AI, Localization, and the New Music Economy

Jakob Wredstrøm

Hey guys and welcome back to the Sound Connections podcast. Today we have Ben on the podcast. Welcome.

Ben Mendoza

Thank you, Jacob. It's great to be here.

Jakob Wredstrøm

Ben, I'm looking forward to this conversation. I'm speaking with a founder today that has quite a lot of experience in the founder domain across multiple companies. And I'm very happy to dissect that today, your mentality. And I have a bunch of questions that I want to ask you. But Ben, for the people who don't know you, who are you and what do you do?

Ben Mendoza

Okay, I'm Ben Mendoza, I'm co-founder and CEO of Beat Chain. I suppose the best way to describe it is I've always had a great passion for music, for as long as I can remember really. Certainly before I knew anything about business or the music industry. I started playing guitar when I was 10 and then joined a band when I was 15 and actually to the... great frustration of my parents left school at 17 to play in a rock band. So then I did that for a few years. But then once I got married, I got married at 21. So it was a very rock and roll thing to do back then. You know, life steers you away from the music industry a little bit. And I got into, let's say, a more traditional world of technology. And back then, That was in data communications and networks. You know, we're talking the early 80s here. So I really got involved in understanding how to connect the world together for large organizations. And I also fell in love with my next new passion, which was personal computers and coding. Software and basically solving tricky problems has always been what I like to do. So to move it forward, in the 90s I found myself in the city of London in sort of financial sector and I was building networks for some of the big banks there, know, back in the day it was like Lehman Brothers and Citibank and all these sorts of guys. I noticed they all had a tricky problem they were trying to manage which was the consumption of market data which for those who don't know is the services that traders use to look at exchanges and so on and so forth and I ended up starting a company in 95 called MDSL to try and solve that tricky problem and luckily enough we were very successful.

Ben Mendoza

Ended up opening offices all around the world. In 2017 I sold MDSL and decided that I needed to do something else and it was the opportunity to look back at the music industry and I know a whole bunch of musicians who were having all sorts of tricky problems and they said, you know, how can we solve these? That's really how BJ stopped.

Jakob Wredstrøm

Ask a direct question here to begin with. I always have this dark side I go to when I see profiles and stuff like that. Was like, was this the sort of naive hobby project to some degree that you tried to do? One second.

Jakob Wredstrøm

And on side, it's calling.

Jakob Wredstrøm

All right, I'm back now. That was exactly what my kid did, what he was not supposed to do. But that was good to return. Was that a call on your side?

Ben Mendoza

Yeah, I'm just sorting people out, sorry.

Jakob Wredstrøm

I'll ask that question again. Ben, I'll just jump right in with the question because I have a bit of a dark side or devil's advocate every single time I see a person that I study or follow on LinkedIn. And my first thought was, I'll just be blunt, is like, this is a very successful founder that then for me just seemed like, okay, this is a guy who's had a hobby project or music of passion that he now wants to take his immense success and apply that into something that he thinks is fun.

Ben Mendoza

Yeah, please do.

Jakob Wredstrøm

Was that the case or like what were you? Okay.

Ben Mendoza

Yeah, no, that was exactly what happened really. For a long time it was a very expensive hobby before it was turned into a proper business. Yeah, no, was, it was definitely the case because I was just intrigued with the challenges that musicians had independently. Now, talking to them, there was one particular guy who was a co-founder of Beat Chain, a guy called Steve Jones, who runs a fabulous band called Brother Strut.

Jakob Wredstrøm

Hmm.

Ben Mendoza

And when he was starting that out, that's when I got to meet him. And he was saying that having had the experience of working with record deals he's a very talented producer and musician, and had been dropped by labels and so on. You he was now starting his new band. He didn't want to get stuck in the old ways and was trying to work his way to having a proper career as a musician on his own. But the challenges he had in terms of doing everything himself, in other words, arranging venues to play at, selling tickets, promoting it all, doing all those things, was taking so much of his time that he didn't really have any time left to be a musician. That's when really I thought, okay, well, looking at all the process work that I know about and understanding the technologies that we use now, I could see a way in which we could really build something to help not just him but musicians generally with their careers.

Jakob Wredstrøm

So try to walk me through your thought process. What is, like if you wanted to distill the problem that you found so interesting, what was that?

Ben Mendoza

Okay, well independent artists need many things. You know, if you're seriously going to become a career musician then you need to be able to pay the rent and we can come back to that point but you know as you probably know today it's actually in some ways worse than it was when I first started this. Know, when you release your new track it's competing with the other three plus million tracks that month that got released onto the DSPs. So you also need a way to be discovered. That is a very tricky problem. And you can't just rely on getting lucky on TikTok. I know, that isn't a good strategy. And it's not only a problem for the artists actually, but it's also a problem for the industry. Who were never really designed for the extreme amount of content that's now coming out.

