← Making It with Jon Davids
Making It with Jon Davids
220 - This Is 100% AI... and they fooled everyone | with SoundCloud CEO, Eliah Seton
00:46:53
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- [00:00]
A
So, Alaia, have you heard of this thing called Velvet Sundown?
- [00:04]
B
I certainly have.
- [00:06]
A
I'm not surprised that you have. I came across this a few weeks ago and let me just kind of give you my version of the story. You tell me if this is what it is or if I'm kind of missing a few things. What's up, guys? JD Here.
- [00:19]
C
And on today's show, I'm talking to Elias Seton, the CEO of SoundCloud.
- [00:24]
A
Eliah's been in the music business for.
- [00:26]
C
A few decades, and as you can imagine, it's changed a lot today.
- [00:31]
A
Being a successful musician is sort of.
- [00:33]
C
Like being an entrepreneur.
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A
You got to create a great product, you got to find your fans, you.
- [00:37]
C
Got to get attention, and you got to figure out how to make money. Plus, you got to do all that with AI changing everything every day. We're going to get into all of it. Get my best stuff to your inbox@johndavids.com let's get to the show.
- [00:57]
B
You're listening to Making it with John Davids.
- [01:04]
A
So back in June 2025, this band comes kind of out of nowhere and they're called Velvet Sundown. It's got this 60s inspired psych rock kind of sound to them, and they start gaining a lot of traction on Spotify. They've got four members and their first album is called Floating on Echoes. And then two weeks later, they drop another album and then they drop a third and a fourth. And I think they drop like four albums in this. In the span of like a month or something, which is crazy. And they get a million streams on Spotify, like, in no time, they're charting in Britain, Norway, Sweden. And then around July of 2025, Billboard says that they're like one of the top, you know, bands in the world. And then some chatter comes out that that's like, hey, who. Who are these guys? Like, there's no digital footprint of them before June 2025. There's no breadcrumbs, there's no social profiles. And so then this spokesperson, quote, unquote, comes out and says, hey, no, no, this is a real band. They're cool. The spokesperson's name is Andrew Fretton. And then people start saying, no, no, this dude Andrew is also fake. He doesn't exist either. So totally, like, people are just getting completely gaslit by this. And then finally, like, two months in, Velvet Sundown updates their Spotify bio. And right now, this is what it says, says the Velvet Sundown is a synthetic music project guided by human creative direction. And Composed, voiced and visualized with the support of artificial intelligence. What the hell is going on? What is this all about?
- [02:41]
B
Have you gone back to listen to the music? Are you just obsessed? Are you living it?
- [02:44]
A
So I gotta be honest, I was tuning in before this, and maybe we'll. We'll drop a track right now, few seconds, Rivers Run Red, the drums. But, like, it's pretty good. I don't know, Like, I listened to a minute or two of it. It was, it was good music. What do you think?
- [03:02]
B
Totally. Look, as you said, synthetic artists, synthetic music, pretty much fully AI, generative AI music creation. This is all over the place. Yours, the example, the Velvet Sundown example is a prominent one given the streamership and the press that was accompanying it over the summer. But this is happening all over the planet, across all services. Where there is synthetic music, there are synthetic artists. And we're in a whole new age to us at SoundCloud, you know, we are an artist first platform and have been since we were founded 18 years ago. And, you know, in a second I can, you know, share a little bit just about where we are today and what the. What the business actually looks like, what the product looks like. So you've got a sense of that. And so, you know, we're. We're kind of level set on the rest of the conversation. But ultimately, AI, generative AI tools hold the promise of unlocking a tremendous amount of opportunity for human artists. The critical thing that we need to take into account now in this early stages of this journey is ensuring that it doesn't get in the way of human artistry and replace human artistry. So that's how we're focused on it. We love AI because AI has the ability to democratize music creation. You know, historically, to be a music creator, you needed to know how to play instruments and carry a tune and know other people who could do those things and maybe read music and afford a studio and afford expensive tools and software, and then only then are you in a place where you could create music. And generative AI tools have put music creation in the hands of everybody. Everybody can play with music. You can write a lyric, write a hook, write a beat from the. From your smartphone for free. And that is very powerful and very exciting because it puts into. It puts into play music creation for everybody on the planet. But we have to make sure that those tools don't replace the artists themselves. Ultimately, I'm not that worried about that, because while Velvet Sundown may have been synthetic, the listeners and fans aren't Synthetic. We are humans with ears and hearts and we want, we may occasionally want to hear synthetic music. It happens, it's there, it's currently happening. But ultimately we want a connection to an artist. We want to touch and feel that story, understand their story, follow that story, wait with bated breath for the next piece of new music, for the next sense of self expression. And that's why I feel like we're going to get to the other side of this in a way that's actually very positive. And I think ultimately these AI tools are going to be a really positive thing for independent artists.
