Hugh Forrest and I am the Chief Programming Officer. Thanks for getting up early to enjoy this incredible session that we're about to have. A few points of housekeeping before I intro today's session. You've heard me plug it before, plug it one more time. Trade Show on first floor, rebranded as the Creative Industries Expo. That runs until 5 p.m. today. If you haven't spent some time in there, go through, check it out. Some pretty cool stuff there. Also, there is a merch booth roughly first floor, this level. As I've mentioned before, we are selling SXSW t-shirts for Ukraine. Buy one, please.

Benefits some great nonprofits in Ukraine. Speaking of Ukraine, we have a session tomorrow, March 17th at 3.30, which is titled Ukraine for Peace, Supporting Artists and Creatives. That is in 2.30 in Ballroom D, right over there. I also want to talk about our keynote lineup for the end of the week, beginning today. 1 p.m., we have the longtime science fiction writer Neal Stephenson speaking. There was a big session about the metaverse yesterday. You may remember that Neal Stephenson coined the word metaverse in Snow Crash many, many decades ago. That'll be fascinating. Thursday, we have our first music-related keynote. That is Nabeel Ayers, longtime music executive, talking about his journey, his new book coming out.

He will be interviewed by Andy Langer, a long time radio personality here in Austin. Friday, our keynote is Beck, which will be amazing. And then Saturday, we close it out with Michelle Zahner of Japanese Breakfast. All those keynotes, 1 p.m., Ballroom D, right next door. Check it out. Okay, to this morning's session. You may or may not know, that we have an informal rule at South by Southwest, that we can't have any speakers taller than me. That is a joke. Please don't put that on social media. If we did have that informal rule, we would break it for the next speaker, Bill Gurley. He is a former basketball player, division three, like I was, then he played a year at Florida. I've enjoyed talking to him a lot about UT basketball over the last two months, go horns, trying to get their first tournament win in ages tomorrow, Chris Beard and company.

He is also, Bill is also a huge, huge, huge music fan. Hence the focus of this session. You may as well know that he has played a minor role in the venture capital community for the last few decades, and there's a TV show out there that may or may not portray him accurately. He will be in conversation today with Tom Gimbel, who is the GM for the Austin City Limits TV show. Tom has been a fixture in the Austin music scene for the last 20, 30, 40 years. Today, they will be talking about how artists, bands, musicians can make sense of the current internet and online tools. Please join me in giving a huge SXSW welcome to... Gotta look at it one more time, Bill Gurley and Tom Gimbel.

So Hugh asked me to speak on this topic. So as a venture capitalist, I actually, I looked at Napster years ago, but I haven't been involved in music-related venture investments. But as Hugh mentioned, I'm a huge fan. I've always favored the second weekend of SXSW for all the music. And I will be spending every evening hopping around to see a whole bunch of new acts. I really enjoy it. Hugh asked me to speak on this topic and I wanted to see if Tom would join me. So you have a history both as an artist and as a record label.

Executive, very, very briefly, as, as an artist, I came to Austin, uh, as a musician and, and quickly realized that being a musician is really hard, uh, touring is, is really difficult, and I discovered, uh, after interning for a summer at a record label called Amazing Records. Any Amazing Records fans in the house? No. It was the first label that I came to in the phone book. I just, if you remember, a thing called the Yellow Pages. And I called them up and I said, 'I'll work for free.' And they said, 'Okay.' And I realized that I could come to work every day and talk about music and be involved in music without the grind of being on the road and being a musician. And then... Amazing Records then took me to New York, and I was with Arista Records for 10 years and worked with a number of artists that you would have heard of, and then came back to Austin in 2006 and am fortunate to be with Austin City Limits for the last 11 years.

An amazing, amazing show that you guys put together. So as part of trying to figure out how I could be helpful, I just did what I normally do when I'm looking maybe at a new category, which is I just did a super deep dive. So I got on the phone, I called artists, I called people in the industry, I called, you know, people at Spotify, people at Instagram, people at all these different places and tried to make sense of things. And there's really five things that kind of came out that I'd like to go through briefly that I think are important for artists right now. And I think it's really important to separate things that are probable and are trends from things that are kind of options and experiments.

And I think it's very easy to get drawn into something that may be an option or experiment, but that may affect your career in a way that's not gonna be successful. So let me jump into those. So the first one is just streaming. I think everyone knows this, but prior to about 2014, we had like an 11-year decline in recorded music revenue, as basically, as piracy and the internet—so the internet wasn't helpful, it was painful to the industry. But lo and behold, starting in about '13 or '14, streaming started to work, and now we have growth again. Almost the entirety of that growth is from streaming, and if you look at what, of what Goldman Sachs thinks, like they expect streaming to be the vast majority of all revenue in the future.

