Democratizing Music Ownership Through Smarter Finance and Technology

Jakob Wredstrøm

Hey guys and welcome back to the podcast. Today we have Lior from Duetti in the studio. Welcome.

Lior

Thank you, Jacob. Thank you for having me.

Jakob Wredstrøm

I've been looking forward to this podcast. Leora, you have had quite a significant career and also now as a founder making a lot of impact with your company, which is Duetti. Lior, for the people who don't know you, who are you and what do you do?

Lior

Sure, so thanks again for the invitation. I'm very excited to be here. So for me, I started my career 16 years ago in London. I joined finance right after college. I worked in Deutsche Bank for over five years in investment banking, which is really advising companies on management acquisitions and other capital transactions. That's how I stumbled on the music sector. Sadly, always say a lot of people in the industry have some really great stories on how they got into this industry. It's of course a fashion industry. And I love music as much as anyone. But in my particular case, I kind of stumbled on it. That was back in the day before streaming really took off. The music industry was in a really, really tough spot. Was kind of early 2010s. And I just got to work on a number of transactions in the music space with companies that were pretty challenged. And because of that work, I got connected to people in the industry. And ultimately, I kind of... got an inbound from Rock Nation, Jay Z's music company out of New York. And they were looking to assemble a team that is going to support the kind of relaunch of Tidal and the music streaming company that Jay together with other artists acquired in early 2015. And so that's really when I made the move from finance into music over 10 years ago. And I joined kind of the founding team of Tidal, really the

Lior

dealing with a lot of the operational day to day and kind of taking over big responsibilities. I was the COO there for over seven years. Ultimately, the company got acquired by Square and later called Block and Jack Dorsey in 2021, kind of the beginning of or during COVID. And then a year later I left and started the Duetti.

Jakob Wredstrøm

And Duetti is a really interesting company that sort of has sprung out from the last, you know, small decade of movements in catalog acquisition. And even though buying music as IP rights has been a thing for, you know, decades, there's really been a lot of movement in this space the last, you know, five, 10 years. Maybe you could describe a bit what Duetti is and how it sort of stands out in that whole catalog acquisition and purchasing space.

Lior

Yeah, absolutely. So you're exactly right. I think the concept of acquiring catalogs and acquiring IP has been around for a very long time. We can go back to the 90s, there were the famous Bowie bonds. So it's kind of a dead instrument backed by the David Bowie catalog. And then fast forward to the last seven years or so, really it's becoming more and more popular. But on the one side artists and songwriters to sell their catalogues and then on the other side financial investors like big name investors from Wall Street to come and acquire those catalogues, right? And so a lot of that activity has been going on and got to some type of a peak in the last few years, but it's really been concentrated in what we call the A-listers, right? It's been done in a very kind of traditional way, so to speak, right? And so you would have an estate or even an individual songwriter or an artist that are interested in selling. And then they would hire a set of attorneys and a set of financial advisors. And those would go around and try to shop around, as you say, and find a buyer. And try of course to get the highest bid possible for their catalogue. Because that process has been so labor intensive, right? And with all these different advisors in the picture, it's really been only available to folks that are at the very, very top end of the income distribution, right? It doesn't make sense to sell a catalog of $200,000 if you end up paying half of it as legal fees. And so that's really what we're trying to change, right? We set up the company three years ago and we're trying to think every day,

Lior

how do we make the whole process more simple and easier and more efficient? And so folks that are interested also the same way that a lot of these A-listers are doing and selling many parts of their catalogs can do that and can access that option in a pretty frictionless and efficient way.

Jakob Wredstrøm

This sprung out a lot of interesting models in the music industry or financial industries with the focus on purchasing IP that have very many different directions. Some are purely facilitator some, evaluate catalogs, some list them for sort of public ICO type things, and you've chosen to raise capital. Can you try to explain sort of what your strategy has been with like raising capital and what do with that money?

Lior

Yeah, no, absolutely. As you said, there's a lot of different models to do that, right? Like you can, are intermediaries, you can try to do almost like a crowdfunding type approach and there are definitely platforms that are trying to do that. You know, we thought from the very beginning that it makes more sense to provide a holistic solution. Meaning that we are in a conversation with an artist, a songwriter, a producer, or anyone else that has some income from music rights. And we can then provide them with a number, that number we can stand behind and actually execute on. I think the industry has a lot of misconceptions in terms of what financial value is, and people kind of run around and have different formulas.

