The Future of Fandom in a Digital Age

Jakob WredstrømHey guys and welcome back to Sound Connections podcast.

Today we have a guest that's called Mike Pulchinski. Welcome Mike. Mike PelczynskiWell, thank you, Jackie. Excited to be here. Jakob WredstrømI've been really excited about this episode. We met at a conference around a year ago andyou had a talk about streaming, you had to talk about artists and royalties and it sortof really sparked some great conversations in my career.

And today we're gonna talk about fandom becausethis is a place that you've worked a lot with. And before we go into that, we need to setthe scene. Mike, I'm obviously honored for having youhere but for the people who don't know you. Who are you and what do you do? Mike PelczynskiI'm Mike. Most people can't pronounce my last name,so some people call me Mike B. I've been in the industry for a little bit over 20 years.

We'll probably go into that a little morein depth, but essentially involved in strategic licensing, business development, royalties,and streaming sides of the ecosystem of music and music tech. Over that 20 years, yeah. Jakob WredstrømYeah, and we will dive into your career because it's been quite interesting.

And just to set the scene, I just teased abit to it. We're gonna talk about fandom today, Mike. And if you can give me 30 seconds just tohelp me navigate, what does fandom in the music industry mean to you? Mike PelczynskiMm-hmm. Mike PelczynskiI mean I think it's as ancient as human beings fandom. I think some people even call it the new format.

I think it'smaybe a new format if you think of the way we interact with music today, which is mostlythrough streaming. And we'll go into that and what I was tryingto do over the past four-ish years. But I think fandom is just inherent with humanbeings. It's something that, you know, we're obsessivewith something and anyone that's in music or in love with music, you're a fan of somethingsomewhere.

within the musical realm of creativity, orjust even being a fan of listening to music, let alone making it. But yeah, fandom, I think, has a definitionfor everyone in a different way, and I think that's also the complexity of trying to makea business out of it today. Yeah. Jakob WredstrømHmm. Because it's definitely the talk of town. And if you read any music business, journalismoutlet, then you'll see fandom everywhere.

But as entrepreneurs, it can sort of beenhard to navigate what is the actual opportunity. Is this a new buzzword that we're all usingand what is the actual practicalities about it? So I'm very curious to follow your thoughtson this talk. But Mike, walk me through your career a bit,because... Mike PelczynskiMm-hmm. Jakob WredstrømAgain, I said I'm honored you're here and you've accomplished a lot of interesting stuff.

But how did you get into music and how didyou come to where you are now? Mike PelczynskiYeah, what a start. I'd say I came from a family of musicians,so I'd say that is probably the groundwork of why I actually care. And I tried to rebel against my family andmy parents who were both working musicians.

I didn't want to be a musician. like any kid, you just rebel against yourparents. But then in the end, I have the inherent bugin myself and pursued it in a different way. And I went to schooling, I went to schoolfor economics and minored in music and theory and things of that nature. But then by the time I got out of school,I luckily got a job working in the music industry right out of school.

And that actually was, I went straight tothe major label side of it, which was at Warner Music Group. I had the luck and opportunity to work withtwo individuals, George White and Michael Nash at the time, who were leading new mediabusiness development. And at the time it was literally... them at the trenches of ringtones and thatwhole kind of first stage of saying there is something new we don't understand it yetbut we can see this completely taking shape we don't know how long ringtones didn't lastthat long but it was a really interesting it was a really interesting moment for meto see this flash Jakob WredstrømI'm sorry.

Mike Pelczynskiof the music industry that's so stubborn in terms of innovation to see this happen. And those two people, I really give a callout to them and a testament to them because they worked incredibly well and also kindof laying the groundwork of what was new media for music. And then I took a huge curve after that. I decided to then go into royalties, licensingand rights administration, because that was where the bedrock was of everything that youwould ever do in innovation.

So then the next, I ended up getting a, anactual, then permanent job. That was a temp position and I worked therefor a long time. under the Warner umbrella, Atlantic Records,then going to the corporate umbrella back and forth across rights admin and royaltiesand eventually looking at the licensing side of it before I skipped over to the digitalside and I joined SoundCloud six-ish years ago, I believe, to be the head of global economicsrights administration.

And then eventually... was being brought into the licensing discussions,negotiations, I got closer to the tables to the point that I sat at the tables and theneventually I took over licensing efforts and then strategy as a whole across the business,which SoundCloud is incredibly interesting because it almost has a couple of businesseswithin itself that compete with themselves.

So for me, that was, it was an incredibleexperience of one, learning that ecosystem. Jakob WredstrømOkay. Mike Pelczynskibeing tapped into everything from commercial charts, marketing, economics, the creatortool lane of that business, the DSP component of that business, UGC, complexities and opportunities.

And then as I was probably towards, I thinkthe last, well, the last half of that is when I started to execute on some visions whereI wanted to change the... the entirety bedrock of how you get paid inthe economics of streaming. And the real basis of doing that was to builda fan economy, which is the topic we'll talk today, which I look forward to diving intobecause I'd say four years ago, there was when I brought this to some of the leadershipin the company.

