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- [00:00]
Dan Runcy
Foreign.
- [00:05]
Trapital Host
I'm Dan Runcy and you're listening to Trapital and you're about to hear a conversation from our Trapital summit about AI's creative crossroads. You'll hear from Andrew Sanchez, the CEO and co founder of Udio, and Tati Sirisano, the VP of Music Strategy at Media Research. AI and music is as hot a topic as ever. News broke that suno, one of Yuio's competitors, is raising an additional round and seeking a 2 billion dollar valuation. Meanwhile, Yu, Rio, Suno and others are continuing the song and dance they have with the major record labels and rights holders in finding the right solution despite the ongoing legal dispute, but the desire to find common ground, which is a theme that you'll hear throughout this conversation. Depending on who you ask in music, you'll hear a wide range of opinions about AI music and its future. Some see it as the key to unlock new creative opportunities for art, their fans as well as rights holders to monetize it further. But others see it as a potential detriment to take away from the human art that is already struggling to break through. But regardless of where you stand, the key point is having the dialogue because it's more likely than not. Then there's more common ground than folks realize. I personally disagree that we are reliving Napster. We're in a different era, we're in a different time. The industry is a lot stronger than the companies themselves are a lot stronger too. So I hope you enjoy this conversation as a lens into Yudio, how Andrew sees the business, the opportunity and that ongoing tension between technology, its role it has in society and the inevitable disruption that impacts all of us. So I hope you enjoy it as much as we did. Let's dive in. This episode of Trapital is brought to you by Lelo. Tour cycles are the number one driver of fan list growth and they have the data to prove it. LELO's new drop report How Live Events Fuel Fandom analyzes over 200 million fan actions across the world's biggest drops to help you turn live moments into long term fan relationships. In this report, you'll unlock exclusive insights on tour drops, shared publicity for the first time, over 15 artist highlights from Shibuzzi, Party Next Door, Ski Mask, the Slump God and more. You'll also see the data behind why drops convert up to seven times better than traditional campaigns and trends, and insider tips from tour executives, artist managers, agencies, labels and festivals. You can download LELO's new drop report by clicking the link in our show notes.
- [02:43]
Dan Runcy
So Andrew, thanks So much for being with us. Thanks, everyone, for being here. I'm excited to be back for the second annual Chapital. Obviously, lots to discuss. Your company has managed to both absolutely terrify and absolutely excite the entire music industry at the same time, which is quite a feat. Your group chats must be pretty intense these days, I would imagine.
- [03:01]
Andrew Sanchez
Yeah. I mean, we sit at the crossroads of a lot of interesting things in society right now. You know, we try to bring humility to it. It's not like we have all the answers to everything. And we're trying to discover what the future looks like and in collaboration with folks on the tech and the music side. So it's exciting.
- [03:15]
Dan Runcy
What is it actually like to be in the center of all this noise? People are calling this AI the biggest kind of disruption the music industry has ever seen. There's a lot of excitement. There's also a lot of fear. You're in the eye of the storm. What's it like?
- [03:28]
Andrew Sanchez
Yeah, no, it's interesting. We were just talking about this. I had some amount of preparation for this. I actually did my doctorate work on. The main motivating question was how societies respond to high levels of technological changes. And so now we're sitting in this extraordinary moment where there's enormous amounts of technological change. And I think the answer to it is one, it's incredibly exciting. It's very challenging because I think as someone who's trying to navigate these changing waters, we want to build something that is incredibly empowering for people. It's like we want to think about it as something being empowered by AI. So I'm very conscious of the fact that building something that works for artists and that works for users and that works for the music industry and culture more generally is a big burden. So that's a challenge. At the same time, it is interesting because it's a unique experience to sit at this nexus between culture and art and technology and humanity and really ask ourselves, what do we do in that context? Fascinating, challenging. Would recommend for anybody, if you have an appetite for that sort of thing.
- [04:36]
Dan Runcy
Yeah, it's so interesting. Having done your PhD on the impacts of technological change and now being part of this massive one. I want to hear a little bit more about that. Like, what lessons, I guess, would you apply from your education to today and what's happening? We've been here so many times before, I guess, is the thing here. We've been through these shifts before, and I think similar cycles tend to happen. So I'm just wondering if you could share some knowledge on that.