Jakob Wredstrøm

Hmm.

Lior

But when we give out the number and when we kind of put out a proposal, we can stand behind it and close the transaction, right? And that's why we thought this is really important. And I talked earlier about the perspective of being efficient with time and with kind of how you do things. And so for us to go and put out there for like a public auction and trying to find the kind of

Jakob Wredstrøm

Yeah.

Lior

hundreds of buyers with fractions of the royalties. It works for some people and in some situations, but what we're trying to do is different and we're trying to provide an efficient and quick solution for people across kind of the industry.

Jakob Wredstrøm

Yeah. Let's try go back to when you started the company because you've raised half a billion USD, which is quite a significant sum of money. So there must have been some conviction behind this, but let's go to like, where did the ideas come from? Like, was that while you were a title? Is that all the way back at Deutsche Bank?

Lior

Yeah, so it's interesting, right? This is kind of been the two chapters in my career, Antide, the start of the worry, a financial chapter, and then a streaming and a music chapter. And I think this idea really combines both. Know, after the sale of Taro, I started, I joined a block and...

Jakob Wredstrøm

Mm.

Lior

I was basically committed to stay for one year and towards the end of the year, it became pretty clear that for me that it was time to kind of leave and move on and try to think about something else. And that was at a time where really the whole capital boom was at, I think, the very, very peak. It was supported by very low interest rates and just a lot of activity and fraud that happened in the market. And so as I was thinking about what's next, I saw all those headlines of all these really big artists and really big songwriters selling their catalogs and I immediately thought why wouldn't it be possible to try and do something very similar but with much more technology to make it more efficient into a broader set of creators. That was really the genesis of the idea. And then as soon as I left Tidal in the spring of 2022, I reached out to my co-founder, our COO, Chris Nolte. He was at Apple Music at the time. We walked the Tidal before that and convinced him to kind of join and start fundraising for this idea. And we closed our first financing in the summer of 2020.

Jakob Wredstrøm

So when you close your first financing, well, there's so many interesting things in what you said, and I'll dissect it here like one at a time, but I have a question. So when you raised financing, was that for a tech company or was it for a catalog acquisition? Like how did you frame that whole thing?

Lior

Really another great question, Jacob, because that's really, and to some extent still is one of the biggest questions we got, right? When we talk to investors, it's like, what is it? And is it a catalog assembly kind of company? Or are you kind of building technology? And are you building a brand? And the answer is both. We are thinking about it when we think about what we're building is really building two sides. We're building on the one side, we're assembling a fantastic collection of really valuable catalogues and we're very proud and honored that so many artists, many, many hundreds of artists and songwriters are choosing to partner with us and for us to effectively become the custodian of their kind of life for a very long time. And then on the other thing, the only way to really enable and do it is to heavily invest in technology, in go-to-market, in branding, in order to get to a point where the whole concept makes sense, right? And taking a step back, if you compare what we do to a more traditional catalog fund,

Jakob Wredstrøm

Hmm.

Lior

Right? A catalog found the way that traditional, what I mentioned a few minutes ago, the way they walk is they really would do maybe a couple of deals every month, right? They were looking to deploy a lot of cash.

Jakob Wredstrøm

Mm.

Lior

And they will make a management fee out of it. And then ultimately, right, they will need to sell because the money they get, usually has an expiration date. And so that's a very different dynamic. And so they're limited in terms of the size of the team and the type of activities they can do. In our case, it's very different because we're building a company and we raised money. The equity money to support the company, we have very, very long-term capital that allows us to take bigger bets, hire a much bigger team, and build much more infrastructure to support all of them.

Jakob Wredstrøm

So do you have separate entities or is it one legal entity raising the capital and on the tech and the catalog acquisition side?

Lior

It is one legal entity that's raising both the equity and the debt, but ultimately once we buy these catalogues and we grow them... we securitize them, right? And so by securitizing, we issue bonds in Wall Street by big Wall Street investors. Typically they represent insurance companies. And so at that point, the catalogs sit in a different entity that is fully controlled and owned by the main company, but there is some separation there.

Jakob Wredstrøm

That makes sense. Okay. It's really interesting model. Know, the traditional way you probably would do this is you had a tech element, you had a fund that you would raise capital in two different ways. What's, what's sort of been the reasoning behind collecting this in one, one entity? I think that's a really interesting question to sort of dissect.