And most importantly, when I brought thisto the leadership outside the company. Jakob WredstrømHmm. Mike PelczynskiYou know, there was a lot of squinted eyes and being like, what does this have to dowith streaming? And it was a long path to actually make peopleunderstand. what we'll dive into, but what you asked atthe top of the podcast is, what is fandom?

What are fans? And quite frankly, today, our fandom is inhow we engage with music, which is mostly doing streaming. So that was a whole nother effort for aboutfour years until I built an architected the model with a really small team of, I thinkit was just four of us at the time. Jakob WredstrømHmm. Mike PelczynskiAnd then eventually launched it, did it with the independence.

And then I was able to co-lead the negotiationswith the majors where two of the four majors adopted the model. And then since then I've, I've left, I'vestarted up my own advisory agency, working with AI clients, creator tools, licensingfor some partners, and also administrative tools. And then currently, which I'm probably comingout on your podcast in relation to this.

Jakob WredstrømOof. Mike PelczynskiI was advising and working with an AI company called VoiceSwap.which I've now I'm moving into an actual full-time position as a chief strategy and impact officer. So I'll be dual role looking at the wholeholistic business strategic partnerships, but on the impact side be looking after policyand trying to assure that this technology as we develop the commercial aspects of it,we're also preserving the social econ, you know, aspects of just the entire creator.

Well, potential, you know, wrongdoing by doingthat so want to be a player in that space as well yeah so exclusive for you yeahJakob Wredstrøm Mm. Jakob WredstrømWow. Well, I appreciate it. I appreciate it. This is great for the podcast.

There's so much to unpack of what you justsaid. Mike PelczynskiYeah. Jakob WredstrømLet's just start with explaining more in depth behind what you did at SoundCloud. What was the thought process behind what youdid and what did you actually launch? Mike PelczynskiSure. Mike PelczynskiThere was three fundamental questions that I had when I first started having the ideaof trying to completely reshape the whole platform under a user-centric model, whichis paying every artist and rights holder based on how each individual listens.

So you're 10 euro or quid or dollars and mine. only go to what we listen to as opposed tothe pro rata model, which is the industry standard where your money, my money, and everyoneelse is thrown into one pot in a given country. And then that's just dispersed by volume ofplace. So scale wins in that ladder.

In the former, as you can imagine, withouteven knowing the technicalities, you're starting to align a business and the way that everyentity makes money with individual listeners. And that's when you're no longer diluting. Jakob WredstrømMm. Mike Pelczynskithe greater scale effort of market share dynamics of ProRatio. Because then, if you and I are very nichein our fandom, if our fandom doesn't have scale, and that market or that genre or thatcommunity doesn't have scale, Our fandom means barely anything in a pro-ratastreaming ecosystem.

If all of a sudden an ecosystem or platformis paying on each, every single individual's listenership, now you've just totally fragmentedin a positive way, the entire ecosystem. So my first three questions. as I was familiarizing myself with all thelicenses that I was gonna be responsible for from the economic side at SoundCloud, I startedseeing opportunity because their licenses were incredibly complex.

I think the most complex I've ever seen. But because of that, they had avenues. They have UGC, where other platforms don't,and I won't go into that for obvious reasons, but it did give the opportunity because whathappened was every artist, if they own their own content, was a rights holder. That's not the case on other DSPs.

It, you have to go through a third party. You have to go through an aggregator or asupplier. So I saw the opening and I think that washonestly the first spark of, so what if. I could get around the big problem statementis that there are, there were other companies at the time trying to figure out how to launch.

Jakob WredstrømHmm. Mike Pelczynskior reshape a totally new way of calculating. But the only way they were approaching itwas to say, you have to do all or nothing. I have to convince all the players, all therights holders to go to this other way of calculating the foundation in order to dothis. So my first question to myself was, how inthe hell am I gonna pull this off in a way that I can architect a model?

that gives me the agility to do it with agroup of people that agree to do it and leave others on the old paradigm if they chooseto. And that's when I started thinking, okay,two models in parallel. And that's the architecture where I was saying,what if we have the world of today, pro rata, majors, independence, DIY, you know, the directindies, which are the artists that own their own rights on pro rata.

And then I build with the team, the entireuser centric ecosystem. for everyone I just mentioned on my righthand. And then we have both worlds in parallel inperpetuity. And even if we never launch, this is a greatway to detect behavioral differences, prove the theory and also curb fraud.

So we could go into the fraud aspect, but that was a way to convince my internal stakeholders and the other leaders that I was working withto be able to say, let's build it. and we can get value out of this, even ifwe never launch this into the market. So that was one baby step to get everyoneto say, okay, I see how you're going to do this. I get the value and at least it's not goingto be work that is spent and then discarded.

And we lost all that cost opportunity andoperational cost. Second question, which I think was even themore important one was does the behavior of a sound clouderor the whole platform of Soundclouders, that DNA of audience, does it serve the value orthe necessity of that model to really shine?

Meaning, if all of a sudden we're calculatingon each individual person, does that demographic that shows up to Soundcloud, that customer,that listener, or let's just say it, those fans within that larger audience,Mike Pelczynski Are they the type that would really give thatvalue to artists to calculate that way? And that was the big question that we couldn'tanswer until we built it.