Jakob Wredstrøm

Yeah.

Jakob Wredstrøm

So it's basically trying to survive and the overwhelming amount of work you need to do. I have the privilege and the burden of being exposed to a lot of different startups in this space, both through the podcast and through the work we do at Amplitude Ventures. And I've now come to the point, I always have like sort of waves of excitement and depression about certain things. And... I've now come to a point where I get so incredibly exhausted when it comes to the business propositions towards artists, not because of the business itself, but I have been active on the label side, on the publishing side, on the management side. And I'm a, I'll be honest, I'm a pretty smart guy. I can do a lot of things. But I don't wanna curse on this podcast, but it's so incredibly difficult to... keep track of all the things you need to do. And even if you partner with us, it's like me as a manager, when I did that at one point, it was so overwhelming the amount of tasks. So I see there's a problem. So I almost get exhausted by thinking about the problem. But then the real problem that I see as a sort of entrepreneur and a venture studio owner is that you need to charge a customer money that almost per default in the problem statement doesn't have a lot of money. How do you build a business around that?

Ben Mendoza

Yeah. Okay. Well, you're absolutely right. You need to understand all the moving parts and all the, if you like, the pain points that occur in this. And, you know, as I say, the pain points are not just on the artist side, they're also on the industry side too. So what we've tried to do, Beat Chain has come up with a solution that... solves for both sides at the same time because that's the way in which you can be successful. We came up with this concept of the B chain arena, which is in our opinion the best way to connect artists, audiences and industry sponsors together in one ecosystem. So imagine an artist services platform that has best in class distribution and it has unique and simple and effective promotional tools. And I'll get into that in a bit. Amazing insights in terms of dashboards data and understanding for an artist of where they are in the world, what playlists they are on, how their socials are performing, all that sort of stuff that they need to see on a daily basis. But on top of that, then also bringing in industry players into that platform that can offer real opportunities to the artists that are doing well. So, bringing together both the artists and the industry into one place. And the idea is that, you know, if you, as you say, you know, if you're an artist and you don't have any money, which is like most of them, What are you going to do with your 10 bucks that you've got to spend on your release? You're going to want to put your music out there anyway. There are plenty of very well-known distribution companies you could go to. You know, the likes of CD Baby, Distro Kid, Tune Call, all the well-known ones. And there's absolutely nothing wrong with any of them. But they're, to my mind, they're very much, we do this, we do this well, that's what we do.

Ben Mendoza

If you then need to do promotion, if you want to be discovered, if you want all these other things to happen, that's all on you as an artist. You've got to, you've got to try and work that out yourself. So what we wanted to do was add those extra capabilities into one place. So when you spend the same amount of money as it would cost you anywhere else to put your distribution out in a beat chain arena, which is by the way, branded by our partners. And I'll get to that in.

Jakob Wredstrøm

Mm.

Ben Mendoza

Not only do you get your music out onto the DSPs as you would anywhere else, but now you become visible to the sponsor of the arena and you join a really big community which gives you collaboration capabilities and you also, know, using our technology and scoring system, you get rated effectively on our charts, our leaderboard for want of better word, in the arena. So this solves a number of problems. One, it gives instant feedback back to the artist on how they're doing and a load of mentoring and education on what they could possibly do better, which is something many people need. On the other side, it starts to solve a problem for the industry because, you know, there's millions of tracks out there. There's like, what is it, 100,000 a day or something going up. There's no way they're going to listen to all of that. They already get bombarded with demos and all sorts of messages every day of people wanting to work with them. And most of them turn away or they just can't deal with it. Only got a, from an A &R point of view, they've only got a small team normally that can deal with this. So if we can act... as a filter, smart filter for them and have a leaderboard which is bringing the very best talent bubbling to the top, then they can certainly spend the time to look at the top 50 of those or whatever and communicate with those artists and also provide them with opportunities they couldn't get elsewhere.

Jakob Wredstrøm

So what's the model there for the businesses? Do they pay money for the service or?

Ben Mendoza

Okay, so the model is really, really attractive. Basically, the idea is that we discovered at B-Chain that we were very good at managing bands. We tried that for a while and it's not our expertise set. We are really good at tech. We're very good at building sort of global platforms. And so we thought, let's stick to what we get at. And so the way this works is, We build the platform and it's built in a way in which it can be white labelled, as they say, by our partners. So, for example, in the UK we have a label called Odd Child Music that has an arena called oddchild.app and then in India we have Radio City using it and they've branded it as Moves.disco. In South Africa, we have Kubo Studio, we're just opening in Ghana. But the idea is that the brand name that gets put onto the arena is something that's well known to the artists in that region and therefore is attractive to them. So the way it works is we don't charge our sponsors for the software. Basically, that's our part of the bargain. We'll provide it and run it. They contribute. By putting their brand on it, by paying for the advertising to attract the artists into it, and by offering these amazing rewards. And these amazing rewards are things like, well, anything from a shout out on their socials, all the way up to a collaboration with one of their existing artists, or having your music played on the radio, or being interviewed, those sorts of things, which are really career changing for independent artists that are looking to be discovered. That's how.