- [06:20]
C
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- [07:04]
A
So when I was in college, I got a degree in music. I grew up doing music, playing music, teaching music. And I remember when I was in.
- [07:12]
B
The recording studio, by the way, we should, we should make some music together. I grew up, I grew up performing.
- [07:18]
A
Let's jam.
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B
Let's jam.
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A
My keyboard.
- [07:20]
B
In this room we use one of those AI tools.
- [07:23]
A
Seriously. So I remember when I was like 21 years old in the studio for the first time. It was in some guy's attic, but it was a studio and it was a keyboard, a synthesizer. And he had, I can't remember the name of the software, Sonos or something. And he was making, we were making full tracks, percussion, piano, guitar, strings. And it was all coming out of this keyboard. And this is in like 2208 or whatever. And so that was happening then. And here we are almost two decades later and now we're kind of a step further, which is you can make the full song. And I didn't even need to be there as the musician. I could have just programmed it into the machine. So, you know, it's no different than somebody sampling a beat back in the 90s, is it? Is it that much different? Or what is materially different about a band coming out that is totally AI? But is created by humans versus the just the keyboard is created by humans or something like that.
- [08:17]
B
Yeah, look, I, I think you're onto something there. And sampling is a great analogy. You know, back in the late 80s, the, the incumbents in the music industry were shocked and appalled by the notion of sampling because there wasn't really a precedent for that. And, and from, from their perspective, like somebody who was sampling to create new music was simply infringing upon their rights. So what happened was there was a process to establish legal, a legal and commercial framework for the use of sampling. And once that was the case, then the incumbents were thrilled. They were like sample away. You know, this is very content. They were thrilled. There, there was a legal basis, there was a legal framework and then as importantly there was a commercial framework. They got paid for it. And I think that that is a very strong analogy for the moment that we're in now, which is a concern that large language models have been trained off of ip, off of artists rights, off of artist content, and that that's been done unfairly so and that that's forming the basis for the, for these generative AI tools to actually generate new music and make it sound catchy and make it something you might want to listen to and as a result not listen to something else. And, and that's where artists and rights holders are, you know, are coming from. Their, their, their view is that if those tools have been, have gotten so good because they have been trained off of the back of prior ip, then there needs to be a legal framework and a commercial framework to protect those artists rights. And we fully agree with that. And I think, I think they're right. I think what we're seeing is there are generative AI companies and tools and products and features that are doing it right, that are licensing content to train on so that ultimately those tools are your right, they're instruments. It's like you've got a guitar, you got a piano, you got a synthesizer, you got Auto Tune. Now you've got Soundful and Fader and tuni and 2D and hook and all these, yeah, all these really great, interesting products and features. You know, for us, we're incredibly excited about that because as a day one for an artist who's looking to get in front of fans and build a fan base and introduce their music and express themselves and share that music with the world, first time, suddenly there are going to be 5, 10, 20 times more music creators out there because these tools are, are allowing more people to play with music and be Part of that game.
- [11:15]
A
Yeah. As we record here. It was a couple days ago that OpenAI released Sora, or the next version of Sora. Have you seen that at all?
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B
Just a little bit, yeah.