And then the third was one that I'll talkabout later, which was how do you commercially build this into something even bigger thanjust paying streaming? And that was one that I didn't expect to getto. And that was one that I think to cut thisinto two pieces, there was the fan powered royalties or the user centric model building,launching it, testing it for 18 months, I think it was that we tested.

And then the other part was then bringingthis into a fan powered business, which was built on top of reshaping the economics. And I think like you just said at the topof our chat is, you know, this is becoming a trend word, a hype word, you know, fan,super fan. What does all this mean? Mike PelczynskiI knew what Soundcloud's fans looked like years ago based on this whole new model.

And the interesting and simple way to articulatethat is if I have artist A on Pro Rata, and I have artist A also all of his content orher content calculating, everything's the same, plays, behaviors are all the same, exceptthere's two different models. If that artist on Pro Rata...is making significantly more than in this fan user centric model, that is an immediatesignal to say there's something inauthentic happening.

I don't have to articulate anything. I don't have to dive into crazy metrics ofseeing what the inauthenticity is. I already know there's something fraudulent. If I see the inverse of that, that someonethat's making X amount, artist A on pro rata, and all of a sudden they're making multipleson the fan.

side of it, the user-centric side. That's a huge signal to behavioral fandomthat was never rewarded economically. It just was there, but it maybe was on a smallerscale, or the demographic was spread out and there's, you know, that particular, you know,listenership wasn't being rewarded, or basically directly connected to how they calculate forthe artist.

So that in itself was incredibly promising. And then once we launched that whole... hybrid model that there was a research paperthat I worked on, I co-authored with Will Page that was supposed to come out at theend of 2022 and it finally came out earlier this month that talks about the hybrid model,it documents what we were trying to do and Will did a great job at trying to articulateall that.

And that's essentially where we started it. That's where we went to a point, we launchedit with all the direct creators that own their own rights. Jakob WredstrømHmm. Mike PelczynskiThey saw the benefits. There was a media paper covering that, ifanyone wants to jump into those technical specs and the outcomes. And then there was the bigger hall. Then it was, what do you bring to the majorrights holder?

After you've established this bedrock, you'vecurtailed industry challenges. And now this is an area that I loosely termedthe establishment of commercial FOMO. Jakob WredstrømOh Mike Pelczynskiis because I was able to build something with the team that had two worlds living together.

And I had 130,000 artists say, yes, move mylicense from Pro Rata to user centric. Great. And then everyone that stayed, you know, the130,000 artists were still calculating on Pro Rata based on marking share because they'restill here in the calculator. but I'm moving their license and I'm payingthem from here. So now all of a sudden, my ideation was, nowlet's share that data.

Let's share with those 130 artists, 130,000artists, let's give them what they already see in SoundCloud. They can see who listened to them the mostby volume and other metrics since the inception of the platform. And myself and one of my colleagues that workedon my strategy team, Matt Jong. Jakob WredstrømHmm. Mike PelczynskiWe were wrestling with this and we eventually said, you have to share all this informationto show not just who listens by volume now, but who listens by listener share.

So like all of a sudden, I am the market becauseI'm the individual and 50% of what I'm listening to is you, your body of work. Now, if I can communicate that as SoundCloudto that artist that, and there's an amazing stat in that paper with Will, for little UziVert. Jakob WredstrømMm-hmm. Mike Pelczynski6.5% of his total audience in a given month when he released a record made up 72% of hispayout under user-centric.

And that means that 6.5%, so much of theirlistening time, of their own listener share was going to Uzi Vert. Those are the people that, if Uzi's team hadaccess to that, they can just message those people and say, here's a concert that's showingup. Jakob WredstrømYeah. Mike Pelczynskihere's merch that we're releasing just for you.

Adopt a wallet if Web3 is a priority for theartist. Like things of that nature where you startto connect by definition what fandom was to SoundCloud, like what we said at the top,it's gonna be different for everybody. The DNA for SoundCloud was that type of userthat they just, they're in there, they're liking, they're reposting, all this stuff. So that was the definition that by the timeI took this proposition to...

Jakob WredstrømMm-hmm. Mike Pelczynskithe major rights holder space, my proposal was simply, if you engaged in this model andyou adopt this licensed model, you have the potential of directly connecting with allof these super fans across your entire roster. If you don't take the model, you don't haveaccess to the fans.

And as I mentioned, we've moved. So that's the commercial FOMO is that there's130,000 artists that are already doing this. Jakob WredstrømMm-hmm. Jakob WredstrømOkay, wow. Mike PelczynskiThey're going to have that once the fans tool is going to launch that me and that gentlemanMatt envisioned. And any other partner that starts to adoptthis, they will have that access.

So what was really fascinating just to kindof in those conversations is that some parties were just saying, well, can I have that toolto show me the fans and reach them, but still be on the old economic paradigm? And it's an interesting question. It's just... Jakob WredstrømHmm. Mike Pelczynskigive me that view, but pay me in the old, which is fascinating because why would anyonewant that?