Jakob Wredstrøm

Amazing. Give me one second and I'll ask.

Ben Mendoza

Yes, sure.

Jakob Wredstrøm

He's not coming back. OK, so basically what you're saying is you still have the B2C model, Direct to Outstanding model, but you're using partners to basically do user acquisition. And that's why it's a more viable way of doing, let's call it B2C or direct. Yeah.

Ben Mendoza

Yeah, sure. So, I mean, importantly, it's free to sign up. OK, because again, you've got to look at this. And we approach this from trying to remove as much friction from the process as possible. You know, if you put subscriptions in place, obviously from a business point of view, it's great to have subscriptions. But from an artist's point of view, they're not always ready to do things. I mean, an artist may release a track three or four times a year or something. You know, if they sign up. And they're paying a monthly subscription. In the months when they've not got anything to do, they're liable to say, I don't want to pay for this, and they'll churn. Whereas if you make it a pay as you go solution, in other words, you sign up for free, you've got all these fantastic tools available to you, and an amazing marketplace of affiliate services that you can use. And then you just use them when you want. Then you only have to pay when you're ready to do something. And that model works so much better. And what we actually do, which is really important, is the money that the artist pays for those services, which is incredibly affordable, we actually share that with our sponsor. So our sponsor is now making a revenue stream from a demographic they would never normally ever interface with because

Jakob Wredstrøm

So if I were to sort of distill it down in my simple understanding, at the base level, you guys function as a distributor.

Ben Mendoza

That's one of the features in the platform, yes. Distribution is really important.

Jakob Wredstrøm

But again, this is how I it, I might be completely wrong. Distribution is sort of the primary monetization. The features you have, promotion, all these communities are, let's say, the competitive advantage or sort of the argument for why not to be somewhere else. And then you use the sponsorships for basically user acquisition. So it's like the way to... Does that make sense or am I wrong here?

Ben Mendoza

Yeah, that's pretty close. Right, I would say that, you know, obviously distribution is a hook because everybody wants to get their music out there somehow. So that's certainly what initially attracts artists to come in and do it because they've got to do it somehow. But we're more about career than just one thing. All right. What we want to do is show an artist that they can actually take on not only, you know, simple act of distributing your music, but also understanding what the best practices are for promotion and also building your career and getting yourself into a state where you're going to be attractive to labels who are then going to want to sign you, know, because when you start out you're not attractive, you don't have any following, you don't have all those things.

Jakob Wredstrøm

Yeah.

Jakob Wredstrøm

That makes sense. The reason why I'm asking these sort of questions that might be bit unconventional on podcast is because I'm still, you know, the point to how do you build a sensible BDC business without success to customers in the music industry right now? And I think it's really interesting. And again, I'm just interpreting in my own understanding. So when you talk about career, you basically talk about retention, right? Like reasons to stay over time.

Ben Mendoza

Yes, exactly right.

Jakob Wredstrøm

Which is the train you referred to, is one of the big issues with these things. Like how can I not lose this customer? Like how can I stay relevant? So, okay, that makes sense. Do you believe with this way of designing it, I would assume it's very intentional also as maybe a reaction to the statement that I made that it, know, I almost get dizzy thinking about the artist subscription thing.

Ben Mendoza

Yeah, well when you say intentionally it was not intentional it was what we ended up with as the result of trying all the other methods. You know we've tried everything over the years to work out which would be the best and this without any doubt has been the most successful because you know if it's free to sign up there's no reason to churn right. You're getting value all the time from the dashboard you're getting as long as we're providing value to the to the end user, it's undoubtedly that we are, then there's no reason for them to move anywhere. Even if they use other things, which is fine, they've always got that platform to go back to see how things are progressing. With the new features we're adding all the time, we're just adding more and more value.

Jakob Wredstrøm

I have a question. When I look through your track record, you see there's an overlap between your presence in your old company and when you started pursuing this one. I would assume it's like an acquisition that was in an earn-out period or something like that. What was the story there? What went on with you when that transition happened and you started B-Chain?

Ben Mendoza

Yeah, well. Basically after I sold MDSL for the next year I acted as chairman as often happens with these sorts of things. But I have to confess, my mind wasn't still there. My mind was now thinking about new things. And that's when the beat chain stuff really started to bubble up. And so...

Jakob Wredstrøm

Mm.

Ben Mendoza

You know, as you said, it sort of started off as a passion project, really more than a, let's be the biggest infrastructure in the business for independent artists, which is where we're ending up and where we're going. But the... What was interesting is that obviously a lot of the people at Beat Chain that had worked with me for 20 odd years, many of those were musicians as well, as well as being technologists. And they all said, yeah, I'm interested in this, let's put this together. So quite a number of the people I used to work with came across into Beat Chain in the early days and still there now. And...

