Today, I\u2019m talking with Golnar Khosrowshahi, the founder and CEO of Reservoir Media, a newer record label that I think looks a lot like the future of the music industry.<\/p>\n<\/div>\n
You might not have heard of Reservoir, but you\u2019ve definitely heard of the artists it works with. Everyone from A-ha and John Denver to Evanescence to Joni Mitchell and even legendary film composer Hans Zimmer. What makes Reservoir different is that Golnar built the company through acquisitions.\u00a0<\/p>\n<\/div>\n
You might think of a traditional record label as sending people out into dive bars to find new talent and then break new artists. But Reservoir doesn\u2019t do any of that. It buys catalogs of existing hit songs from established artists. Reservoir owns the songwriting copyrights to about 150,000 songs and another 30,000 copyrights in master recordings.\u00a0<\/p>\n<\/div>\n
Listen to Decoder<\/em>, a show hosted by The Verge<\/em>\u2019s Nilay Patel about big ideas \u2014 and other problems.\u00a0Subscribe\u00a0here<\/a>!<\/p>\n<\/div>\n<\/div>\n<\/div>\n As Golnar explains, Reservoir thinks of those individual songs as assets, and after acquiring them, the company sets about monetizing those assets in various ways. This is a copyright-based business in an age where copyright is under a lot of pressure. There are the familiar issues on social platforms like TikTok and YouTube. And now, there are new existential issues created by generative AI tools. You\u2019ve all heard of fake Drake. Fake Drake is going to upend copyright law<\/a> one way or another, and it\u2019s the music industry that traditionally leads the charge in pushing back.\u00a0<\/p>\n<\/div>\n Golnar founded Reservoir in 2007. She\u2019s been in this game for a long time, and she\u2019s seen a lot of tech-related changes come and go. But now, there are huge companies and private equity firms pouring tons of money into the same catalog-based business model, sometimes with disastrous results.<\/p>\n<\/div>\n You\u2019ll hear Golnar say all of her competitors seem to have a billion dollars to spend on songs. And you\u2019ll hear us talk about a company called Hipgnosis, which spent a ton of money building a giant catalog<\/a> but now has very unhappy shareholders after that catalog wasn\u2019t worth what they were promised.<\/p>\n<\/div>\n Of course, Golnar and I also talked about AI and training AI systems. A lot of record labels are very unhappy that their copyrighted work is being used to train generative AI tools. And a lot of artists are even more unhappy that their voices are being used by AI systems. Golnar has some surprising thoughts here and one very instructive example she brought in to share. It\u2019ll definitely make you think about who should be making money on what and when.<\/p>\n<\/div>\n If you\u2019re a Decoder<\/em> listener, you know that I love thinking about the music industry. Whatever technology does to music, it does to everything else five years later. So paying attention to music is the best way I know to get ahead of the curve. I also just love music. Golnar is herself a musician. She obviously cares about music a lot, and she\u2019s clearly given a lot of thought to what happens next. So this was a great conversation.\u00a0<\/p>\n<\/div>\n Okay. Golnar Khosrowshahi, CEO of Reservoir Media. Here we go.<\/p>\n<\/div>\n Golnar Khosrowshahi, you are the CEO and founder of Reservoir Media. Welcome to Decoder<\/em>.<\/strong><\/p>\n<\/div>\n Thank you so much for having me.<\/p>\n<\/div>\n I am really excited to talk to you. Reservoir Media is kind of like a new-look music label. It\u2019s newer than sort of the big giants that are floating around. You have a different approach to the business model, and as I was just saying to you, I really think that whatever happens to the music industry happens to every other kind of creative industry five years later. I\u2019ve been saying this since we started The Verge<\/em>.\u00a0<\/strong><\/p>\n<\/div>\n So I\u2019m always trying to figure out what is going on in music right now because then I seem like a genius when it happens to TV or Hollywood five years from now. And there\u2019s quite a lot going on in the music industry right now. The whole industry is restructuring itself. There\u2019s AI to talk about. Distribution on the internet seems to be changing. Marketing seems to be changing. It\u2019s a lot, but let\u2019s start at the very beginning. What is Reservoir Media, and why\u2019d you start it?<\/strong><\/p>\n<\/div>\n You\u2019re characterizing us as the new look, but here we are, a precocious teenager at 16 years old. We started as a publisher, and we built the business from there, acquiring rights. It really wasn\u2019t until a few years in that we bought a very small recorded music catalog, Philly Groove, and then it really wasn\u2019t until we acquired Chrysalis Records in 2019 that we got into the label business. So our business really is focused on publishing, and we are looking at sort of revenues that are 70 \/ 30 publishing versus recorded.