What most founders miss: Industry Marker Fit

When we're kicking off new initiatives or new companies or startups, is to say, how can we reduce all of the noise around where the value is in music and how to get to that value? Those who can translate into a 12-slide investment deck and have a 30-minute conversation to make the case with an investor, those are the companies that will win.

Vicky Nauman is a second-time guest on the Sound Connections podcast. She is a consultant in the space between music and technology, and she's one of the most knowledgeable people out there. She has coined a term called industry market fit. We talk about that today. How does that differ from product market fit and investor market fit? This is interesting. Okay, Vicky, I'm already in the mood. I needed to sort of calm down before I press the record button because we already talked a bit about the topic today, and I'm very passionate about it.

Vicky, welcome back to the Sound Connections podcast. Thank you so much. I'm really happy to be here. I love what you're doing. You know, you're narrowing in on some really, really important issues in the industry and it sounds like you're getting a lot of traction, so that's great. People are reacting. And we're going to talk about some of the things that I think people react to the most right now. I read an article of yours on music business worldwide, and as far as I know, it's got tens of thousands of views and readings, which is quite unique for our small industry.

And we're going to talk about a few different things today, but one of the things that stuck with me, Vicky, is the term industry market fit. We're going to dissect that today, but for the listeners who don't know who you are, even though you've been on twice, oh, this is your second time, could you briefly explain who you are and what you do? For sure. I'm Vicky Nauman, and I'm L.A.-based. I run a consultancy called Cross Border Works that sits in between music and tech companies. And so most of the time I'm representing people who want to use music, so gaming companies, platforms, apps, sometimes even in the M&A space where they say, we want to do something meaningful with music, but we don't really understand how.

We don't know, you know, how to create a business model, don't know how to integrate, don't know who to talk to, don't know how these crazy music rights work. And so I'm kind of a translation layer. But I've been, you know, before I, this is my 10-year anniversary of my own company, but before that I've been one of the few people that is still working in digital who was around at the very beginning in 1999, and I've worked at Real Networks and Sonos and 7 Digital and had some real formative experiences in those early days of digital music, and the patterns are just continuing to reemerge every time we have technological innovation, and that was also part of my motivation for writing this article in Music Business Worldwide because I see patterns, and I see the same mistakes being made over and over and over, and I like to try to correct those things.

Let's jump directly to the term that I'm saying you coined because I haven't heard it before and I try to research this space a lot, and that is the industry market fit. A lot of people would know the term product market fit. Could you maybe just, just to start something basic, could you just dissect what does product market fit mean and then sort of transition into what you mean by industry market fit? Absolutely. So, product market fit is a very, very well-known concept that almost all technology companies understand.

It's part of a North Star of realizing that you've, you know, you've built a good team, you've been able to raise a little bit of money to build software, hardware, content, whatever it is, and you have identified a need in the market, and you have made a bet on how you can either open up an opportunity or solve a problem, and you're seeing that it's working. The product is the right one for the market, and that means product market fit. It's also really essential because in fundraising, you need to get product market fit to be able to tell a story to investors that you have data and KPIs, and that will hopefully allow you to open up a round of money to fuel further growth.

And that is very well-known, and I think people going into the space of music tech has that very much in mind. And for those who don't have that in mind, there's a long way to go in understanding how this works. But the people who might know what product market fit is and might be, let's call it, experienced founders or, you know, being quite well-versed in what they need to do, miss out on the, let's not call it on the complexity, the challenges of the music industry.

And that leads to the term industry market fit. Could you break that down for me? Yeah, I started thinking about this last, like in the fall of 2023, is I was like, why are all of these music tech companies struggling so much? And why do we repeat the same mistakes over and over again? And I started kind of breaking it down. And I really broke this into three pieces, which is product market fit, have to have that.

You also need investor market fit in the sense that you, if you're trying to raise money and, you know, you're not speaking the right language to the investors or you're trying to raise money for something that has a $20 million problem you're trying to solve and you're going to investors who want unicorns, that will not work. But at the center of it is something that's so unique to this sector in which is industry market fit.

And I see problems with startups, especially technologists who are coming from outside of the music industry, that they kind of look at the landscape from afar and they try to identify a problem, but they don't understand the music industry enough to know, is that a problem that the music industry is going to support, that they even want solved? Or is this a problem that has a lot of other elements to it that are in your blind spot?