Jakob Wredstrøm

Because you did say, not only say a passion hobby project, you said a very expensive one. I assume there was some sort of money you got from the sale. Is that what you put into the business, or how did that work?

Ben Mendoza

Yeah.

Ben Mendoza

Well. Yeah, well, mean, I'm very fortunate in that obviously, know, MDSL was a big company and we sold for a decent number. So I established a family office at that time and my family office has been funding beat chain, you know, from the outset. And in fact, now we're at the stage where we've, you know, we've got lost traction. Got very exciting roadmap and I'm actually looking for really to bring investment in now.

Jakob Wredstrøm

Still, that's like eight years where you've sort of taken.

Ben Mendoza

Yeah, I mean, we're unusual. You know, can't really say we're a startup, you know, because we've been going for eight years, but really in the...

Jakob Wredstrøm

No.

Ben Mendoza

In the form that we are now, we've really only been doing what we've been doing for 18 months in terms of the arena effects. And we've already got some 40,000 artists signed up to various arenas using the product. And that's growing at thousands of artists a month. So, yeah, I mean, the reason I say it was an expensive hobby is because I started employing people. And if you can employ... the best people in the industry. Unfortunately, they have requirements of reasonable salaries, which is fair. So it does start to get expensive. But at the same time, we're all very excited about where we've come to now. And so, yeah, we're looking forward to the next step.

Jakob Wredstrøm

Which is fair.

Jakob Wredstrøm

But did you have, when you started your previous company, I would assume that it had some sort of a for-profit mentality going into it. Or how did that happen? Was that the similar sort of happenstance almost that they grew into what it was?

Ben Mendoza

Yeah, I mean, as I say, when we first started this, we were B2C. We were providing services directly to artists to use. We started with subscription models and we started with all sorts of other things and as you say, we regenerated revenue but it wasn't, it was very much a sort of sawtooth type waveform in terms of you get some and then it would drop off and so on. So we needed to work out how to do this consistently and scalably. And we're very good at building very scalable products. And what we've... What we realised was that, when you look at distribution for example, you talk about distribution companies, distribution isn't a very profitable business to be in. It costs money to do it. I mean, if you've got some really big A-listers who are earning you lots of royalty, then fine, that's a thing. Mostly, the vast majority of the business that runs through that isn't going to be doing that. You have to think about how you can run a long-term business in the music industry. And the way to do that is scale. If you've got hundreds of thousands of artists, possibly millions of artists in there, then as long as a good percentage of them are doing something, it's not costing them very much, but it's a numbers multiple that brings you the revenue. And that's the model we

Jakob Wredstrøm

One of the things I saw from your profile, which I thought was interesting, is the time spent at one company, right? So it took you 22 years from founding the previous company to selling it. What is, is patience like a key ingredient in how you look at this?

Ben Mendoza

I don't say it like that.

Ben Mendoza

Yeah, I think... Being tenacious is a key ingredient. Obviously, being passionate about what you're doing, actually producing a good result for the end user is really important. And I've been very lucky. The secret of my success is surrounding myself with people much cleverer than me and being able to recognise where they can really apply themselves and do great work. And it's the same at BTEC. I don't write code anymore, I used to write code in the old days. These days, I mean, I could always ask Lovable to write some stuff, it's still, you still need to have good codes, good data scientists to understand what's being generated, because we use a hell of a lot of AI now. That's the secret. So I think in terms of longevity, if you believe in what you're doing, and there's a real need for it,

Jakob Wredstrøm

Mm.

Ben Mendoza

and you're not just sort of delusional that you're going to be successful. You will fail a few times. You just carry on failing until you don't. But it's a matter of having the stamina and the drive to get to a point where it's all working and it's starting to be a real business.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

How do you attract people around you or get to work with people who are smarter than you? Because this is a statement that's fairly known. I personally struggle with it. It's not because I don't know smart people, but getting them to work with me, that's a different thing. And obviously one of them is bucks. But how do you go about meeting that?

Ben Mendoza

You basically have to include them in the success. I'm very lucky that BT has some people here. And what we've tried to do, as well as me funding this, I've also made some of the stock available to the people that have helped me from the beginning. And when we become successful, everybody should enjoy that success. That's really important and they need to believe that. They need to see some evidence that's the case. It's not, I mean obviously we pay them well, that's their job and so on, but at the same time you've got to find, there's two qualities that I think are really important in people. One is obviously that they love what they do. The second is that they're willing to share their knowledge and experience with others in your company. Because what you can find you get is you get a really good coder or something's really good. And they feel that's their IP. That's what makes them worth the money and therefore they don't want to give that away to anybody else. But they then become a critical point of failure actually because if they are not available for whatever reason, nobody else knows how to do stuff. So it's really important that you get that balance right. So I think in terms of how you attract people to organisations to do that is... being very clear with them at the outset that this is how it works and that there's always going to be a challenge for them, tricky problems for them to solve. People really enjoy that and being recognised for it.