There's a trick to that being the reality that people need to lean into streaming, which is many, many artists say, 'You can't make money in streaming,' right?

Yes, I mean, some, if you look at recorded music and if you just look at the, the old days of what an artist would make from a royalty of selling an album or a CD versus what you're now making per stream on Spotify or any of the other services, it's a micro-fraction of what they were making. And so artists who were selling 10, 50, 100,000 records were making money. Now that artist is, at least in the recorded music side of things, definitely not doing as well.

Right, right. One quick note on the streaming services: all the artists that have leaned into Spotify's geographic data have said that it's had a massive impact on their touring efficiency. And so both Spotify and YouTube will provide artists with basically where their fan base is on a geographic basis, which is a tool people didn't have before.

Yeah, I mean, the data is now what you're being paid. Artists have always accepted... Well, first of all, these lights are bright, but just a quick poll: how many musicians are in the room?

One? No, no.

Two, yeah. Five. Going back to the blues musician at the crossroads making a deal with the devil to gain that talent to be a musician. Musicians have always strived to, and they've always done this deal. And I come from a record label background, so I don't want to knock record labels, but artists have always done an unfair deal with record labels, and it was kind of this acknowledgment that, 'Look, you're going to win on the recorded music side of things, and I will accept what is clearly not a fair deal.' It's amazing to me, as we sit here in 2022, that artists are still doing deals where they're taking their soul and their creativity and their life's work, and they're giving that ownership to another company for a stream of royalties on sales.

That's kind of crazy to think about, that that has still been the way of things for all these years. But artists have always accepted kind of this unfair deal on the recorded side of the game in exchange for all the machinery that a label puts into an artist to make that artist famous. So then the artist will tour, sell merch, and now they're having shoe lines and their own vodka and everything else. So now, another addition to what you're getting as part of that unfair transaction is you're getting this great data that you can then use to tour or do whatever you're doing and be more efficient and profitable.

I would say the number. So this is a this is a slide that tries to look at how the money flows. So ten dollars on your Spotify and how that split between artist, songwriter, label, publisher and then the live music. And to what Tom just said, you'll see on this slide, artists might make six bucks out of ten on live music, but might make one buck out of ten. The thing I learned that was just super eye-opening to me is that that's not universal. There are actually artists that make a much, much higher percentage of the dollar on the recorded side, as much as four or five times more. And they're traditionally not the major label artists that are well-known. They're a new breed of artists that has learned that they can take ownership of their own music.

And so this may be one of the most important things that's happened in the past year. You wouldn't notice it just by reading, oh, John Mayer left Columbia after 21 years. I talked to Irving Azoff, who's his manager. This is the first chance he's had to get out of the relationship. So you do one record deal. This is what you're talking about. You do one record deal and you like commit to four albums. Now you're like eight or nine years in. And then at that point in time, you may be underwater. if you spent too much on production or whatnot. There's a movie called Artifact that Jared Leto did about 30 Seconds to Mars legal battle with EMI. And when they got to the end of their first contract, they owed EMI $4 million.

So even though they were in a lawsuit, they had to do another deal with EMI just to get kind of back to even. And so you end up in these relationships. So this is the very first time in 21 years that John Mayer's had a chance to consider an alternative. And what I'm seeing, and where I talk to a lot of, especially young artists, is they're thinking about being the owner rather than the label being the owner. I think it's just super interesting that, in industry lingo, the label is often referred to as the 'rights owner.' Like, that is the phrase they use to describe the label.

Yeah. It's again, going back to just that whole concept is, you know, that someone else is owning your creativity and the fact that, you know, now we've reached a place, and really it's thanks to technology. You know, if you look back, why did someone enter into such an unfair relationship in the first place? You needed money and technology to get into a recording studio to be able to record your album. And now, with a laptop computer and GarageBand or whatever, now that barrier to entry has been eliminated. So why would you give what you can now create over to someone else?

And as these tools have proliferated and services, I'd call them internet technology tools, but also just internet services, there's now a wide menu of choices that an artist has. along a continuum. So there's new labels that have popped up. One that both you and I know, the guy that runs it, is called 30 Tigers. Jason Isbell, many of the Americana artists use it. 30 Tigers says, we'll take 20%, but you own everything. So it's a completely different, and there's many other labels that are doing that same kind of model, but they leave the musician in the ownership of both the recorded music and the publishing rights.