And so you're trying to solve it, but you don't understand the value chain. And like a good example of that is artists. Lots of people want to solve problems for artists, but they don't realize that artists are signed to labels or publishers or at least distributors. And so artists are not oftentimes in a position to be able to act on their own behalf because they've signed rights to other entities. And so you're trying to solve a problem for artists, but you actually can't solve that problem without engaging with music publishers and music labels or distributors.

And that problem that you've identified with artists is not something that those entities think is valuable to solve. And so all of these things, kind of industry market fit is something that is, that comes out of the complexity of master recording rights, publishing rights, how artists, managers, administration companies all fit into this industry. And it's very difficult for people outside of it to understand the differences, who makes what decisions, and it's changing all the time.

But it is something that, you know, investors increasingly, they're looking for indicators from young companies that the music business wants the problem that you're solving addressed. And so if you can't answer, if you can't answer that to your investors, they're not going to give you money. And if you're not on the right trajectory with the labels and publishers and how the ecosystem works, you're not going to get adoption.

And so these things all feed off of each other. Yep. And it's an interesting problem. And it's a consistent problem. I think you said before we start recording, like it's just happens over and over again. I haven't really said this much on the podcast because we have too much work to do, but we also launched a sort of a consultancy arm four months ago. We haven't announced it and we have too much work, so we cannot say yes to all. So this is the first time I'm saying it publicly. But the reason why I'm saying it is we sort of work with the same clients' problems.

You're just on a, you're a world leader in this space. And we have a lot of fun helping people. But we still do a very good job and we work with this every single day. It is incredible to see how wrong people get it when it comes to how to navigate the music industry. Even with highly intelligent founders that are charismatic and might come from each their domain expertise world, but just don't understand how they should tackle the industry aspect of it.

And really, it's so hard to get any information. When I help companies do market research on some of their problems, I have a hard time substantiating numbers that I know to be true. Like, I have hard time substantiating problems and dynamics and power struggles that I know to be true. And it takes me a lot of time with a lot of focus and purpose to really find the sources that underbuild that. Because it seems like the structured information of how to navigate this is not so available.

And there's a flood of incorrect information about the industry, how it works, and all that. And it's, yeah, sorry, I'm sort of going on a tangent. But what I'm trying to say is what you see, you work with, you know, clients on many different levels. But being in the position you are, you are one of the most sought-after consons in this space. But we also see it in the earliest of stages with the most talented people, like, they don't know how to tackle this issue.

Exactly. And I think there are some really common, there's some really, really common errors. Well, one, you know, one of the most, I think, you know, deceiving problems is around data, rights-related data, metadata. Lots of companies come from outside of the industry, some who have raised enormous sums of money. But they don't understand why the problems are occurring.

There are data problems. There are lots of data problems. There are problems in matching sound recordings to publishing. There are problems with metadata. There are problems with unique identifiers. But the, you know, outsiders, you know, come in and they just sometimes will say, I mean, I hear this all the time, people saying things like, the industry is just really stupid. You know, I mean, like, you guys are just don't know what you're doing with data. And it's actually not that simple.

I mean, there are some things that could be done differently. But when you, for instance, on publishing, if you understand how publishing flows between, you know, mechanical rights, performance rights, registrations of copyrights, collective management, you know, music organizations in Europe, and then how the money has to flow, you understand this is not about stupidity. And it's really about existing legacy systems and, you know, the inability for music and data to transfer elegantly, consistently throughout the world.

And we have, you know, we have, you know, we have a billion songs out that are floating around between those that are in streaming services, those that are in, you know, social media and artists who are just uploading to SoundCloud and Instagram. You know, and then we have probably an average of eight songwriters on every song. So there's, you know, you know, hundreds of billions of shares that are trying to be accounted for. This isn't about stupidity. But it's also, it's just a very, very long, tangled problem.

And a lot of companies will come in and they say, we're going to solve some of these music data problems. But then they get into it, you know, you're peeling back the layers of the onion and pretty soon they realize that their assumptions, when they looked at the problem from afar versus once they get a few layers in, have been challenged. And that the path that they wanted to solve the problem is no longer viable because of what they've learned. And then they get lost. They get lost in there and they say, oh my gosh, you know, okay, so we wanted to solve this problem, but now we don't think that's solvable.

