At the Crossroads of Arts and Business

Jakob Wredstrøm

Today on Sound Connections we will have Stein Peder, the chairman of Music Norway. He's done a lot of things, much more than being the chairman of Music Norway. He is an expert in the intersection between arts and business. He's an extremely interesting man and I hope you enjoy this conversation.

Jakob Wredstrøm

Welcome Stein to Sound Connections. To Zandark, thank you. This is gonna be the third episode. This is the third episode of Sound Connections. I'm honored, I'm honored. Yes, and you were actually a very natural choice to pick for this podcast because we sort of have, have like a, from my side, a weird history. I met you around four years ago in Denmark and I was moving to Stavanger and you're apparently the king of like, king of music in Norway in a way. And- Your words. Yeah. Thank you. You heard me like try to speak Norwegian and like, what's your thing? And I'm like, I'm going to Stavanger. And you're like, I'm from Stavanger. So that's sort of where our story began. And... Yeah, I was really happy actually. So it was like, just we need people like you moving to Stavanger, sort of bring the world to Stavanger. Yeah. And I've been here for many, many years. Yeah. And try to sort of establish a music industry for many, many years. And it's... That's the fourth largest city in Norway. It's always, you know, we have the league to Oslo, to Belgium, even to Trondheim. Yeah. When it comes to talent and stuff. So I've been in that space for many, many years. So for you moving here, I was like, okay, good. Let's see, come to Elephant that I co-funded like 10 years ago. Which is a workspace, creative workspace. Yeah. So it's like, this is the place for you to be. Yeah. And it's been good. Your story is, and the reason why I called you King of Stavanger, like King of Norway in music, is that you have done a lot of stuff and we'll just venture into that journey. Probably your most, let's call it like your most publicly visible role right now is chairman of Music Norway, which is Norwegian's export organization for music. Yeah, it's a music export office. So the Norwegian government's sort of public mean to actually work within the sort of export space. I'm the chair of the board. Yeah, and you ended that position because of your quite long journey and quite interesting dynamic journey music. So you said, okay, you're from Stavanger. Yep. But then why are you here? What's the journey? What's the path that you're here? I mean, I did like, you know, back in the 80s, I was just like, I really want to have, I've been playing the violin for six years, so now to have happy marriage. I sucked basically. It was like, there was no tension between the violin and me. And then by pure luck, I started to play the guitar.

Jakob Wredstrøm

And I was just, the only thing I just wanted was, you know, to be Richie Blackmore. So it was like, you know, huge influence. I listened to it. This is like the basement, my buddies, you know, his older brother, blah, blah. You know that story. So I spent many years just like, you know, shredding, trying to shred front of the mirror. So it's like no songwriting whatsoever, but also like being in a little community, working with people and be interested in playing in bands and then everything from heavy metal. and guitar music to eventually free jazz music, pop music, all different kinds of things without sort of being I want to live from this. But throughout the years into the 90s, you know, we did a lot of, a lot of touring with your band. Yeah. Like, you know, my five different bands, but my first band was Metal Suckers. So it's like, okay, kind of a parody act taking on like sort of. hair metal, late 80s. But it was nice. We played all the local venues. And then I got asked to join a band that with people I didn't know from Stavanger. And it seemed like one of the guys has been studying abroad and sort of being part of a sort of the boy band duo. Okay. Kind of some international experience. They asked, you know, if I want to join the band. And it was like, okay, this is pop music. Was like, okay, I'll give it a try. And that became the band that sort of gave me all the opportunities later to get away people. To get away people, yeah. That was the first time when kind of music became a business to me because we set up a shareholder company or raised some funds because I was, took a teacher education back in the nineties because it's okay to have student loan and buy stuff. Guitarists and traveling and stuff. So basically we went to the bank and got a loan, recorded an album here with the ambition to actually get signed to a major and especially a major in the US. And that happened. It actually happened. So it was like good songs, you know, we were a good spot, like creative. And then we produced ourselves. So Columbia Records came to see us play in 1997 here. We have more major labels. They came to Norway? They came to Stavanger. Oh, okay. Which was extremely unheard of. Yeah.