You know, I think the label now and what David is doing at 30 Tigers and what others are doing, yes you can record at home yes you can put your music up on soundcloud and and bandcamp and other places and you know you're going to be one of millions because when when you remove the barriers to entry now everybody can enter the playing field personally i think there's something There's a romance and nostalgia about the A&R guy and getting signed to a label, and as a band, that was such a career achievement. We're gonna make a demo, we're gonna get signed, we're gonna be on a major label, they're gonna get behind us, they're gonna support us, and these massive dreams. Now, I'm gonna put my music up on SoundCloud, and then what?

There are amazing success stories. You look at somebody like Billie Eilish, clearly over the last five years, that's kind of right at the top of the list of somebody who, her music was so strong and profound that it just found its way through. But a label signed her. Her brother was there writing and producing, but it was a label that then took what was very special and something that had attracted a lot of fans and then took it to the masses. We were talking before the panel about your VC experiences and kind of the analogy between an A&R guy now waits and sees what are the statistics that I'm seeing on SoundCloud or YouTube or TikTok or Instagram. They're kind of waiting for the artist to show themselves in the marketplace, which is a fantastic tool if you're an A&R guy.

In the old days, you went to clubs, those of us who were here at SXSW 25 years ago, you signed a band because, one, you thought they were great and you resonated with their music, but you saw that there was the line out the door of what club they were playing and there was that energy. Now you can just wait and see the statistics. From a VC world, a venture capitalist might wait until a certain, a certain entrepreneur is producing $100,000 a month or whatever it might be, and then they'll come in and sign them. And as an entrepreneur, you might say, 'Well, if I'm making $100,000 a month, why do I need a VC? Or if I'm a musician and I've got 50,000 followers on SoundCloud, why do I need a label?'

But the value that a strong VC brings and that stewardship that they bring in helping that entrepreneur really achieve their vision, I still think, even with all the technology that we're talking about and the home recording and the tools, there is a place for the record label. There is a place for the artist manager as a partner, as a steward, to help that artist achieve their biggest dreams, you know, going beyond what they can do on their own from their bedroom, getting to 500,000 subscribers or followers on SoundCloud.

Yeah. And I'm sure that this will sound remarkably inconsistent for me as a VC to have this point of view, but I find that this deal, that this record label deal, is more... I find it more us versus them than a traditional venture capital deal. I'm sure people accuse me of splitting hairs, but there are a massive number of success stories of entrepreneurs doing extremely well. In fact, making way more money than the venture capitalists themselves. Most venture capitalists are minority owners. And then their co-owners, you know, where the entrepreneurs own a lot more than the VC even. And so, I don't know, I feel like there's more kind of the way this upfront money works is it sits there, it's spent.

And then once you do start earning royalties, you have to pay that part back for it's just pretty egregious terms. And maybe one thing that's possible right now as streaming opens up so much more competition for alternatives to traditional label deals that you start to see some movement on what's possible. And the 30 Tigers type deal and there's new divisions of traditional labels that are willing to do these types of deals that leave the artist as the owner.

Yeah, I think that's an excellent point. I've heard a lot of artists who were on major labels. A friend of mine was on a label called Elektra Records, and he now refers to them as Neglectra Records. And there's other stories that you talked about, Jared Leto and others. Being a record label guy for many years, I've never sat in a meeting at a record label and heard a label say, 'Let's not. Let's not support this artist. Let's not do our best for this artist.' Now, the artist has to show themselves. You have to put the record out, and if the record is getting the airplay and selling records, or today if it's getting streams and spins and attention, you then put more investment into that artist. You're not going to continue to just pour dollars and dollars and dollars.

And so those artists might feel, 'Well, I'm neglected.' And if the label wants to push the button, they can push the button. It's really not true.

But they've also locked up the next album and the next album. So now you're in a relationship with someone that you don't feel supported. You owe money. You can't get out from under it. I think there's a real danger in just time-shifting money. And so, like, the big upfront, the big studio, the spending all this money that you then owe later. I just don't think, especially for young business people, whether that's a new band, whether it's a new startup or a new musician, they don't know enough to really mentally compartmentalize, 'Oh, I'm taking a million now and I owe it back over the next five years.' That's very difficult to perceive. And I wonder if, like, being independent and being your own owner and being a do-it-yourself musician keeps you just a little closer to the grindstone because you're living cash flows day to day.

Yeah, I mean, at Arista, and a lot of artists don't realize that it's not just your recording budget that's recoupable. 50% of your music video budget is recoupable. Your tour expenses are recoupable. We were doing a video shoot with Toni Braxton and it was about, the shoot location was about three hours outside of Los Angeles, kind of a desert scene with Toni Braxton. And she did not like the jeans that she had, and this was about a $60,000-an-hour shoot. And she wanted different jeans, so they had to send somebody back to LA—six hours at $60,000 waiting for a pair of jeans. So this is a $360,000 pair of jeans that at the time, as an artist, she's not really aware. She just wants to make sure she's got the jeans.