- [04:59]
Andrew Sanchez
One of the things this is slightly broader point, is that there's this general trend in human history where there's technological innovation, innovation, and then there is a response to that technological innovation. And folks on the tech side historically don't like that response. They see that as inhibiting progress. And folks who, you know, are against that say, oh, no, this is, you know, undermining a system that we spent a long time building. My take on this is that it's that tension, that dialogue between the two, that is the thing that actually is good for humans. Because what happens is you have one force that's going in one direction and another force that's going in a different direction.
- [05:36]
Trapital Host
And.
- [05:37]
Andrew Sanchez
And it's when you arrive at a compromise between those two that you actually come up with something, you know, in our case, which is new business models that figure out a way for AI to ensure that artists and rights holders and users and everybody else benefits from this, both from a cultural perspective, but also from a financial one. And that only can arise when there's that sort of dialogic tension between the two. So that's something that I think that humans, historically, you always feel a bit uncomfortable when you're in that moment, but it's one that you really need to embrace. And that's what I see my role writ large as is trying to sit there and navigate that and come up with something that, that sits in that tension, but that ultimately leads us forward.
- [06:20]
Dan Runcy
So before we get into the licensing of it all, which I'm sure that everyone in this room is really eager to hear you speak on, I want to make sure we all understand actually what. What even the goal is, what is the opportunity here? What are we building? So I'd love you to talk a bit about what is Udio's unique value prop and if there's any use cases that you feel like are misunderstood or aren't talked about enough.
- [06:41]
Andrew Sanchez
Oh, for sure. So it's interesting that if we talk about AI music 1.0, which has happened for probably the last 12 to 16 months now, it's found a great and interesting niche in the creator space. These are people who are amateur musicians, sometimes some of the world's greatest producers, and folks who are using it as part of the ideation process, the thing that we most often see is, folks, I have a musical idea, I have a thought. I want to get kick started. I get an idea. And then as a musician myself, I'm going to iterate on that and expand on that. That's where We've been. Right now, the thing that I see as most interesting in the future is one that more directly involves artists in that process. It's one where there are these new opportunities for connection between fans and artists that I think we don't really have too much precedent for yet. And this is one of the things that we're most interested in is what are these incremental value adds to the music industry. One of the natural sort of concerns that comes up around AI, which is a valid concern, is one of substitutionality. Is this just going to make a lot of music? Is this going to make a lot of art or text or whatever it happens to be. And I think the thing that's most interesting for us is navigating what are those areas where you can bring incremental value, where it can be accretive. And that to me, I think the most interesting area there is when we build on co creation experiences across users, across artists, to make stuff that currently is impossible. That's the general area that I'm looking at in the next chapter and will be interesting to see.
- [08:18]
Dan Runcy
So rather than replacing things that exist, doing things that we've never been able to do before.
- [08:22]
Andrew Sanchez
Yes, exactly. And I think that's the, and this is probably admittedly a sort of lack of imagination on the part of a lot of tech companies is that like, okay, I've got a, you know, like, let's take ChatGPT for example. Like ChatGPT, the first thing people do is they like start spitting out poems and they're like, oh, I'm just going to make a lot of poems for this. And so that's interesting. But what are the. If you have this amazing tool for creation, what are the most sort of novel ways that you can apply that? And I think that the idea that you're going to make a bunch of poems in this case, well, maybe you could figure out a way to make poems with your favorite poet. I think that's an interesting example. And so I think that what I've found, and one of the most interesting things in the last year or so is having spent more time with artists and folks in the music industries, is being helped along that journey of imagination to figure out what are those most interesting things that can be done.
- [09:15]
Dan Runcy
Yeah, no, that's interesting. Going back to your background in history, I remember one of the most interesting things I learned in my own research on what's happened before when there's been big technological shifts, is how new technologies in art are often used to make versions of Things that we were already doing, like photographers, the first photographers took photos of landscapes because that's what they had painted when now we have abstract photography and all these things. So. Yeah, that's really interesting. I also wanted to ask you more on like, a. I don't know, to make it a little bit more specific. Who is your target user? How would you define that?