Like, I would want uniformity between thedata that I'm providing you and the way you're getting paid. But again, I think the one part of discoursethat people don't understand in this debate is that's what works for SoundCloud,and that was fine for SoundCloud. If I took that entire architecture and appliedit to some other platform, would it work?

Probably not because the audiences, the DNA,the age groups, the demographics, all that is very different. So, and again, I think that's the key thingto say. Fandom on a platform of SoundCloud, different,or even within the corners of the platform, right, are going to be different. So when, when the market and the industryis saying, we're going to get behind super fandom, my experience was building it in onehouse.

Jakob WredstrømMm. Jakob WredstrømHmm. Mike PelczynskiIt was a big house, but it was in one house. So when I've been working with clients totry to answer this question, it's really making them understand, you're gonna have to framethis in every single house that you're pursuing or you're in with your artists or with yourcatalog or with your platform. So it's fascinating to see that this has finallytaken hold.

Not gonna lie, there was a couple of laughs,four-ish years ago about doing this. Jakob WredstrømMm. Mike PelczynskiAnd it's really re-encouraging to see literally some of my catchphrases out there now thatwere more in the backroom conversations about this, but this is a good sign. It's a good sign because it means someone'sgoing to succeed.

And hopefully whoever succeeds at this maybe on the, you know, rights holder label side, or if it's a platform side or both, or evensomeone who's outside of that, maybe it's just a community. Jakob WredstrømHmm. Mike Pelczynskikind of dynamic. It'll inspire others to take whatever is theirDNA or whatever they do, whatever it is they do, they have to have some visionary to kindof put this into that context that will be organic.

And I think that part was the other thingthat was interesting is when conceptualizing the fans tool to be able to communicate witheach other. The one thing that was always up to be howdo you make this organic? Jakob WredstrømHmm. Mike PelczynskiHow does the creator and the listener, or even the creator, the creator, or the listener,the listener, communing with each other, how do they do this and use this in a way it doesn'tfeel like another thing they have to get behind or another tool that they don't understand?

So there's so much product potential of thingsflying or dying. There's so much business and commercial aspectto it that you have to create a little bit of that commercial FOMO to get people to understand what you're doing. Yeah, and quite frankly, some of it is, it'snot rocket science. But I think in this particular case, the sciencewas the economics to really push the innovation and people's attention to say, this is thenew format.

When everyone's asking, what's the new formatafter streaming? It's, it's not a new technology, separativestreaming. It's looking at streaming and saying thereis another dimension within it that you haven't actually even looked at it by turning it overon its head. Jakob WredstrømHmm. Mike PelczynskiAnd I think that was really the thing that it took a while, but I mean, here we are. And it's really interesting to see and platformscoming out and changing their economic models and how they pay.

And if I had to be completely honest, oneof my main personal professional directives to pursue this, not even as an executive atSoundCloud, but just as an industry player and leader in the space, I really hope thatit would get to this point that. they would put pressure on other platformsto make a decision.

And I never imagined, I mean, I imagine, butI never thought it would happen that they would be so honest in their economic modelsthat they would say, I don't really value this, so I'm going to cut this out of my model,or I really value this, and I'm going to give you an uplift if you give me this, or youpursue this as a, you know, in relation to our platform.

So they're really divulging the complete honestyand sincerity of what they value as a business. which then creates the complexity to that. Fenn on a different platform means a differentthing. And that kind of fractionalization even amongstplatforms hopefully makes people choose. Maybe I don't need to be everywhere as a creator. Maybe I only need to be on A, B, and C, andthat's enough for me.

But yeah, that is a whole kind of landscapeview to kind of set the stage of what we're talking about that. Jakob WredstrømYeah. Jakob WredstrømHmm. Jakob WredstrømHmm. Mike PelczynskiIt's not just a definition of fandom, it's also fandom in relation to where and whatplatform. Jakob WredstrømHmm. That's amazing. One of the things that I try to do as a musicindustry professional is not research things too much while there's a lot of hype because,you know, what can you trust?

What source can you trust? And, you know, having this conversation, I'vealready gotten some new perspectives I haven't been exposed to before, so I'm very thankfulfor that. Such an amazing story. I'm gonna take some sort of some questionsfrom an entrepreneur's standpoint and the listeners that are listening to this podcast. When I consult early stage businesses, whichI do quite a lot, a lot of the things that I work with is assumptions that might be incorrect.

I would love to touch base about that andabout fandom. What are you experiencing right now? Mike PelczynskiMm-hmm. Yeah. Jakob Wredstrømin the assumptions that platform startups are making about fandom that might be incorrect. Mike Pelczynskiany kind of data that you look at, when you're trying to define fandom, I would call it onedimensional, not even two dimensional.

And I think that's the difference betweenthe art form and science of trying to define fandom. And what I mean by that is you can look ata person's profile and how they engage with music. And if I gave you all my information to studyme... and how I listen on my two DSPs of choice,how I search for concerts and all the other things and if I buy merch, if I don't.

But what's really interesting is most of theindustry right now is just obsessed with counting. It's quantitative measurement, not qualitative. And I think that's the part that is the challengeis that what the assumption is by looking at me listening to 300 plays a month and you see my 300 playsand then say, you know Three-quarters of it is going to as an artist.