- [11:25]
A
So the, the big innovation, I mean it's, it's a way better like video making tool. But the big innovation is sound and the idea that you can create a video where people can talk and you have voices and they're, they're pretty good. Like I made a couple little clips and I was like, wow, how, how is this allowed? I think the distinction and, and you come at this, I mean, obviously you're looking at the copyright here and that, that's a huge piece. There are, you know, creators, whether they're musicians or filmmakers or writers, composers that have a lot of work that these models are being trained on. But then the question is, and I think the Supreme Court is or will be weighing in on this, but the idea of can the LLMs train on data and then can LLMs have output that is similar to existing copyrights? Can there be a character that looks identical to Mickey Mouse that OpenAI just generates, you know, that, that's different from can OpenAI train on millions and millions and millions of pieces of footage from Disney? And I guess that's sort of the question. I don't know too much about this, but I'm sure that's something you guys are thinking about for sure. Because this is going to affect the future of music.
- [12:34]
B
Absolutely. And I think where we rest easy is SoundCloud is a two sided marketplace. So we've talked already a little bit about how these AI tools are impacting artists at best, giving more people the ability to be artists and play with music and create music, and then, you know, at its worst, potentially substituting for human artistry. So we talked a little bit about how commercial framework and a legal framework will protect against that. And many, many folks are focused on that. You know, we're a two sided marketplace. The other side of that marketplace are the feds, listeners.
- [13:12]
A
Right.
- [13:13]
B
And that's where, you know, at its worst, you have platforms out there where there are artificial bots that are trying to drum up streamership to drive more royalties and payment to a certain track or certain piece of ip. But, but ultimately, you know, our, our platform is hundreds of millions of fans who are coming to find new music and new artists that they might be delighted by and might love. And we're trying to use AI to delight them in that way. You know, we're SoundCloud. I don't know how much history you have on our business, but we.
- [14:00]
A
My account is 10 years old, so that's how much history I have. But I want you to take me inside today. Yeah, I got the fresh new app on my iPad here. So tell me, take us inside SoundCloud and tell me what I should be looking at.
- [14:09]
B
Sure. So, yeah, you know, the company was founded 18 years ago with the founding purpose to, to bring artists and fans together to share, connect and engage through music. That was 2007. That was the same year Spotify was founded. And you know, the amazing thing is that notion of bringing artists and fans together directly is more at the center of gravity of music today than ever before. So we very much feel like after 18 years, this, this startup's moment is now. You know, for all of SoundCloud scaling and, and building a global brand and, and all of it over the last 18 years, this is the moment when what we do is most, the industry is most primed for it. So for the fan, the experience is unique compared to any other place on the planet. You know, we've got well over 400 million tracks. Sounds like a lot. It is a lot. It's four times what a traditional streaming platform would have. So you can get all of the typical content you would get from a major label or an independent label or, you know, if you're coming to hear Beyonce or the new Taylor Swift or Drake or whatever it might be, you obviously can find that music. But 85% of global listening time on our platform is unique to us. It is UGC content. It's new artists that have not put out their music anywhere else on the planet. It's a remix or a DJ set or some form of content that you can't find anywhere else. And that is what really distinguishes our platform. The fans coming to our platform are generally very leaned in, lean forward, taste making what we used to call crate diggers in the music business because, you know, they'd go to vinyl shops and dig in the crates for, for, for something that nobody else had been able to find. They're doing that digitally on our platform. So the platform's all about music discovery. More than half of listening time is against new music. You know, on a traditional streaming platform, that same metric is about 15%. So we are truly unique in kind of the content you can find on the platform and then how people use it. So, yeah, you mentioned you joined the platform 10 years ago. Probably looked a little bit different then, but over the last six to 12 months, we've really Made a ton of strides in this regard. I think if you go to the homepage, I can shake your light, please. There you go. So you're on your iPad, I'm on my iPhone on the homepage here. Most of what you're seeing as I scroll up and down here is a set of playlists oriented toward your own consumption. So you know, every day in the morning I drop my kids at school, drive into work and I'm listening to a specific set of playlists that are mixed for me every day. And the vast majority of the artists and tracks I'm hearing I've never heard before. And for somebody who's living and breathing music every day, you know, that's, that is quite a feat. The music discovery opportunity is, is like that on the platform. So you know, I have a question about that, Elias.