Maybe we'll try this other problem. And the, you know, these data and rights problems are really, really difficult to solve. Sometimes the tech stack that you have to build to solve the problem is way bigger than the reward of solving the problem. So you won't be able to raise money. And sometimes there are problems, especially with related to unattributed revenues, that the industry doesn't necessarily care about. And so these things are not written anywhere.

They are not, you know, necessarily readily understood by very many people. Yet there's a, you know, a clear issue that needs addressing, but it's not necessarily got that industry market fit of, you know, does it actually make sense to try to solve that problem? Hmm. It's very true. And to add another dimension to that, at least through my sort of recent analytics of the industry is when companies try to solve their problem, they might be able to solve a part of the problem, but the rest of the industry needs to move along for them to have the real long-term impact.

Like it's, it's not a, it's not a, it needs to be, you know, if you successfully are to do a change, you probably need to focus on a small piece of it and have a collaboration aspect to it. I need to follow the movements of the industry. And not because I'm a, I'm a, I'm a, I've tried to, you know, praise people on this podcast, but like, for example, following the work of Dan Archer and Copyright Delta, I think is extremely interesting because it's such a Haitian company. Like, obviously they, they work very hard and they've been at it for, you know, 10 years and Dan is a powerhouse, but the mentality and realism about the pace of which this moves and the pace of which they need to have consistent pilots and tests and integrations with big organizations here and there in order to prove a thing.

And then sort of help alleviate the pain of this big horse that needs to be pushed to the side of whatever, that was a bad analogy, but like, I think that's fascinating because that's, that for me really strikes the right chord of how to maybe look at this is like find a niche, help solve that problem, understand the context and the collaborations and the bureaucracies associated to it and be patient. Like it, nothing is going to change overnight here. It's a great point, Jacob, about patience is, it is an enormous advantage to companies who want to work in music and music technology to be patient.

And this is, this is, I think of the music industry, you know, to go back to the metaphor, I think of the music industry as like an oil tanker. And I think of startups as like- That was a better analogy than mine. I think startups are like the little speed boats. That are really nimble and they're, they're zooming all around the oil tanker and they can't necessarily see where does the oil tanker, where's the oil tanker moving. It takes big, wide turns. And then, you know, the industry will start to turn toward a solution.

And that is something that can take a really long time. I mean, it probably took us 12 years before on-demand streaming really took hold and started producing revenues. And in that time period, there were a lot of companies that, you know, small companies that wanted to solve these problems in other, other ways. A lot of people in the, you know, labels and publishers were kind of like, well, do we need to build systems for trillions of transactions?

We don't know yet because we don't know if on-demand streaming is actually going to be something that lasts. And then all of a sudden on-demand streaming was the baseline of all of the industry's revenues and nobody had systems to be able to manage the incoming reports and the incoming data. But it does move, it's just kind of a glacial pace and everything is connected. So, you know, labels, publishers, performing rights, artists, artist management in, you know, industries, all of these things are tethered together.

So they sometimes move at a slightly different pace, but ultimately they're all on the oil tanker and they will all move in the same direction. I, Vicky, I have recently started deep diving a lot into research in sort of startups in the music tech space and I'm still young and dumb. So a lot of my assumptions are probably not true. But one of the, one of the assumptions I have is because of this slow moving thing and because you can look towards industries that maybe move with a slightly faster pace, you can use it to your advantage to understand where is the music industry most likely going in adaptation of new technology and how can I see into the future to anticipate this change happening.

Because one of the things that, you know, having this very first mover or re-adapter problem is like you go too fast, no one is there to buy a product, maybe it will be later, and then you're out of money. But there might be an opportunity in the music industry because it moves slow and maybe also because it adapts, I would say, a tiny bit slower than, for example, gaming, to see where the opportunities might lie in the future. And that's sort of how I'm approaching some of the opportunities we're doing now within my venture studio and the ventures that I'm a part of is like looking towards adaptation elsewhere.

Looking, is the music industry adapting this? There's clear indicators that there might be, okay, we'll build towards this, but we won't build towards what we believe will be a product market fit before in two years. And again, I'm young and dumb, so I don't know if that's true, but that's my assumption based on what I see happening. And I think that's an interesting thought at least. Yeah, exactly, and I think there's a long history of the music business missing out on opportunities because it moves too slowly and the tech and the market change so quickly.

