Business in Music: Understanding The Challenges and Opportunities

Jakob

Hey guys and welcome back to the Sound Connections Podcast. This will be the last episode of the year and it will be a bit special. It will be different than what you're used to. In the studio, actually just a few kilometers from where I live, I have my business partner, Taj. Welcome!

Taj

Hello, hi, how are you Jacob?

Jakob

So a lot of people might not know Taj, but Taj has been working with Amplitude Ventures for about two years. And we'll talk a bit about that journey and sort of how that relates to the podcast and how it relates to music. But Taj, for the people who don't know you, which probably would be everyone here in this audience, who are you and what do you do?

Taj

Ha.

Taj

Okay, it's a long story but I'll just make it crisp and short. I'm originally from India. I came in Norway three years back. I was new in the country, I didn't know anybody, so I was just sitting in, I was standing in one of the venues, a student venue which is very famous in Jamaica, that's called Falcon, and I just went in and I said, I just want to start volunteering with you, and I was, there was one of the shows, and I was just doing the ticketing and I went, gate, and then the ticketing manager, the manager of the... when you said, I should make, and we had a long conversation with that venue manager and said, you know, I should make you some person who I met. Is that interesting? You would like it. And that's, Jacob. I said, okay, yeah, sure. So we just met for like briefly talked for four or five minutes. He said, yeah, interesting man. Let's connect. And yeah. And then I came for a coffee, which is supposed to be 20, 25 minutes. And it ended up like one and a half, two years, two and a half. That coffee has now been for two and a half years. We still have it. So this coffee is not finishing till now. That's how met Jacob and then I started in Keppela as a that time AmpliAdventures as a sales and marketing strategy. I'm still working on that and we have seen a lot of ups and downs. But the really good thing is that every day is new. Every hour is new and there is a whole new adventure that we are on.

Jakob

Yeah.

Taj

So thank you so much for being having and right now I'm still reading the sales and marketing from what I started as day one and always been an employee of Amplitude, working really trying to make a difference. That's it.

Jakob

It's really interesting and obviously ties you a bit more than an employee, your partner in the business. But the reason why we have you on the episode is actually that we're be starting another podcast as well. And that is, I'll just tease to it and we can come back to it later. But Sound Connections have grown to become a rather large podcast. It's one of the largest in the world within the music industry. And we have lot of listeners wherever we go for conferences. There's a lot of recognition of sort of the exposure we give to the industry and education. But one thing we realize as well is that music is difficult to some degree just because there's a lot of... unset things, there's a lot of emotional aspects to music. It's a relatively fragmented industry and to be honest, not very easy to understand, even if you would understand it academically. And the podcast also reflects that. The podcast with Sound Connections is really the business of music. And how do we make sure that we make good choices, are informed about innovation in this space. But the podcast is not really about business in music. Like, what is it if you come not for music? If you want to be a businessman first and foremost and you see an opportunity in music, how do you approach music? And the Sound Connections podcast does not necessarily address that audience. But when we travel around Europe and we speak with startups, we know that at least half, if not the majority of the people come from that. That's why... who better than a person who doesn't come from music and doesn't really care about music, Taj, but still works in music to start a podcast about exactly that. So Taj, could you explain to me, what is it about music that you don't care about? No, what is it about music that you would like to know about from a podcast angle and help people understand that journey?

Taj

Okay, so I'll set a little bit context for everybody's understanding. I come from, majorly, a communication and marketing background. I did my bachelor's and master's in that domain, and then I did my second master's in film direction, then service design. I went to a design school to study. films and then studied many things and went there. So when and I have worked across different industries advertising, real estate, animation, communication, services, right? I worked across industries. So in some way or another way, especially when I was in ad film production, in some way or another way I've always used music and music has been a product for me. That's it. I am creating something very big and music is part of it. Music has not been the sole product for me. And I have always seen music as a by-product for something I am doing. is needed to accelerate. And then when I came to Stepanger and then I met you and then I realized, okay, then suddenly I am in industry where music is the product. So, and then when music is the product, then obviously like every product has own layers and own nuances, own businesses, own economies. And there is a whole value chain to the business and then depending where you are standing at what maturity level with what capital, with what market cap, and then you go to the whole economics like a regular business. So what? What I realized when I was working with Amplitude and haven't been hearing a lot of Sound Connection podcast is that actually there is an interesting way how you look at the music and