- [17:34]
A
So in that. So if I'm an artist, because this is really interesting and the reason I say this because let's say there are creators, artists listening or maybe you know, someone who's trying to break into the music industry. The idea that this is a platform, that SoundCloud is a place where people go to find new music versus just play the same Taylor Swift song for the 58th time like I do for my six year old. That's interesting because if I'm an, if I'm an artist who wants to get discovered, this is a place where I'm going to come because I know that the listener here is actually more primed to want something new. So how do you guys at SoundCloud, how are you guys deciding what surfaces? I'm guessing this is pretty automated but like could somebody who just has a really good song but is not a famous artist that doesn't perform, could they just pop up on SoundCloud?
- [18:18]
B
Yeah, this is where the two sided marketplace really, really matters. And sure, for if you're coming to play the Taylor Swift song for the nth time for your daughter, we want to be able to scratch that itch too. Like this is the largest catalog of music on the planet and we want to be able to delight fans across every genre and of all sorts of. But the primary use case is this more unique discovery use case. So yeah, for an artist who's coming to the platform to find a path forward to build a fan base, if they're a subscriber on the, on the, on the platform, they're, they're paying our, our artist subscription, they'll have access to a set of tools that are AI tools that put their new music in front of fans who might be delighted by it. So this is a great use case of AI. We use AI to study that track and that artist, know everything there is to know about it, what scene it comes from, the BPMs, the all the different kind of elements of the metadata, audio tagging and all the different component parts about the that track. And then on the other side, we use AI tools to understand listening behaviors on the plan on the platform. So what fans listen to and what they save, what they skip, what they repost, what they share. And because the fans are coming to find something new and the creators are coming to find those fans, we've got this kind of mutualistic opportunity where we use AI to study that new track, understand fans who might be delighted by it, and put that track in front of those fans, drop it on a playlist like the one I'm listening to right after I drop my kids, I'm on the way to work. And from there it's a meritocracy. So if we've put that new artist and that new track in front of the first hundred fans and they're skipping it and they don't like it, they're not engaging with it, it doesn't go further because you know, we don't want to disappoint fans who are coming to find new music. But if the first 100 fans are enjoying it, they're listening to it again, they are sharing it, they're engaging with it, they're dropping a comment, dropping an emoji on it, they're having some form of engaged interaction with that track. We're going to get the next thousand fans and then the next 10,000 fans. And those are all going to be based on, you know, a meritocracy where the, the, where the track's really performing and we can get use the AI tools to put that track in front of more and more fans and suddenly this artist with their new track has, has a followership and then to put new tools into that artist's hands to be able to engage with that fan base, provide an exclusive content DM with them, provide them potential other ways of supporting that artist or, or, or buying other products related to that artist. In know that's all kind of the roadmap that we're building. But ultimately that's where two sided marketplace comes in. The fans are coming to discover something new and a creator's coming to bring that new music to find new fans.
- [21:38]
A
So who, who are some really big artists today? I could think of maybe one or two but who are some really big ones that have broken on SoundCloud that we would all know.
- [21:47]
B
Yeah, you know, Billie Eilish is a perfect example. Billy thanked SoundCloud from the Grammy stage when she won her first Grammys several years ago. Last year we actually did an app Takeover album that she released in 2024. And actually we piloted a new product with her when we did this, which was we found her first fans on the platform. So before anybody knew Billie Eilish, there were people who were. Who had found her on SoundCloud when she had uploaded her first meetstick and she wasn't anywhere else. You know, there are 50, 100 fans who had stumbled across her and liked the track and maybe commented on the track and were building a fan community in those very, very early days. And we used our tools to find those fans and we gave those first hundred fans exclusive access to Billie and the music when she first released it. And to be able to do that at scale, we're incredibly excited about. You know, imagine if you could. You know, our. Our platforms are really oriented toward that tastemaking fan, that super fan, that fan who wants to find what's next. Maybe they might come to stream Billy, but they want to find the next Billy. And if we eroticize that and create a badge that, you know, I was one of the first fans of Future. I was one of the first fans of Post Malone. By the way, these are other great SoundCloud stories that we've got. We just had Chance the Rapper in our New York office a couple weeks ago. We've been doing this program called the Booth. You should definitely check out the Booth. It's on our YouTube channel. So it's just exclusive content. So chance came and what is it?
- [23:30]
A
Lil Nas X1 too.
- [23:31]
B
Lil Nas X. Great SoundCloud origin story. Post Malone. It's a phenomenal artist.
