The video offers a detailed conversation on the state and future of the music industry, focusing on the changes brought by technological advancements and how these influence art and business models. The rise of streaming platforms has not only revived but also plateaued the industry’s growth, posing new challenges. The speaker emphasizes the importance of adapting to technological shifts, like AI, while maintaining artistic integrity and exploring new revenue streams, including catalog sales and multi-dimensional ventures in entertainment.

The conversation highlights the balance needed between technological integration and protecting artistic value. The speaker provides insights on how the music industry can leverage new opportunities brought by AI and other emerging technologies without compromising artistic quality. Furthermore, the discussion touches upon the speakers' views on past technologies like Napster and iTunes, and the role of algorithms in shaping music consumption today.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. plateau [pləˈtoʊ] - (verb) - Reach a state of little or no growth after a period of activity or progress. - Synonyms: (stall, stagnate, stabilize)

That growth has started to plateau a bit.

2. crossroads [ˈkrɔːsroʊdz] - (noun) - A point at which a crucial decision must be made that will have far-reaching consequences. - Synonyms: (juncture, intersection, turning point)

But the challenges are always what's next? I mean, we are at a crossroads.

3. renaissance [ˈrɛnəsɑːns] - (noun) - A revival or renewed interest in something. - Synonyms: (revival, renewal, resurgence)

The way Tyler is a. Is to my mind a renaissance artist.

4. lucrative [ˈluːkrətɪv] - (adjective) - Producing a great deal of profit. - Synonyms: (profitable, remunerative, gainful)

And so that has been very lucrative as a business.

5. algorithm [ˈælɡəˌrɪðəm] - (noun) - A process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer. - Synonyms: (procedure, system, method)

But an algorithm tells you what you want, not what you might like.

6. synergy [ˈsɪnədʒi] - (noun) - The interaction or cooperation of two or more organizations substances, or other agents to produce a combined effect greater than the sum of their separate effects. - Synonyms: (cooperation, collaboration, teamwork)

So, so the synergy at Sony is multidimensional.

7. fabric [ˈfæbrɪk] - (noun) - The essential structure or foundation of something. - Synonyms: (structure, framework, base)

I think his music's in the fabric of society

8. multidimensional [ˌmʌltiˌdɪˈmɛnʃənl] - (adjective) - Having several different aspects or facets. - Synonyms: (varied, manifold, diverse)

So, so the synergy at Sony is multidimensional.

9. exploitation [ˌɛksplɔɪˈteɪʃən] - (noun) - The action or fact of treating someone unfairly in order to benefit from their work. In a general sense, the utilization of something to achieve a benefit. - Synonyms: (utilization, use, operation)

We think that as we move into the, into incredible eras of digital exploitation.

10. juncture [ˈdʒʌŋk.tʃər] - (noun) - A particular point in events or time. - Synonyms: (moment, point, stage)

But the challenges are always what's next? I mean, we are at a crossroads at the moment.

Sony's Rob Stringer on the State of the Music Industry

How you doing? I'm good. I'm here. Lucas. I'm here. Thanks for coming. You were in LA. The timing of this worked out in part because you were in LA for a Sony corporate event. And I'm curious. The record industry for the last decade has been on kind of a rocket ship fueled by streaming growth. After in many ways being left for dead, that growth has started to plateau a bit. When you're talking to the folks from Tokyo, what do you say is the engine for the business going forward? What are you most excited about that is going to make the business grow in the next five years? Well, I try to tell the truth. Mostly that would be helpful. I mean, they kind of know because, because it's such a constant dialogue. But I mean, you know, we've had five years of consecutive growth from streaming, we've had 10 years of consecutive growth from the company. But the challenges are always what's next? I mean, we are at a crossroads at the moment. We have AI, which I'm sure you're going to talk to me about, and we have other challenges of just constantly looking how the business moves on. But you know, we're not a new company, we've been around a while, so we've weathered plenty of storms in the past. And whatever comes hitting our way next, I think we'll probably figure it out.

What of, of those new things do you consider the biggest opportunity or the biggest threat? Well, I think the threat is that the disruption from the next chapter of tech causes something that happens that doesn't, to my mind, benefit the art. I mean, my view of where my background and where I come from was art first, business and tech with involved in that second. So if I look at the next chapter, I care about what happens with the art, the tech. I mean, I've been through, I've been at the company a long time. I've been through plenty of different chapters of technological innovation, whether it be cassettes or CDs or downloads or streaming or whatever. So I look at it and say, how is it going to affect the art and how is our positioning going to be? Because at the end of the day, I look after a 125-year-old company really, and to my mind it's like a modern art museum. And we have amazing paintings from the past in there. And I'm always looking to put brand new paintings in there from future geniuses. And so therefore I'm always concerned with that. Sometimes the tech bothers me more and sometimes it bothers me less.