And I think a good example of this is online fitness and that during the pandemic, there was this explosion of online fitness that was kind of coming out of not only the pandemic, but Peloton and a handful of other bigger online fitness companies that invested in an enormous way in music, built a brand and an entire product suite around music. And the music industry interpreted Peloton and some of these bigger companies as, wow, this online fitness thing is going to be our next huge vertical.

And we're going to have a handful of companies that are as big and as deeply invested in music as Peloton. And that was wrong. It was wrong at the time, but the tanker was moving in that direction and you couldn't quite stop it to say, this is a trend. And most of the online fitness companies saw music as a nice to have or they were letting people just use their Spotify or their other integrated music into their own routines.

And production music or royalty free music for the most part worked just fine for most of those companies. And they were a, you know, kind of artificially, you know, bolstered by the fact that we couldn't leave our houses and go to yoga studios and gyms. And so the music industry created all of these pricing structures around fitness and, you know, very high priced, you know, trying to address this market at precisely the time that it collapsed.

And so then the music industry spent all of this time and energy, but its cycle was different than the cycle of online fitness. And so it's like surfing, you know, like you miss that wave. And this has happened over and over and over again. And so I think that, you know, when I start looking at the landscape and I see things like gaming, I do an enormous amount of work in gaming. I love it. I find it really satisfying to, you know, get a deal done and see, bring an artist and music to life inside of a game.

But gaming will never be the same to the music industry as things like on-demand streaming and, you know, the gaming, you know, each platform, each game is really different. How they monetize, how they, you know, engage users, what music is appropriate, what music isn't appropriate. And importantly, gaming companies are all built around engagement and KPIs of, you know, getting users to come back and play the game over and over and over.

And music is kind of nice to have. It doesn't mean there's not a huge opportunity, but the approach, if we approach gaming in the same lenses and the way that the industry approached on-demand streaming, it will completely fail because that is not what gaming companies want. They don't want a hundred million songs. They don't want to invest engineers in it. They don't need them. They don't want the risk.

They don't want to give up the margins. But there is a great opportunity for gaming if you're an artist and you want to engage your fans there and you work with a label and publishers and you're working to figure out ways to monetize your presence inside of a game. That's a much more nuanced approach. But that is what will succeed. And just kind of trying to have leverage over gaming companies and, you know, and force them by sheer will into some sort of market share-based licensing scheme will just not.

Yeah. Vicky, we've come to a part of the podcast where I'm going to ask you to be critical of stuff. And I hope that's fine with you because I think it's important that people sort of very clearly see what they might be doing wrong. With me? Because there's a lot of things that consistently are conveyed wrong. So let's take it from a pitch deck perspective. You have a company. You might have a great idea. You're pitching an idea.

What do you believe consistently comes back wrong when it comes to industry market fit? Well, I think one of the most important things that I have been seeing in the last couple of years is around direct to fan, artist to fan. And there is there's a lot of sympathy and a lot of people see the plight of artists right now. And they say, oh, they're not making any money because they're not, you know, getting enough streams.

They can't engage their fans because there are algorithms sitting in between social platforms and their fans. And so a problem is identified. Artists need help. We have a tool that we want to help them. And then I see decks about this. And I see that they are making assumptions about solutions that might work for one segment of artists but are not going to work for another. And I think the most common one is they, you know, a lot of the companies that are focusing on direct to fan, they're looking at really young bands who own their own rights, who own their master recording rights and their publishing rights.

And they're nimble and they're nimble and they can choose to do anything they want with this. And that falls apart almost immediately once you get to artists who have an established fan base and established collaborator teams because they no longer own both of those rights. And so this is one of the things that are trying to make their way out there of, you know, artist subscriptions or, you know, direct to fan streaming or, you know, we want to put unreleased songs into the app.

And all of these things are, for me, I look at that deck and it's just full of red flags where I say these guys have not done their homework. They don't understand the way that rights work with artists who are established. They don't understand the decision makers. They don't understand that artists do not want to release unreleased songs. The reason they're unreleased is because they're not ready. And so these are just like over and over and over again projects that are designed around the plight of an artist.

It's very, very obvious that many of them do not understand the complex layers that surround artists once they've achieved some level of success. Okay. That's very interesting. I also, the other thing in terms of decks is, in all the companies that I work with, the early stage companies, is if you're out raising money and you are doing anything with music, the minute that investors see music in a deck, they have two thoughts.