- [09:46]
Andrew Sanchez
Yeah, so the platform as it is today, as I said, is it tends to be used more by the professional, advanced, amateur types. And I think part of that is because our platform is distinguished in some respects by the high fidelity of the outputs. It's also distinguished by the range of things that you can get out of it. There's an enormous sort of genre coverage that you have, which is pretty cool. So this tends to be used more heavily by producer types, very serious creators, I think I'm particularly interested in expanding on that strength among those creators, but bringing that into people who are music lovers, for instance, who are fans of great music and great artists, but who themselves perhaps don't have the facility that the world's greatest artists do, and figuring out ways to give them experiences that bring them closer to their favorite art. Again, this is an interesting. Where it's not just about necessarily creating new music in this future world, but it's taking music, it's taking hooks and things that you already have and that you have an attachment to and expanding on them in novel ways. Those are things that I think will expand the user base in a way that we're excited about.
- [10:55]
Dan Runcy
And you touched on something that I wanted to zero in on a bit, which is differentiation. Because I think something that frustrates me, and probably frustrates you as well, is how so many AI music companies are put in the same bucket and talked about in the same breath when a lot of them are really different. It doesn't help that Udo and Suno rhyme. So this is your chance to set the record straight on what is the differentiator. How do you see Udio as being something separate from the competition?
- [11:19]
Andrew Sanchez
Yeah. So I think there are three pillars of identity that I want to drive. There's the great quotation, I don't know who it's from. It's in matters of principle, B as a rock, and in matters of style, B is the stream. And these are the sort of principles that I try to instill in the company as we build it. I think the first is thoughtfulness and cooperation. I view that as absolutely elemental. And I view that, particularly in the case of the music industry, this is something that I, as somebody with a background in literature and history, is really fundamental to me. We want fundamentally to build new great art and new great systems that expand how people interact with these amazing cultural artifacts. That's fundamentally something that we want to do. So being incredibly thoughtful and having a cooperative view on that is something that's really fundamental how we view it. The second is joy and fun. I think that we love everybody on the team. We have a consuming passion for music, whether or not that's listening or singing in my case, or whatever it happens to be. And using the technology as a way to bring that joy of music creation or music consumption or whatever it happens to be to new audiences. Like, we love making music and we want to make sure that everybody can do that. And then the last is quality. We want to set the highest possible bar in terms of the musical outputs that we create. We want to be the partner of the world's greatest artists and the greatest rights holders and demonstrate that this is something that can be truly remarkable when done well. And I think that having an incredible technological quality is the foundation on which that rests.
- [13:02]
Trapital Host
Let's take a break for our chart Metric Stat of the Week Mariah Carey was just named the MusiCares 2026 Person of the Year, which means that she will be performing at their annual fundraiser two days before the Grammys, which I am very excited about. But now the holiday season is just around the corner, which means it is that annual time of year for Mariah Carey to cash in. Her hit All I Want for Christmas Is yous has taken a whole new life in the streaming era. There have been plenty of breakdowns on how much money that Mariah Carey actually makes each year from streaming and other platforms, and those numbers normally range between a few million dollars. But that's not all. She does a number of live performances leading up to the holidays, whether it's an arena tour or Vegas residency. She has TV and streaming holiday specials. She does brand and commercial partnerships to celebrate Christmas and merchandise reissuing of her music and other long tail opportunities. And if you were to model all of this out, this is an eight figure payday annually for Mariah that she's able to bank through everything associated with Christmas. Let's get back to the episode.
- [14:12]
Dan Runcy
Going back to the principles of it, I'm curious if there's anything that is in your principles not to do. You've talked about what you want to focus on. Is there anything that you've said we could do this, but we're not going.
- [14:22]
Andrew Sanchez
To oh, yes, There have been many things that we have elected not to do in the interest of upholding those principles. And there are absolutely things that we want to make sure that we do 100% the right way. And I think that one of the most important things, as I said on the cooperative point, is figuring out the right entry points into new areas. And I view that having partners across the industry as being absolutely crucial to doing that in the right way. So, yes, yeah.