So I'm curious, that end, which of those technologies do you feel in any way benefited the art? And is there one that you think has detracted from it? Well, I mean, I would have an unusual position on that because in 2000, post Napster generally everybody wrote off the recorded music industry, including the investment community. And I didn't mind that chapter because then I got left alone. And actually I think out of that period we started to create better art because the pressure wasn't on from the technology to be the most powerful chapter. And then iTunes came in. And iTunes, to Apple's credit, did have a boutique taste mentality about the store, which meant that I think they understood, I can tell you from that period that the artists that came through were of a very high quality because it was encouraged to be boutique. Now, ironically, this chapter has made us more money times five than the iTunes chapter and the Post Napster chapter.

But an algorithm tells you what you want, not what you might like. And there's a difference between what you want because everyone always wants something until they get tired. You like chocolate chip ice cream until you eat five tubs of it and then you don't necessarily like it anymore. But with streaming, the downside is you have incredible penetration and we have hundreds of millions of people around the world and so that has been very lucrative as a business. But I also miss the sort of the "fuck it up" algorithm where you learn about something that you didn't know about. Right. Instead of getting fed more of what you already more of the same. And I think that what you didn't know about and you learn about, certainly when I was, I consider myself, and I think probably the reason I'm here and came to America at a time post Napster when the industry felt like it was in bad shape, was because musically growing up with the BBC, they played everything.

So I wasn't an R and B guy or a pop guy or an alternative guy or a hip hop guy. I listened to everything because the BBC had a government mandate to play you every type of music. So I was kind of open to that experience. Whereas I think the disadvantage with automated taste is that you end up, as you said, being funneled the same music. And there is no reason why, when you're 14 and you love pop music, that when you're 18 you won't love folk music or if you're 16 and you love emo music. I was at dinner with someone Tuesday where he and I are of different generations, but we both grew up loving hip hop and we both agreed that most hip hop right now sucks. Yeah, I mean, well.

On hip hop, I think that hip hop, I think that honestly that's a different conversation because the industry funneled so much focus as the industry does. And Instead of signing 100 gray artists, you sign 1,000 artists, then you're going to dilute. I think hip hop will. Hip hop will be. Hip hop is not going anywhere. It's a 50 year old genre and it's as powerful as rock music ever was. But. But the truth is that it will hopefully go underground, come back up again with an incredible type of fusion music that makes a difference. We had that, we signed the old Future franchise that was brand new in hip hop at the time. And did you think that from that odd future kind of punk rock, hip hop terrorism you would get Tyler the Creator? Right. You know, and the way Tyler is a. Is to my mind a renaissance artist. So I think it will change.

But do I think hip hop will go have to go underground to come back up again? Yeah, I do. And I think that, you know, again it's the same thing as you said, you know, you get fed every. If you like, you know a certain type of genre of hip hop from Atlanta, you fed that. So you've had enough of it. Right. Well and then there's been this development where a lot of, a lot of the music sounds very similar because they're all catering to a particular playlist or algorithm. To your point, there's a. They have the sort of the same target. Yeah. And I'll give you another example which makes it sort of a little bit more illuminated when we put the first Harry Styles single coming out of One Direction. Sign of the Times is over six minutes long and we were told that you can't have a six minute long song on a playlist because that isn't the way the algorithm works.

And I pointed out the Bohemian Rhapsody was six minutes long plus and that was a pretty good record. But that's the kind of thing I came up against. And as it happens, the public one Sign of the Times has done a billion and a half streams and out Spotify. But the beginning, they did not playlist it. Yeah, they've learned the lesson a bit since then. But. But you, but you. But to my mind, honestly, it sounds cliched and I work for a corporation and profit is important, but art comes first. Right. You brought up Harry. When you have an artist who comes out of a boy band like that and they're than wanting to be a solo act, how do you position them as their own artist. And then also in his case, correct me if I'm wrong, but it felt like the first album did fine. But it was really the second album that sent him to the stratosphere. Like how do you have patience in that process?