Lior

Yeah, and we thought about it a lot when it started, right? Because it's not an obvious route to take, right? The other route, as we said, is that you do more of a traditional fund route and you raise some money. Not to say that it's easy, nothing is easy, but you try to raise the money, get management fees and try to build a team from that. And there's been multiple cases of companies that have done that in the music catalog space. In our case, I go back to what we're trying to do. The only way that we can do what we do is if we have a very strong tech and product infrastructure that supports every single piece of action that we take. The only way to do that is you need people and you need to invest in

Jakob Wredstrøm

Hmm.

Lior

infrastructure, which means that you need to buy lot of data and so on and so forth. And so, you know, the way to enable all of that, if you want to start and kind of build from the get-go is to really raise money at the company level. So, so you can start hiring.

Jakob Wredstrøm

Yeah. Yeah, you could never like sort of justify the management fees necessary in order to grow that directly on the management side. Okay, it makes sense.

Lior

Yeah, you would need to raise billions of dollars as a fund in order to have the same type of budgets that we have as a of a tech enabled platform that can grow. So it's really just a different calculation there.

Jakob Wredstrøm

So what is the return your investors are expecting? Like what are they investing into?

Lior

Yeah, so I'm assuming we're talking about the equity investors, right? Because it's very different than the debt investors. So look, the equity investors in the company, the early investors expect venture-style returns, right? Which are pretty high. And as we've been growing and we've raised additional rounds, the expectations may become more kind of growth style.

Jakob Wredstrøm

Yeah, equity investors, yeah. Hmm.

Lior

in terms of what you expect to expect the company to maybe double, triple, quadruple, but not a lot more than that when you're trying to kind of get comfortable with a new investment. And so to go back to our earlier point, I really do think that the investors, when they think about it, they really think about both aspects. They think about the value of the catalog. As well as the value of the company that we're right? Because another way to think about it is what's going to happen if tomorrow we need to start from scratch for whatever reason. We're not really starting from zero. We already built a ton of kind of almost like a first mover advantage in this particular segment of the market. And we can probably can start and...

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Hmm.

Lior

assemble a lot of good catalogs very quickly because of all the operational know-how and the infrastructure that we've built. And so to me, that's the proof, if you agree with that, is that there is a lot of value that sits at a top company and it's not really just the catalog that sits below.

Jakob Wredstrøm

So there's been a lot of sort of public announcements about the amounts that you guys have raised, which I think is really interesting. And I'm going to ask some questions about it, and feel free not to answer if it's too intricate. But maybe could you just say for me the debt side versus the equity side? Like what amount, what focus, and for what purpose, for example, do you have debt? Just for sort of the listeners to understand what that means practically for you guys.

Lior

Yep.

Lior

Yeah, so at a high level the debt is really used to help finance the processing of the panel, right? Buying catalogs, this year will end the year probably with hundreds of millions of dollars of value of catalog that we acquire. That's a lot of money and that money needs to come from somewhere. And so that money is primarily coming from the debt investors, right? And there's a lot of different announcements and different layers of that and different facilities of that. I don't know if we need to go into all the detail.

Jakob Wredstrøm

Thank

Jakob Wredstrøm

Okay.

Lior

Conceptually that's what the debt investors are looking for. And for the sake of just explaining a little bit further, the debt investors like this because they have, you they expect to get interest, right? And their money back after a few years. And because music world is, you know, you can predict them pretty well. There is every month you get cash flow in, you can basically pay the interest and you can predict what's going to happen, hopefully.

Jakob Wredstrøm

Mm.

Lior

A few years down the line. So that's really on that side. It's really only being used for the catalogs and to acquire more catalogs. For the equity side, as we said, there's dual use. One use is also to support the acquisition of the catalogs. We're not just doing it from that. We also need to use equity for that. And then secondly, is really to help finance the growth of the platform itself until we get to enough scale in terms of technology, marketing, and so on and so forth.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Yeah, we'll get back to you, if found a story in one second. Just want a few things, I just want to dissect more about it because I think it's so interesting to have a conversation about this because it's really so confusing about how you go about this and you really need to do deep research to really fully understand it. When you have securitized sort of this catalog, is it liquid? Like, can people buy from each other in that state?