Jakob Wredstrøm

Back in those days, you know, they sent cassettes to the majors in Oslo and they just said, nah, nah. So we managed through connections, good music and luck to actually have the A&R come to the Manganzios play. And that's a really interesting subject because that's also sort of what we're talking about today. And that is intersection between arts, music and business. And that's been the journey you've been on. And I think you're still on, like, it's like you're very close to art. You're very close to the art form and the culture, but come from a... from both sides, I guess. Yeah, I managed to see, and that sort of comes from these experiences, and especially the getaway experience was basically, I didn't know nothing about the international music industry or the national music industry from here. So we had this goal, we managed to do that with our own risk capital. Yeah. You know, we actually, we took the risk, loaned the money in the bank, spent it on. An album, Soulie to Columbia Records got signed directly out of New York, late 90s from Norway. Probably the only handful of artists ever who got a major deal. Yeah. Not like in a, you know, a development deal, but actually a major big sum deal. And also we signed with EMI Publishing. I knew nothing about publishing. And then January 1998, we moved to New York and I started to pay my taxes in the U.S. So we became a local New York band. and spent the next four years touring 48 states, 250 days on the road, really trying hard to succeed. And also because we produced ourselves, we were not kids anymore. I had a teacher education already. So it's like, that was interesting to me. So that sort of brought us, they gave us a lot of creative freedom, but I didn't know nothing about the sort of the money and within the music industry, but we sort of experienced. both the hardship of actually being on the road, which is like crazy. It's, you know, and we just started a tour and they just added dates at the end. It wasn't like we're gonna go on tour for two weeks. And in Norway, you can do a tour for two weeks. Max, like in spring and maybe you do the same in the fall. And it's like, you know, it's team building seminar for a bunch of middle-aged, no, middle-aged, but the middle class self-realization project. I mean, it's...

Jakob Wredstrøm

and it's nice and you can do that and be in your bubble. We were actually out on the road for months, paying every single day for a month straight. So it's like, you know, carrying, doing everything, all the cliches, but I was like 27 at that time. So it kind of took me. So I kind of said, okay, so this is actually happening outside of Norway. So when Napster happened in 99, the consequences eventually sort of bled into our project. 2001 was like, okay, it's actually time. leave again because we lost our marketing people in New York. I mean, we smoothed them so much with aqua vets and koftor and sweaters and like all these things. But so when I came back to Stavanger early 2000, it was like it's a crash landing. What's going on here? What's happening? Because that, you know, Norway is very different from the American mentality. But also, I think you're quite progressive on your own rights, just with the way you structured the business and the way you were trying to get signed to the label. Came from looking back, I always like, I want to do this. Yeah. It would be nice to have something like this and nobody else is doing it. So I'll do it or we'll do it together as a band, starting a festival, doing creative stuff. I mean, we've always been sort of, okay, nobody else is doing, I want this in my life. I'll do it. We'll do it. We'll find means, money, whatever. and whatnot and then just do it. And that's like my story since I was a kid, the eighties, nineties, and then coming back was like, okay, there's not much happening here. New music was happening. So I can't- And new music is what? It used to be a club-based electronic music festival. Yeah. So started in 1999. So in 2002, I think I joined, so it was me and Martin Reed do like new music for years and years. Just like, okay, we wanted to do like a super international festival with a core audience of 30 people maybe in the city. So we had to say one, get the artists to come here and not paying the premium fees. So we kind of bypassed all the booking agency and went directly and said like, this is our narrative. This is the curation and or the curatorial sort of.