But when that accounting statement comes through and you see that deduction—so this is why you see stories. And now that's recoupable. That is recoupable. And this is my point.

Become adversarial without knowing it because of all this time-shifting of money and these incremental liabilities, and you don't realize you're spending money. You're not writing a check, so you don't think about it as your money, but you've spent your future money.

You don't understand, and as a musician, you feel like your job is to make great music, and it absolutely is. That should be 100% what you're about, but your comment about the entrepreneur—the entrepreneur is savvy to the dollar and is partnering with the VC and wants to be responsible because...

It depends. I mean, we've been through the past 15 years where some companies can raise hundreds of millions of dollars. And I think anybody that's sat on multiple startup boards would tell you that the less money in the bank, the better steward of capital the people actually are. And it's a similar thing, right? Like, you have an unlimited amount of money, you kind of get sloppy with it.

Well, it's the Silicon Valley episode where they do the party out at Alcatraz. Absolutely. I'm sure VC has it. That's just like the jeans. You have your $360,000 jeans, which is, "Why did we give this person $100 million? And they took their whole company to wherever rather than putting that money into R&D and really creating a product and delivering on it." Yeah, same thing.

Yeah. Yeah. So anyway, I think this is a really, I think it's real. I'll tell you a couple other stories that I think relate to this that are interesting. So one, I talked to a gentleman, Jack Conte, who runs Patreon. He's in a band with his wife called Pomplamoose. And I don't listen to Pomplamoose, but he shared with me how much money he's making on streaming. And I talked to other Grammy Award-winning artists, and he's making more than they are. And it's all because he made a commitment, him and his wife, that they were going to do no percentage deals. Now, this is an outlier data point. But they don't have a manager. They don't have anyone that's taking a percentage of the take. They pay some people dollars for services.

They pay lawyers. They probably pay DistroKid, who seems to be the predominant way to get your music onto a streaming service for the lowest cost possible. But they don't pay that percentage, and as a result, they make this massive percentage of those royalties. And another example that kind of came about it from a different way: I talked to a 19-year-old hip-hop artist who was born on YouTube, and he started getting money fast enough that he never had to consider doing the label deal. And now they've come approaching him because of the stats and the numbers that you've talked about. And luckily enough, he had enough advisement that he didn't end up having to take that kind of deal. And he's making so much cash flow now.

They promised him money up front. He says, "I don't need it. Don't need your money." And so it's just an interesting time. I think a big part of what enables that is this issue, which is for the very first time, if you think back 25 years ago, the artist really didn't get to know their end customer. They were pretty far separate from them.

Sure.

They toured, you know, but that was it, really.

Right.

You send a letter in, maybe, you know.

And whether that even makes it to the artist or it gets answered by, you know, an assistant of a manager.

And so today there's like, I have nine here, but there's all different types of social media that you can use to start to develop your own relationship with the audience. I think a lot of people may find it intimidating. Obviously, you see examples of artists where it's super natural, right? Some of the largest Twitter followings that exist are musical artists. For sure, yeah. But what this gives you is more control over your relationship with your customer than artists have ever had before.

What we're talking about now is this one-to-one relationship and kind of where Web 3.0 is going and everything. It's being able to eliminate a number of links in the chain and have that direct relationship and savvy artists are doing it very well and it is about discovery and then it's about engagement And then it just becomes this virtuous cycle where you grow your audience, or your audience becomes your evangelists. All of Billie Eilish's fans who are sharing pictures of Billie Eilish and it just becomes this massive thing. In the old days, the gatekeepers were the radio stations and you had a limited number of pages in magazines and you had limited amount of shelf space in a record store.

And so there was a lot of attention being focused on very few artists just because of the physical limitations of the industry. Now that's unlimited. Unlimited amount of artists can be available on Spotify. We're not constrained. Even I remember when a big store like Tower Records came to Philadelphia and that was the most amazing thing, Tower Records. They've got 50,000 records. Now I've got six million records in my pocket. Or you would wait to get Rolling Stone or Cream or whatever magazine and it was that many pages. Now if I'm on... Instagram, my fans can see my picture every day, 10 times a day. Not only can they see it, they can respond back to me. I can see which picture is doing better than the others.

And it's just a remarkable way of doing business. You know, going back to the streaming services and the record labels. When we were selling physical records, you had manufacturing costs. Many people don't know, but all records were 100% returnable. So anything that was sold to a record store from a record label could be pushed back. 100% returnable. So when you would do an accounting statement to an artist, you would take a reserve on returns. You would pay price and positioning. So that's also recoupable back to the artist. So I'm making my Whitney Houston record, I'm manufacturing it, I'm sending it to Best Buy, I'm paying Best Buy $60,000 a month to be on the power wall so that when people walk in, they can see the Whitney Houston record.