- [23:38]
A
When these people are popping like, obviously we all know their names today. These are huge. Some of the biggest artists in the world. But when they're bubbling up early, how early do you guys see that? And I don't know, do you have like a. I'm picturing this like SWAT team with a red alarm that goes off. AI there's, there's, you know, we got someone breaking here. Like, do you guys know when someone's about to pop off?
- [23:58]
B
You know, theoretically, being a platform that has well over 400 million tracks and 100 millions of fans listening to those tracks, we get a lot of signal. And this is again, is where AI tools are really beneficial because it can consume all of that data. And if we create, create the right, the right tools, the right, the right dashboards around it, we should be able to have signal for what's popping. And you know, we often say what's next in music is first on SoundCloud, that's very much the case. So we take those signals and those signals are, you know, a lot of what I described earlier around how, how fans are engaging. Are they saving a track, are they, are they liking it, are they dropping a comment on the track, are they dropping an emoji on the track, are they sharing it or reposting it with other friends on the platform? There's a real social element to how fans use and engage with music on the platform. And we're leaning into that and are going to be releasing a whole bunch of new products this fall around that. But ultimately, yeah, it's signals that show that this is a track that has something going. And we weigh that against all the reams and reams of historical data where this is what, what Billy's early tracks look like, this is what Lil Nas X's early tracks look like. And those signals can prompt for us exciting opportunities that we may, we, you know, may have something exciting going on. We have. I'll describe this for you as best as I can. I wish I could show it to you on a screen or whiteboard behind me. But we have something called the Creator network map at SoundCloud. So if you can imagine a map of the world with the various continents, except it's not about geographies, so throw geographical relevance out of your mind. But it looks like a map of the world. The continents are like genres. So you got hip hop and R B and you got dance music and electronic music, and you've got pop and rock and country and Latin. And then the countries and the cities that make up those continents are like scenes, you know, prominent scenes within those genres. And then the individual towns, like the little dots that make up those countries and cities are the artists themselves. And the size of an individual dot relates to the streamership. So Billie Eilish would be this huge bubble on the map. And then my nephew might be a really tiny little dot because it doesn't have much of a streamership, but it is a living, breathing, pulsing heat map of, of music today. Every scene, every genre, self defined scenes. Nobody at Soundcloud is defining. This is Brazilian funk and you know, this is Indonesian R B or anything like that. These are self defined, self, self defined scenes and, and communities within Music. And, you know, had we had this 10 years ago, we would have looked at the wall coming into work one day and seen this, like, big bleeping red continent going off. And that would have been SoundCloud rap. And we would have been like, oh, my God, that's Juice World. Look at that. Who is that? What's going on there? But today, that is what we're doing and we're seeing, you know, what is that next scene? What is that next community? Who is that next great artist? And that's incredibly exciting. It's exciting for fans. Is.
- [27:23]
A
Is every record label paying you a billion dollars that data? I hope the record labels are listening. I. I could tell you a few of them are. But this. This sounds like. This is incredible. This is like knowing what stock is going to, you know, climb tomorrow before the S and P opens.
- [27:39]
B
It's the future of music and it is in real time and is happening on our platform. And, you know, in. In the spring, we released our Music Intelligence Report publicly for the first time. And we're going to be doing that annually. But it's kind of hilarious to do it annually because even by the time it's released, not that it's stale, it's just what I just described to you, which forms the basis of that Music Intelligence Report, which is snapshot of everything going on in the future of music. What I'm talking about now is in real time and it's developing day by day, hour by hour. So it's incredibly exciting for a fan because, you know, I'm going to go back to the homepage again. Like, there's this carousel. More of what you like here. Yeah, like the track. And I'm getting like a dozen playlists every day that are based off of a track that I've liked. And that algorithm is using the creator Network Map that I just described. So the reason I'm getting 19 new artists and new tracks that I've never heard of is because it's reaching into that creator network map and it's finding something that it knows. I like Renee rap. I'm all of a sudden going to hear something that's just like her, but different and somebody who's. Who may have just made new music last week that nobody's ever heard of. So it's incredibly exciting for fans and delighting the fans who come here specifically for that experience, taste, make influence, culture, find something new. Be the first. It's also, to your point, really exciting for rights holders, labels, folks who care about ip, who care about developing new talent. And that gives us a great opportunity to serve, to serve our partners, to get new artists discovered, but also for us to play a role in that game too. So it's pretty revolutionary. And again, it's really just about building something. Signals and tools on top of ways people have used SoundCloud since its earliest days 18 years ago.