Lior

So it depends on the type of securitization that you do. Our securitization, we did the first deal, is a pretty small deal in the overall scheme of things, and we'll have more announcements, hopefully, on more to come there. But the size is not big enough to be actively traded, right? And so typically the type of that we do, is smaller and it's not really liquid. You will have a couple of investors that will come in and they're happy to acquire bonds secured by the catalogues that we own and basically sit on it, so to speak, for a period of time and they're not looking to trade out of that position.

Jakob Wredstrøm

In.

Jakob Wredstrøm

Yeah, makes sense.

Lior

Once you get to much bigger deals, and they've been in the music market a few, right, if you think about Concord or recognition, which is the old hypnosis kind of company, they got to a level that's much bigger deals. And so those deals were done in a different format that does allow more trading. I do not know to what extent it's actually being traded. And I think the key point here is that music, it's still a pretty niche space and a lot of investors are actually looking to get into it, more so than people are looking to get out of it. And so don't think a lot of investors are happily sell their pieces of securitizations. But that bigger deals would come with a structure which lends itself more into kind of public trading.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Yeah, makes sense. You said something really interesting when you talked about sort of your one year, where you need to be present at the acquisition company. And that was that you at the end of it were thinking about like what to do. Were you not, you know, was this sort of like reading the manifestation of the end of that company or had it been brewing for long time, these thoughts?

Lior

This is all the way back when I was at Tidal and I was thinking about telling Abdul-Eli. Yeah, I mean, think, for me, was, know, Tidal took 110 % of my time when I was there, right? I was the COO, it was a global music streaming company. There was a lot going on. We then went through COVID, which created a set of challenges of its own. We then went through an acquisition process by...

Jakob Wredstrøm

Yeah.

Lior

Public company blog, right? So as you can imagine. There was a lot of work for many, many months to get it over the finish line. And so I frankly just have not had time to kind of stop and think, you know, what's next? What's the next chapter for me? Right. And so once we kind of got it all through and I kind of committed to stay for a year, it was then that I started to really think and experiment with different ideas and talk to a number of people that I kind of trusted and kind of use them as a sounding board to see whether some of my thoughts kind of make sense. Pretty quickly, I have to say, I honed in on this concept and kind of getting very, very excited about the opportunity.

Jakob Wredstrøm

Hmm. It's really interesting because you, big degree, have a very unconventional entrepreneurship, the CVE. Like I was looking through LinkedIn and like this is basically your fifth position, like in your career. Like you've stayed at your job for a while before you've moved to Next and moved to Next. So it's not that traditional entrepreneurship journey that I see. But is that also maybe your angle to entrepreneurship now? Like that sort of patience and rigor, rigorness in one thing or like, how do you think about this?

Lior

Yeah, I appreciate you saying it. Think, I take it as a compliment. I look, I think particularly for this type of business, I think it is, and I think there's the two sides, whether it's the music side or the finance side, I think they do lend themselves to folks that are...

Jakob Wredstrøm

Hmm.

Lior

Pretty deep and have some significant experience in both industries. It's very different maybe than...

Jakob Wredstrøm

Hmm.

Lior

Kind of the Silicon Valley kind of 20 something or all that's trying to create kind of the next big blockbuster platform, which is great. And there's a lot of, course, very big success stories in that kind of lane. But when you're really trying to do something like this, like which is very high finance and very, very deep into the music industry, you need, in my opinion, to have some very specific expertise. I don't know if it's absolutely required. I think that other people, I'm sure, can hack it. But you can just do it quicker. Sometimes speed is really critical and avoid mistakes. For us, even when we started, the first year of the company, we were doing deals well into the six figures, even low seven figures, a couple of deals. Make a couple of mistakes. That they're pretty detrimental for the business, right? And so you really need to have that. And then on the other side, the ability to raise money and to convince investors that are more traditional, that, know, banks and funds and bond investors and equity investors and all those different kind of stakeholders, you know, they just by nature, more traditional and more comfortable, I think, with someone that have kind of a longer track record in the industry.