- [14:51]
Dan Runcy
Um, and let's talk about the business model. What is the monetization strategy? And also how do you see that evolving over time?
- [14:57]
Andrew Sanchez
So here's another example where I think that there's a. I don't mean to be too critical when I say lack of imagination, because part of the cool part about technology is you have a technology, you bring it to market and you see what happens because the market is a great educator. And I say lack of imagination. I don't mean to be too critical of our previous work in other tech companies, but the way it was brought to market was here's a subscription, where you pay to create. And I think that has some benefits to it. Obviously it puts a lot of focus on the creative aspect, you know, which is the differentiator of these technologies. A lot of the previous leaps in music technology have been ones of distribution, right? There's great content and we distribute it. We distribute it in a more efficient way. Whereas now this is fundamentally at the point of creation. So the business model of subscription for creation is one that puts that focus on there. There's a very clear product directive and impetus that derives from that on creation, which is cool. But being said, I think there's a lot of other stuff, for instance, transactional models where you would buy songs for specific purposes, paying one off without subscription. I was talking to a venture capitalist a couple months ago and he's very negative about subscriptions. He thinks there's an enormous amount of marginal value that is one being left on the table from the part of the companies and is being taken from users who subscribe to things that they don't want to do. So transactional is one. And I also think that there's a lot of interesting stuff broadly in the field of what we might call gamification.
- [16:24]
Dan Runcy
Or something like that.
- [16:24]
Andrew Sanchez
The gaming industry, this comes up a lot in sort of music industry reports, is one that has done very well in monetizing the long tail of heavy users. And they've done that by coming up with new interesting interactions for users to get more out of the value And I think that. So when I say gamification, what I mean is what are those things where people lean in more, where it goes beyond just that basic subscription allows people to express their preference monetarily through additional add on purchases. So those are some that I don't have any sort of lightning bolts here, but those are things that I spend some time thinking about.
- [17:01]
Dan Runcy
And how do you define success around that vision and that business model?
- [17:06]
Andrew Sanchez
I think success is one where there are new experiences that are tapping into fan bases for artists and music in a novel way, in one that drives revenue streams to be clear to artists and rights holders and those users as well. You can think about it as monetizing that long tail. I think if we come back and we say, I don't think as a startup, I think in terms of days, usually I can't think in terms of months or years or weeks. It's too difficult to think that far ahead. Yeah, if we think as far ahead in the future as I can think about, I think it will be we'll have some success if one, we've brought novel creation experiences to market that leverage artist fan connections in new ways and that we come up with clever, clever mechanisms to monetize that.
- [17:59]
Dan Runcy
Yep, fair enough.
- [18:00]
Andrew Sanchez
Cool.
- [18:01]
Dan Runcy
So, Andrew, we're approaching the elephant in the room of the fair use debate and everything around that. I think we're finally reaching this point where after years of standoff and litigation, we're actually seeing some precedent start to emerge for commercial partnerships and licensing. Udo was first sued by the major labels, now is reportedly in talks to resolve some of those disputes. I think a good way to enter this conversation is just in your view, what does a fair system actually look like?