Jakob Wredstrøm

Statement and this is why you need to be here, because your music and your artistry makes sense within this curated festival. Yeah. It's interesting because hearing you talk, it's very clear that you're a creator. Like that's sort of what you do. You create culture, you create music. And I wanna talk a bit about the business side, because obviously you've had a lot of big positions in music in Norway and also have a lot of recognition internationally for your work and your thoughts. So because you're such a creator, business of course is a big thing about making it realized. So what's your thought about that? The business in making creation possible. You get comment from, I mean, we have the support system here. So in the 90s, I hated commercial music, whatever that is. I hated pop music, commercial pop music, because I was born and raised as playing weird music. So instead of embracing good pop music and bring it into whatever I did back in those days, I hated this stuff. It's like, it's not real, it's just shitty, it's money mixing into. So it took me a long time to actually understand sort of art happens in a happy space that's completely to me disconnected from markets. And when I teach, I do a lot of teaching now and I teach at the art school, visual art school is the same thing. Art happens in this space. But what happens when you take, you know, when art becomes your lease, you know. Or art needs to become money at some point, if that's what you do as a professional. So when it sort of crosses that line, just dawn on me, I actually need to understand the different marketplaces. One of the biggest marketplace for art in Norway is actually the art council. It's kind of like no string attached, the return on investment from the Norwegian taxpayers is basically autistic, which is also return on investment. So to me, I'm sort of been going with these, you know, really thinking about these things for a long time. There's to me, it's not like I don't want to be part of support structure because I'm not weak. Art is not weak. It's got, you know. I think that's an interesting question what you just said. And I'm asking, do you think there is a line between art and business? Like, do you really do you think that they are separated and you need to intersect between those two at one point? I mean, art is a product, whatever the moment becomes money.

Jakob Wredstrøm

That's the product. So you can't say no to that. It's actually, it's like, as long as whatever you do, you know, minimalistic electronic noise music, eventually when somebody put money or buy something, a cassette or CD, a tape or stream something, or they buy merch, whatever, you're part of a marketplace, it becomes money. So they're always been interconnected and tied together. Thing is, it's the way you think about these things and the way you approach and work with these things. And I think artists, you know, for a long time where you couldn't say art and money in the same sentence because you kind of devaluated arts. To me, it's, that's just stupid because arts needs to happen and be created as whatever good or interesting you want it to be as an artist. But the moment you bring it to a marketplace, you need to understand the marketplace. You need to understand the money, you need to understand the business modeling. So when I teach a class at NYU and the Clive Davis Institute is like my first class is basically the history of recorded music, just to show how technology sort of influenced both the business modeling, the distribution and how we actually built the modern music industry around the recorded music. And it's like, it's so interesting, both for me to do this every time I do it, but also for the students to actually see. A lot of the stuff that happens now, there's parallels to a lot of stuff that happened before. And then I spent a lot of time talking about what is art and what does art and music mean to people. Because if you don't understand that, it's impossible to monetize it in a good way. And that's where the missteps happens, where it becomes blurry. To me, it's super easy. Art is art, money is money. At some point, the there's an intersection and you have to understand what happens. If you can do that, you'll be confident. Because I And true to yourself, that makes any sense. I agree to that statement. I personally, myself, I have maybe a variation of that statement. It's I believe that art is value. And therefore inherently art is already money. Well, it should already be money or the understanding of the value should already be money. And I think as an entrepreneur, because I'm talking from an entrepreneur's perspective.

Jakob Wredstrøm

I think a lot of the lack of opportunity in the music industry and with the artistry in general is people not thinking about money when they create. Not specifically about money, but let's say value. And I think I think value is more like, you know, because it's, and it's different values. I mean, this is all about like, you know, art is about who you are, it's identity, belonging, it's all these things. And it's like, again, to me, there's a lot of return on investments. So instead of being supported, I think of like money is not money, it's different money comes with different expectation for return on investment. Again, said the art councils return on investment that basically, the first one is artistic return on investments. Art needs to be good for art itself. So it's like, you know, you don't use the Norwegian taxpayers to invest via the art council to get money back or taxes or whatever. It's like, it's art itself. Then if you're a you know, a venture capitalist, then you're gonna go into this space. I mean, most likely you want return an investment financially. Yeah. That's different. And then sometimes it's competence, it's structure, it's instrumental. Sometimes you just wanna give kids, you know, a rehearsal space so they don't spend all weekends drinking and smashing things. It's like, so different money comes with different expectations. And if you think of it as an investor. You have me as an investor investing in you. I have to make clear there's a respect and you got something I need. I've got something you need, which is most likely money. And then we need to have that conversation and there's a risk elements in that. So if I put money on you because I want artistic return on investments, we need to have that conversation. If I'm gonna invest in your company and I want like a quick, you know, I want money back, you know. We have that conversation, it's different conversations, but I think it becomes really complicated when you sort of mix, you just say money and arts and then it's just complicated. And as long as it's project-based, application-based support funding, it's like, you're arts, you're an artist, you're weak. I'm strong because I have money. To me it's like, no, art is strong in itself because it gives back to the community, to investors.