I must be a fan of that artist That wouldbe the assumption right again. You're counting my behavior as opposed tounderstanding the context and qualitative Why am I listening to the artists for thatmuch time? Do I do it over X amount of periods? Is that something that would have was influencedby a concert that then after that?

I've moved on. And I think that's the thing that I feel withmusic, the challenge is that so much of the qualitative nature is such an emotionallybased charged thing, that it's very hard to make a business decision and also make thingssticky. And also saying something, you know, reallykind of most people don't want to say, but that's also why music has been dumbed down.

Jakob WredstrømHmm. Mike Pelczynskiin many respects, right? It's been dumbed down in terms of, some wouldargue artistry, I'm not going there, but I mean in terms of even just music, for example,the length of music. The reason length of music has gotten shorterand shorter is because of the economic model. It would reward you better to have a two anda half minute song that's played ten times and having a twenty three minute song.

or composition or classical composition. So like the format used to always expand musicand give more liberty to creativity. This was one of the first times where it startedto limit and constrict because it influenced how you made money. So again, I think it's really interestingto take that thought and put it with the context of counting and data and it not even beingtwo-sided and two-dimensional, it's just seemingly one-dimensional because...

It's so much more complicated than that. And I think that was one of the challengesthat I faced with the team, is when we were looking at this and trying to articulate fandom. Luckily that platform had other signals thatwe can cross check that didn't exist even on other platforms to be able to say, thisis kind of a rule of thumb that we're seeing in terms of association and behavior and thingsthat sometimes people just are so varied that.

you would think that they're not a fan ofsomething, but that's the small amount of time they had, and that's where they put it,right? Not voluminous, but it does have a signal. So I just say never fully trust the signaluntil you actually get down to the human aspect of being able to even get down to what youthink is a populace of a thousand fans, and then pull a hundred audience research candidates.

And then test it that way, right? Like you need to have that context, that qualityof context. And, and we had an audience research teamactually at SoundCloud that was under my strategy org and that was one of the ways that we,we assured what we were looking at wasn't just that one dimensional data, you know,landscape that we said, okay, we got it.

This is what it is. You won't know until you talk to the people. Yeah. Jakob WredstrømAmazing. There's so much gold in this podcast. Well, I feel blessed that I get to share thiswith the world. Okay, I have some more questions with theentrepreneurship perspective. The work you did with SoundCloud was monetizingaudience differently than the pro rata model into using centrum model.

There's a lot of nuance to it that you useexisting technology to change the economics of that relationship. Mike PelczynskiThank you. Jakob WredstrømThere's obviously a lot of companies right now pursuing new platforms, new technologies,new approaches for growing the pie or new revenue sources. What's your, what's your analytics of what'shappening out there?

What, what seems reasonable? What seems unreasonable? Mike PelczynskiI think the immediate question in seeing the news and hearing to former colleagues andother players in the scene in terms of this, I'd say focus, is I haven't heard the termscale yet, which is a good sign.

Because I think anyone that's going to findsuccess is they're not thinking in terms of scale yet. They're trying to mine. and find where is there even a source of oilin context of what they're trying to pursue here. That actually has value and has that stickinessthat we assume that fans are.

I think with Lisa Yang's music in the airstudy from Goldman Sachs, it had a percentage of 20%. were considered super fans and how many morebillions they would actually make for the industry. It's a good headline to bring attention tothis, that there is again that dimension of creating something from what was already there.

So I see less as I think the term that youwere just saying, like growing the pool or those other aspects where people are tryingto conceptually think of taking the thing that is streaming and other things and justgrowing the amount of money. I see this more as an adjacent way of doingbusiness and trying to actually not let those two things completely have to be coexistive,but hopefully one, which is the major one, streaming or whatever it is, to inform theother.

But I feel like a proper way that from whatI've been hearing and how people have been approaching it. The ones that I would say would probably besuccessful is the way that it's starting to treat it in a way that they're not lookingfor scale. They're not looking for immediacy. They're looking at it as you're simply lookingat another dimension of something that already exists and super serving those people andthey still have to figure that out, but I, it, it again, I think is really touchy becauseit goes back to product, it goes back to the context of.

Jakob WredstrømHmm. Mike PelczynskiIf all of a sudden someone told me to download another app and I had to do something andI had to do other behaviors, the experience has to be so seamless that I'm okay to takethat on. If an artist told me to do that, that I'ma huge avid fan of, maybe it'd be more likely.

But then would I do that just for one artist? So I think it's really... Culturally, the ecosystem, the culture ofproduct is huge on this. And then the other aspect too is just, I thinkthat if we had this conversation a year ago, I think it'd be very different because I thinkthe general audience would be less educated on this.

But now artists being so incredibly vocalabout their discontent of streaming platforms, how they're getting paid, policies, governments. All the stuff that's happening in the UK,US, globally, everywhere. Like, even the general listener of music hassome idea. Do they actually generally care?

Most likely not. They have their service and they have theirmusic. But I think, again, what we're talking abouthere is fandom and fans and super fans, or maybe the collective of audiences that area little bit more passionate and obsessive. For them, it should matter and they probablyare more educated.