One is interesting because music is great for platform adoption because artists and music will bring a crowd. But the companion to that is, I don't want to invest in a company that's going to get sued. I don't want to invest in a company that is not understanding, that doesn't have enough money, that's going to give all the money I give to them, to the labels and publishers, or that doesn't, you know, I don't understand all of how music works and these guys haven't demonstrated to me that they do.

And it's essential when you're doing something with music that you have a slide in your deck that de-risks it for the investors, that you have a strategy, you have someone on your team who knows how all of this works, and you also have, you know, kind of a path to that all-important product market fit that is not going to require you to have $50 million raised for advances for some product that you want to build.

That, those are the things that investors, you know, like, and when I look at decks that I can really, really easily see whether or not someone has done their homework on this industry. And it's really about a history of music failures, music tech failures, investors putting money in, not knowing the right questions to ask. So investors are skittish, so you have to preemptively de-risk music for them so that they will even consider it.

It's very interesting. I would like to add a point in that direction as well. Now I'm contributing what I believe to be some of my experiences. As I've said, I'm doing quite a lot of research in this space, like from an academic perspective, sort of combined with my commercial work. And one of the things I'm working with is seeing investments through the lens of behavioral finance. And sort of the core concept of that is that an investor would invest with an emotional aspect of the investment, some out of fear, some out of fear missing out, some out of the...

There's a lot of emotional impacts in a choice. And one of the things that I'm working with that I have consistently now seen to be true in... Now we have 18 investors in our full portfolio. We're onboarding two more. So 20 investors, none of them are from the music industry. And the assumption that I work from is that an investor's relationship with music, whether good or bad, is an emotional relationship.

So an investor would like to feel like they have a logical, sane due diligence process on a company. And as soon as they experience an emotional tie to a company, they disqualify themselves for the due diligence. That's why I see consistently, psychologically. So does that make sense? Yeah, that's super interesting. Yeah, yeah. So I'm working on this. So it's not fully a theory yet. But it's almost like you're seeing that we're all kind of programmed to desensitize our emotions, especially people who are in investment and finance.

They want everything on an Excel sheet. And the minute that they feel some sort of tinge of emotion, then they say, oh, no, I've lost my ability to judge this. And sometimes it's conscious, sometimes it's subconscious. So what I've started exploring is a term that I'm trying to coin, the same way you've coined something, so congratulations to you. I'm on the same path for fun. And that is the concept of parallel narratives. And what I mean by that is you tell a story about your company in a way that is very relatable to their domain expertise, where you mention music as little as possible, not to trigger emotions related to behavioral finance decisions.

In other words, practically speaking, we have clients that are pursuing a technology that's supposed to have some sort of interaction between data and fans and artists. And, you know, you can very quickly go down your music tech company path. But what we agreed on is like, no, you're a marketing technology company with a niche of music as an underserved market. And that's always the communication we have. Like, we are a market tech company.

But we have seen clearly through advisors, market research, that there's an opportunity in a space that's underserved for the representation. And what I believe that does, and it gives the investors, especially that has a, let's call it a marketing background, a form of like, I can do due diligence in this. I can contribute to it. It's within my knowledge base. And it's interesting to work with a space where there's an underserved market with a space that has a cultural impact.

You give them the power of the due diligence and you minimize the emotional relationship to your product. And that's sort of what I'm working with. I'm terminating right now parallel narratives through a behavioral finance lens. Does that make sense? I think it's great. And I feel like, you know, this is, this kind of is very consistent for me in, with early stage companies in kind of helping them think about, you have so many different audiences.

If you are, if you're engaging with artists, that's a different message than if you're engaging with labels and publishers. And you might need to do both, but you probably can't have the same deck for each of them because they have, they have different lenses and you have to be able to speak to their needs. And those decks are very different than an investment deck because an investment deck needs to speak in the language of somebody's going to give you money and they want you to assure them that they're going to get their money back and hopefully some additional money.

And these are, these are, these are, can be the exact same product. It can be the exact same ultimate story of how you're solving your problem, but how you position it to the different audiences is, has got to be tailored because, you know, music is emotional and it is personal. And that's the power of music. But I also feel like investors want, they want to see just the really, really core basics.

