How Tuned Global and BeatDapp Are Unmasking Fraud In Music

We really need to attack fraud puts more money in artist pockets but also takes money out of bad actors. What no one wants to talk about is that the 80% of the fraud we catch is financially motivated fraud. There's organized crime money launderers terrorist organizations. These aren't like artists juicing their own numbers up. My point is if you're a real artist or you're really part of the music industry you will make substantially more money with fraud removed than with it in inserted. Today Andrew of Beat Dap and Con Raso of Ton Global talk about how modern technology is reshaping the music industry. They talk about ensuring fair royalties for artists and tackling fraud at its core. I learned a lot I'm sure you will too. But well guys we are roting on the podcast I'll make an introduction one minute but Andrew you know I've been following a few stories you know the last couple of months that most people in the music industry have been following with like you know 10 million fraud uh like creating music that kind

of stuff and when I read this news for me it seems like oh this crazy big thing but like what you're actually saying is it's a very small part of something much larger uh because when if you say 10% of all streams that are for that is that what you're saying that's what you're flaming yeah that's what I'm saying well then we have much bigger story than you know what most people including myself are exposed to but let's just eventure quickly into an introduction Con and Andrew thank you so much for being on um we have Tune Global uh we have Beat Da you guys have both been on the platform before we'll return to that continue well we'll continue that talk in just one minute but Con and Andrew just for the sake of listeners who haven't heard the other episodes you guys have been on Con could you just start doing like 30 second introduction of what Tun Global is yeah sure I mean Tun Global e provides a technical platform for people wanting to do something in music and we'll cover a

little bit deeper later but it doesn't matter if it's streaming or if it's music used in gaming or Medtech or whatever else we provide not only the music itself but a very comprehensive uh range of tools to enable you to do it successfully and I think that was the Genesis of our partnership with Andrew Beat yeah Bap is the leader in fraud detection for the music industry specifically on streaming content so we analyze you we sit with the streaming services underneath their hood um that the streaming services are primarily our customer and Distributors uh and we analyze all kinds of data you know like battery life gyroscope orientation of phone when you played everything you've done in app pre- and post playing a track um what features you used uh all kinds of data points we're looking at you know thousands and thousands of data features and we have you know 600 plus machine learning mod models to identify different types of streaming anomalies and more importantly manipulation so um we analyze all this

and we say these 3,000 artists are fake they're not even real all the streams are fake don't let don't pay that out we take that money and we repay back where we advise to the streaming platforms reallocate it all to the real artists in the pool so um you know whether an artist knows it or not every artist made more money last year because we exist um and we're sort of the ghost in the background sort of writing all the wrongs you know Con could you just explain sort of the impact Tun Global has and your positioning the market and why this particular partnership is quite um interesting yeah absolutely I mean from early on I would say and we've been around for about 12 years now right so um we've been around for a little while our journey was out of Australia into southeast Asia with many services before we sort of went through to Europe us and uh really right across the globe today a position has always been uh well there's actually two things that are really interesting about us because we started into some of these

unusual markets there was a strong focus also uh throughout early days on music and artists that were specific to Regions and countries and we know that they're artists that are really struggling today so certainly for my myself when I started to uh talk with Andrew Forefront in my mind was really how do you continue to help these artists and not uh I guess Decay their revenue opportunities in that process but if we take a step back just for a moment we um we started as a B2B business we reasonably successful at being able to provide technology for people in streaming services a key part of our journey was uh our early Journeys into Indonesia and developing our own direct consumer business in that market and that really shaped us with understanding not only the technology landscape but the landscape as a as a company that's actually a DSP themselves and what are they trying to drive what's important to them and so it really uh brought us on a tool set to say okay so what do we actually have to make available besides just I'm gonna say the

basic stuff of the basic stuff is pretty hard which is you know managing all the rights across different territories managing reporting being able to actually access a stream do all those sort of things but what about I want an inapp message I actually need an attribution platform I need an advertising platform I need to be able to operate on TVs as well as phones and cars and everything else and so we really are the company that takes that whole breadth there and so it just made absolute sense to say but we're not offering anything in the where fraud is existent and I'm going to say I was much probably like the listeners here where until I started hearing Andrew and being exposed to a lot of the numbers that Andrew probably share on this podcast I didn't think the problem was as big as it was and I also wasn't fully aware of what the impact would be to our clients both from maybe legislation that may force them to do something or from simply wanting to make sure that the money goes to the right artists or