<\/p>\n<\/div>\n And just for the listener, publishing is songwriting.<\/strong><\/p>\n<\/div>\n Songwriting, we own copyrights, we own the intellectual property. We own the words and the music, and that\u2019s a really, really important distinction versus the recorded music where you own that actual sound recording, that specific recording. When you own the publishing to a song like \u201cTake Me Home, Country Roads,\u201d there are 500 covers of that song on streaming platforms. So you are monetizing that every time that copyright \u2014 those words, those notes \u2014 are used, regardless of whether it\u2019s me or you or John Denver. Master recording is only\u2026 we don\u2019t own the master recording rights to that song particularly, but it\u2019s that particular execution. So that\u2019s the distinction there.<\/p>\n<\/div>\n And then when you bought Chrysalis, you own the masters from Chrysalis, and you own Tommy Boy Records as well\u2014<\/strong><\/p>\n<\/div>\n … then those masters. So you have a pretty broad base of copyrights.<\/strong><\/p>\n<\/div>\n We do, and it\u2019s been interesting growing that business, and we\u2019ve had incredible opportunities come before us. The Tommy Boy opportunity was just amazing<\/a>, and then what we did with it afterward and with De La Soul, and the release of all that music was really a pivotal point career-wise, personally and professionally.<\/p>\n<\/div>\n When I say it\u2019s a new-look kind of company, I recognize it\u2019s been around for a while. What interests me the most is you have built the company through acquisition of really successful existing catalogs.<\/strong><\/p>\n<\/div>\n When I think of a record label, I think of I\u2019m going to go discover an artist, we\u2019re going to pair them with a songwriter, we\u2019re going to put them in a studio, we\u2019re going to go market the hell out of some hit singles. Oh, look, it\u2019s Justin Timberlake. We\u2019ve done a thing.<\/strong><\/p>\n<\/div>\n That was the \u201990s approach. That was basically the approach that I grew up in understanding the music industry. We discover talent, we market the talent, we create new talent, we burn them out, we find some new teenagers, and off we go again. That was the music industry. You\u2019re really focused on, \u201cOkay, there\u2019s a bunch of catalogs that are really valuable, and we\u2019re going to acquire them and then we\u2019re going to get value out of them.\u201d Is that a fair characterization that you\u2019re kind of on the other end of it?<\/strong><\/p>\n<\/div>\n I think so. We never really got into the business with the intention of developing a frontline label that was going to develop artists like Justin Timberlake. That\u2019s an expensive proposition\u2026 we\u2019re slightly more risk-averse than that.<\/p>\n<\/div>\n We look at buying these existing assets and what we can do from a value enhancement standpoint and what that translates to in the form of organic growth. That\u2019s what\u2019s really important to us. That\u2019s how we believe we\u2019re building long-term value for ourselves, for the artists, for the songwriters, regardless of who that other rights holder partner is that we have in the equation. And every deal is different. That continued value enhancement is what\u2019s really important to us. And yes, you\u2019re right: we\u2019re not out there finding the next thing. That\u2019s a different business, and I\u2019m not sure how effectively a company our size, with our risk profile or appetite for risk, can compete with others in that area.<\/p>\n<\/div>\n This is a really fascinating fracturing of the industry in my mind: on the one hand, the discovery marketing of new artists, the social platforms are just completely encroaching on that. And I hear from young artists, \u201cThe labels won\u2019t even talk to me until I have so many followers.\u201d I have a person I went to college with [who] literally got a record deal by buying followers on Twitter, and then that got him some attention. This is crazy. This is a thing that has happened in the past. You\u2019re saying we\u2019re going to leave that aside. That seems like the big labels\u2019 business. We\u2019re going to go find successful artists and help them get more from their existing catalogs, help them gracefully retire. What\u2019s the pitch there?<\/strong><\/p>\n<\/div>\n Every pitch is different, and it really depends on where you are on your creative journey and where you are in your life and are you 30 or are you 60? Are you wrapping things up, or are you thinking about estate planning and legacy, or are you looking at what your next portfolio looks like? <\/p>\n<\/div>\n So, every deal is different, but I think the pitch from a bird\u2019s-eye standpoint is we want to be your creative partner in your musical journey, whatever that means. That could be a \u201cgo forward\u201d deal, that could be, \u201cWe\u2019re going to buy the back catalog, and we\u2019re going to partner with you and enhance the value of this catalog.