Jakob Wredstrøm

You know, public investors, whatever you call them. It's like, there's something there. And it's like that conversation we need to have. Because I think about it quite differently, like when in our businesses. And because we don't talk about art at all. But we recognize that as the base communication form and the product we're working with. But when I'm talking with investors, I haven't talked, I haven't said art once. Because what I want to change in the dialogue about music industry is, is stop looking at it art because everyone's got that nail down. Everyone understand the value of music from a pure human perspective. What most people don't understand is just from a business perspective. Yeah. So the way I talk about music and what we're doing is like, we're creating IP rights that can be sold at one point. And I think, honestly, I think the needs to be a change, especially about young people in the entrepreneurship, like, which is where, what this podcast is about, is about maybe detaching the word art to the business in a way that does not need to be the main selling point. Like the value of music itself can be the main selling point. The success of music can be the main selling point. We're an emotional business. What we sell is attachment, is belonging, is all these things. So you have to, that's the product. So you define, I agree. And then again, if you're gonna sort of build and monetize this, it's like you have to come up with a business model. I think one of the main problems is basically in Norway, most of the music companies in Norway are not investable in the sense that a VC wants to actually touch them because they're, and this is completed. So that's sort of, sort of different, you know, they don't want to scale. They don't want to build the next universal major. They want to do what they do because the passion is there. So if I can run a label with me and two employees and have a good life and actually release music I care about, go to work, make money. Have a family, have kids in the car. I mean, I'm happy. It's like, that's my main goals. So I think one of the main problems or issues for the Norwegian music industry when we're such a small market is actually how do we build bigger, or how do we fit into the scaling model that's sort of the sort of standardized financial business modeling is built around? Because that's a good point. I was just gonna

Jakob Wredstrøm

Continuing on it. Because you're talking about VCs, you're talking about not companies being investable. One thought that comes to mind, isn't that sad? Because most artists, when they talk about their own careers, they want to scale. They want to become international stars. That's on an artist level. But shouldn't the industry address that? Shouldn't, in order to accommodate artists the best possible way, shouldn't the businesses also address that? Okay, the artists want to become huge, international, they want to scale. Why the industry shouldn't be matched in mentality in order to actually live out the purpose for that access? We don't have that sort of, I totally get this. It's like people don't start the label because they want to be the next big thing. It comes out of passion. So meaning these one, two, three person companies are happy if they can make a good living of doing what they do, because that's the drive. The drive is not to be the next global entrepreneur, top 50, whatever,