will'll cover it later or really Grassroots how do I make sure that I actually am better off commercially by not actually streaming to fraudsters rather than streaming to fraudsters so you know it's really multi-layered and we just felt it was just perfect it just fit exactly in uh with us um and uh yeah you know uh early days but we're really uh I think we're really in sync with Andrew and what we're trying to do I have a question one of the things I'm um thinking about a lot these days is sort of the value of music and one thing is how artists operate in this industry which I think is incredibly important but also the infrastructure around them let's just say traditional labels music Publishers uh whatever if you look at those companies the margins of those are also incredibly Slim like it's this is this is a this is a business that it's hard to create a good business and to be to be honest and if we looking at there is a potential of 10 I think Andre even said you know north of that uh percent that's fraud that could over time

be addressed that can that can really contribute to a company's economy when it comes to margins and expenses and stuff let me just talk a bit about the end goal before we go into the details Andrew if bdap or other initiatives were able to eliminate fraud and allocate the uh rightful money to the rightful people what would that do to the business at large on macro environment but also on like a company by company basis yeah I mean uh macro level the same amount of money is being paid out and the same amount of money is being made typically um pragmatically what happens is uh everyone in the industry who's actually in the industry makes more money so what no one wants to talk about is that the 80% of the fraud we catch is financially motivated fressers organized crime money launderers terrorist organizations these aren't these aren't like artists juicing their own numbers up there might be some artists that try to move or manipulate some charts or algorithms to get into playlist or get charted or whatever um

but when you remove those out and then you like for example there was an artist recently that we caught that had 47% of their streams the first month were fake um even when you remove out all of those fake streams that artist still made 9% more money prata when we remove out all the other fraud so my point is if you're a real artist or you're really part of the music industry you will make substantially more money with fraud removed than with it in inserted um it's seems kind intuitive but if you're an artist and you're trying to juice your own streams right you actually let's say you do a million streams for yourself well you can't just have a million streams pointing to you it's obvious so then you need to have 20 million streams pointing to other artists so it's like taking one step forward 20 steps back from financially so unless there's like another reason you're doing it like chart or whatever um you actually lose money doing it this way so it doesn't make any sense for you um the reason everyone still makes money

When you remove the fraud though, is none of them are real artists. They don't have like a real user base that's actually listening to their music regardless. So it's not like you me from ninth in the chart to first or 40th to 20th, you literally were nobody at all, period. So you go from 100% to zero and that's what we see a lot of. We see like millions of tracks that are uploaded that look like they're artists, they have fake artist names, they're attached to fake labels, um, they'll create entities in different countries and upload it through 15 or 20 different distributors. Uh, last month we had 50 distributors that had over 50% of all their streams are fraud in the DIY sector specifically. So what that tells you is that it's systemic and that frauders are not just picking one pathway, they don't want one point of failure, they're creating multiple pathways forward so if one gets shut down they can continue to operate. All of those people aren't real artists, all of those people aren't really part of the supply chain, they're not managers, agents,

producers, um, songwriters, the actual artists themselves, the labels, they're just frauders. And when you remove them out, everyone makes more money. So maybe the net effect is same dollar comes in, same dollar goes out, but individually to everyone that's actually in the music industry, you will make more money, period. And we see that now year-over-year with the market share. Now we don't publicize exactly how market share is shifting, but we can see it shift. Um, to give you an example, la, like last month we saw a market share shift of over 21% on a platform. Uh, that means that every artist on that platform made 21% more money. Um, because we removed the fraud out and I think that's where this goes, you scale that across the industry, real artists make more money for their creations, everyone in the value chain makes more money. Um, and I think it's a, I think it's a lwh hanging fruit to just a, to sort of give everyone a quick win here. I mean, it's wack-o, so it's constantly going to be a problem, but

that's why we exist. Like we have, you know, massive, a massive team just working on this problem and uh, and I would say that's the fast win. Sorry I'm rambling on, but it's a quick win. Like if you want to talk about how you just increase profit margins quickly, you remove fraud, everybody wins quickly. Uh, and it's obvious within 30 days. And Jacob and Andrew, I think you know one of the interesting things for me always is the motivation of people and I think using, we have to do something that's right across the industry and it's also getting this knowledge out right across the industry and the biggest reason for that for me is that some businesses today are built upon vanity metrics and that vanity metric is that the stream number is X and if they attack fraud, their stream number is actually to go south and that includes everyone in the industry, right, that their stream numbers will go south when they're looking at that next raise depending of where they are as a company and they're cycled, you know, um, that's an important metric and so I think we have