Well, the first album was, was. Was where he wanted to go and where we talked about him wanting to go. And it was very clear cut where he wanted to go. And actually as it happens, the first album is now done. Great. Right, so. So in retrospect, as with many proper artists, you go backwards and you say actually it was all planned but the first album was a step to go left, not go down the middle, not go right, not more pop, not down the middle and make it easy and go left. And we went left and that set us up to go back into the center a little bit on the second record. And then the third record was just completely natural and literally the easiest record one of these record to admit because he had total vision and the experience of the previous two records. So it's always a journey artist, always a journey. And you don't necessarily think you don't have to start in the most commercial place to end up being a really super important artist.

Yeah. How would you say. I talked about this a little bit with Scooter earlier. How would you compare the power of the artist right now relative to when you, you started your career? Well, we, we held passport control when I started, I started in 1985 and it was, you know, you, we controlled manufacturing, co distribution, we controlled radio. You know, we had the, we were passport control for artists. So we had a lot more power and I think probably in the pioneer days of the music industry we abused that power and we probably got a lot wrong. But it was pioneering and now the artists have at the very least equal power to us, if not more power to us because we're part of a overall picture.

There's live merch, branding, you know, there's, there's, there's a lot of streams now of the music business that are super lucrative and we're one strand and I'm being very comfortable with that. I wanted to be the artist partner. I never wanted to be, you know, a cigar smoking fat cat. Particularly, you know that. I know it's always cliche. We were talking the other day, it's like, you know, Mike Myers in Bohemian Rhapsody is fantastic. But he. There's a bit of a cliche about who we are and you have to kind of work hard not to be that cliche really. Well, it's interesting that you say that because I feel like both of your peers in the music business, Warner and Universal have spoken a lot about capturing more of those strings. I guess you're the recorded music Patel's others.

Warner wants to do a super fan app. Universal has made some noise about super fans in their own way and we just had Carrie up here. One of the big trends I'd say across entertainment is sort of these celebrity driven businesses is that are you trying to go to a Beyonce, to a Harry, to these and try to build businesses with them or are you content to sit back and just say we're one leg of the stool, do whatever you want anywhere else. It's pretty multidimensional. I mean we have, we have a different path to my, my two friends and competitors because I work for Sony. So, so the synergy at Sony is multidimensional. I mean, you know we had, we've had meetings with all our heads of entertainment companies for two days and the conversations are about PlayStation, anime, movies, television, electronics. So at the end of the day we've always had that.

So I actually think that we were first in all those ideas because we have a lot of strands. You know we're making movies with, with our picture company, we're doing games with our PlayStation company and anime which is obviously one of the biggest growth brands in the world. We're doing tons of stuff with anime now that I wouldn't have necessarily thought five years ago. So I think it was organic for our company because we were part of a bigger company in itself. I mean we are part of a bigger corporation. My counterparts at Warner Music and Universal aren't. We are. So it was in our bloodstream to some degree and actually we concentrate on that much more in the last few years. But we have multitude of different revenue streams and probably 60 to 80 different multi revenue streams now. So, so with, we're pretty, we're pretty dimensional and I assume the biggest one is still putting out new music.

Yeah, I mean you know, but, but, but there were gold mines for everywhere. You know, if you, if you know, for instance, you know we have a share of MJ the Musical now that's that MJ the Musical is on. We, we have a percentage with Michael Jackson estate as does our picture company. And that is on in five places the world. That's like an act touring times five. It's on in five cities in the world within the next year and that's quite lucrative and unlike with an actor and you actually get to participate. Yeah, we get to participate, which is, quite frankly, led to a movie which we're making now, which is. Which again, we're.

You know, we own the music rights. So what is the movie? It's a Michael Jackson autobiography. So. So that's them. But, you know, the Broadway show has turned into something probably way bigger than we even imagined. And. And. And that's a revenue stream that is, quite frankly, more lucrative than streaming. Michael Jackson feels he. His. His music has survived all of the controversy. All the controversy. I think. I think his music's in the fabric of society. I mean, you know, I think that. I think that you can't take. You can't. It would be impossible. Whatever people's opinions in the audience are about Michael Jackson, you cannot take his music out of the fabric of. Of pop culture. You can't take it out. It's absolutely entwined.

Right. You brought up your. Your two friends and competitors and how you're different. Has it been they both went public recently? If you talk to people who work at those companies, I don't think they love the experience of being part of a public company. Has it been to your benefit that they both now have sort of quarterly reports and they have to satisfy shareholders and obviously you're part of a public company. But it's not the same. No, it's not the same, because when we. We are a public company, but when we're talked about on the same terms, it's as much about PlayStation or electronics or Sony Television. So. So, no, I mean, yes. I mean, what. I want to be doing that. Not particularly, you know, doing quarterly earnings. I mean, you know, I.