Jakob Wredstrøm

On your LinkedIn description it says, working for my team, not the other way around. I think it sort of piggybacks a bit what you say, but try to explain that to me, like what do mean by that?

Ben Mendoza

Yeah.

Ben Mendoza

Well, I mean, you know, in the best possible way, I need to, even though I don't write code, I need to contribute as much as I can to the running and the roadmap of beat chain. So, you know, my job is to... work for the team by basically taking away all the things they worry about. They're my worries, not their worries. They've got to worry about getting the product right, getting it out there, making sure there's no bugs and it's working as it should do. Sorting out things like payment systems in India, which we can talk about, mean, it was my problem. I had to go there and sort that out and we had to set up a company out there so that we could get the payment systems right. I mean, getting back to... without changing the subject, but getting back to some of the taking the friction out of the way this works is lessons that we've learned by trying to work in these emerging music markets like India and Africa and so on is that they're not like the West in that, yeah, can, they've all got access to the internet now and they can all see your products and services, but can they pay for them or can they be paid? Because If you're in Africa, you don't have a Western credit card. You have mobile money, it's a way of paying for things on your phone. If you're in India, again, you don't have many Western credit cards. You have UPI, which is a government system for payments. And the only way we could support that was for Beat Chain to go out there, establish Beat Chain India Limited, and set up the payment systems to enable that to happen. That's the work I do for the team, if you like. Just because my title is CEO doesn't mean I can sit in an ivory tower and watch everybody else do the work. I've got to be part of that. And that's what I meant by that statement.

Jakob Wredstrøm

It makes sense. Why are you doing this? You've paid your dues as a founder and you've harvested from that hard work and then you choose to put yourself in that position again. What's the reason for that?

Ben Mendoza

Yeah.

Ben Mendoza

Some of it's genetic, think. I love the challenge, I love the stress of trying to make it work, trying to fix the problems, trying to do that stuff. That's me personally, all right? Also, there's nothing better than seeing somebody be successful because you've helped them. We've had people appear on the radio in India and so on that would never normally have had any chance of doing that.

Jakob Wredstrøm

Okay.

Jakob Wredstrøm

Thank

Ben Mendoza

We don't really expect to discover necessarily the next Ed Sheeran or Adele or whatever, you know, and if we do that, it'd be fantastic. But even so, helping people pay the rent, helping people move forward, be able to live their life as musicians and run their careers is really gratifying and that's what we do.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

Hmm. It makes sense. But like, how do you, how do you take this business, which is, you know, operates at scale, 40,000 users, and still, you know, focus on those individual stories? Like, is that...

Ben Mendoza

Well, that's the beauty of this. That's really the genius of the arena model is that's the job of the partner. The partner's job is to look at these individuals and it's brilliant PR for them to say, we've discovered this new talent. It gives them every month they can award some prizes. Can write some blog posts they can put out, all sorts of content. That's much better coming from them than it is coming from us. We're the intel inside, if you like. They're the music industry. So being seen in the music industry is much more powerful for these artists than being seen by BeatChain. So that's how that works.

Jakob Wredstrøm

Mm. It's funny, I'm currently, I'm... I've begun to do keynotes at different music technology conferences and events. And I have this current keynote that I did last time in Poland just a few days ago. The topic is how not to do a music startup. And one of my key arguments for this, and I have a point which is to your benefit, but it might sound critical to begin with, is the depth of the B2C model. Like how easily it can kill a startup by competing about user acquisition. On digital marketing and that whole rat race for customers that don't have money at scale. But what you've basically done is, well, you've kept the B2C model, as an, well, again, my interpretation, as an enterprise way of doing it to some degree.

Ben Mendoza

Yeah, I would describe it as B2B2C. So our customer is actually another business.

Jakob Wredstrøm

But they're not paying you, right?

Ben Mendoza

They're not paying us, but they're making things available to us that we couldn't do on our own, solving the problems you were talking about for small companies. So this is our crafty way of doing it. And yet they're also generating revenue. I mean, without sounding like I'm just quoting loads of numbers, but you're probably aware that there are something like 76 million creators out there. This was from a media report that came out.

Jakob Wredstrøm

Yeah. Mm.

Jakob Wredstrøm

Yeah.

Ben Mendoza

a little while back, and Goldman Sachs talked about this too. Did you know that only 0.2 % of them are signed by any sort of labels? That's about 150 to 200,000 artists actually signed by all the majors, all their sub-labels, all the independent labels, managers, and so on. It's about that number, okay? So 99.8 % of the rest of the creators... are not being monetized by the music industry. Right? I mean, they are in terms of they're using distribution companies and things like that, but labels and so on aren't getting that. So what we've tried to do here is open up some of that to the label. So what we're saying to them is not only are we giving you this platform that you can use because you're putting your brand on it and you're making these things.