Taj

And there are two ways of looking at it. One is if you are from the music industry. When I say if you are from music industry, that means I believe that you are somebody who has formally learned music in any form, music business, music as a craft, specialized in any particular thing, and then you join the industry formally and then you are there considerably for four, five, seven years. Then you, I personally believe, then you qualify for yourself as somebody who's in the music industry. And then there are people like me who come from outside, who have worked in like oil and gas technology and every kind of an industry and then there is another industry that we enter and this is a music industry. So the difference between people like us and people like Jacob is that we will always see that this is a business and it is in the music industry. So we will always operate in a method people like me is I'm here to earn money. The rule of earning money is the basics is A, B, And this is a product which is music and the music the product has to work in some way in a certain way in order to deliver value. We come from the traditional ways of doing businesses, obviously because we have industry experience. So we know, for example, in oil and gas, isn't work in technology, it works in healthcare industry, it won't work, but here it works. But the real challenge that comes a lot of times for people like us is when people like Jacob say this is not how music industry works and that is where you realize the whole difference that this is not the regular business. I have in practically jumped at least 7 industries started with FMCG, selling Pepsi, Nokia, ATL, Pizza Hut, Lays all these things. I have done FMCG like very good from mobile telephone to chocolate bar. IT core IT technology services working with all the major banks, all the insurance and all the healthcare companies in the world.

Taj

I've worked in oil gas for some a bit, then I was in films, then no business selling anything and everything, real estate. So practically I've seen all the industries and I could always navigate and jump it very easily, smoothly, like within short time because ultimately the main component that needs to be taken out was always money. This particular industry, especially when I entered and I found it so challenging after two years that it somehow defies all the rules and then you say, no, that's not a music work.

Jakob

You

Taj

And I always jokingly say to Joke Up, the last thing I'm worried and I care about anything in this company is music. Because that's your job to do. I'm not interested. For me it's like any other industry. And the good side of it is lot of times when we are working in amplitude, where people drastically fail and because we as an outsider bring that respect and say, we never thought, the whole industry never thought that way. And a lot of times when we say something and then realize how horribly wrong I am, because this simply doesn't fit in. It's all about finding that right balance of an outsider-insider because I think so then it is the only way you can make an economy out of it. Otherwise traditional ways have already proven to weigh where this industry is. So that's my view of an insider versus outsider.

Jakob

Mm.

Jakob

Yep.

Jakob

And I think that's so valuable because at the end of the day, what we want to do with Sound Connections podcast and this new podcast is, is bring value. We believe obviously that the progress we can help make in, music tech and the music industry in general is also good business for us because at the end of the day, we want us to make money and you to make money. Like for us, that's the most important thing. And I'm traditionally trained in music and I grew a love for music. But what I also see is that the love for music can make you blind for livelihood. And that's what we want to address here at both the podcast, but from two different angles. But Taj, we have talked a lot about the music industry and we've had a lot of, I would say very interesting discussions. I think one of the things that we have... thought a lot about is where are the opportunities in music? And I think it could be really interesting to just understand that a bit. Like for you as an outsider, as of right now, and also realizing that you obviously don't know the full scope, that's also part of the journey with the new podcast. Where do you see there is an opportunity in music and where do you see there isn't an opportunity in music? And when I mean opportunity, I mean good business.