Jakob Wredstrøm

Hmm. It's really interesting, sort of, your approach to technology and, sort of, I... I'm definitely not an expert in the catalog space, but I like to nerd out sometimes. And I remember like five years ago, so I was, I was reading the, both the white paper of hypnosis, now recognition, and then also sort of the, what was it called? The music, I forgot what their management firm was called, but something with music. And I was looking at the fees payouts and then the actual return investments for investors. And I was quite surprised to see that the actual fees of the management of the catalog was higher than the actual sort of returns on the actual investment. That for me like found very strange and one of the things is not what he said but I'm reading into it is also the there could probably be a different layer of efficiency when it comes to sort of managing such transactions and sort of the return that the investors want to see. What was the reasoning for the technology approach to be doing now? What we seeing in the market that you thought was inefficient or not good enough?

Lior

Yes, would say for us, overall, would say the music industry suffers from a disease of being well over-reliarized, right? If there's any sense, versus what's really needed, right? When we do a deal for $50,000, $100,000, let alone $10,000, right? There really should not be a reason.

Jakob Wredstrøm

Hmm.

Lior

To have, to kind of reinvent the wheel on every deal, right? From a legal standpoint, right? And I think that, you know, what every deal has some nuances and most of them can be, can be, can have their own kind of quirks. Generally speaking, you can try and standardize. And it also goes to our business model, right? We are unlike a record label and unlike an advanced company, right? When we do a deal with an artist or songwriter,

Jakob Wredstrøm

Hmm.

Lior

Or producer, we're not looking to lock them into a very long-term arrangement. We're not looking for future commitments or any of that. We're really out looking for a very simple buy and sell, right? And we can negotiate the price. We can negotiate which tracks the deal is relevant for.

Jakob Wredstrøm

Mm.

Lior

But once we do that, I don't think that there is a need to try and kind of recreate a very complicated agreement, right? And so that's one way that we're trying to really bring change to the industry. And to say that not every deal, you know, both parties needs to spend, you know, 10 to thousands of dollars on lawyers to customize it. The other point I wanna make, which you mentioned more specifically about technology, is it goes all the way from the very beginning, right? How do we think about each and every track and each and every track catalog that we're looking at, right? Ultimately, in this day and age, especially on the master side, to a lesser extent, but still true on the publishing side, the activity is really driven to a very large extent by... the streaming kind of numbers, right? And so if you are able to create a consistent framework of looking at the numbers, projecting the numbers, and making sure that you're not making any obvious mistakes, you can get to a point where you can come up with kind of pricing and price proposals pretty efficiently and quickly in kind of into the chain. And the final point is really all about, as you said, once we acquire, once we start managing catalogs, how do we think about that and how do we have the right monitoring tools to make sure that every catalog is being taken care of, to make sure that we're, you know, if there are opportunities, we're leading into them and so on and so forth.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

Hmm. Not only when you build a technology, you build it to be acquired or vastly profitable. And you yourself mentioned, well, you used the words sort of early movers or the early mover advantage. What's your thought about your technology? Is that primarily of a competitive advantage functionality? Is it to create the best return on investment? What's the purpose of the technology from more like a return on investment perspective or your positioning in the market?

Lior

Yeah, so the technology that we build and I do want to say I really love those questions because we usually are being perceived as another financial buyers of catalogs and I think there is not a lot of appreciation to everything that goes behind the scenes. Mean, we're doing every month. Dozens and dozens of deals, right? Whenever I say some of the numbers to anyone in the music industry, they think they misheard me, right? Because this level of scale is something which is truly unique and I'm not familiar with any music company that is able to do so many different deals every single month. And so to go back to your question. I would say the technology that we're building is really internal, right? You cannot really see it from the outside. And it's really being used by our team members to just make everything as frictionless as possible and as efficient as possible so we can do more and offer more and be as honest as we can with anyone we're talking to, right? Another side effect of that technology and why it's so important. Is that we can, know, if you are the artist or the songwriter and you show us part of your catalog that you're interested to sell, you will get the price from us typically in a few days.

Jakob Wredstrøm

Hmm.

Lior

And we will stand behind that price and it's not going to be a made up price and we're not going to retrade you. And in fact, I cannot even think of one case that we kind of actively retraded someone, meaning that we told them the price, we signed a letter of intent. And then two weeks later, we were like, we found some problem and we need to take the price down. That just doesn't happen. It could happen because the other party decided to change the number of songs they sell, so that can happen. But on our side, we take our world very, very seriously. And so that's the type of things that this technology is enabling. And the technology is not just the data, it's also how we analyze the data and what we learn. Because every deal that we do, we learn something new. Right. And that really, I would say the advantage that we have, over anyone else who would try to, who would try to kind of do something similar. Like we've learned so much over the last three years that we know what to focus on. We know how, you know, we know what mistakes to avoid and so on and so forth.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

Do you see a future where you would productize that and sort of use it for other, you know, private actors interests or do you see this is something that will keep and improve internally only?