Jakob Wredstrøm

So I think one of them coming from a small market, we never had that kind of ambition. And you see the only kind of international success on a lot of other company level is like, you know, title got sold, you know, voicey got sold every time the phone file got sold. So every time there's something that sort of this could actually be a global Norwegian music company taking market shares internationally and build from Norway. Somebody else comes in with a checkbook and it's gone. And to me, that's a failure. And I don't blame like the entrepreneurs or the people who actually founded these companies. They're fantastic. They're doing what they, and they cash out when they have to because that's their drive. Sure. And there's the same thing with management companies and you run one yourself. The moment you have an international success, are you rigged to actually follow that success internationally? So if you... You know, you develop an artist to be a huge international success. At the moment, you don't have the infrastructure within your company from here to follow that success into different markets. So you have to make deals in that market and work with local players to actually be able to penetrate that market. Meaning what I say to American friends, since I live in New York, 15% here and there is like the Norwegian taxpayers through our fantastic support system. That is not support what it means in Norway, but it is an investment. Develop takes, you know, give you opportunities to actually develop these artists into being come international successors. But what happens next is basically the American corporate music industry, they make the return on that investment. So what I'm gonna champion over the next years is basically how can I inspire you and... give you the means, not soft funding, but hard funding and high risk capital for you to establish a sister in a different market. So the knowledge and some of the money, the money actually also comes back here. And I think we need, to me, we need a new generation of music entrepreneurs here who actually think globally and will be able to act globally. We need people who are willing to relocate.

Jakob Wredstrøm

We need companies who can give us business modeling that sort of, you can actually buy competitors, hire people locally. You can sign local talent. If that's in the US, in Capella should have a sister in the US market buying competitor, actually penetrate that market and take market shares. So if via Musing Norway, via risk cap, and a structure, I think we can actually do those investments without sort of being on the shareholder side, I don't want, but actually do project investments. So I have an idea for this and we're actually starting to work on it. You're talking about music now and the vision there. I think this is a really interesting talk and actually this is what I'm the most passionate about. Yeah. Because... just to give a slight personal introduction, I do come from the arts myself as a songwriter and producer and I love music, but from a very early age, when I was 18, I started my first company. So, business and arts have always been following along and I've never felt less about art because I've been aware about business. And I think for the, I wrote a LinkedIn post recently that people can check out, that's called Bridge in the Gap, the Future of the Nordic Music Industry. And what I criticize or point out is I believe that a lot of brain talent is not even entering the industry because there's this mentality of not it being business or having good enough opportunities. Or the business is basically making a good life for yourself. And that's where it comes, that's where our music entrepreneurs are actually driven by the same force as an artist. We do this with passion and with something else that actually scale and employ a lot of people to make a shitload of money because we live here, we just want to live a good life in. Richest country in the world with the highest living standard and the expectations to life are like this. So to me it's like, okay, I really understand sort of the indie small industry and this is like, but then again, we can't force these companies to scale or join forces because that's not the drive. So to me, we need to sort of say, okay, is there other ways to bring risk capital into this space? Because me buying

Jakob Wredstrøm

15%, maybe not of your company, because you're on a bishop with some of the other music companies, even the well known, it would never ever give a financial return on investment because most of the money coming in, the surplus is not that big. They reinvest, they build and they reinvest in talents. So to me, if we really gonna scale this industry in the Nordics and in Norway in particular, we need to make sure Norwegian companies have the ability. To establish themselves in different marketplaces and take market shares, bring home money, bring home inspiration and knowledge, and actually start to buy, you know, go after, buy competitors, penetrate the markets, take market shares, because then, I think the next generation of music industry leaders from Norway will have a global perspective that's not just like on an individual success. I mean, I love the Norwegian artists. Who do great internationally. You know, it's fantastic. They've been great. They're working really hard. So on that level, it's a big success. It's a big success for the management companies and the players in Norway who manage to make that happen. I'm like, it's fantastic. They do great, great job. But to me it's like, how can we inspire and actually find the means and money for these companies to follow that international success without signing off these talents to the majors? Or other international companies, but rather build our own international infrastructure. And I really wanna see like global Norwegian music industry and companies on Norwegian hands. And we need that probably for 10, 15 years before. It's like a phase to me, we have to ref, that's the focus for me at the moment. I'm very interesting about this point because my, and I'm very admirable about that vision and entrance to the market. Vision for it. My perspective is exactly that, but a step before, like personally, because I believe that in order to have these companies that can scale and have these companies that can actually do international departments of their own company, there needs to be fundamentally different mindsets about creating business in music industry. And the reason why I'm doing this podcast is actually to address that market. It's the young people that are maybe venturing into some sort of industry now. And it's like, it's actually utilizing, let's say,