Jakob WredstrømHmm. Mike PelczynskiAnd that's, I think, where the conversation now is already different than a year ago. And I think that's where these potential prospectshave to be able to connect to that and maybe even further educate them to understand whythis matters and what's the return. If I spend my time on that app or that otherway of connecting with an artist, I need a return as a fan.

And I think that was the other aspect. Jakob WredstrømMm. Mike Pelczynskithat was challenging is even if you create value for the creator to have connectivitywith their super fans, seeing where they are, identifying them, then what is the rewardfor the fan? And in the initial moment, I mean, I'll behonest, one of the most, the biggest highlights was while demoing that fan's tool with anartist, and we're just walking them through Jakob WredstrømMm.

Mike PelczynskiThese are the people, you see them, you can click on them, you see their profiles andexplaining that you could directly message the person. And they're like, what do you mean? And this one rapper, Dot Cromwell, he just,on the call, he just clicks on it and he goes, and he's like, wait, you're telling me thisperson made me this much and this is just this person?

And it was in the dollars from just one person. And he clicked on and as we're talking, hetyped and thanked them, said thank you and all this. By the end of the call, that person, thatfan, or he wrote him back, was shocked that it was him, was asking that if it was reallyhim. And there was already a connection, right?

But, and this was back in May, just beforeI was, I left in July of last year. And it was one of those highlight momentsof being like, that's the moment. There's the connectivity between this artistbreaking the barrier of them connecting directly. Jakob WredstrømHmm. Mike PelczynskiAnd economically they're connected the same way, right?

The only, and that was the only thing thatmade it really interesting is Dot Gromwell knew that this person was valuable economicallyby them just listening to his music. What happens after that? Is there a novelty stage? Probably, right? They have an exchange a couple of times andthen does that sustain to, to keep doing that, to keep having that relationship.

So. I think that was one answer I couldn't, thatwas one question I haven't had a chance to answer since I left. But it's one of those ones that I felt likewas the next step of evolution. Does the novelty, or is it even a noveltyto be connected with your favorite artists in a small capacity, maybe a small group orjust one on one, will that wear off?

And then you go back to just listening tomusic as you normally do. So it's, I think it's a constant evolvingthing. And Jakob WredstrømHmm. Mike PelczynskiYeah, it's not a simple ticket to be successful, I think, in this one. Jakob WredstrømInteresting.

Jakob WredstrømUm... I'm trying to interpret what you said a fewminutes ago about the opportunities. And you mentioned, you know, are you introducinga new platform? You know, that might be difficult. A new thing is what you entered directly sayingthat if you were to have any significant practical impact on this space, it should either bewithin the existing systems where you sort of make new ways of doing this the same wayyou did in the SoundCloud.

or create supplementing businesses to existinguser journeys. Mike PelczynskiSo I think both of those, so the one where, you know, someone trying to do it in the traditional way of it is today or how it similarly did it at SoundCloud.

There's a company called Volkana. It's a streaming platform that's going tobe launching, I think, I believe this year. That's heavily focused on the social aspects. So think MySpace kind of format with musicavailable, right? And... The way that they're approaching it thoughis different because what they're doing is they're going to only go through the independentarm of music and by independent meaning either independent labels, DIY artists that go throughaggregators, that realm.

So they're entering the market in a time thatthere's a lot of changes happening in, you know, the major players in the market, butthey might be hitting that niche, right? They're going to come in there and they'realso going to have different dynamics. for their business commercially because they'reonly in the focused and the differentiator that they're doing is they're leaning intothe social contact context.

So for them, success are those pieces andpushing on those as best they can. And I think to your that question, right? They're entering the same arena, but they'refocusing on a particular area of that arena, where there's others, and I'll even just Ithink Warner was coming out with this. in the press over this past week is buildingtheir own app.

And I think that's almost someone literallysaying, I'm going to build the supplemental thing on the fringes to hopefully to be ableto commune in and out and figure out a commercial opportunity there. So I, it's interesting to see that there'ssome coming into the forum and some kind of trying to build and live on the outside ofthe arena of today and where the majority of money is being made.

And quite frankly, hopefully they I mean, hopefully they both succeed. Um, and I think that's the thing that's reallyinteresting to take this and your question to even a more macro perspective is thereneeds to be. Most of, I've started to talk about consolidationand most are talking about music tech needing consolidation.

I agree depending on what we're talking about,but then there also needs to be diversification. And I feel like streaming. Mike Pelczynskiis so buffet style, everything's the same, and platforms are feeling the need to differentiate in what they're offering, that they have to, they have to differentiate, and there's newentrants coming in.

And then at the same time, where do we consolidate,right? We should be consolidating on the administrativeside, or we should be consolidating on the services side. But the access to each other, the fan andthe artist, like that... That should be something that the market shouldhelp figure that out with. May it be in that forum, like you posed aquestion or just outside of it.

And I think there's going to be customersthat really want to just stay in there, you know, listen or engagement flow and not strayout of that. And there's other people that love the deepdives and going out into space and finding their community. So it's all of this sounds so non-realisticand hypothetical, but Conceptually, I really do believe that someone'sgoing to find the means to do that.