- [29:42]
C
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- [30:16]
A
There are a ton of parallels between breaking as an artist, being a musician today and entrepreneurship. And I would say even more and more because there's just, there's no walls, there's no barriers. You don't need to get a, you know, an A and R guy to pay attention and perform at a club. You can just, you know, put your music on YouTube, on TikTok, on SoundCloud and all these places. I've talked to a lot of people in the, in the music industry. I've, I've got some, some buddies who, you know, have been in the business for a long time and the way they're finding artists is they're browsing their phones and they're just listening. There's one I. So I was checking out TikTok. This is a guy I found a while ago actually. His name's Connor Price. I, I found him on TikTok. I don't know if you recognize the name, but Connor Price, he, I'm sure he's on SoundCloud too. Started doing these skits on TikTok probably during the pandemic. And like every skit would sort of start with him doing something funny. Usually his girlfriend's in the skit with him and then after four or five seconds he breaks into a rap. And he's a really good 20 something year old white rapper, like really good. And so he would start doing these, these little skits and then he started doing collabs where he would spin a globe and, and wherever his finger landed, he'd find an artist in that country and he would do a collab with them and it was, it was all happening on TikTok. And now he's doing collabs with like, Idris Elba. You know, maybe he's done with like, you know, a bunch of famous artists now because he's already really big, millions of followers on TikTok. But I look at how the opportunity for somebody to break like that, and to me, that's an entrepreneur. Your product just happens to be music. But like the, the, the thought behind it, because when I think about how you become a, you know, a famous singer, like the next Taylor Swift in 2025, is somebody who knows how to use all these tools really, really well. Is that what you see also?
- [32:06]
B
Absolutely. And, you know, I think we, we see that a lot of discovery, that initial moment of discovery for artists who build great traction on our platform may happen, may start that Flickr, may start at TikTok. And, and we've seen from industry research how important TikTok is for discovery, and I think that's really important for artists to be able to use. We like to say you snack at TikTok, you have your meal at SoundCloud. So we really view these platforms as complementary in many ways, and we've tried to build product and features and bridges that lean into that. So, for example, the ads playlist, so somebody might be scrolling on TikTok and see something and hear that rap and be like, oh, that's awesome. I like that. I'm going to add that to my SoundCloud playlist and I'm going to go find that at SoundCloud. And when I'm back on SoundCloud, I'm going to be able to engage with the full track, the rest of that artist's music, and then be able to DM with that artist or DM with other fans of that artist, drop a comment on one of those tracks, drop an emoji around one of those tracks, get access to exclusive content with that artist and engage more deeply with that artist. Ultimately, your point around how artists need to engage with these various platforms to make a career is so spot on. There's a central philosophy to everything we're doing right now at SoundCloud, which is streaming is not enough. You know, more than anything, this is, this is, you know, a central conviction of mine that led me to come to SoundCloud as a platform to really execute what I think is, you know, the future of the business. Streaming is clearly not enough for artists. You, the vast majority of artists you come across do not earn a living wage from streaming alone. You know, there are 80 million tracks that get less than $5 of streamership a year. There are 46 million tracks that literally get no plays at all. Unless you're a household name, you're not earning enough money from streaming alone. So plenty of ink has been spilled about this. Streaming is not enough for artists, but we also feel that streaming is not enough for fans. For certain fans who just want to put on a popular playlist on the way to work and listen to it in the background, that's fine. It might scratch their edge. For the fans that we are primarily focused on more superfan, they want to engage with artists and music that they love beyond just the stream. They want to have some way of expressing their connection to that artist, their connection to that community. And that's something that we're very focused on. We're focused on building new products and features that solve both of these problems. The streaming is not enough for artists and that streaming is not enough for fans. So the best way to do that is to put new pies on the table rather than cutting the streaming pie up in thinner and thinner slices where it's kind of a zero sum game with decelerating growth and less reward for artists. Create new opportunities for artists to engage a fan base and then monetize that fan base. So when, as you say, an artist needs to be able to use YouTube and TikTok and SoundCloud and Instagram and all these various platforms not just to make the music and get the music out there, but to find a fan base and build a fan base. We are striving to be a platform as a two sided marketplace that monetizes that fan base for those artists. You shouldn't need to have 50 million followers on SoundCloud to earn a living wage. If you can make a vinyl on demand and sell it to your your top fans, or make a new track only available to paying top fans, or ask for a tip or paid support in exchange for acknowledgement on your artist page or access to a super fan community. All of these are ways that the vast majority of artists will earn more money than they'll ever make from streaming pennies alone. And that for us is the future of the platform. So you know, we, our platform is defined by our fan business, which is a streaming platform and has economics that look like streaming platform. Our creator business where artists are paying a subscription to access these tools and services. And that's our two sided marketplace that defines our business today. Tomorrow there'll be that third leg of the stool which is about fans monetizing their love of artists and music and putting new dollars in artists pockets. It's going to solve the problem that streaming is not enough for artists and it's going to solve the problem that streaming is not enough for fans either.