Lior

Yeah, I would say not anytime soon. We feel there is a lot to build and a lot to justify to keep it in house. And we do think, as I said, it's part of the kind of secret sources that we have in terms of being so aggressive yet accurate and measured in how we approach the market. But look, down the line, a lot of things can happen. And I think it's something we can consider, but not anytime soon.

Jakob Wredstrøm

So you start this company and sort of the entrepreneurial journey is a pretty rough one for anyone. Like no matter if you come from nothing and come from absolutely something, it's always going to be rough. Like were you aware of the price you were paying going into this? Like personally as a founder, like do you felt like you were equipped to know what it took?

Lior

Yeah, I would say to some extent yes. The reason is that a title while I was no founder, I was the COO. Taya was a company that grew tremendously at the time I was there. And the level of responsibility that I had was pretty high. It was not a CEO responsibility and it was not a founder responsibility. But the level of involvement I had and kind of the different challenges I've dealt with, I think, set me to a pretty high stress and high pressure environment. And with that being said, I do have to say that now going through this and we're over three years in, definitely the first couple of years have been, do take it to a different level in terms of both the stress and the pressure sometimes, but also on the other side, the success, right? Because for me, even to sit here, I still remember very well. And how the whole concept was really an idea in my head, or maybe on a few text messages. And we're now at a point where we have, you know, dozens of people and, you know, hundreds of artists and songwriters that have chosen to, you know, do a deal with us. And so it is very rewarding at times to see, but definitely, even though I had a lot of, think, kind of good training in Tidal in that respect. It did bring me to a whole new level of pressure sometimes as a founder.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

But what is the internal motivation that keeps you driven towards that goal? Is it the end goal, is it the process, like what is keeping you going?

Lior

Well, that's maybe a good psychological question that at some point, I don't know if I have a full answer to, but at some point I maybe should look for. Look, I would say for me, one of the key motivations I have in doing this is, know, when coming from Tidal, right? That was not really the first time I saw the music industry from the inside. And you really know, was there for seven years and Tidal was of course a very... kind of a challenger kind of company, right? It was significantly below the scale of kind of the giants of the industry. And you find yourself time and time again, wondering why is this industry set up like that? And why is the industry operating like that? And kind of you feel sometimes that so many different things kind of are stacked against you. You meaning kind of a small player in the space that's trying to kind of make things kind of better. And so, you know, for me, that's one of my key motivations, right? It's kind of to look at the whole system and to say, you know, it's really, that's not really the only way that you can do things. And there are different perspectives and different motions that you can take to be successful in this industry. That's really for me one of the main motivators as I think about this company.

Jakob Wredstrøm

Does that come from like a challenger mindset or you want to fix something? I understand what you're saying and I definitely recognize it myself. What is behind that motivation of, this could work better and therefore I'm gonna make an effort of trying to make it better? What is it that lies there?

Lior

I think so. Think for whatever reason there is a burning kind of passion to change things and to question things. Right? And one of the things that are

Jakob Wredstrøm

Hmm.

Lior

always have seemed kind of strange for me, right? Is that certain people do certain things because that's just like how things are done, right? And I gave an example earlier and I'll repeat it, right? Like there's an artist that wants to sell the catalog for let's say around $300,000. Why is it the case that they need to be in a situation where, you know 30 percent of the deal would go as legal fees. It just doesn't make any sense, right? This could be a pretty simple, straightforward transaction. And so there's a lot of different points like that make me think this just needs to change. It does not make much sense to continue to go with the way it goes. And, you know, that makes sense if that answers your question.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

It makes sense. Know, the music industry to many degrees without being demeaning is quite immature in a lot of the ways that it operates for many different reasons and explanations, both politics and technology disruption and whatnot, consumer sort of perception of value and all that kind of stuff. But it is in many ways immature compared to other industries that adapt better, faster, stronger. Was that sort of like a frustration that grew from working in the music industry? How would you describe that sort of, when you looked at that problem?