What's the problem? What's the solution? How much is it going to cost you to build the solution? Why this team? Why now? And then show me that if I put money in and I invest in you, that, that I can see a path to revenue and I can see a path to me getting my money back. And that's totally different than talking to artists. Artists don't care about that. Yeah. You know, they care about, you know, I want fame, I want fans, I want money. And labels and publishers are oftentimes saying, how would I integrate this into my systems and into the things that we work with?

And do we want to have another, you know, artist data platform? Why that, why this one and not that one over there? Okay. But it is, it is about these parallel narratives and founders have to have them all straight in their head, which is not easy. Eh, eh. Vicky, I'm going to ask you another question that, that I'm very interested in. And that is a lot of startups that I talk with, they have this initial strategy to contact and pitch to music tech investors.

That's a, that's the term they use. Right. My question is, um, is that a thing? Does that exist? And if it does exist, how many are there? Uh, like, can you, can you sort of describe that to me? Yeah, it's, it's a, it's a great, it's a really, really great question because I don't really feel there are enough in there to make it an entire investment category. I think, I think, I always kind of think about it more like investors who have an appetite for music.

And that's usually in early stage, you know, you either need to have a, a product that integrates music and completely simplifies it and dumbs it down to something that, you know, investors will understand. Or you have early stage investors who have some knowledge about the music business and that they will understand. I mean, I guarantee if you're building a startup to help collect neighboring rights.

You know, most people in the music industry don't even know what neighboring rights are. So you have to then completely talk about this in a, in a different way. But I think that, you know, music tech investing has, is, is wobbly right now. And, um, you know, and when, when music tech stars shut down and did not, you know, carry on with its program, that took a lot of wind out of, that took a lot of wind out of the market.

And investors who were on the, kind of on the, um, the fence about music saw that and said, mm, okay, there's an indicator they're exiting, there's too much risk in this, and they can't even get it right. Then how could we possibly get it right? But an example of something that I want to point out where money into music has completely flourished is in, in financial investors, private equity, putting money in for catalog acquisitions.

And for many, many years, you know, there have, there have been banks and there have been investors who like fund publishing catalog acquisitions. And this is long held in the industry, but music became an asset class, probably, this probably started about 10 years ago, where people were talking about music is decoupled from the market. And that because of streaming services and access-based models, that people are going to continue to listen to music because it's like a utility, whether the market is up or down.

And this became something that investors latched onto. And then there's data, which is a translating layer between the industry and finance of saying, you know, we don't know anything about artist development. We don't know anything about, you know, management of artists or careers or any of these kinds of things. But we do understand data and we understand managing assets. And so this has been something that I feel is, you know, not enough people who do equity and early stage investments are looking at that.

And I think that the trend of having a translating layer that all these finance companies can understand has made them be willing to completely put money, enormous amounts of money, into buying catalogs because they can understand that layer. And we aren't really clear that with early stage or equity investing. I'm always bubbling when you say there's so many things, exciting things to dissect of what you said.

And I'll start at the end. And I'm sorry, normally I don't speak this much of the podcast, but you saw my presence before we started. I'm so excited about this. So one of the things that I've been looking very much into is the value of music. And if you start at the example you just gave with purchasing of copyrights, multiples on recurring revenue, there's an interesting, very small example that I have from my own professional life that I would like to present for the audience. And that is, I used to run a company called Tabor, which had the ambition of fractionalizing rights and making it publicly available for private investors to invest in.

That might sound quite familiar. I just recently had an episode with the great Scott Cohen about two bucks. I'm young and dumb now. I was younger and dumber then. So that would never have worked. And what was really interesting is when I moved to Norway and sort of left my career back in Copenhagen because I found an amazing Norwegian girl and had three kids with her, and I thought my career was over, I moved to a region where there was slowly no music infrastructure, and that was quite depressing.

So I helped a few guys sort of start a label, and I was like, well, I know a thing, too, about fundraising money now because I've done a fintech startup that failed, and I also know the concepts of copyright. And how they got sold. So I went to an investor and said, you know, these guys, and I'm building a record label. And he's like, okay, so what's the potential? I'm like, well, I'll tell you this. Within the next seven years, we believe we can create one international hit. If that has a recurring revenue of $1 million, we believe that we on the open market can sell it between a seven to 12 multiple in the Nordic context.