to be understanding that as an industry we really need to attack fraud for a whole bunch of great reasons that it puts more arti in, puts more money in artist pockets, but also takes money out of bad actors in the market. Um, and then if we look at it in that way, then I think we can at least have that harder um conversation about okay, these went down, but all the only reason they went down was because of we really got vigilant and attack this fraud. And I do think it needs to be said because sometimes we hide that part of it, but it's a key um metric for businesses who are just starting to grow. I have a question, one of the things um that I have been thinking a lot about lately, I might be right, I might be wrong, but this is sort of a thing phrase I've been poting about and that is music sells anything but music and it's not directly related to this talk, but the whole point behind it is that music in itself is undervalued. One thing is you directly affect that by the work you're doing, but you guys also moving into, you know, blockchain, metaverse,

discourse or other environments where music is still music, but it's a, I wouldn't call it a byproduct, but it's an add-on to an existing thing and say it's a major feature of those existing things. Like yeah, Discord, when they were doing their last fundies, I remember seeing the deck and I think they Ted that 70% of their users listen to music while they're on Discord. So it, you know, I would argue that it's a feature or a major product feature for the enabling them to be successful, period. And that's amazing and that's actually great to hear. Uh, the point I'm try trying to get at is you guys are both technology companies and you know, I think Andrew you said was it 600 machine learning models and one of the things I find really perplexing about the music industry is also sometimes it's um relationship to technology as something relatively um let's call it simplified according to what other industries might be deploying in order to have a better experience or in this case fraud detection or streaming services and do you believe

that the reason why you guys are partnering, why you seeing this probably for the first time really at scale, is because you're both are leading heavily into technology, also looking at other industries, what makes you the leading players in going into this field with extreme um fraud detection? Well I think um, look, I think tun Global is the, I mean he speak for himself, but I think team tun Global is the leader in like services for dsps and making it easy if you want to deliver content to users, going to one stop and being able to do that at scale with uncompromised technology and having like a best-in-class experience. I think that we are the best at catching fraud and we, what made us successful was not, I take a little bit of a different stance than maybe you do with when it comes to like the industry basically not being tech friendly and not leaning into tech and being slow to adopt or whatever. I think a lot of the problem is people that come into the music industry aren't from the music industry, they come in from the tech perspective and they're

told disrupt and they come in and try to disrupt and create something that no one wants to use and I think they don't understand how songwriters function in a songwriting room, they don't understand that it's different when you walk in for a country and you sign a split sheet then when you show up to a producing session with rap artists and there might be seven or eight people that come and go and like no one's signing split sheets till after and that's just culturally how a lot of things are done. Do I wish it would be changed, for sure, but that's not how it works. And so I think what happens is people have this conception or misconception of what they think the music industry is, then they go to build technology for an industry that doesn't operate that way and then they're questioning like why doesn't the industry take tech. I think the industry takes plenty of tech, I'd seen them evolve a lot in the years I've been in, I just think that they do it better internally out picking and choosing the

products they think are going to help their own supply chain, their own mission, their own critical sort of mandatory targets and goals. And so I think by coming from the outside and trying to guess what those are, you sort of lose the reason we were successful is because we built a product for a music label and accidentally found fraud. We were building an audit product which required us to have a clean data source and once we had the clean data source of all the times the songs were playing, we saw all these anomalies and said we think you have fraud. At the time everyone thought we were crazy, we went there and they were like this is rounding here, this can't be real and then as we showed them one platform after another it became so obvious you could not reject it and so we had to be the best at catching fraud because you can't audit something and say Here's the in fact number of times this song's been played 100 million but actually these 20 don't count and then have to like describe why those 20 don't

count, you need to be able to prove why all those don't count. So we became the fraud detection specialist out of necessity because we stumbled into it and nobody had really been talking about or realized this problem was as systemic as it was and once we were able to prove that I saw the industry turn around very quickly and say let's go um because they all lose by this fraud occurring and none of them want it to happen. So I would say um the two things I would say is that we stumbled into a problem the industry actually needed to solve and solve quickly once they became aware of it. I would say also that we weren't outsiders trying to build something for an industry we knew nothing about. Uh, we were very much insiders who were who were very tech focused. Uh, who knew how to build something that was useful for the existing industry and I might just add to that um and I agree with everything Andrew said from the customer point of view or our client that's actually trying to create something in music, you know, uh, we're getting a lot of