Lior

It is definitely creates a lot of frustration, but I do want to say alongside it, there needs to be, I think, a certain level of maturity that maybe I did not have 10 years ago, but I have now, and a certain level of appreciation of why things operate the way they are, right? Like you can try to change things, but if you don't have a very deep appreciation into the way, the reasons why the system is set up in the way that it is. Then I think you're going to run into a wall very quickly, right? It's very, I hear and I'm talking to a lot of different startups and other folks that are around this space all day long. And I hear pretty frequently folks that come from outside the industry.

Jakob Wredstrøm

Mm.

Lior

That spend very little or no time in the industry and we will come and say, well, the whole thing doesn't make any sense. And, you know, the whole metadata, you know, all these different kind of big problems that bother all of us very, very deeply. And yes, if you can start from scratch and draw kind of a blank page and say, this is how it should be, maybe that makes sense. But in my opinion, it's not very productive to kind of come from outside and kind of make these observations, you need to really ask yourself why is it like that? Why is it operating like that? Who are the different stakeholders? What are the different weaknesses that are built into some of those relationships that create that situation? And then how do you get out of it? And to get out of it, at least my approach is, you don't start from a blank, a blank sheet of paper. You need to do it in more incremental way as things change.

Jakob Wredstrøm

Hmm.

Jakob Wredstrøm

So I run a venture studio and my business partner that I run it with, he does not come from music and he spent the last two and a half years since he first got employed and then sort of turned into a partner to sort of question my activities in music because we're obviously making a lot more money outside of music and see a lot more success but I'm still a bit focused on music technology especially and... It's really interesting to talk with him about all of these things and he also gains his own perspectives and he was just returned from BIME, which is a music industry conference based out of Spain and he was a part of the startup program and we talked about how it went and he said one thing which is kind of banal and I've heard it many times before but he said it quite beautifully. He said, I'm talking with these startups, I'm trying to explain them. The way to do music is not revolution, it's evolution. And that was just so concisely said, and I really loved it when it came from his mouth because he's from an outsider, but that's one of the things that he's really seen. It's just like, don't come here to try to disrupt. It's, there is reasons why things work the way they do. Maybe they don't strike you as logical, but if you understood the full scope of history in this industry and what's gone through, you would know that there is a reason. It might not be the best reason, but there is a reason and you can't just change that. I think that's really important.

Lior

Yeah, that's absolutely right and that's what I was trying to say, but you put it in a more eloquent way, great. But no, I look at it in another piece which is interesting is, you need to understand this industry and maybe that's another side of disruption. You cannot come in and be against everyone and start fights with everyone. And the reason is very simple. If you're involved in a master, for example, the same master recording would have three different songwriters and each one of them would have their own publisher and their own PRO. And so, you start picking fights with people on one side and then suddenly you meet them on the other side. Or the whole way that price stacking and... data clearing and lot of different processes kind of work on almost like a collective basis, whether it's on a country level or even on global level. And so you have to understand the stakeholders around you. And yes, you can compete. A of people obviously compete with each other all day long, but you also have to maintain those relationships and be respectful. Zero sign, it, you know, any change you're trying to affect has to take into account all of that and be pretty gradual.

Jakob Wredstrøm

Hmm. Yeah, no, I think it's super important. And one of the things that, you know, there's a lot of founders listening to this podcast. And when I look at the music industry through sort of the knowledge I have academically, practically from the music industry, and I look at cases, what I always look for is... the typical work from a new angle. I think Duetti is a perfect example, right? You're doing some pretty typical work, even though it's quite capital intensive and is not for new beginners, you're doing typical work, but from a new angle. And I think that's what really works in the music industry. Like, for example, I see a lot of decks right now, we're running the accelerator at Schloss music, which is the side event. And I look through all the applications and there was so many of the same applications, tackling the same problem in the same ways. I'm just like, guys, that's not how you approach this. Find that small niche angle that just makes a tiny bit of a difference. And that's how you pursue that. And that's how you can do like move that incremental step, as you said. That tends to be what works here, which is fine.