All that gets charged back to Whitney. Now, if you're on Spotify, there's no manufacturing, there's no returns, there's no real price and positioning. It's remarkable how many layers have been cut out of the relationship, and that's to the benefit of the artist and it's to the benefit of the label. But if you're both, if you're a 100% owner, and you've got this streamlined way to get your music to your fan without having to worry about manufacturing records, it was hard to break an artist before because what happens if Detroit is the radio station that starts playing the album and you don't have records in the stores in Detroit? Or what if it's Philadelphia or Miami or Atlanta? So what did you do?

You had records everywhere. And then you're on sale everywhere. It's very, very expensive. It's kind of like a craps game. It was really expensive to set the table until you could finally start making money. Now the data points that you speak about—not only can, if someone wants to listen to me in Detroit, they can instantly listen to me in Detroit. Not only listen to the one song that was on the radio, they can go back and find my entire catalog. I then learn about that. They're telling their friends in Detroit, and now I'm gonna tell my booking agent, 'Get me to Detroit because I've got something going there.' It's remarkable.

Yeah. And the other element, I mean, I think a lot of people have anxiety about social media because like, well, what do I do? I mean, I see this. I talk to my CEOs about this. Like, I don't know what to say. Or they get really upset about the trolling or the negativity. And my advice would be just mute frequently and don't let it roll off your back. this ability to be able to directly talk to your customer is just way too valuable. And if you can control your own audience, I mean, there's really two elements to this do-it-yourself concept. There's the production part that we talked about The getting it up now is a complete commodity. DistroKid will get it up. But then the promotional element, these tools are your best shot at having self-promotion.

And probably the best chance any artist has had at self-promotion in the history of the business.

For sure.

Because they're available. One thing that I've seen be quite powerful, and venture that I would recommend to any musical artist—which is, this sounds kind of silly, but just praise your peers as much as possible on social media. Like, follow a bunch of them. The ones you like, promote them. It'll come back in spades.

That's really good advice for a musician, to talk about who else you're listening to and who you love. We did something recently with Austin City Limits. We had Olivia Rodrigo tape the show, and we also had Phoebe Bridgers tape the show. They taped on separate nights, but then we combined those two performances into one episode of the show. And on the night that the show aired, both Olivia Rodrigo and Phoebe Bridgers, who I would have thought, from a genre standpoint—Olivia's a little more pop and Phoebe's a little more alternative, and would they be friends?—but they have this huge mutual appreciation of one another, and they did an Instagram Live as the show was being broadcast on PBS that generated hundreds of thousands of views on an Instagram Live, which just blew me away.

And then you share those audiences and crossover, and nobody's—nobody's going to let people listen to a ton of different artists. So you're not going to, like, lock somebody out. And so I just think it makes a ton of sense. I had—I had two artist conversations that were very—one was older and wildly successful, one was just getting started. And I said, 'What would you recommend to other artists?' And the older, more experienced one said, 'People always underestimate community.' And I said, 'What do you mean by that?' And they said, 'Well, like, the more other artists, the more other producers, the more other people in the industry that I spend time with and hang out with and talk to and share ideas with, the more optionality there is for my business.'

When I talk to the younger person, that community has moved online. And I think this is super powerful. So they live on Discord all day. They're sharing tracks with other artists all day. And so the amount of opportunity for community interaction and kind of is all of a sudden 10 to 100x what it is in person because of the tools that we use in business, whether Slack or whatever. Now there's all these tools that allow for live collaboration, and that's another element. Not only would I recommend that you promote your peers externally on social media, that kind of thing, but I think you should do more of this interaction in these online services.

You know, I was talking with a manager who was a manager of a songwriter, and we were talking, and there's a couple questions that we can get into here about live streaming, but the manager was talking about collaborative songwriting, and you know, there's a lot of collaborative songwriters in Nashville, and they'll sit together and they'll write songs, and so you kind of have that community songwriters. But now with the technology, that songwriter in Nashville now has access to a songwriter in Stockholm or in, in London or in LA or whatever, and you can start to get these different influences and, and these sounds and these experiences. So our community now through technology is, is going far beyond a singer-songwriter night at a local club where everybody's just kind of sitting there.