People every single day trying to do something. Some are, some are ideas that don't never find funding for, right, and others are ideas that have real validity but they're different. And often these people, like Andrew said, are not coming specifically from a deep understanding in music. I'm going to say it's almost impossible. I'm going to say we can probably count on our, uh, maybe hands and feet, maybe a little bit more, how many people understand most parts of the music supply chain, right? You know, some of those things that Andrew just said, well, gez, that's not my world, right, in that, in that piece. So these people come in to do something with music and build something big, maybe in UGC content, maybe in gaming, maybe in something else that not always as a DSP, and they really don't know what they don't know. We there to assist and help them through that process and I think that's the critical part of this journey. And I'm going to say the music labels generally, I think certainly, um, you know, the major music

labels and I guess Andrew might touch on how the fraud changes between different sorts of, um, uh, labels, but the major music labels I would say, uh, yeah, this is Forefront in their mind and I'm going to expect that in the next few years it, I would absolutely expect to see something much metier than it is right now in contract for people who are getting licenses for music and what they're actually doing proactively for fraud. So this is actually something that's got to be top of mind for people in the future about what am I actually doing here CU at some point I'm actually going to be forced to do something. I have to learn this. I can't just put it under the carpet, uh, and I think that's really important to, you know, for people who entrepreneurs listening to this and saying I got a great idea, awesome, right, just understand this will be part of your Solution. That's really interesting. I have a question that sort of is a bit away from what we're talking about. I'm just trying to really understand the implications of if we can, well, when we

will solve fraud. We talk about catalog Acquisitions and you talk about the sort of, uh, dividend on the Investments. I guess this is a pretty attractive thing that's going on right now because, you know, some of these, um, companies that have invested on behalf of other investors is either publicly listed or private has sometimes struggled to pay out the amount of dividends they're supposed to or aimed for, um, but if this is solved, over not solved over a few years but addressed strongly over a few years, I think there's going to be some really attractive things happening in that space as well. Is that correctly assumed? Yeah. Do you think there, sorry, do you think there's also another question to that though, that companies that were sold recently, uh, or in the past few years that might have been on evaluation depending on streams, I think there's harder conversations that have to happen at boardrooms as well within that process. So I do think it's a double-edged sword myself, right? I think there's tough conversations but I fully agree with you that, you know, if

Andrew, if Andrew is able to lift, uh, Revenue by 20%, that's 20% inflows to these other companies are ultimately part of that going to artists but part of that going to the companies themselves. Yeah, if you no as you say, like, um, I think about the mold tools a lot actually because I think, uh, you know, as an investor myself, I think about sort of you buy something at 8X and you know you get it and find out that 30% of the streams were manipulated and the reason it would happen if you're a large artist is not, uh, actually malice on their part. If you're a fraudster, you need to look like your normal and how you look like your normal is you bury your music am amongst a bunch of normal looking artists. So there is a lot of artists that will have sort of different stream numbers than what they really should have. Now when you remove all the fraud out, they still make more money but the number itself is different because they're being Juiced by all these other like, you know, frauders, um, there's an interesting stat actually which always

alarms me, 99% of Internet logins on websites, uh, are fake, like on social media websites are Bots, they're bot logins, like if you look at all the social media site the actual traffic is low, it's almost all automated and any security expert will confirm that and tell you the same thing. So it's interesting, um, what that tells you though is that there's just going to be inevitably a lot of this that happens. Now when you remove it out everyone's prata share increases so even you remove the fraud they still make more money. What I think about though currently is that if you buy a catalog for 8X and you find out that it had been manipulated more than others maybe you accidentally bought it for 12x so we're paying that back over time might cost you more money. The other side is maybe you got lucky, maybe you got a catalog for 6X that really should have been worth 9x and now you actually going to do super well. So I do think there's two sides of that. I think the real potential losers here are the Distributors because if you're a