Which means we believe that within seven years, we can create an exit, a small exit on one song of between 70 to 120 Norwegian million kroners, and this is your exit. And I was like, no, I get that. Cool. Even though that was a simple personal case, it speaks to the point that you can use this to your advantage to help investors understand the value of music. Because if you look at the value of music just from the long journey that it needs to get to somewhere, and then at one point you might have a hit, and then you have a recurring revenue that's worth something, then that's not the big deal.

Well, no, but as an alternative asset class that you use to diversify your portfolio from an institutional perspective, it's actually worth a lot of money because it might be recession resistant. It might be sort of what they need to put into it, but not be the highest dividend yielding asset they have, but it fits into the risk profile. So that context, now I just, that was a very complex description, but that whole line of storytelling is very important in connecting with investors that might speak that language.

Does that make sense? Exactly. And, you know, and like going to investor, I have seen so many decks that kind of appeal to the, you know, the, the difficulty of young artists to make, make their way in the industry. The industry is broken, you know, these young artists, they're not making any money. And, and I look at that and I feel like that is, that is dead in the water. And it's not that the problem isn't real, but it's never been easy to be an artist.

You know, back when people couldn't get into a studio before digital and they sold CDs out of the trunk of their car, that there's a romanticized view of that. And people oftentimes look back on it and say, oh, it was so much better than it. You know, was it really? Um, it's always been difficult. And I think that, that things like this where, you know, there is no translation layer between how sad and difficult and complicated, overly complicated it is for an early stage artist to make a middle class income.

That means nothing to an investor. It's absolutely nothing. And if you can, if you can translate that instead and to say, we believe if we manage the rights properly, we collect every money, we manage our unique identifiers, and we use data to track the exact triggers that will help an early stage artist go from no income to $100,000 in income.

And then we want to scale it and replicate it across all of these artists who fit into this category. And we think there are 25 million artists. Therefore, 25 million times X times a rev share equals a future value. That's how you talk about the plight of artists. It's so interesting. I'm going to ask you some more questions, Vicky. And I'm using, I know that you don't go this far into it, but I'm using some questions to throw some thoughts at you and see whether or not you resonate.

I usually had, two weeks ago, I had a conversation with Dr. Chinito from Nigeria, and he used to be the CEO of Nigerian Copyright Society. And he said something that just has stuck with me so powerfully. And that is, he said that he believes that music and the creative industry is going to be the new crude oil of Nigeria. And when he said that, I was like, what does that mean? Like, what does that mean?

But then when he went on to explain the economic impact of music export for the creatives in Nigeria, how powerful that was. And while he was talking, I was like, okay, what is the GDP per capita in America? Okay, it's 70 something thousand dollars a year. What is the GDP per capita in Nigeria? It's around 2000. We're like, okay, there's a disparity in the average wealth here, right? And if the Nigerians, the creatives might be able to sell their creativity at something that's comparable to what they would sell in America, that difference in sort of annual income on an average person is significant.

Yeah. And then I understood, okay, so the $44 million a year annual revenue that they're very excited about in Nigeria, I sort of, when I read it, I was like, how is that celebrated that much? But then I look into the context of how much that means on average. I'm like, I was shocked. Now I'm coming to my point. I'm sorry, that was a long story. So what I'm assuming now right now is also music has different values attached to where it's placed. And that also has a narrative, you know, and now I'm just speaking hypothetically, like if a music tech company in Nigeria were to be invested in, it might have a lower valuation, but it might have a much higher impact.

It might have a much higher impact on the local community and therefore also have a more inherent worth, more, more possibility of local investment and having an actual impact in the side it's based in. So now I'm framing it to be a very long description. What I'm asking is, have you seen that the value of music is also dependent on the context it's placed in, and that also changes the investability of music?

Absolutely. And I think, I also think going back to his comment about wanting music to be the crude oil of Nigeria, I think there's, I can take that metaphor just a step further, which is the crude oil industry is incredibly valuable to Nigeria. But if they didn't have any infrastructure around it, and it was just in the ground, it would be worth very little. I love that. I love that. And that's similar to what he's trying to do in Nigeria.

You know, he's got this, you know, I think it's called Purple Blue. He's setting up an academy to train people about how infrastructure and how music tech works. They, you know, need to be able to have systems and collecting rights and royalties, managing all of this. You know, most artists are independent, but they're getting scooped up by labels, international labels, local labels. What about publishing and setting up infrastructure in the same way that you have to, you have to get the crude oil out of the ground and into pipes and you need to do deals and you need to join the, the global collectives and distribution systems for oil.