I'm sure you're aware, Lucas, because it's your job. You're aware of the number of press releases we put out compared to our competitors, considerably less. We frustrate people. We don't even put press releases about the things we do, which I know sometimes is a little bit annoying. So we can talk about that next. We can sign huge catalogs and we don't tell anybody officially because, you know, it's not quite the same dynamic. And would I want to be in that position? No, not really. I mean, I think it's tough. And I'm friendly with people in the other companies. I've worked with the head of Universal, and I've known him for nearly 35 years. You know, so it's a. It's a tough gig, that. And, you know, of the wider entertainment business, how tough it is to be literally reporting back to shareholders and investors.

Right. Every three months. Yeah. You know, and you do have to, you have to talk your company up, right? I'm fortunate that, you know, I do investor analysis meetings twice a year and, and I contribute to the Sony quarterlies, but. But I'm left earning a little bit more. I think to be behind the curtain when you're doing my job is not a terrible thing. The artists are in front of the curtain, the talent is in front of the curtain. And I think being behind the curtain is sometimes better.

Right. You brought up the catalog. So you did Springsteen deal. You did. Queen didn't announce it. You did. Pink Floyd didn't announce it. We did. Michael Jackson didn't announce it. I'll just give you a showbiz exclusive. Why are you so. Why are you so active in buying these catalogs? And can you explain? Because these numbers are huge. Like, how does the math on some of those deals pencil out? Well, using the modern art concept, I think this music is priceless. And we bought name and likeness on two of those acts. So we own all the logos. Merchandising, experiential potential, you know, event potential. There is no price as far as I'm concerned for Pink Floyd. There's no price. What price can you put on? What price is a, you know, Picasso, you know, it's relative.

And interestingly, which has backed up that process, is that Spotify now, as it hits a maturity in particularly the English language markets that the, the audience of Spotify is older now? I design. Because Spotify is now 10 years old and the audience is getting older. And so if you look at the dynamics of the marketplace, it means that the percentage of people listening to older music is much higher. And so, you know, I think it's a foregone conclusion, to be honest. We have relationships with every one of the ones you mentioned. We've had recording and Michael songwriting. We had the recordings for 50 years. Pink Floyd has been signed to us in America for 50 years. Bruce Springsteen has been signed his whole career for 50 years. We took the publishing of another company with Springsteen, we took the records of another company with Queen, with Pink Floyd. We had the records in North America.

We didn't buy the publishing and, and you know, we bought Bob Dylan's recorded rights as well. You know, so they all had a relationship. So Universal did the publishing and you did the records. Because Dylan released a lot through Columbia. Right. Historically, Dylan's been on columb apart from one record in the 70s with which David Geffen. But we, and so we have, obviously we have a lot of numbers. We have a lot of artistic understanding. We have a lot of expertise on the structure of those, those artists careers. So they felt like good fits. And quite frankly, I didn't want any of those artists to go anywhere else. Bruce Springsteen has been on Columbia. His whole career was not going to leave. It would be like, it would be like, sorry, in the museum saying, there's the Basque, it's someone else's now. That wasn't going to happen.

So at the end of the day, you know, but that we think they're lucrative. We think that as we move into the, into incredible eras of digital exploitation, we think Dark side of the Moon or Thriller or Bohemian Rhapsody or Born to Run are going to be experientially very exciting for generations even. Well beyond certainly your generation. Well beyond my generation. Your generation is going to see those in different guises for the next hundred years.

Well, you brought up the increase in catalog consumption. I'm curious how much of that is just older listeners coming on streaming, by which I mean, are people listening to more old music or is it just you're getting paid for it differently? We're getting paid for it differently. And I think that. And obviously people are discovering catalog on all the platforms, whether it be Snapchat, Instagram or Tick Tock or Spotify. So you know, people are discovering that, I mean, you know that the chart is random with catalog because we've got records in the chart from 30 years ago, 20 years ago. I mean literally when I say in the chart, in the top 50. Right. Spotify from four different decades. Yeah, because people blame catalog. There's this, this whole narrative in the music business.