distributor you've probably, if you're a DIY distributor specifically, you've probably made a lot of money off of fraud over the last couple years and when those, when that market starts consolidating you've probably raised money, you have your 100 employees, you think your X doll big and then they're going to come around and they're going to say Hey you do $200 million in Gross A year of which you capture let's say we let's lucky across the board let's say 30 million 15%, um, but actually 80% of that was fake. You have clawbacks now against you, have these things that are considered like advances of future payment because you owe them back the fraud money they accidentally paid you, like now your business might only be worth 50 Grand or sorry let's say let 50 million or 10 million or, uh, you know, in that example with 200 million at 30 let's say a multiple of five but you're 80% off so now you're talking about a $30 million acquisition when you thought maybe your company was going to be worth 300

million or 400 million. So it's pretty wild, like what I think is going to happen over the next two to three years is that it'll shine out light on all the fraud. The Distributors who make money from fraud are going to have a tough time if they don't get ahead of this now, they're going to have a tough time, like they better start moving quickly to sort of get ahead of this or I think they get bought for 10 cents on the dollar and I think these private equity-backed music conglomerates are going to go around and just buy this one and this one and this one and this one and this one and they will be using a beat dap like service to come in and say we need to analyze all of your stream numbers and you said this company is worth a 100 million, it's only worth 12 and we're paying 12 and I think that's going to be a tough situation for Distributors who don't get on board quickly. That's a pretty good sales pitch. Amazing. I mean a whole lot of nothing soon, you know, it's a heavy conversation isn't it, right, like you know I've been having

this conversation with people over the past probably, you know, a few months and I think most people are, uh, you know, the majority are in Blissful ignorance, right, and then when you start to look at all those impacts. But ultimately I think these are really good things for the industry because it does start to put money where money should be and I do think, you know, yeah, like if you're a distributor like you pay, you accidentally paid $70 million to a terrorist organization who's blowing up kids in a train, like the world wins from this. It's not like it's just music people, like the world wins from this and so I think, uh, cuz the people that are doing the crime are not musicians, we are not the same, they look like Independent Artists, they are not, they are not real artists. 80% of the fraud is fake artists from crime and organized crime, like scammers, professional scam organizations, terrorist groups, like none of them should be getting our money period. And I think that's, um, it's not just for the industry, I think it's good for

the world, like the amount of money you can, look I'll be bold here and say I think you can wash easily a billion dollars through the streaming services right now without anyone really noticing, like a billion dollars. I would bet can go to illicit funds, uh, and go to these scamming organizations and they can get it through, um, because there's, you know, 100 stores, various amounts of ceilings on each store, uh, you can generate a certain amount of streams, you can have them coming from different countries, so again it's just a really large unprotected pool of capital and these aren't nice people that are doing this, these are some of the world's worst people and I think that's what we have to keep in mind here, like nobody's out to catch the independent artist who is just trying to make a career as an artist, like we want them to succeed, we go as far as telling the streaming services these are collateral damage, do not penalize these artists, these three are the problem, we'll see 4,000 artists in a scheme and say only these two need

To be like targeted for any kind of implementation, um, do not go after the other 3,998, like those guys weren't the problem. Like we go that step because we don't want an individual artist who's a real artist being penalized for something they're not generating. But um, sorry that there's a little bit of a soap boox, but I just want to point out that this is not just artists that benefit, it's the world that benefits, you know, because like we don't want money going to these types of activities period. Yeah, I might have just been living under Rock for the last couple of months and I have, because I've been focusing on work quite heavily, but this is honestly like the first time I'm hearing these numbers to be honest. Uh, you know, 50% over 50 Distributors are fake, uh, 10% upwards might be fake, a billion dollars might be, you know, easily go through all this. What's the industry consensus on these num, you guys are hinting at, is there's like broad consensus that, you know, most players sees that this is true, this is this like

Initial findings, where are we in this journey on, might jump in here just as Andrew probably can't talk about himself quite the same way. Uh, certainly when we're talking with the major labels, which we do often, around just strategies, what are we doing and things like that, you know, they see beat dap as critical to the music industry and companies like beat dap, but beat specifically as well. So I do think there's a full awareness that this has to be out there in some ways, and it's not necessarily connected to AI, although AI might be able to make um fake artists easier, right. Uh, in there he, I guess, I guess the music industry is trying very hard to get in front of that with a lot of restrictions on how their content can be used. This one's a lot harder to get in front of, and so you really need leaders like uh what Andrew is doing and his business is doing to make a difference here. So I do think there at the certainly at the major label level there's and significant uh Distributors there's absolute consensus