Jakob Wredstrøm

Yeah, thanks.

Ben Mendoza

And you're spending your money, you don't get me wrong, you're spending your money on advertising. You're attracting artists through this. But you're also earning. You're also earning from them because we're sharing the revenue that generates. Plus, you know, when you get to the 40, 50, 60, 100,000 artists in there, what a wonderful marketplace that becomes for everybody else. And, you know, even our competitors, we're happy to say, well,

Jakob Wredstrøm

Hmm.

Ben Mendoza

Not necessarily competitors, but associated companies, people that do things like AI mastering and these sorts of other artist services, know, come into our community. Our artists, those hundred thousand artists would love to see your products and have those available that way. So, you know, we really see this as a community building ecosystem, which serves to reward us, of course, we're a business after all, but also everybody wins. The artist gets the services they want and better services they could get from anywhere else in my opinion. The labels get to find new artists possibly, but also start generating income from everybody that's in the arena, regardless of whether they're in the top of the leaderboard or not. And we get bigger and bigger and open more arenas in more regions.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

A key part of what you're talking about is discoverability. Obviously, AI has made a lot of changes there. AI off the shelf does not address that pain point. What is it the way that you approach discoverability and new technology and of leveling the playing field for authentic talent that's trying to get through?

Ben Mendoza

Yeah, okay, so...

Ben Mendoza

Different, it's almost down to different genres, but different companies have different requirements or attributes that they look for in artists when they're looking to sign artists or being interested in them. Many things are common, like how many followers do they have, how many streams are they getting, this sort of thing. But if you're a metal label or whatever, you might well be interested in how many gigs are these people playing. How many tickets are they able to sell? Because they're obviously looking at monetizing them in the future and so on. So different attributes have different weights for different companies. So the way we use our tools is we gather data from 10, if not 50 different sources of information. So bands in town and all the social platforms and everything else. We're bringing all that in together and We're weighing it and looking at how artists are performing, not only for themselves, but against their peer groups and so on. And we effectively then apply this score to those artists, but it's weighted based on what's important to our customer, to the brand. So automatically the ones that are doing the right things and doing them well and consistently are bubbling to the top of the list, right? Which is...

Jakob Wredstrøm

Sense.

Ben Mendoza

A simple way of looking at it. And that means that, I mean, there's no obligation for our partners to do anything with any of them. It's just another convenient way of them looking at a list of people and saying, I'd like to listen to some of that music, that sounds really good. You know, we can see they've got the right attitude. They've done, you know, they've ticked a number of boxes we would be interested in. And it reduces the risk for us if we want to go ahead and make some sort of offer to

Jakob Wredstrøm

Hmm. You're describing a quite complex tech stack across the board. You know, you're touching upon a lot of things that are very difficult to develop and sustain. Like I'm not a technical founder, but I'm more than usually technical. I think in some cases I can function as a casual CTO. So I have some sort of like a sense of what it takes to build these kinds of things.

Ben Mendoza

Right.

Ben Mendoza

Thank

Jakob Wredstrøm

And there must be some sort of return on investment mindset for you. Like, again, you've sold a company before. Like, when you've put such an incredible investment into the tech stack team, traction, user acquisition partnerships, what is it that you want to achieve on sort of the return on investment side? You personally or sort of your employees, what are you looking for?

Ben Mendoza

Yeah, of course.

Ben Mendoza

Well, I mean...

Ben Mendoza

If we do this well, that'll take care of itself. Okay, so, you know, I'm not going to say, yeah, we've started this out because we wanted to be bought by UMG or somebody like that. If that happens, that happens. But what we're trying to do is to be the most successful infrastructure provider for independent artists. And we'll be, we're sort of doing it in a stealthy way in that it won't be the beat chain name necessarily that's well known. It'll be the bigger brands that are branding our platform that are in the spotlight. But we're the engine underneath. That's always been, well, for the last couple of years, that's been our strategy. And it seems to be working well. The other thing that we're doing is we're attacking those markets that aren't as well served so that we don't have as much direct competition when we do it.

Jakob Wredstrøm

Thank

Jakob Wredstrøm

Mm.

Ben Mendoza

It's difficult to do this in India. It's difficult to do it in Africa and so on and so forth. And we're at that. So that's where we've gone. And if you look again, look at those media reports of where the growth is, that's where the growth is. There's growth in New York and LA and London. Of course there is, but it's nowhere near on the scale, the growth of music and artists and audiences in these emerging music markets. So that's what we're doing.