You know, if it kind of maybe went in theforum and Warner is just outside of it, instead of talking about it and debating, just building. And I think that's the other part that maybejust to add and chuck into our conversation is the one thing that is frustrating, if I'mgoing to call out, is insurmountable amount of debate.

Insurmountable amount of debate. And that's why, like speaking to yourselfand your background. Jakob WredstrømHmm. Mike PelczynskiAnd, and, you know, forums like this or podcasts like this is talking to each other, whichare builders and founders and people that they figure it out and they know what they'regoing to build and they build, but sometimes they need that help, right? To be able to navigate, especially in music,the complexity and the, you know, everything that we're just talking about.

But this feels like 2023 to me felt a lotof like a lot of debate and finger pointing and potential. But now this year it's. You have to build, you have to build thatproduct. Like AI, great. We all proved this is insanely amazing andpotential and potentially destructive and you know, everything, everything.

But now everyone has to hunker down and buildthe service or product and show this is how you have to package it. And I think that's, that's the thing. Like AI is what everyone's talking about andI'm fully in there myself, but Jakob WredstrømHmm. Mike Pelczynskithis foundational thing of fandom and streaming, and I still believe they're paired together.

No matter what you do in AI, let's take thatas an example, maybe generative or you're doing AI likeness, all of it's creating outputthat still has to have a home. It's still gonna go back to the platform,which then brings on the discussion and debate about streaming and payouts and royaltiesand licensing, and.

how do I mine this differently? Because there's fans in here somewhere, butit's a little too soupy, right? To figure out what that is. So all of that is still so incredibly interconnected that I still think it's a falsehood not to realize that's all connected. Even if you're on some frontier and you'rehitting it well and you're hitting it home, you're still gonna come back to either bedrockor situational challenge.

So it's, yeah. Warner. interesting play and they're connected toall those things that we, you know, I was just touching on, right? They have partnerships and content and rostersand so, yeah, it's yet to be seen, but hopefully we get more action than debate this year.

Jakob WredstrømInteresting. I love this. And yeah, founders are the ones that are buildingtogether. Of course, there's founders internally incompanies as well. And the music industry does tend to be a discussionindustry. I was at a conference. I'm not going to name my name, but like athink tank conference. Mike PelczynskiMm-hmm.

Jakob Wredstrømhalf a year ago, where we talked about AI with a lot of cool people in the room fortwo days straight. And it was just like discussing about whatwe can do. And the conclusion was after two days and25 hours of discussion is nothing. Like, in a way. And for me, that was sort of like, wow, okay.

What am I getting myself into? But obviously that's a part of any industry,but. Mike PelczynskiHahaha! Mike PelczynskiMm-hmm. Jakob WredstrømI think as founders we have a responsibility of reading being the doers and of course listeningto the ongoing discussions but making some change. And I've talked to you a few episodes aboutthis but if...

I love music and I'm gonna stay here the restof my life. but I also feel depressed sometimes aboutthe industry and the opportunities and how, you know, how the industry, not the industryper se, but the economics treats the artists or the sort of, you know, how difficult itcan be to, to equate you making something great without actually also making a livelihood.

Um, and for me, the, the concept of fandom,a monetizing fandom, a superfans, whatever you want to call it, gives me a lot of hope. Mike PelczynskiMm-hmm. Jakob WredstrømBecause I'm gonna stay here and you know, my family is gonna be supported by the incomeI'm making this industry and For me, it's just like okay. Wow, maybe there's an opportunity for Artistswhich you know every business we build in this is based on the artists and the songcan get Better opportunities and a bigger chance for having a livelihood that actuallyreflects with the impact they're doing and for me that's just amazing

Mike PelczynskiMm-hmm. Mike PelczynskiIt's really, I think it was Chris Dalariva. He works at Audio Mac, but he has a fantasticnewsletter, thought leadership newsletter called Can Music Can't Get Higher? Music can't get higher? Can't get, I forget, but sorry Chris.

But it is, I read it all the time. And he asked at one point, do you think, the music business would be better off ifevery company had musicians running it. And it was one of those questions obviouslymeant to just like kick off a conversation into what you just said, right?

There was and is and was and is and was andis people at really important positions that were obsessed with music, musicians themselves,or somewhere in between, right? Like the founder of Atlantic Records, Omit Artung,right? He was, he was obsessed with music.

He was, he ended up becoming a producer, right? He lived and breathed it. So anything he did had that ethos. And I think to what you just said, right,for those that people are diehard, right? Like yourself, I'm, I have no intention ofleaving music. Um, family makeup, I think, and breathe andmy kids are getting into music too.

So it's, it's just, it's here. It's here to stay and wanting to make it abetter place for everybody. And I think there is this interesting unspokensituation going on where. There's so many companies, so many players,so many. avenues of being able to build and work inmusic that there's more and more people getting into those positions of action and influenceand impact that are those music lovers are those people that have that I Don't know ifyou want to call it grounding or centering of themselves that they know what they'rebuilding towards or with or for And I think that's something to be hopeful about

Mike PelczynskiAnd I think also to add to what you're feeling and thinking and sharing that sentiment isthe music tech space is the space that I think finally we're dealing with all guards of thisbusiness trying to figure it out. Some are trying to get to ahead of it in formof a desperation to get commercially ahead and to be, you know, the band aid of whateverit is.