I think there's a ton of research that suggests having that broader exposure and that broader lens will add to your own creativity. David Epstein's book, Range, comes to mind. Just people that travel in further and farther away circles tend to bring new ideas back to their own. And I think you're seeing that collaboration just really proliferate. Once again, certain types of music, like someone was telling me about Diplo. I don't even know who Diplo is really, but he's a DJ apparently. But I looked at his last album, and every single track he released was with someone else, like the whole thing. And so this concept of cross-promoting yourself, cross-promoting audiences, it seems to be very, a big piece of this puzzle of the modern-day distribution.

You know, and it's not just collaborating with other musicians. You know, I see relationships between musicians and actors, between musicians and athletes, fashion, you know, design, chefs, like this kind of, it's really a community of celebrity, and you can draw influences and audiences to your benefit. So if you're a musician and you're wanting to increase your social following and also just find more inspiration, it really feels like a lot of the folks that are in the world of community, first of all, they understand what each other are going through. They're all coming from a place of the heart and the soul, and they connect well. They have to live in the public eye, so they kind of understand what that's about.

But there's a lot of mutual appreciation in these different spheres of entertainment.

And there's some profound examples of that: Ryan Bingham being in Yellowstone, and then Tim McGraw getting into 1883. Koppelman brought Isbell into the Billions script, actually, and put his music out there. One other thing, back on the artist-as-an-owner thing, the number of publishing, publishing, and performance royalties are starting to expand, whether it's Peloton, movies. There's a service called Splice that makes it a lot easier to pull pieces out. And so owning 100% of that can also be profound for downstream monetization if these new types of opportunities exist.

You want to talk about this? Yeah, so there's a couple questions here. And if you want, if you're using Slido and want to engage and put a question up here, that would be welcome and helpful. And we'll try to get to it. But a couple questions about live streaming. And I think live streaming is really interesting—necessity being the mother of invention, and what we've all dealt with over the past couple years with COVID and what it did to us who work in the live music space. I work with a live music television show, and if artists aren't touring, that's really harmful to our business, right? So, live streaming, we really saw a huge increase in live streaming. It really forced mass adoption of live streaming, where maybe three years ago, only a small percentage of the population would really engage with live streams.

Now you've got a huge audience that is experienced in live streams. They've walked through that door, whether it's Mandolin or any of the other services, they know that it's a good experience. A lot of the technical stuff has been ironed out. So, yeah, live streaming absolutely fits into the model. It's something that can be free and either used to, audience and engage with more people. Or there are artists who are making significant amounts of money doing live streams and charging a ticket. And customers now are willing to pay for a live stream. So, whether it's ad-supported or a ticket, it can be a revenue generator for you.

Step out on a limb and say that the more bespoke it is, like the collaborative thing you were talking about, I think the better chance that it's gonna be successful. I don't, I don't think you can put your, your, your live tour online every night and expect, you know, something like that to really work.

Yeah, I mean, exclusivity and being somewhat limited in what you put out. You know, for the first, you know, 50, 60 years of the music business, we really dealt with long-form albums. And again, it was really due to space limitations. It was a physical constraint. You want press when you're gonna release an album, and you're not gonna get a writer to write 15 reviews for you every time you wanna release a song. So, you would wait and put an album out; that would be your turn. And then Rolling Stone, or whoever it was, would write that album review, and then you would move on to the next. A lot of the newer generation of musicians, the art form of the album is now kind of passé among young people. It's really not about an album.

It's, 'I'm able to record a song and get it out there, and then when I record my next one, I'll put that out.' One of the other questions here is, what's on the must-see SXSW list? I want to see a band called Wet Leg, who's only released five songs. That's it. And they're like one of the big buzz bands here right now. It's amazing. How can you release five songs and you're a buzz band? But that's the pace that we're kind of moving at.

One comment since we talked about live streaming and because you mentioned the metaverse. So, I read Snow Crash when it came out, which is probably 20-plus years ago, and was equally enamored with the idea, and Ready Player One, written by an Austin author. It's interesting, both of those novels are dystopian. They paint a picture where the world that we normally live in is pretty much dead. And therefore, you move into this virtual world. I also was an early investor in Second Life. And so, I spent probably 12 years tilting against what the metaverse is. And in Second Life, there was a $700 million annual economy. There's $100 million each year that went out to the developers. And there were performances, not unlike the famous Fortnite example.

That said, I have very low expectation that we will dress up as avatars and attend concerts in a virtual world, precisely because it is kind of a role-play game. And kids love to role-play; that's why kids play these games. And a few adults like to role-play—you'll see them in the park with swords and cloaks. But most people don't. I saw in Zilker Park people playing Quidditch the other day, and I'm like,

"What are you doing?" And they were really into it. But, you know, maybe you and I are old.

No, like I said, I feel pretty safe on this one. I think Zuckerberg's all wet, like completely wet. Is Mark here?