- [37:07]
A
Yeah, I'm with you 100%. This conversation around, oh, there needs to be better economics around streaming and artists need to get paid more in my mind is nonsense. If you look at the stand up comedy world, every which is exploding like stand up comedy is bigger today than ever before. And it's because all these comedians, especially kind of during the pandemic when they couldn't be performing like they used to, would go onto YouTube and go onto TikTok and started dropping all their clips on there. A lot of crowd work, a lot of little like here's a five minute piece from my hour long act. And that's how they can then go to clubs and sell out clubs, arena stadiums, etc. And so it's really like, okay, there's the awareness piece which is, it's cool if you're getting whatever it is, 50,000, 100,000 streams on SoundCloud, but don't expect.
- [37:55]
C
To make a living off that.
- [37:56]
A
You have to have a back end of some sort. Performances, merchandise, products, whatever it is that people can make money off of. Are you seeing, are there cases that you're seeing of people who maybe are not household names but are making a good living off their music and, and what are they doing?
- [38:11]
B
Yeah, absolutely. And by the way, this is not new behavior for fans. Like the notion of a fan coming out of pocket for an artist or music that they love beyond just the consumption of that music is as old as commercial music. Like, you know, obviously it's a, it's a, it's an extreme example, but you know, Taylor Swift's era store people were spending all their disposable income and traveling to different countries to go have that experience. You know, when I, when I was at Warner, before I came to SoundCloud and I ran the independent division, there was large independent. The largest independent label was our biggest commercial partner, that was bmg. And there was one year where their biggest commercial release was a Keith Richards box set. It didn't have any music, but it was a catalog of music. It was, it was, it was like a credenza. This was like a piece of furniture. It was this huge lacquer, gorgeous piece of furniture. It probably had music in it that you could play, you know, vinyl or whatever. I can't recall exactly. Nobody was Using this piece of merchandise to play the music. They were, you know, there were 1200 people on the planet who would have paid anything for this. Um, they have this kind of willingness to pay in order to own this thing that they put in their living room, put in their office, and is an expression of their love of Keith Richards. So this notion that fans are willing to, to pay for artists and music that they love and to be closer to that artist and that the fan community around that artist is, that's what defines super fandom. And that has been suppressed by streaming. In an all access environment where you spend what, what it used to cost to buy the CD catalog of your favorite artists, you spend every year for access to over 100 million tracks. Streaming has suppressed the ability of that superfan to really support those artists. So absolutely what we're seeing is that in early experiments, artists are able to make 10, 20, 50 times what they would make in streaming for a year through the release of one product. That product could be something very analog, like making a vinyl on demand. Over the summer, we announced a partnership with Elastic Stage where we're giving every artist on the platform the ability to sell a vinyl recording on demand to fans. And that's putting the ability to sell vinyl in the hands of independent artists directly for the first time ever. And other kind of analog, you know, I call them analog, but you know, very straightforward transactional opportunities like exclusive content or early access to buying a ticket to a concert. You know, ultimately where I think that's going because we, we see the early traction around you don't need a big fan base to make a lot more money than streaming will, will provide you. And it's not only our platform that's showing us this. I think if you look at the metrics on Twitch, there's some crazy metric that I think it's. You need something like a Twitch creator needs something like 183 fans in order to generate $50,000 of income on average.