That this is something that is going to have to be invested. I guess my question is ultimately, uh, you know, where does that commercial responsibility lie, how does it lie, is it split between different players, because different players all benefit from less fraud in this process, but I think we're pretty early in that journey and Andrew might have more insights into that part of the process. No, I agree with you, I think I think everyone, it's one of the first times in an industry where someone doesn't have to lose for us to win. Like if you're in the industry, you are probably going to win by doing this correctly. Um, even the Distributors, like look, you don't want to pay out the wrong partner, you don't want to suddenly get shut off stores because you're delivering like crap music that's all tied to fraud and then suddenly your users are like wait I can't deliver to these six stores now I need to go somewhere else. So long term everybody wins from cleaning this up, and so I, it's one of the only instances I've seen where this happens. Almost always if you

Win something, somebody else is losing something. In this case, that somebody else losing something is not part of our industry, so good, go back to like e-commerce fraud or whatever else you guys were doing some, you know, along the lines like get out of this, get out of this part. So I think, uh, look, I have no illusions that we're going to stop all fraud, I just hope that they don't make it here and they sort of move on to something else. Uh, so yeah, that, I mean, I think the industry agrees, I think they see what we see. We aren't a black box, when we give results back to our customers, they aren't getting back a percentage that's vague, it's like here's the exact fraud down to the stream level, how it rolls up to albums, artists, tracks, um, here's our exact flags and why it was flagged, our confidence levels, why we've come to the conclusion, all of the evidence, a dashboard to investigate each one of the cases if you want to go deep. Like we are providing you everything because we believe it's so hard to do this and do this at scale and do this

Consistently. You guys want to be the best at delivering content, making content, or creating the sort of experience for the fans, you don't want to be the best at fraud detection. Like that's what we're doing, and so from our Viewpoint, there's no point in hiding the numbers or how we do what we do. We're very much not black booxed because we are of the understanding that there has to be someone like us doing this, and makes sense for one Consolidated player to do it across the industry so the economics work for everybody, so that every distributor isn't spending $10 million chasing their own tail. Like spend a few hundred, get the same level of protection, protect your business, stay ahead of the thing. If you're, if you're a large DSP, maybe it cost you millions of dollars, but at the end of the day it's a heck of a lot better than trying to spend $20 million building it internally. So just same reason no one has on server Prem, like on servers anymore, like you don't walk into someone's house and they have their own server stacks these days

It's like everyone just uses AWS or Google, like it's just normal. Like you don't need to be the best at file storage to run an internet company, so same concept, we are just the fraud detection side. So I think the industry sees it, they've all seen the same numbers we've seen for years. I think what you're seeing now is more people's willingness to talk about it because a lot of people, especially the incumbents, feel comfortable with the defenses we've now built and I think they're now willing to sort of have this conversation more publicly than they were maybe in the past. Con, Andrew is talking a bit about benefits and downsides of reacting early versus late, and now you Kan and your customers through you are acting early. Um, what are the um upsides and downsides you might see from being, I'll call it first movers, maybe you're not, but that's these T teams. Yeah, sure, I mean, I think you first of all, you know, the pressure for our customers comes from lots of different things, there's many, there's many, there's

Much legislation that exists around the world that um government can close down businesses that are allowing funds to flow through terrorism and such. So if you're actually building a business that's also reliant on investors and confidence of investors and everything else, I think you have to be really diligent in the story that you're telling and the risks that you're removing through this process. So I think that's a benefit straight off, but there's a lot of other benefits. If you start to actually look at the algorithms that we work on and at the end of the day our major metric for most clients, not for all, but for most clients, is total listening minutes per you, or total listening minutes and Miss average listening minutes per user, right. So the more that you can get that up, hopefully that means they've got higher engagement, less turn, all those sort of things that are sort of crucial. Um, when you start to pump that into algorithms, which is the usage that's occurred, your algorithms start going sideways because