I don't think he's here. No, okay. Some other questions? Percentage of musicians that make their own arrangements... I think he means like... not musical arrangements, okay, and still go for conventional record deal. I don't know the percentages on that right now. I do know the percentages are massively skewed in terms of there is such a large number of albums released on a yearly basis and such a minute fraction of that actually sell more than the equivalent of a thousand records. Still very, very top-heavy. You know, one of the downsides of removing all barriers to entry is, you know, maybe some people who shouldn't be making music are making music and putting it out there. You know, if the NBA would allow everybody who wants to be in the NBA to jump on the court, it would look really silly.

You know, so I do think the, you know, there's a role that the gatekeeper plays, but now that role has been replaced by the role of the curator. And that's one thing that we really look at: what's the service we provide as Austin City Limits? It's as a curator. You've got the world; anybody can be making music. There are so many albums being released, so many songs being released. How do you know what's good? I mean, this is a question that I get more than anything. It's like, "What's good?" And we kind of pride ourselves in presenting 20 things a year that are really special that people should know about. And there's a value in being a curator. There are algorithms within the Spotifys and the other services that will recommend, "If you like this, you'll like that," but I still think

there's something special about the human touch there, that someone who is passionate about music and lives and breathes it knows what's good and is able to.

There's obviously a conundrum where, if you look at the top artists on a revenue basis—and especially if you use the record label's revenue number, not the artist's revenue number, and that's part of the trick—then you're gonna see that the labels still control a majority of the industry that's out there. These new artists that are starting to figure out, and even some older artists like Mayer, that owning my rights is way better than ending up in a Taylor Swift situation or a Michael Jackson situation or a Prince situation where your music's running around without you attached to it. But there's this trade-off, which is—and there's a conundrum that you're pointing out, which is—what if production quality is what matters?

And what if I can only get the best producers attached to a record deal? So it'll be interesting to see, as things evolve and we get labels that are more open-minded about artist ownership, will a great producer be willing to do a deal with an artist that's retaining their own rights or not? And can that work economically?

A traditional royalty for a producer was 3% to 5% of a record album. What if they're now more of a—it's a partner model, and if the artist is earning a bigger share and finds value in that producer, and it's treated more like a share of a company, that's, you know.

Be like an advisor to a startup taking a percentage, and it'd be great if some of the greatest producers would do that type of deal. These artists that I talk to that are on this ownership side are fronting their own production costs. You know, even some of them paying for studio time, paying for studio musicians, that kind of thing.

Yep. Do you know what the bottom question there—I don't know what that means. I haven't known what that means. There's a... I have a question.

And non-performers, what should they do these days? Go to publishers or create their own presence online? What do you recommend? Both. And not only songwriters, but session musicians. There are session musicians who are being discovered because they put their guitar or bass or drum practice sessions as Facebook Live sessions or Instagram Live, and then people can tune in or they create a reel that people can see. Hopefully, the songwriter can perform to a certain degree. They may not have the voice or the talent that the big superstar has, but hopefully you can still present that song in a viable way through any of these social networks and let people see your songs. There's absolutely discovery happening there.

If you don't want to be the performer, you want to be the songwriter, you still have to perform at least a little bit online to let people see and hear.

There also is an increasing proliferation of services on the publishing side. There's an increasing variety of types of deals you can do so that you're not selling out your future. And then the collaboration piece, like get into these communities.

We talked about our friend David Macias and 30 Tigers. The equivalent to that, which is rather than a publishing company owning half of your publishing, is what's called an admin model, where basically they just collect the royalties on behalf of your song, and that's only typically a 10% admin fee. So a company like Cobalt is very well known for doing that.

One of the questions says, 'How have labels successfully shifted the PR narrative to blaming the streaming services rather than the outdated deal structure?' Yeah, I mean, that certainly is attempted continuously. There's a really weird thing in the music industry that I think is remarkably unfair where historic precedents and legal rulings, especially in the United States, have left a world where there is a streaming deal that's authorized by everybody, and a minute of recorded whale sounds and a minute of Taylor Swift's best song earn the same amount. And that makes no sense to me whatsoever. I think anybody's attempt at undoing that is gonna be futile because there's so much history. You could be upset about it, but I don't know what you can do about it.

And maybe we should talk about crypto for a second, but I don't see a way out of that box. And so if you assume that's fixed, then the best chance you have at changing streaming economics is to get ownership of your stuff, rather than hoping the labels can negotiate 20% more. They're going to do that anyway, but it's not going to move the needle for you that quick.

It was my question. I don't think you understood.