Jakob Wredstrøm

Almost like capitalistic people that want to have huge success within business and then choose music because that's actually an on tap market of opportunity. That's one type of people. And I see that. To me, that's like, that's sort of the normal way of doing things. And we have an infrastructure for that. But it's not normal music. It's normal in other industries why they're also more successful financially. But that's where I think the challenge is because people are not moving into this space. I know. Building these. There's a few and I'm sure they're out there and they'll listen to this hopefully. And- because then you sort of fit into the framework of what's there already, and we need to have those kind of, you know, big or some ambitious sort of, who wants to build sort of the next phonophile, the next title, the next voicey, who wants to be that kind of, but I think to me, that infrastructure is understandable. It's easy to understand. It's like you follow these, you follow sort of the standardized entrepreneurship rules on the VC sort of. You do this and then you do this and you do this and you scale and you do all that. That's like the innovation all the way to me. The challenge is basically because people are not doing this because of that, they don't wanna go there. And that's an issue, like you say, but it's your other means to at the same time make them succeed and take those market share internationally. And I think that's about building, giving these companies an infrastructure for them to grow into international market, but still be who they are. So the values of why they do this, and that's very artistic to me. So it's like trying to force these people or these companies or these entrepreneurs to fit into this mold will never fit. So basically what you're saying is like, we need to find the other people who actually are. Ambitious and I think within the music tech space in Norway, that's like, you know, that's fits sort of the more traditional way of the things. It's a very interesting talk and I think what's really interesting right now is we actually have two different opinions about this because what you're saying is that you have arts people that come from passion and they need to learn scalability and business in order to succeed. And that's what I'm hearing you saying. My view on it is that it needs to be straight up business people that needs to

Jakob Wredstrøm

Take advantage in a good way of the music industry, because we have had so many people in the past, being artists and trying to put on the scaling mentality and never really fulfilling what you need. And I believe because I am very passionate music, don't misunderstand me at all. I think we need capitalists in this industry much more. I think we need to be able to go here. Yeah, but I'm not sure if the Norwegian market is big enough for capitalists. I mean, of course like. Because then you need to have that. But the Nordics are bigger than Norway. Yeah, then you have that global perspective and then you can build big entities and companies that actually takes that global space. And I would love to see that. And there's, again, there's these few companies that actually were on their way to become that. And then we didn't have the capital in Norway to actually, we didn't have the VCs who actually would understood and were willing to take the risk to actually do that investment to build them as Norwegian companies in the. international music industry. And I'm not saying like, in one way I'm saying, I don't want all the American capital into the Norwegian music industry and market because I think we should develop this ourselves. It's gonna take time. We need a new generation. And I'm not forcing anyone to sort of scale. Again, my artistic background, I really understand people who run these small boutique operations and why they do that. And why they're not willing to scale because it's not a motivation. That's not why they do it. So we're gonna have those companies and I love them. It's like sort of the indie world. I'm sure there's way they can work together. They can kind of solve a lot. I have a way to raise venture capital into this space by going back to the 50s and looking into the cooperative model. I think that's where you can scale. But not going into the equity way. I don't want to use money to buy 10% of your company and not make any money for the next 20 years. It's like, it's just a waste of time and money, both for you and for me as an investor. But if I can finance your projects and do more a licensing deal structure, which is a recruitment, it's a profit split and it's time-based, I've tested this small scale. It works. I really think that's the way to bring

Jakob Wredstrøm

Risk capital into this space. Thank you, Stein. That was really interesting. I think we have a lot to talk about, definitely over multiple beers at a long night. I think we're very passionate about the same thing, which is succeeding in the Nordic industry towards an international market. So I'm going to take your perspectives and some of the other talks I'm going to do on the podcast, and I'm definitely going to think a lot about what you talked about project investment. And I think it's a really interesting talk in general about arts and business and where they collide and when they intersect. But thank you so much, Stein. And thank you so much for listening.

Jakob Wredstrøm

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