- [18:28]
Andrew Sanchez
Yeah, so it's, it's a really important, important question, I think. And it's one that's very near and dear to my heart. I think, as I was saying, and it's, I spend a lot of my time thinking about this. I think having a, an equitable framework that ensures the technological inventions that you know, that we've built and other platforms have built as well as the important contributions from artists and great art is absolutely vital. And I think that we've come to dialogue is the way that you figure this out. When I speak to artists and I understand where they come from and I understand what's important to them because people have different views on what's important in terms of whether or not you're a songwriter or you're a singer or something like that. And there are different mechanisms that come out of that. So we're discovering that day in and day out in conversations across the industry with everyone that will engage with us. We absolutely want to do that because as I said at the beginning, there's a sort of dialogic thing that has to happen. You know, we, you know, we learn what it means to build an equitable system by talking to people about this. And so, so that's really, I mean, if you can, if you can believe this, I spent 97% of my time working on this, thinking about this question because it's so fundamental. One thing that I think is really crucial is that, you know, there's, there's, I think in the sort of hyper tech forward mindset, there's this idea that business model, that figuring out these business models is an impedance to progress. I view it fundamentally differently. I think that it's a challenge, there's no question about that. Like I've been living through that challenge very seriously. It's a real challenge and it's not always pleasant. But it's in that process that we can unlock new things. There's new rights that can be, can be developed, there's new opportunities for collaboration, there's whole new things with artists that are currently not, you know, on the market. That, that insight into this and that building a system that does ensure, you know, equity across the different stakeholders is absolutely fundamental to this. I don't view it, I don't view any of that challenge as an impedance. I view it as something, it's an interesting problem for us to address that we're deeply committed to addressing. You know, we want to be the absolute leaders in this. By the way. This is something that's really important to us. We want to be the ones that, that, that help pioneer both the tech side and, and also pioneer the business side to ensure that we have this great future and that will enable new things.
- [21:00]
Dan Runcy
No, that's great. It's nice to hear someone expressing excitement about getting into these negotiations, which are often quite the opposite. I also wanted to get into how you're building trust with the creative community within that because you're having these closed door conversations with the industry. But then you also have to make sure that creators trust you and there's a lot of fear and doubt around that. So what are you doing to build that trust?
- [21:21]
Andrew Sanchez
It's a great question. So I mean the, the answer to that is open door is like, call me, get in touch. Like we, I think that the way to do this is to sit with people In a room and chat, one on one, you know, many to one, whatever. It happens to be like some of my absolute favorite moments in the last year. When I look back on what would have been the coolest moments, it's when I've sat with some of the world's greatest artists in their studios in LA and New York, all over the place, with me and some of the other members of the team. And, you know, we're looking at the technology or we're just talking about it and it's like, really, that's where the sort of rubber hits the road. It's like there's this powerful thing and we've also got on the same on, you know, on the other hand, one of the world's greatest musicians saying, this is what's interesting to me, or actually, no, no. Why are you approaching it like that? I would, I would do it like this. One really interesting thing I heard is somebody said, you know, I think the model is good, but it makes mistakes 10% of the time. And it's the mistakes that are the actually interesting part. So I'm getting value out of it. And this is one of the world's great producers. I'm getting value out of it 10% of the time because I'm only interested in the mistakes. You know, when a chord progression that isn't textbook shows up, that's interesting. So I would say that sitting down in. And this, by the way, takes an enormous amount of personal interaction. It takes an enormous amount of building trust and building bridges, which is my whole goal. Takes an enormous amount of time spent with people to do that. And I think that I deeply committed to that and want to make sure that door is open to folks who want to engage.
- [22:56]
Dan Runcy
Great. So before we run out of time, another thing I wanted to touch on is the sort of forgiveness versus permission dilemma that so many startups end up. Dan and I have talked a lot about this. We have a whole trapital episode about it where it can be hard as a startup where you need music to build your product, but you need to build the product to get the music licenses. And often they end up choosing the path of asking for permission rather than forgiveness first. Udo has followed a similar path of, you know, first you get sued, then you come to the table and negotiate. How have the past experiences of other platforms influenced your approach?
- [23:30]
Andrew Sanchez
Yeah, it's an interesting question. I mean, I think what it's getting at is this, you know, there's a historical, an unfortunate, I think historical antipathy between technology companies on the one hand and other, you know, this isn't only about music. This is about, this is about all, you know, all across the board and other players. And I think that that is a sort, sort. I've mentioned this initially. There's a sort of endemic feature of society and I think that on the tech side, one of the major issues and the things that I want to combat is the sort of arrogance of this. You know, it's like, you know, we understand all the answers. Anybody who wants to predict the future in AI right now, like if somebody is confidently predicting that future, you should, you know, grab your wallet. Like, you know, we don't know what is, what's going to happen here. So I think that the important thing is, is figuring out how to get into the room and have, have dialogue with people on this. Because as I said, I've learned when I've been speaking with artists over the last year and a half and folks across the industry that there is so much solutioning that needs to be done that only can happen if you're talking to people. If, if, if folks, you know, in, in, in tech just think that there's a sort of top down solution that'll work and you know, that that will, that will inevitably come up against the realities of artistic interest, creativity, all sorts of stuff. And I think that there's only, there's only one answer to that and it's try to sit down with people like, like we're doing.