There's a few different things NFTs could do. So they can be a merch alternative, which they kind of are already. They could be a rights thing for a consumer. So I'm gonna give you the right to some future work or to access to a concert. And then the third thing people are talking about, what you're talking about, is could it track the royalty stream for this? And some people have added to that, could you fund? Could I crowdsource the production cost for my album and then those people would basically own equity in that song? Right, okay. There's no reason why it couldn't serve in that role. And if you think one of the big problems, and like Dixie Chicks sued their label because they said the royalties weren't tracked properly.

So if you think that was part of the problem, like the inefficient accounting, or maybe a misunderstanding of what's recoupable or not, then I think having those things in a smart contract could be very helpful to remove ambiguity. The idea of having your, like—I have some skepticism about that. I mean, it's certainly plausible. This has been tried in other areas. Prosper and LendingClub were two crowdsourced lending things for consumer loans. And over time, they both moved more towards institutional lenders. And the issue, I think, is no consumer wants shitty return. You don't want a bad return on any investment that you make. And there's scale in institutional lending. So I think it's plausible.

I just don't think it's realistic that we're gonna have all music funded by fans. Now, it's different from your question about accounting and tracking. I think you could take something that's as complicated as royalty streams and say we all are going to feel better and trust this more if this lives in something that's tautological, like a smart contract, you know?

Talking about this earlier before the panel, but for something to disrupt, whether it's a crypto-only type of marketplace, a one-to-one marketplace, who's gonna go to the marketplace if it doesn't have the established superstars? At what point does the content offering in that marketplace become compelling to enough of an audience that would support the marketplace? I think the technology is there. It's possible right now, but there's so much established hierarchy and power positions within the industry right now with the major labels signed to major management companies, signed to major labels, major publishing companies, they still really dominate the marketplace, and until you get a super disruptor that would be so compelling that you would attract all this audience onto this new platform.

And it may happen, but right now I see it being years away.

And here's what I would say from being an investor in other successful marketplaces, which is you want to focus so that you can solve that problem. So there's two problems, really. There's catalog and user interface. So right now, everyone's become accustomed to Spotify, which has the ultimate catalog and a pretty good user interface. So if you want people to come to a new player, you've got to compete both UI and catalog. It's very tough. If there are genres that are already tilting into this type of approach, I would go all in on that, because you're going to be more likely to bring that consumer along. I mean, there's a company—well, it's not a company, it's a DAO project called Audius—that's trying to be SoundCloud-slash-Spotify with a token.

And I think it has this problem. I think it has this liquidity issue. How do you get over the top? And the more you could focus on a particular type of music... But there's already some backlash. Like I talked—this hip-hop, the 19-year-old hip-hop person I talked to, said NFTs are already a no-no because of environmental concerns and this kind of crypto-bro thing that they don't want to be associated with. So, you know, it makes it difficult.

Yeah, very challenging. Yeah, I don't have an answer to that. Christine asked, "Tom, quick question, is that a Stuff T-shirt as in the band?" Yes, this is Stuff from the '70s, cool session band. Christine, good job. Joe Cocker wore the Stuff—it was Stuff first, and Joe Cocker was wearing the shirt.

That's deep.

Cool. We're at the last minute. Any other questions, or do you have a big question?

Do you have the solution and you can wrap it up in 30 seconds? The one thing I'd wrap up with, I think it's just super ironic. The do-it-yourself artist is sitting there producing all his own music or her music, is spending all day on social media trying to promote it, eventually breaks through. And because they're self-funding all this, at that point in time, they have all their rights. And if you talk to—and I've talked to people that their first job out of college is going to a label, they tell them, 'Go on SoundCloud, go on Instagram.' They're now looking for these people that have done it themselves. And so it's just super interesting, like the day where you, you know, try and get that demo and try and get in front of a record studio, just so different.

And I, I just, I hope that some of these young artists that make it to that point are able to be educated enough to retain ownership and not get caught into a deal that's going to hold them up for 20 years.

Yeah, somebody asked, 'How do you curate? What can the human do that the algorithms can't?' And kind of just the other side of the coin, to close it up, you're talking about education and being savvy in these areas so that you can best manage your career. The other side of it is make great art. No doubt. I think algorithms that can identify certain similarities based on other people's purchasing and listening patterns can't teach the soul. When we hear a song and we're moved by it, that's why I'm in the business. That's probably why a lot of you are here, because we love music to our very being and it moves us at the deepest emotional level. I don't think an algorithm can do that. I think as long as people are making great music and getting it out there, there's gonna be fans, there's all these great tools to discover new music, and then certainly, as Bill said, as a musician or being in this industry, educate yourself as to all the technology and tools that are out there.

Cool, thank you. Thank you.