Some of that, some of those algorithms are actually affected by fraud, and so it actually hits down to the root level of the user not getting what they want to actually hear because Fraud's actually playing a role in this. Purely also then on a commercial model offer, um, you know, our commercials with our clients are linked into a few things, features, but they're also linked into catalog size and a whole bunch of other things in there that we make available. Now what we're doing with Andrew has been able to detect this fraud and then block this fraudulent content from ever coming back in, so that fraudulent content now is no longer part of that service. Their total track count might go down, but so does their actual cost and everything else to that goes along with that, along with actually the streaming component of it. But I think those other bits to me are less important than how do you actually continue to engage your user and you can, everyone says it's a, it's a data game, yeah, but garbage in garbage out, right, we have to make sure

That data is really clean in that process, and I guess from our perspective with Andrew, we um, we really want to make sure that certainly for our customers it's almost a little bit like of a SAS offering if you like, so how do we make it as simple as possible, and this is true of everything that we do. You know, you take uh some thirdparty metadata providers that are integrated into our systems and those Integrations in some cases have taken us up to six months to do, it's just unrealistic the clients are going to go out and do that or have the resources to do that, but they can come to us and say hey we want that service provider, no problem, there it is, turned on. How do we actually achieve that same result to that ease? Now I do think to be fair, you know, we're uh early on in our journey and I think we're going to continue to make that smoother and smoother over the next probably couple of years, uh, and also I think depending on the data that we find back from the different types of services, so remember

For us it could be a service that's on um a gaming headset right or a headset like IVR it could be in Medtech it could be in background music it could be in other areas that are not necessarily where you see here's a DSP right and the top handful of DSPs around the world so I do believe that there's going to be um some learnings from that this sort of has to be um but you know I think us looping in with Andrew just to find that out and fine-tune that is going to be the real critical component but it's really about making it easy for clients just to say yeah I want that and they literally I'm going to say almost press the button because it really depends what they're trying what their actual user experience is but we get as close to pressing the button as possible for us it's easier because we do an integration with them and that allows every one of their customers to turn it on so instead of doing that integration 100 times over uh we only have to do the one and sort of it works now for anyone

Who wants to carry us so I think there's a huge value proposition for us in terms of um just the resources required to build an execute this and again the faster we can sort of look in every dark corner of the industry I think the faster these guys go back to Payow or wherever else they came from yeah Andrew um you recently posted on your LinkedIn that um I might be getting this wrong either were part of starting a VC firm or you joined one um and you guys are not investing directly on music as a part of your profile that's something different but as an investor with an experience with that when look at the music industry how is this going to affect investor sentiment towards music businesses not at all is it going to be positive like because one of a lot of the listeners on these podcasts are entrepreneurs or innovators in this space and they are um pretty much all struggling with the concept of investing in music or music related Technologies um and I think they're always looking for an edge up to sort of see how they

Can tell things a bit differently is this going to change anything on this perspective um you're right I do I am uh I started a VC fund years ago actually around the same time I started Beat up I just didn't tell anybody I kept it quiet uh for six years I didn't want people to I liked I think there's a power in meeting Founders as a founder and not meeting them as an investor so I met them as a Founder first and then I would Mentor them and if I liked the company I would invest um we have now invested as a fund into almost 200 companies um you know across different vehicles around the world I think we have as a portfolio 8 billion in Enterprise Value now um so it's been like a pretty fun ride on that side um I've gotten a lot better at picking companies I definitely uh would say that I pick some losers early uh but that also applies to knowing which companies of my own to invest my time into so that's why I was so confident be stab because I already had this lens of like what I would invest into and what I

Thought would be good and what wouldn't be good um the problem of music is that in from an investor standpoint 75% of Music companies are acquired for under 15 million the only ones that are in the other 25% are consumer facing applications or ones with broad appeal so think like the Spotify of the world or SoundCloud or streaming services which con works a lot of or you know potentially fan apps because fans could be anywhere of any type of genre um most of the stuff though gets acquired really early and from most early stage Venture you're looking for a minimum of 50x return really we target 100x plus so when you look at that you're like I'm like show me 10 companies in the music space that have exited for at least a billion dollars because I rarely see around for music under 10 million valuation cap so if I think partly it's wrong based on where the company's rais at I think it's partly wrong based on how big they think they can be or the problem they're actually solving and who buys them the