Taj

Honestly, context is music industry from my perspective is very hard to make money for the one simple reason because it's a passion economy. And whenever there is a passion economy involved, there has been traditionally a rule that people will not care for money and that is where the biggest damage is done to the industry. Because imagine you are producing a music piece because you passionate about it and you have put 10, 15, 20 hours and you say I will not charge, I will charge very less. The damage it is doing to others is that those who went to university, those who spent like really good amount of their life, when they come out to the market to ask for money because there is already free stuff available. And I'm not against people producing free stuff out of passion, the real danger what it does it, kills the person who is, it kills the economy for everyone. It doesn't happen in coding industry, technology. It doesn't happen in oil and gas. It doesn't happen in FMCG. It happens nowhere. It is only in the music industry that because of passion, a lot of free, I would not say a lot of subsidized and highly extremely subsidized product is created, catered and flooded again and again in the market. And then those who want to create really nice stuff. because then it's not practically possible. So that is the biggest challenge. So where I see if you somebody wants to make money out there is simply the number one thing is I don't see where is and there's a second bigger problem is that the music by and large has been consumed for free by and large like and I'll always give this a nice analogy when you go when you consume a bottle of wine Everybody, because the last person consuming is me on the table of a restaurant, I pour it and I drink it. The moment I drink it and I pay 500 Krona or 50 Euros of it, everybody from that consumption get paid till the two years back of somebody who has planted grapes. Now the problem with the music industry is when I'm listening into your song, I'm not paying anything. Now the end consumer, is which me who has listened to the song has not paid anything. Somebody needs to pay in this value chain.

Taj

And the last consumer is not paying it. What it does, the ultimate damage it does to the whole value chain is that the last consumer didn't pay. So, now everybody is trying to find more innovative and creative ways we have to make out of money. Because somebody has to pay in the end.

Jakob

Mm.

Taj

So these are two very clear observation I could be absolutely wrong but these are an opts out of observation. I have not read any book in theory but this is my general understanding. Where I think there is money is again then you create a solution for somebody who is trying to create a music not the end consumer. Because it is proven end consumer won't pay. Now a lot of people put Spotify and Spotify is just one of the small part of the world of music. Spotify is not everything. I mean obviously we can say in scale and volume but how many people have got Spotify subscription? Lot of music is anyways available for free. So I think if there is a money that is to be made it will always be made in the B2B solutions. That's a specific word. And helping either create music, distribute music, publish music, push music, market music. Something that helps music get pushed. It is neither in the creation part nor in the end consumption part. Because creation is happening free because you have passion economy. Consumption is because end consumer doesn't want to pay. Then where do get money? It's always in the between. And obviously somebody will always find an intelligent way to create money at the creation level or at the consumption level. Somehow depends. But the major chunk is in between that. I believe that is why we are always at amplitude focus on solutions which are B2B oriented and less on the B2C.

Jakob

Mm.

Taj

Site.

Jakob

Yeah, I think that's really important. And that's also, I think, where some founders get a bit hurt or disappointed is if you go on my LinkedIn and you read some of the articles I've done on music tech financing, I provide some pretty clear, it's called evidence on our arguments here. So you can go and read them. But there is there's only specific places in music where there's really money to be made. And We're quite bullish on that because all the numbers points to that. But anyways, and not because that needs to be a bit focused on the podcast as an agenda, it's just important to know that there's places to make money and there's places not to make money. But the core part of that is that you need to most likely know music quite well in order to have a place in this market, but you also need to know business quite well. And then there's several complexities. Also in some of my articles, I talk about industry market fit, which is a term one of my good friends, Vicky Nauman has coined. And that is most founders are used to the two terms product market fit and investor market fit, which basically means you need to have someone who wants to buy your products and you need to have investors that believes in your products. But the music industry has a quite particular extra layer, which might come from a lot of industries, but in particular, particular music. that is industry market fit that there's sentimental. bureaucratical, political, gateholder fits that needs to be addressed as well. And for that, the knowledge of the industry can be quite key. And so this is where we need to navigate this. So if anyone here is listening to Sound Connections podcast right now, and some of the conversations that I have are just way too philosophical or like doesn't really cover the basis of what you need to have. We won't announce the name of this podcast yet. It will launch in about a month's time, but you can follow our channels closely. Then you can go to a new podcast and sort of deep dive into that. But Taj, what do you believe will be the output of this new podcast? Like what kind of audience will we reach and why do they need to be addressed?