\u201d It really depends on who the client is because our goal is to be in business with people long term, and I think that if you cater to and satisfy people\u2019s needs and their objectives, then you can have a pretty good shot at staying in business with people.<\/p>\n<\/div>\n You have quite a long list here. Joni Mitchell, John Denver, De La Soul, Evanescence, Hans Zimmer\u2026 It\u2019s a pretty intense range. Some of these artists are pretty current and relevant, some are older artists, quite frankly. Do you have different strategies for each of these catalogs? You say, \u201cOkay, we have the publishing right to a Cardi B song \u2014 our songwriters wrote the Cardi B song. We can go out and license those for television or advertising. But then you\u2019ve got Louis Prima, and I\u2019m assuming that\u2019s a different strategy. <\/strong><\/p>\n<\/div>\n It is a different strategy. I would rather say that the strategy is different for each song versus the writer.<\/p>\n<\/div>\n How many songs do you have in the catalog?<\/strong><\/p>\n<\/div>\n 150,000 on the publishing side, just over 30,000 on the recorded side. <\/p>\n<\/div>\n So this is a little bit of a bigger theme in that we do everything on a song-by-song basis. We actually assess value on a song-by-song basis. A lot of people assess value on an income-type basis, but if you look at somebody like Hans Zimmer, you\u2019re looking at a portfolio that dates back to Driving Miss Daisy<\/em> up until films from a few years ago. Very<\/a>, very<\/a> different<\/a> films<\/a>. You can\u2019t really look at these assets. You can\u2019t look at Driving Miss Daisy<\/em> and Kung Fu Panda<\/em> as the same thing. They have a different audience, different music, different genre. It\u2019s all very different.<\/p>\n<\/div>\n So I think it\u2019s really important to look at song by song, especially because you\u2019re dealing with songwriters who have this range and who could do all kinds of work. And so the pitch is different. The pitch is different for every song, but the pitch is focused on film placements, and it\u2019s focused on advertising placements. Digital licensing is super important for us. We were the first independent to actually do a direct deal with YouTube. That was back in 2014, I want to say. So we do things at a very granular level, but we can because we only represent 150,000 songs. <\/p>\n<\/div>\n It\u2019s the benefit of being nimble and independent and small.<\/p>\n<\/div>\n So there\u2019s a huge surge of money into companies that look like yours\u2014<\/strong><\/p>\n<\/div>\n Everyone has a billion dollars.<\/p>\n<\/div>\n … like KKR and BlackRock and Blackstone \u2014 not the grill company, the huge hedge fund. We\u2019ve had the CEO of Blackstone, the grill company; we\u2019re working on the hedge fund. But these are huge private equity funds just dumping money into these catalogs. They have a pretty shaky investment thesis. I can never quite figure out why they want to own Pink Floyd\u2019s catalog or whatever. I can kind of understand your investment thesis. It seems like on a song-by-song level, you can evaluate, \u201cOkay, here\u2019s the earning potential [of] this song.\u201d But in general, is there a model that you use that says, \u201cOkay, we own 150,000 songs, we paid X dollars, we can expect Y return.\u201d<\/strong><\/p>\n<\/div>\n Sure, we can get to that top-line number, but the engine behind that is the song-by-song information, and that song-by-song information can be organized by our top earners. So we can say, \u201cLook, this many songs contribute to 80 percent of our revenue.\u201d And that\u2019s going to give us, \u201cWe paid X. This is now worth Y. Here\u2019s our return.\u201d But it\u2019s still the engine behind it is song by song because you\u2019ve got portfolios of songs where you have significantly more valuable songs in completely different genres. <\/p>\n<\/div>\n I think the investment thesis for a lot of private equity is that you are looking at uncorrelated assets that behave very much like annuities, that have dependable cash flows in an industry where the data around growth and monetization is becoming more and more compelling every single day. That\u2019s in Western markets, coupled with compelling data in the emerging markets. So that\u2019s a pretty good investment thesis. And then it becomes a pretty great investment thesis when you\u2019re operating in troubled macroeconomic times. I think that\u2019s the motivation there. It\u2019s also\u2026 it\u2019s fun.<\/p>\n<\/div>\n Well, there\u2019s that part of it.