Reason I believe bdab could sort of buck the trend was because it couldn't take any strategic money so it would never be sold to a strategic beab if it gets sold would be sold to a private Equity Firm or a large data security company like we will never be sold we do not take any money we have no money from any musician label distri distributor dis like DSP nothing we are we've stayed as neutral as we can so that when we say the number is the number no one has a benefit uh period so that is very important to us so that means our potential exit is much larger than if we tried to sell to an industry in coment that only buys companies between 15 and 50 million so that just inherently gives us another piece the other thing is becoming the industry standard um and solving this problem we could potentially jump into other Industries later that doesn't necessarily mean that's where we need to be but we have the potential to be scaled across other types of verticals like video games or whatever so as a Founder what I thought about was how do

You Buck the trend of that and it's okay if you're not that it's okay if you do admin it's okay if you do um something that's more B2B Niche that's fine too but then what you should be targeting is Angel Investors people who really love music and really love what you're working on and the problem you're solving um that to me that's they're investing because they really want to see that technology succeed or they want to see um they're happy with a like you know you just not dying and having some potential gains that are 3 to 4X and being there along the ride and learning all this cool stuff like Angel Investors are great to have I think I think there's this weird thing where Founders like oh I want a venture fund like I think Angel Investors can be amazing investors to have and so and they often are operators you know and they understand what you're going through so I would say that my feedback has been the music industry is tough because there's very few businesses that you could make an argument for legitimately

That could be worth over a billion dollars I think that makes it already sort of a difficult place to be in because when you're pitching a VC it's not that you're the best music company they're going do I invest in this or the fintech company that has a $40 billion Market size and already has $6 million in revenue and they're competing with other fch companies had equal Market you know opportunity it's just hard to compare the two of them together because the opportunity loss investing into music is greater than if you invest into something else so that's that the way that it works typically is I just think Venture does not love music because of those Dynamics um that doesn't mean that there aren't ones that make it look at Spotify look at others for sure it's possible but it's just more the exception than the rule and so as a startup founder my advice to them is to focus on Angel invest who really believe in your mission and what you're building and get a bunch of people around you that are your Champions don't um you

Know don't go Chas I wouldn't even spend if I was restarting today I would never even talk to VC's I like I know it sounds funny coming from me but I wouldn't even have one VC call I would meet Angels only and run if I'm running building a music company I'd just run my round with angels and that would be it I think I think um there too uh Jacob with what you know your question in terms of is it a positive or A negative just going back to what Andrew says with angel investors who understand the industry uh deeper I think without a doubt you end up being able to use a company like Andrew for a fraction of what you have what you'd have to do yourself the reality is I think that most Angels would understand the different pressures that are coming across the industry and so I do think that it's a positive right myself because to be to be honest you can just go use Andrew these days and you've solved the problem right whereas it's much more difficult for an investor to hear a problem and not see a solution or see an open-ended Money Pit to um

Solving that problem so I personally think it's a positive certainly our sentiment from letting our own clients know um what we're doing with Andrew which we did a little bit ahead of the announcement was um it extraordinarily positive right just being able to be able to access a service like that um and so that was that was really heartening to see them actually get it and understand it as well I'm laughing because it's exactly the reason I'd come to you if I was going to launch a music related product I like I wouldn't go try to put all the pieces together and be like I'm going to rebuild everything that's already been built like put this thing together and go after my market so it makes sense totally guys it's been a pleasure and it's so interesting to hear sort of what's happening and uh I'm kind of shocked uh to some degree and I think it's really interesting to see sort of how this um deploys over time both with your customers con and how uh beat dep's going to be used in many other

Different scenarios I think from a personal side one of the things I'm always going to be in music but one of the things I struggle with is uh the amount of problems in the music industry and also the I'll say at least from an entrepreneur the lack of perspective is some sometimes perplexing um and I never doubt that I've done the right thing and I'll continue this path but like I also get encouraged by you know there's a reason why entrepreneurs are in this space there's reason why innovators well actors are in this space right music is music and that is a beautiful thing and I think having this approach to some of those issues is just incredibly important because let's be honest it's not the best space from a business standpoint um and but this makes it a tiny bit better uh and I think that actually does a whole lot um so thank you guys and I thank you for being leaders and really taking the chance con and on bat dabs technology um because that's an important step jaob and I do agree but Ed is a

Heck of a lot more fun than banking yeah I all the time every day that sucks less than showing up for your 9 to5 and being yelled at by a boss Absolut absolutely every bad day is better than the best good day so for sure awesome perfect guys well thank you so much thank for having us Jacob Che thanks Angy [Music]