- [25:07]
Dan Runcy
Yeah, no, absolutely. And this is a topic I could talk about forever. We'll run out of time. But before we do a couple rapid fire questions, let me ask you this.
- [25:14]
Andrew Sanchez
Yes.
- [25:15]
Dan Runcy
What role would you like to see Udio play? Udio in the music ecosystem in five years again?
- [25:22]
Andrew Sanchez
Five years, five months. Yeah. No, I want us to be at the nexus of how artists and fans with their favorite music make new stuff. I think that's the most exciting thing for me. I, I have this, you know, I'm a, I love classical music. One of the things that I most wanted to do is Mozart never wrote a cello concerto, for instance. Bach, you know, wrote his music before the symphonic form existed. I wanted to hear Mozart, it's cello concerto. I wanted to hear Bach's symphony. These things never existed. That's my weird esoteric musical interest. But other people are going to say, I want to do this with my favorite artist. I want to hear what it sounds like to have my favorite song remixed with a different genre. Those are the things that I think are most exciting.
- [26:13]
Dan Runcy
Awesome.
- [26:13]
Andrew Sanchez
Cool.
- [26:14]
Dan Runcy
Real quick Your game for some quick rapid fire questions. Okay. Go with your gut. Don't think about it too much. Last song you listened to and was it human or AI Human.
- [26:25]
Andrew Sanchez
Landslide. Fleetwood Mac.
- [26:27]
Dan Runcy
Beautiful choice. What's the biggest myth about Udio?
- [26:30]
Andrew Sanchez
Udio. The biggest myth is that it is pronounced Udio. Learn with me, guys. Udo. No, we say this actually doesn't bother me. But, like, when people say yu dio, it's like a signal that you've met somebody on the team. So, like, everybody in the room now, it's like it's Udo. Yeah.
- [26:48]
Dan Runcy
Thanks for that. Biggest truth about Udo.
- [26:52]
Andrew Sanchez
I hope that there is a perception that there like that. That it's built by a lot of music lovers. I'm not sure if that is. That is something, but the truth is that I remember one of the guys, when he joined the team, he was like, I have this. I have this undying and consuming passion for music. And I was like, that's a good. Like, that's a good interview line. Like, you know, like, because that's really what we. You know, when you're. If you're in our office or something like that, that's really what it's about. It's about that deep love for music. And so, yeah.
- [27:24]
Dan Runcy
All right, I'll hit you with one more. One word to describe the future of music.
- [27:28]
Andrew Sanchez
Diverse.
- [27:30]
Dan Runcy
And we'll leave it at that.
- [27:33]
Trapital Host
And that is a wrap for our conversation at the trapital Summit with Andrew Sanchez and Tati Sirisano. Thank you both for making the time, and thank you to Sean T. Smith, who captured the video and audio at our trapital Summit. Thank you to Gian Eric, our audio and video producers on the show, for everything that you do to help make trapital possible. Thank you again to our sponsors who made the Summit possible. The Rain Group 2, Lost, Soundcloud, Luminate, Linktree, Beatbread, Live Nation, Urban, Warner Music Group, and Splice. Truly, thank you. But most of all, thank you for listening. If there's one person you know that would really enjoy trapital and get a lot out of it, then send them a link to the show. Whether it's this episode about Yurio or any of the conversations that we have, word of mouth is the best way to grow. And if you have a few minutes, if you haven't already, make sure that you hit that star button to follow us. Whether you're listening, listening on Spotify, Apple Podcasts. Wherever you listen to podcasts or rate the podcast, leave a review that helps the algorithm do its thing and make sure that Trapital reaches the right people. Thanks again. Talk to you next time.