<\/strong><\/p>\n<\/div>\n A bunch of rich guys want to buy some Boomer music catalog. I get that part of it. The thing you\u2019re describing, we\u2019re going to describe massively important cultural works as annuities, and those are going to be safe investments in troubled… Isn\u2019t that a little bit heartbreaking? To me, as somebody who is very much a creative, and you yourself are a musician, there\u2019s something heartbreaking about that, right?<\/strong><\/p>\n<\/div>\n There is, and there isn\u2019t. There\u2019s something heartbreaking in that something that someone considers their child, which is really how these bodies of work are thought of by their creators \u2014 is thought of as an asset, has that label \u201casset.\u201d So that\u2019s heartbreaking. <\/p>\n<\/div>\n And commodified, 100 percent.<\/p>\n<\/div>\n … inside of that language switch is a commodification.<\/strong><\/p>\n<\/div>\n Exactly. It has economic meaning around it. At the same time, it\u2019s really also nice to see creators be recognized for their work in the long term. That\u2019s not heartbreaking. That\u2019s great to see that their art, their child, has that kind of longevity.<\/p>\n<\/div>\n Yeah, I think this is the central tension of the entire music industry. In particular, I feel like Hollywood people are like, \u201cWe want to be rich.\u201d And many musicians are like, \u201cWe would prefer not to think about it.\u201d<\/strong><\/p>\n<\/div>\n Right, and so when are you hitting that edge of selling out versus\u2014<\/p>\n<\/div>\n Do you think the artists care about selling out anymore? So I\u2019m a huge Clash fan, and there are stories like when they bought their first cars, they were in a moral crisis, and I just don\u2019t think the artists do that anymore.<\/strong><\/p>\n<\/div>\n I don\u2019t think so. I think that you have enough people in the music industry who are revered for their art doing these kinds of deals such that the stigma associated with doing the deals and, hence, selling out is… Maybe it hasn\u2019t disappeared, but it certainly\u2026 it has been reduced.<\/p>\n<\/div>\n So the value of the catalog over time, you described it \u2014 the private equity guys think of it as an annuity. I know that you care about them as deeply cherished pieces of art \u2014 but if you describe a catalog as an annuity, we\u2019re going to buy all of John Denver\u2019s catalog. <\/strong><\/p>\n<\/div>\n This is now going to generate returns at some rate for some amount of time. At some point, the fan base is getting older, maybe spending less money, maybe harder to advertise to. And you\u2019ve got younger fans who need to be initiated into John Denver\u2019s music, but they\u2019re on TikTok, and they\u2019re flooded with a bunch of new music. Is there an expiration date on these annuities?<\/strong><\/p>\n<\/div>\n I think about that a lot because I have two 21-year-olds. So, are they going to be listening? Do they even know what this song is? And where I have come to is, a great song is a great song, and great lyrics are great lyrics. So [the] next generation may not know John Denver, may not know his story, may not know this song, but if Google is taking this song and putting it in a commercial and launching Google Home during the Super Bowl with this song \u2014 an instrumental version, no lyrics \u2014 I feel that it\u2019s going to continue to have staying power and relevance. There were several different iterations of this song in The King\u2019s Man<\/em> \u2014 I think maybe five different iterations.<\/p>\n<\/div>\n That\u2019s a film that was catering to, probably, an 18 to 54 demographic \u2014 a wide demographic. So, again, people might be listening to that music and not knowing the history behind it, but it\u2019s a great song with a great melody and great lyrics. I think that relevance will continue.<\/p>\n<\/div>\n And do you chart that on a curve? The relevance will continue, but the instant hit of nostalgia that makes you buy a Google Home will decline for the younger audience. So the value of the song by song will decline.<\/strong><\/p>\n<\/div>\n So we don\u2019t really look at it that way. We look at a rate at which cash flows will be generated over time. We have certain periods where there\u2019s a plateau. You see spikes every so often as it relates to something like The King\u2019s Man<\/em> event or some kind of big film sync event. And then we sort of smooth that out over time. So that\u2019s really how we look at it. And something like that is really in a mature state, and so it has plateaued.<\/p>\n<\/div>\n You have some competitors in this world. Everyone has a billion dollars, as you said. The big one was called Hipgnosis, which, just this week, is in a moment of bizarre controversy.