Taj

So, of this, actually how did this podcast originated? It originated actually, the idea of it was born in slush actually. So, and Jacob went to slush this year and then we were sitting and I was listening to a of interesting people in slush, a lot of meta people. What I realized that there are two categories of people in this space. Number one, who... who are from inside the music industry. When I say inside, somebody who has been associated with music in direct or indirect form for at least five to seven years. Because two, three years you're doing your own stuff and then after two, three years the reality hits on your face. I said there's money. And then you start figuring out where it is money and then everybody finds money in some space or another one. And then the second category is the people who are really passionate about music but they have not been inside the music industry, inside the proper industry and they think that they can make some difference in creating an economy. So in a very simple nutshell what I would say there is something called business of music and there is nothing called a business in music. So sound connection is more primarily targeted at business of music. Because anybody and everybody you listen and hear there know like things in and out. And then now within that industry they're talking about one of the intricacies in music. But we realized that there is a big gap. for business in music people who want to start a business in music and i think so that category is i see the biggest strength in that category is that they've already done substantially good in something and they want to enter the music industry because they want to believe in it they believe the first they don't make it they don't believe in making money because have they believe in making the money there are better ways they know themselves very well

Jakob

Hmm.

Taj

But they believe more in music and they see because they believe in music, then the business will come. And I think so that is where they get a little wrong. That you believing in music is a very good thing. Belief and action and outcome are two different things. You like you're passionate about music, that's fine, nice. You want to start a music, that's fine and nice. But then the moment you're starting a business, the ultimate reality is profit. How can you make a profit in industry which is already too fragmented? And that is where we realized that there is a need for a podcast, especially dedicated to people who want to start a business in music. So that's how this whole idea germinated and obviously we worked in layers and layers and layers and then after a point we got quite convinced that there is a need for that and that's how we thought we should start.

Jakob

Hmm.

Jakob

Yeah. So Taj, we'll keep this episode short because it's just like a quick touch upon sort of the year that has come and our reflections and sort of what we want to do is spin off for next year. But we are going to raise the ambitions for both the new podcast and this podcast. So guys, if you want to have more information about our company, go to Amplitude Ventures. Follow us on LinkedIn. Follow our channels. We'll be very present there. This is just one out of multiple spin-offs we'll do in the future. At the end of the day, we believe that there is business to be made in music, but you need to be smart. That needs to be done research. You need to look at the numbers. You need to look at the money. And over these next year to come in 2025, that's what we try to help you understand where this business to be had. Because we support innovators and founders. But the reality is, you know, I've been a founder in this space for 12 years. It's a pretty sucky industry. Like it's, you know, I would, I would do it all over again because I have a particular hunger for, self-infliction of pain to some degree. But, but besides that, then it must be a better ways of pursuing a career than the way that I have done it. And that's to pursuit. We're on now. Like what is the better way and how can we share it with you guys? And so thank you for taking. responsibility upon yourself also to taking that different angle. think that can be really helpful.

Taj

Thank you so much and I believe that... I don't know whether there's money or not but I certainly believe if you're starting a business in music the first word you hear is business and in the next podcast for the next coming year I'll just try to make my best to make sense whether there's a business or not because music anyways you believe in it so what my job is to make you believe whether there's a business or not because ultimately I believe that When there's money, then everybody's happy. But thank you so much, Jacob, for having me here. thank you everyone for listening. And I hope you'll enjoy the podcast when you break it.

Jakob

Yeah, thank you. I normally say to the guests, I hope we talk again soon, but I'll probably talk to you in 10 minutes.

Taj

You have another meeting starting in five minutes. So yeah, bye. Take care of yourself. Bye.

Jakob

We'll talk soon Tash. Have a good day.