The last few years, I feel like that it's impossible to break new artists. And part of it is that catalog is crowding them out. No, I think it's, you know, I think it goes back to my original point, you know, that I think sometimes you need to have something coming up underground and not being, not being overexposed quickly. And I think social media does expose things very quickly. Not always for the best purposes. When I was a kid growing up, you could look at rooms around genres of music and in that room would be 28 people. And 15 of those people would end up being painters, sculptors, musicians, filmmakers. And those rooms are tough to make now because someone's filming those rooms automatically. And one of my friends in a band who were very big in the 80s from a movement once said to me, I think everyone was said then on social media, we were shit. And so they wouldn't like us.

And we would have never been successful because people would have judged us on the first hour we ever stood on the stage in front of a bunch of people who were tastemakers who went on to be very successful. So I think that, you know, I think that again, I think tech blows it up, and it's great when you're being blown up for that minute. Is it great five years on, who knows, right? Is there a tech platform right now that you feel like you're. I guess you would like to see them pay you considerably more, right? Like you're making plenty from Spotify. Imagine the answer to that. So you just asked. You already know the answer to that. I'd like several tech platforms to pay me more. Okay, I'll ask. I'll ask more directly.

Does Tick Tock pay you guys enough? I think the debate on that would be, did we start off with Tick Tock on the right note, and did we allow them to become what they think they are, which is a promotional platform platform? And we possibly did. They are not a promotional platform. They are a hugely profitable corporation and we allowed them to be mtv and we shouldn't have done that. And now we're backpedaling from there. But the truth is we. We should get paid more by several of our. Several of our DSP partners. And that's part of my job is to make sure that we're paid and in turn, the artists are paid.

Yeah, one of the things, another, Another big development this year is finally those DSPs are raising prices, right? Spotify, Apple, so on. If you could just, like, snap your fingers tomorrow, what do you think Spotify should cost? Oh, I mean, I had lunch with Daniel Ek in the summer in Stockholm. I mean, I constantly say to them, and I think obviously they've done a spectacular job of building a business around music, so I would not be critical of what they've done, but I think it should have been going up a dollar a year for the last five years. I think it should probably be much more akin to the Netflix pricing, because Netflix pricing is not based on the entire catalog of content for television and film. And Spotify has every piece of music you could ever want.

Right. So from that point of view, yes, I think Spotify should be more. But, you know, they're making ground on it now and they want it to be competitive and get their share price up. And so they didn't put the price up. We obviously wouldn't agree with that. But we are where we are and they're finally putting the prices up. And that's great. Yeah. We didn't talk about. I didn't. That's good, right? Is that a good thing? I don't know. Probably. You know, it's like, I mean, how long you got? You know, it's like, I mean, I could talk to everybody individually about, I mean, I mean, you know, we're in a position where it's going to be super important to our business. I hope it's most importantly going to be exciting and make new creative vision and be fantastic in that. For the meantime, I'm sorting out the rights model and my team and I are supporting out the rights model, making sure that we get paid for whatever the training models are and whatever comes out of AI.

But do I think it's going to be an exciting tool in the future for making great music? Yeah, I think there's a 14 year old in the bedroom somewhere who's about to make amazing music using the tools of AI. But we have to get the business model sorted out first. And if an artist comes to you and wants to screw around with different things, do they have the right to do that or do they need your permission? I think that we're waiting for the artist to come. I'm not going to use that phrase. But we're going to wait for the artists to experiment and then we'll follow the artists. When we know that experimentation is absolutely exciting, creative, then we will follow them.

We are at time. But I'm going to give you one last plug. I guess who's going to be the next artist that you guys break? Who? Someone that this room doesn't know now, that they will know six months from now. That would be really bad for me because then some other artist is going to say, you never mentioned me. And I'm really diplomatic. I know I usually have a rule against these questions. We figure this is promotion, we have a thousand. I'm not going to. But every. Every, every. Every label boss, every. I know this, I'm talking to you guys. All. Make a list of like, these are the five biggest. But I can tell you, you know full well that we have a huge independent distribution arm as well. And we have a lot of artists and we. The mythology that we're signing less artists is not true.

We have more. Okay. I'll give you something that my head of Latin told me the other day, which is because we have a very big Latin division. We have Bad Bunny and Raul Alejandro and Shakira and Peso Plumer and all these artists. And he told me, here's a musical tip that the next blend coming from Latin America, which is a huge musical movement right now, is reggaeton mixed with tropical music. And artists are starting to blend. And it's coming out of. It's coming out to some degree of Argentina and Colombia. And tropical music blended with reggaeton is going to be hugely popular. Okay, I look forward to that. That was diplomatic, wasn't it? Not to mention one artist. Rob, thanks for doing it. Great.

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