<\/strong><\/p>\n<\/div>\n And because it is a British company, the British press is covering it. They\u2019re having the time of their lives <\/strong>covering this controversy<\/strong><\/a>. We\u2019ll link to some of the stories, but basically, they wanted to sell some of their catalog to another part of the fund. They had to take some offers \u2014 nobody bit. So they made the sale, and their shareholders were like, \u201cNo, this is a disaster.\u201d The founder might leave. You could take that as evidence of owning these catalogs does not deliver the returns that it costs to build them. What do you see this as evidence of?<\/strong><\/p>\n<\/div>\n I can\u2019t comment on somebody else\u2019s business.<\/p>\n<\/div>\n What I can say is that we take a conservative approach as far as how we value these catalogs. We look for compelling data around growth. Some things may be subject to growth, and some things may not. And we tailor that to the assets that we\u2019re looking to buy. We take into account our cost of capital, which, keep in mind, we did business for 13, 14 years with zero cost of capital to today\u2019s cost of capital. That\u2019s a very different environment to operate in. We had no cost of capital for that long. In fact, we had only known that environment.<\/p>\n<\/div>\n Just to unpack that for the audience, you\u2019re talking about the zero interest rate environment\u2014<\/strong><\/p>\n<\/div>\n … and now it\u2019s very different.<\/strong><\/p>\n<\/div>\n We only operated in a zero interest rate environment, and now we\u2019re not. So we, too, take that into account, and it\u2019s important for us to create long-term value and return for our shareholders, and we\u2019re conscious of that. So we\u2019re never going to do a deal that doesn\u2019t have the numbers that qualify for us making that investment. <\/p>\n<\/div>\n We\u2019re really passionate about music. We are all musicians, somewhere along the way, we are trained. We love music. We\u2019re really dispassionate about our investments, and that\u2019s important. I know that that\u2019s how we have run the business thus far. That\u2019s how we hope to continue to run the business. I think people have gotten very, very excited about music, about music assets, about subscriber growth. There\u2019s just been a lot of press, a lot of education, and sometimes you might, what\u2019s the saying? Get over your skis. So perhaps that\u2019s the situation.<\/p>\n<\/div>\n That was very polite. That was a very polite way of describing what\u2019s happening to your competitor right now\u2014<\/strong><\/p>\n<\/div>\n I\u2019m a very polite person, and I would say that bad news in music is bad news in music. There was a lot of traffic last week around accruals, for example, and how people were accounting for accruals over the course of the past year with the new royalty rates. That\u2019s bad news for music. Now, there is no issue around that, but do you see what I\u2019m saying? We want generally… Investor positivity around music is important.<\/p>\n<\/div>\n I want to ask a couple of the Decoder<\/em> questions, and I want to talk about AI, and I want to talk about where copyright law is going because those things seem to be crashing into each other, and you are very much at the center of those two ideas. But real quickly, tell me how Reservoir is structured. How have you organized this business?<\/strong><\/p>\n<\/div>\n We are a very lateral organization, and we have been since day one. We continue to grow that way. I think that at some point, you get to a point of tension where it\u2019s not possible to continue with that flat hierarchy, but we haven\u2019t hit that yet, and it hasn\u2019t been a problem for us. But that\u2019s a lot to do with our culture. We\u2019ve had zero senior-level management turnover since inception. That has a lot to do with our culture. It\u2019s a very open environment with people who have grown in lockstep with the company, and I think that\u2019s just been really important. And I\u2019m both proud of and indebted to my team. That\u2019s a little bit about how we\u2019re structured.<\/p>\n<\/div>\n But get into it. So the function of the company: you go, you make acquisitions, and then you license them out.<\/strong><\/p>\n<\/div>\n Right, yeah, but I\u2019m just saying mechanically\u2014<\/strong><\/p>\n<\/div>\n And then I go home. [Laughs]<\/em><\/p>\n<\/div>\n … you buy some stuff. You do a bunch of licensing deals. You must account for where the revenue goes. How is that structured?<\/strong><\/p>\n<\/div>\n See, on Decoder<\/em>, everything\u2019s very simple.