Jakob Wredstrøm

And that comes back to sort of the patience discussions we had. You know, we have a good deal of people in Africa and we've also done, through my academic research and my partners, very extensive research about the African music tech industry and the whole sort of ecosystem there of payment. And, you know, in my sort of conclusions is any investment going into this space is not really going to harvest anything in the next five years at least. Like it's a long term investment if you want to go into that. But I guess that comes back to patience. I might be wrong here, but this is my own interpretation. Is that what you see as well? This needs to be long-term positioning.

Ben Mendoza

I mean, some markets will be slower than others in terms of return on investment, but it comes down to numbers. Again, if we get 100,000 artists signed up into their platform and 5 % of them or 3 % of them are active in any month, then we're all making a reasonable revenue from that. So it comes down to having population of artists in the platforms. So we're not always early days for us yet but we'll you

Jakob Wredstrøm

They need to address the concept of What do think about the concept of localization and local consumption of local music? Let's say we work a lot in Ethiopia. If you have an Ethiopian artist singing in Amharic, most likely the Germans are not going to listen to it, which means you also need to have an audience that has some sort of paying willingness in order to reach the numbers of consumption for them to also make a likelihood on the revenue associated with their music.

Ben Mendoza

Yeah, you're absolutely right. And that's why it's so important to work with a local partner, you know, who brands the platform, because they understand the local ecosystem. They understand what's going to work and what isn't going to work. I mean, one of the big challenges from a scalability point of view that we have needed to address, and this comes back to using AI as well, is quality control for distribution. And know, every track released onto streaming platforms has to undergo quality control to sort of ensure it's free from fraud and copyright infringement and contains the correct and high quality content. And this is a major hurdle to scaling as a distributor. You know, because streaming platforms don't accept bad data. They'll blacklist you if you... have recurring infringements and there's a whole range of things you need to check for in terms of original licensed audio, artist track name, validity, explicit content in lyrics, identification, validation, all sorts of things, you know, is the artwork correct, is the text on the artwork correct and so on. And how does that get done traditionally? Well, Traditionally, you have to listen to the music. If you're getting thousands of tracks distributed and they're all in different languages, here's an interesting stat for you for where we are. 27 % of the releases that we have in India don't have any English in them at all. 18 % is Hindi, 5 % is Bengali, 4 % is Punjabi, there's Marathi, Tamil, Telugu and so on. In Africa...

Ben Mendoza

12 % of Zulu or Sotho or Shona or Afrikaans, you know, and as we expand into other areas, there's going to be more and more of that. So how do you do all those checks? Well, and scalably, and the answer is you use AI to do it. And, you know, we have built out a really impressive QC AI system, which basically is more accurate than humans are. Humans tend to be, I would say, 80%, something like that, 80%, 70 to 80 % accuracy, whereas we're at least 88 % with the AI, and it does all the different languages, and as it learns, it's getting better and better. (Add the highlighted part after the guest says: “And thankfully, technology has come along for us to do that.” below) It only takes a few seconds to do it with AI, whereas it can take tens of minutes to do it for a human. AI doesn't get tired. There's a whole range of reasons. And if we're going to have hundreds of thousands, millions possibly, of artists in there who are distributing, how can we do that unless you've got the tools to do it?

Jakob Wredstrøm

Hmm. Do you think it would be possible for you to build this, well, you did build this five years ago, but let's say 10, 15 years ago where AI was not a tool you could use, do you think you could build this business?

Ben Mendoza

No, we couldn't have done this five, even five years ago. This is one of the really big headaches we had when we looked at, how are we ever going to make this work? How are we going to be able to survive as a company and get scalable enough to do it? And the only way we could see doing it is if technology came along to help us. And thankfully, technology has come along for us to do that. Because you have to check for whether there's copyright beats and all sorts of other things in the track. You have to know whether there's bits sped up or slowed down. There's a hundred different things you have to check for and humans can't do that stuff.

Jakob Wredstrøm

It's so interesting and I think when I traditionally think about AI or conversation I have and sort of AI advantage, you think about these cutting edge AI approaches but what we tend to forget is like these business models that are, I wouldn't call as you are traditional but the traditional models in general that you can actually. make it feasible to build a business in a space that wasn't feasible before just because, as you're describing, like we've talked for 50 minutes, and I think we've definitely covered at least 15 different points of serious technology development in order to get to a viable product. So it's so interesting that also affects it and... makes it viable for music to be more sustainable for the users and for the businesses because that's what I've been one of my biggest concern that I'm getting more hopeful about now and I even had a conversation with a business partner today when we were talking about our presence in music technology. Obviously I have a domain expertise here but my business partner who's not for music he asked me the question like you know but is there music to be made here? Like, you know, as a venture studio, like, can we make investments that make sense? Like, can we have clients we work with that can also pay us for our team? We have a big team. And, and we didn't really come to a conclusion, but one of things we covered was we do believe that AI is making things more affordable. We do believe that brings up new business opportunities we haven't seen before. And the future is still unknown on what technology will do to the industry. Because yes. It's a small industry. There's a lot of business models with clients that can't pay really that much. But if you can effectivize many different things, think that macroeconomic balance can be changed. Does that make sense?