And some are just really trying to just existto be able to build something that could be used by musicians, creators, whoever fans. And I think the music tech side of this iswhere we're going to start picking each other apart. And I think in a good way, um, like I, justto quickly dive into voice AI likeness, what really attracted me to it is it's new realestate of IP.

And this is a good example of something thatnever had the value it did yesterday, but because of AI likeness technology, all ofa sudden, the human voice has a new value of IP and potential passive revenue. And I'll just dive into this really quicklybecause I know it's not fan-like, but I think there's two ways of looking at fans.

There's... Jakob WredstrømHmm. Mm. Mike Pelczynskithe inspirational fan and the aspirational fan. And those that are inspired tend to be theaudience. And then the aspirational tend to be boththe audience of an artist, but they also want to be like the artist or create similarlyto that language of whatever they do, right? To me, AI voice likeness is more the aspirationalside.

Like say I love artist A and B and... I have an opportunity to create and maybeeven swap vocals and start to understand myself in relation to them, have confidence singing,all these other things. But the beauty of it is companies like VoiceSwap and others, they are getting paid. The artist is getting paid.

Actually, I don't know how many others doit this way because Voice Swap pays for the influence and conversion of the vocal. Before, there was no IP for the human voiceother than its participation and contribution to recording or live performance. And then obviously the copyrights associatedwith that, right? But this is literally just the voice, it'stimbre, personality, tone, all those beautiful things that make the human voice.

Now, just to convert my voice to someone else's,or in the near future, convert other people's into mine. if people want to use that, that becomes itsown thing. And I think to your kind of hopeful view ofthis, the future is the music maker.

And I think we're all afraid of it becausewe don't know how much that's gonna dilute the current world we live in. But I think we could jump into that prettywholeheartedly and say we should trust each other that even if it gets abused in someway, there's still creativity in there. As long as, still again, there's players,there's companies, there's agents, advocates that are trying to navigate this amongst theothers, to try to get it to some semblance of people's rights being protected to whateverdegree they need to be, and then some freedom of creativity at the same time.

That's my faith. I'm not a religious person. My only religion is music. This tech aspect of it. Jakob WredstrømMm. Mike Pelczynskiwas the first time that I could say in a long time that I get excited because you see, mymother was a professional singer. So like, for me, this is something, talkingwith her and she has no fear about it, the tech, she only saw it as legacy.

And that was really fascinating to me, right? Again, New Wave, you know, attributing IP,quite frankly, having leverage for larger artists, you now have another dimension ofwho you are and what you do in music. Jakob WredstrømHmm. Mike PelczynskiYour voice has value now commercially. And there's legacy.

There's the aspect of people aging out voices or passing away or whatever it may be, collaborative natures of things, right? People who are producers, needing the needto quickly record something and then pitch it to their artists that they work in thenetwork, to be able to sell something to them creatively and say, this is what you wouldsound like on this recording.

And them going, Oh shit, I actually now get what you weretrying to do, which is an actual case example. Like that is exciting. The sandbox, the playground, being able toget more revenue into this business, right? Maybe outside of today's world, but it's scaryand exciting at the same time as it should be, and probably why you and I are in musicand we'll stick in it, right?

But it is one of those aspects that Jakob WredstrømMm. Mike Pelczynskithere is still the need to be protective, right? Like there is still the need to know whereyou have ownership, what are those boundaries that you need to protect in order to preservemaybe like this third tenet of freedom, you know?

And yeah, I share it with you. And I think fandom is one of those, to take it back to fandom and connectivity and opportunities, it's really ultimately someone who figuresit out and knows. I mean, quite frankly, someone maybe eventhe fan communities that figure it out, that, you know, the, I think Mark Mulligan and othershave been touching on this, where it's like, you know, the fan to fan communities.

Um, that was one thing that I was interestedat SoundCloud too, because if you, you create that ecosystem for them to share amongst themselves, let alone the community of the artists, you know, being at the helm of that, that's awhole another industry, like, uh, what's that company, uh, Fave, right? and others like that, that they're alreadyworking in that space.

So there's so many ways, but yeah, there'sso much consolidation, differentiation, where do you go, and where do you and I get offthis call and then pick up our phones or computers and actually go and what do we do? We only have so much time, right? So yeah. Jakob WredstrømHmm. Jakob WredstrømAbsolutely. That is what we need to do and this is suchan amazing space.

After like the small hours of talking, I feelso inspired and much more informed about this and that's of course the whole purpose ofthe episode. Mike, well thank you for announcing your newrole in the podcast and thank you for sharing gold and wisdom that's really difficult toget other places. And I hope the entrepreneurs and music industryprofessionals take a lot of from this, this and actually go and apply it in real world.

Thank you, Mike. Thank you for your time. Mike PelczynskiNo, thank you, Jacob. No, thank you, Jacob. I appreciate you. Thank you, man.See ya. Jakob WredstrømTalk to you soon.