Lior

Yeah, I agree. I'm in the same boat. See, you know, I can tell you, we can go through, you know, probably 10 different ideas that I've seen dozens, if not more, pitch decks over last 10 years of people that are trying to solve these issues. Anything from getting the artist closer to the fans and to how do we solve sync. To the problem of metadata in publishing, right? And I can kind of come up with other points pretty quickly. And all of these problems are very, very big problems in the industry. And every time that you do the research on the desktop level, you can probably come with. Pretty clear conclusion that needs to change and to come up with some great ideas, right? I mean, we've been through a wave, which I think is kind of receding now, kind of over covered off, kind of blockchain solutions to register copyright ownership and things like that, right? So there are a lot of really long standing problems in the industry. But you whenever I get, a founder or a founding team kind of come to me and try to talk to me about one of these things, you know, I give them my honest opinion, which is, you know, I think it's a very big problem, but I think the problem is there for a reason. I can share why I think it's there. And why I think it's just really difficult to change and maybe someone can, but, you need to think about the pretty incrementalist and a pretty smart way to address it.

Jakob Wredstrøm

Mm.

Jakob Wredstrøm

You came into this business from investment banking and from finance. If you were to sort of have an opportunity to start over and sort of choose as a young associate to what direction, what to go to, and you know what you know now, would you go into music and this path that you've been on?

Lior

Wow. The short answer would be yes. And the reason is that I think I got very lucky in the sense that I got into this space right when it was the very trough, right, of kind of the success of the industry. And I rode a wave. Going through a music streaming company that started very small and grew and ultimately got sold and now in this what we're doing at Duedi, right? It's all on the back of the streaming kind of wave and hopefully a lot more to come in terms of where... consumption and where the industry is going to go to next. And so I think it's a pretty rare opportunity. And it's not by design. It's not because I had some great foresight to say that it's a temporary issue. But I just got in early, got to understand this industry early. And the second and final point I would make is that I also think that while sometimes it's very difficult. I also think I've benefited from the fact that it is a pretty small industry and it's a pretty unique niche in the overall steam of things, right? If you ask any finance person, music would be kind of a drop in the ocean in terms of the type of companies and industries that they think about. And so... you but that does allow you to get specialized and to, if you stay long enough to develop a pretty unique set of understandings, relationships and so on and so forth that can really help your career.

Jakob Wredstrøm

Hmm. And is that the tricky question, but like the sense of being a specialist or you didn't say this, but I'm going to say it like a big fish in a small pond. Like what is the feeling that you sit again with? Is that sort of a sense of like pride or accomplishment or like what is that feeling it leaves you with to be in that position?

Lior

Yeah, I think it's very rewarding, right? Because I think you operate at a smaller pool, right, overall. And so, even for Duetti, right? I would say right now, by some measures, even at the end of this year, we would be probably at top, definitely at top 20, potentially even at top 15 or even top 10. Catalog buyers in the world, right? Measured by some metrics, right? And this company started just over three years ago. And so if you are able to execute and if you have the right relationships and if you're probably lucky when you need to be, you can really change things pretty quickly.

Jakob Wredstrøm

Hmm. Lio, it's been a pleasure talking with you and thank you for sort of dissecting your thoughts on this and how you go about it. I think it's just so interesting to see that things are happening at this pace. I was so really excited when this whole wave started seven years ago. And that's sort of also my sort of entry into music technology startups was through that wave and sort of through studying that field. And there's so much more to be had here. And, you know, right now you're working with the layer below the A artists, but there's also multiple other layers, I think, over time to make the value of music. You know, more well received by financial institutions, by investors, or even the public is really important because everyone does care about music, but at the end of the day, it is undervalued in so many different aspects. And the work that you guys are doing and other actors are doing, I think really helps to the value of music ultimately, which I think will make it more viable to actually have a livelihood in this space, if that makes sense.

Lior

Yeah, no thank you for saying it and I am, as always, as you look into the future, there's a lot of different trends that one thinks about, but overall, I'm getting a lot of questions all the time, as I'm sure you are as well, about AI and the impact, but kind of a step back, like I am a big believer in, you know, in a world where things are going to get more crowded and there's going to be even a lot more noise than what we're used to right now, you know, to be able to have partnerships like we do with many, many hundreds of human creators that have something to say and strong standing within their own communities all over the world is a really interesting position to be at and we take this as a very big responsibility. It's on us to not only pay upfront, which is obviously the main thing that we do, but we're also building a ton of different functions and capabilities to make sure that any of those catalogs that we're involved with is going to stay and remain very relevant and get exposed to a lot more new ones. In the years to come.

Jakob Wredstrøm

Love it. Thank you, Lior. Thank you so much for taking your time.

Lior

Thank you, Jacob.

Jakob Wredstrøm

Great, just stopping the recording.