- [41:36]
A
Is that true?
- [41:37]
B
So every time I say that, I go back to my notes and I google it. And that's what the metric is. Even if it were off by an order of magnitude, it doesn't matter.
- [41:47]
C
It's.
- [41:48]
B
It's insane. But that to us is the future of music. Clearly you'll have blockbusters, you will have the Billies and the Taylors and the drinks that will always exist. I think fans want that. Fans want these global sensations. Where I think the future is going is a much broader middle class of artists who, who can make music more Cheaply have a lot more alternatives to create music, to distribute it, to find their fan base so that rather than having three or four doors that they could possibly walk through, they'll have countless doors that they could possibly walk through in order to go on this journey. And then fans having an opportunity to support those artists in ways beyond just the consumption of music. And that will be whole new revenue model on top of streaming, on top of that all access streaming model. And that's going to be the revenue model that defines the next chapter of the music industry. We think we are in a prime position to define that. It's what we were built to do as a two, as the only two sided marketplace exclusive to music on the planet. We're positioned to pioneer that. And that's what's really behind a lot of our product roadmap and what we're really, really excited to, to roll out.
- [43:06]
A
So cool. Okay, Elia, give me an artist. Who should I be listening to tonight at dinner?
- [43:13]
B
Well, I'm not sure what your particular musical tastes are, but an artist who's blown up on our platform across the last year, who I think defines a lot of the things we've just talked about, actually is an artist named Leila. Leila is 18 years old. She's in, broadly speaking, in kind of the hip hop and R and B space. She put out a track called like that on Soundcloud, which immediately started blowing up. Very catchy. I think you'll, you'll, you'll really enjoy that. And then she just started to follow the path that we've talked about already. She used our AI tools to get in front of her first 100 fans and went through the roof. So we found her next thousand Fans, the next 10,000 fans. There you go, Layla.
- [44:05]
A
Okay.
- [44:06]
B
On our buzzing playlists, which are playlists devoted to these totally new unsigned artists who are getting all this traction very organically. And then those signals we talked about earlier, that creator, Network Map, she started bleeping. The alarms were going off. Something's going on here. And we signed her in conduct conjunction with, you know, in a joint venture partnership that we have with Sycamore, the famed, yes, A R and producer who just produced the most recent Travis Scott album. And now it's off to the races. And, you know, we're talking with major labels about, you know, global distribution opportunities to put their might and marketing and promotion prowess behind this sort of, this sort of thing. So, yeah, definitely.
- [44:55]
A
Check out Leila.
- [44:56]
B
You know, I was fed on my, on my mixed for Alaia Tracks algorithm. Algorithmic tracks. A couple weeks ago, an artist named Penny and Sparrow totally opposite end of the spectrum. This is a singer, songwriter, duo from actually UT Austin. And their, their track Eloise is just haunting and like I gotta fight back the tears every time I hear it. Yeah, two totally different things. But that's the beauty to me. You know, I'm. I'm obviously living and breathing the platform all, all the time. But you know, whether it's my I'll show you like whether it's my more of what you like or, you know, my liked by if I like Layla and follow Layla, I get to see a playlist of. Of tracks that Layla likes and that she's following. Another opportunity to get to discover new music and be closer to an artist that I'm following on the platform. So I'll be interested. I'll follow up with you tomorrow, see you know what new artists because of Layla and Penny and Sparrow, I'll be interested to what you're. What new artists you're telling me I should be listening to.
- [46:09]
A
I'm gonna have a whole new mix. Aliyah, thank you so much. This was awesome.
- [46:12]
B
So much fun. Can't wait for the next. Thank you.
- [46:15]
C
Thanks for listening. Get my best stuff to your inbox@johndavids.com Talk to you soon. This episode is brought to you by my one minute marketing roadmap, available@johndavids.com roadmap. In 60 seconds, you'll get a custom report showing you how people are finding your brand, where you're losing them, and how to fix it. We used a decade of data from influence and layered in AI to give you a real action plan. It's fast, it's free, and it might just change your business. Go to johndavids.com roadmap and get yours right now.