It's really very similar for music, except there's humans involved in the creation, but that's where you can build scalability and that's where you can extract value. And to take a perspective to, uh, the industry that you see, we, we operate the most in, which is, I would call it the Western hemisphere. Um, one of the issues that I've been struggling with is the value of music, uh, from a, from a perspective of, can we build a business where, you know, people pace a little for music?

But, but the example of Nigeria for me is very striking. It's like, okay, here's an open, here's a place where music is worth a lot more. Um, if we, through, let's call it technology or market push or super fan economy, whatever you would say, had an opportunity to create, uh, make music worth more on a, uh, impact level, uh, GDP per capita, uh, level. It would probably also over time be a more interesting industry to invest in, that would assume.

Because, yeah. And I think, I think music, you know, we have, what's the latest from Will Page that between master and publishing rights, it's something in the 60 billion, you know, something in the 60 billion global value. Um, that is small compared, you know, for many investors who say, you know, music is too small, it's too complicated, you know, there's all this intellectual property and, you know, we never, we don't understand any of it.

Um, but I think the, I think that there is an incredible amount of value to, you know, to, to foster investments. It's just also, I think, making sense of it in a way that investors and legislators will be able to, to come in and participate. And, and I, I say legislators also because I feel like there are, you know, there are successes around the world that have shown when the music industry brings together labels, publishers, artists, you know, and, and kind of has a unified presentation to legislators.

Legislators can act on behalf of the industry. You know, the Music Modernization Act in the U.S. is a really good example. For years, artists were going to Capitol Hill, labels were going to Capitol Hill, DSPs were going to Capitol Hill, publishers were going to Capitol Hill. They all had different, different versions of what the problems were. And all of our legislators said to them, go away, because you're all blaming the other party. You're confused. We don't understand what we can do to help you.

And that's also, I think, about this, you know, the value of music is the value to whom? Is that, is it the, the value, the total commercial value of, of music? Or is it the value to recording artists? Is it to labels? What, what aspect of the music are we talking about? And I think the one thing that every investor understands is also that there's an, a green and open path and there's something that is going to increase value that others have not been able to tap into.

So that also requires all of us when we're kicking off new initiatives or new companies or startups is to say, how can we, how can we reduce all of the noise around what music, where the value is in music and how to get to that value? Those who can translate into a, you know, 12 slide investment deck and have a 30 minute conversation to make the case with an investor.

Um, those are the companies that will win. Okay, guys. So, uh, I have used up my time and right before, uh, Vicky ended her sentence, I lost my connection, but nevertheless, Vicky, I have so many questions and I would love to continue the three hours, but, but we, we don't have time for that. Uh, but, uh, I'll, I'll continue some talks at this, this point, um, Vicky, I'm, I'm so happy you took your time to be here and sort of dissect this for us.

I, I believe that the term industry market fit is incredibly valuable. Uh, you know, sometimes putting words to things that happens brings immense value. Um, and, and for me, I'm, I'm a word guy and that mattered to me because it puts some things into boxes that are so easy to explain. Um, and guys, if you have amazing companies that's looking into music tech, go to Vicky and Alma and cross border works with a company. I've, I've already sent a lot of bunch of your people your way.

Whenever people come to me with like two complex things, I'm like, I don't know enough about this. Talk to Vicky. She's the best person to talk to. Yeah. Well, thank you so much. And, um, and there are a lot of really complicated problems that need solving in this industry. And so I, you know, I wrote this article, I do these podcasts because I want to try to help spread knowledge around and help more companies be successful. And, um, and, and I feel like I'm so bullish about the future of music and I feel like I just see no end in opportunities, especially in gaming and in virtual worlds and experiential technologies.

Um, so I, you know, I, I encourage everyone to, to take a leap and to go in, but, but to have eyes wide open and make sure you have people that are working with you who can help you close those blind spots that you inevitably will have. Amazing, Vicky. I always love talking to you. I, I think I consider you some sort of a mentor is a big word because we don't talk that much, but I look up to your, your work and the way you think.

And there's, there's so much sanity and experience based on what you say that it's, it's very refreshing. It's very refreshing. Thank you. Thank you, Vicky, for being on the second time. Yeah. And we'll talk soon. Okay. Take care.