Ben Mendoza

Yeah, does. You know, what you have to think about here is, you know, AI is so exciting, but it's also the cause of some problems, right? The fact that AI has made it so easy for so many people to release music now is one of the contributing factors to the fact that it's so difficult to get discovered. So that's the, if you like, the downside.

Jakob Wredstrøm

Hmm

Ben Mendoza

Of having fantastic AI in the music industry. But, you know, we have to write AI on the other side to cope with it, which is what we're doing. And, yeah, I think many of the points you make are very valid, and especially when in your keynote you're coming to next. I'm coming to the conclusion that really one of the best ways to survive for all these companies actually is to start collaborating with each other rather than trying to fight it out on their own because they're all scrabbling for the same space and you know there's never really a good outcome in that situation.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Mm-hmm. Well, one of my favorite episodes in this podcast we've done, I think probably a hundred episodes ago, was a Norwegian guy called Paul Portelund. And he talked about basically the most viable model in the music industry is the partnership integrations, like the infrastructure integrations, because it is competitive, it's expensive, and there's slim margins. If you want to build something that's viable, it's like really based on the partnership. I'll have one last question for you in this interview. And I apologize because it's a bit left of center, but it is very much related to business. But I really do want your comment on it. And obviously we've been covering a lot about AI music, Suno, Udiio, the last year, year and a half here in the podcast. And we've had many different angles, everything from professors to scientists to business people. And I had this episode, I believe four days ago. Where the, I believe the new Suno model just came out. And I was, I'm a big fan of TikTok and I was consuming and there's this sort of track that 50 Cent he shared. There's people have created these sort of 50 Cent tracks where they use these lyrics and you know, made his face and certain genre and they produced the music. And I was listening to this video that basically was a guy's video on top of the song and he was just, you know, listening to the music and I listened to the music was like a two minute piece. And it was the first time of all of my experience with AI-generated music, which I followed closely, where I actually thought, I like this. That was the first time I genuinely liked this music. And that was a scary feeling for me because I used to pursue music production and I stopped that seven years ago. And I just had this thought like, I'm so happy I didn't continue producing music because I would have been destroyed, depressed if I heard this song now if I did that. What is your thought about people's motivation to create and distribute music in the future when that is now becoming the reality?

Ben Mendoza

It's a very good question and I'm sure there's many divisions of opinion here. In my opinion AI is absolutely amazing and can be a really good way of helping people that have writer's block, if you like, come up with their next track. However, my feeling is that what should happen is that real musicians should play the music that AI has come up with. Rather than just play the AI music itself. So there's some performance aspect to it (second line) rather than it just being the output of a computer. I mean, like you, I listened to something, I think it's called Orion 7. Amazing. I mean, it's hard to tell that it's even AI. (This is the first part) And I thought, really like this, who's this? And somebody said, they said to me, well, that's Orion 7 and that's AI generated. Unbelievable. But I think that AI is a tool that should be used to augment the existing processes rather than replace the existing processes. I mean, you can seriously go to a concert where there's a computer on stage playing. You're not, it's the interaction with the artist and this human element that you can't replace. (Fourth line) There's nothing wrong with creating the music with AI, but then performing it. That's my...

Jakob Wredstrøm

Hmm. I think that's an interesting opinion and I think I... I agree with that. I do believe that there's validity also through all the talks I've had about the human experience, the human connection, especially now when AI is everywhere in content, video, you can't really discern things anymore. There is gonna be a pull and there already is to the human connection, things that you undeniably will believe this is human. And I think there's still gonna be a lot of place for music there, but it's an interesting world we're living in and...

Ben Mendoza

Well, that's it. Mean, obviously, they're still going to get over the fact that a lot of these tools were trained with music that was considered copyright. And so that's another very difficult conversation to have. And is there anything now that hasn't been, is there any chord sequence that hasn't been used before? You could get all this stuff.

Jakob Wredstrøm

It's another discussion.

Jakob Wredstrøm

Mm.

Ben Mendoza

But I do think that it's inescapable. AI is now part of the ecosystem. It's not a matter of can we do without it. We're always going to have it. It's going to get better and better. We've just got to find ways of letting it augment what we do rather than replace it.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Ben, it's been brilliant to have you the podcast. Thank you so much for sharing about your journey. And thank you for answering my questions that sometimes had something to do with business, sometimes didn't. I'm very excited to follow your journey. And I love the B2C model, especially in the format that you're doing it, because I do find, I have a hard time understanding how to build a B2C business in this space, but I think you've cleverly done so.

Ben Mendoza

Yes, we're covered.

Jakob Wredstrøm

So Ben, thank you so much. And

Ben Mendoza

Thank you too, Jacob. It's been a pleasure. Thanks.