<\/strong><\/p>\n<\/div>\n That\u2019s fine. I\u2019m going to decode it for you. When we buy the stuff, there is a team of six people who are analyzing stuff. Those six people are really working during that deal process. Once we complete the transaction and we finish all of our underwriting and we finance the deal, we then have an ingestion process. That ingestion process is kicked off with a meeting that involves all the different functional areas so that people know, \u201cHey, we just bought this asset. Here are the rights that we\u2019re getting with this asset. Here\u2019s what we need to do with ingestion. Here\u2019s what we need to do with administration. Here are the rights that are not covered. Here are the territories that are not covered.\u201d Every deal is specific. \u201cHere\u2019s how we\u2019re going to ingest it into our licensing system, etc.\u201d<\/p>\n<\/div>\n From there, digital licensing sync, etc., has a lot to do with actually taking the metadata associated with the music and then starting to pitch it out and register it and claim it and do all of the things that we do on the digital side. We also have marketing involved the entire time along the way because they will announce the deal. We will think about when we\u2019re announcing the deal. There\u2019s obviously some relationship building that needs to happen if it\u2019s a new client, not somebody that we\u2019ve been in business before somehow or another. And there\u2019s a lot of creative discussion around what we can do with the catalog, especially if it\u2019s a relationship where it\u2019s catalog and an ongoing relationship with an artist. So that\u2019s something that we\u2019re focused on with our creative team. And then anything else that\u2019s specific to that deal.<\/p>\n<\/div>\n At the same time, everything\u2019s being loaded up and ingested by our royalties team to prep for next royalty runs and how these people are getting paid based on what rights, etc. It\u2019s a lot of very, very detailed work that goes into buying the stuff, getting the stuff, selling the stuff.<\/p>\n<\/div>\n Right. You\u2019ve had to operationalize quite a lot of licensing deals and royalty deals.<\/strong><\/p>\n<\/div>\n That\u2019s up against the platforms, right? In large part, you\u2019ve got big digital music distributors: Spotify, Apple, TikTok, YouTube. Do you have to build technology or have relationships to reconcile how those platforms think about royalties?<\/strong><\/p>\n<\/div>\n We haven\u2019t had to build technology, and we\u2019re not software developers, and I don\u2019t see a world where we do that. I see a world where we are always going out and buying the best technology that we can to actually accelerate our systems. So, for instance, we use DISCO to manage a lot of the music and how we license the music, etc. Relationships are very important with our DSPs [digital streaming platforms], and we are always looking to cultivate and evolve the relationships that we have there and continue to just improve and make the licensing more efficient and have relationships that go across marketing and playlisting and all kinds of things like that that can be beneficial to our catalog.<\/p>\n<\/div>\n Because you have catalog, when you talk about playlisting and marketing, you\u2019ve got catalog \u2014 you don\u2019t have new stuff. A lot of the pressure on those services is promote new stuff, break new artists. Do you have people who are saying, \u201cOkay, we got to get some TikTok dances going on John Denver?\u201d<\/strong><\/p>\n<\/div>\n You do? How does that work?<\/strong><\/p>\n<\/div>\n I mean, it works exactly that way. We have people in marketing whose expertise is looking at how you can… I don\u2019t know if it\u2019s John Denver, but\u2014<\/p>\n<\/div>\n I just like picking on John Denver. I imagine Cardi B is a little bit easier than John Denver. <\/strong><\/p>\n<\/div>\n But we have a team that is pitching this all the time. Again, the record side of our business is not the largest part of our business, but it\u2019s… As you said earlier, part of your value is determined by your numbers on social media, whether you\u2019re a new artist or an existing artist, a new catalog, existing catalog, those views, those eyeballs that you have are contributing to value.<\/p>\n<\/div>\n Do you look at something like\u2026 the joke I keep making is that I\u2019ve been trying to get away from Fleetwood Mac since I was in high school and\u2014<\/strong><\/p>\n<\/div>\n … I can\u2019t escape this band. They just keep coming back. Do you look at something like the resurgence of Fleetwood Mac?<\/strong><\/p>\n<\/div>\n And say, \u201cOkay, this is an opportunity for us. We have to operationalize that and figure out how to get value out of our catalog.\u201d<\/strong><\/p>\n<\/div>\n What does that look like? What does that marketing meeting look like?<\/strong><\/p>\n<\/div>\n I don\u2019t really participate in that marketing meeting, but you look at music… Cigarettes After Sex, that\u2019s music that has had a viral moment that certainly was not their audience. And yet when you attend a show that they had, say, in the last month, you\u2019ve got a completely different demographic than who was listening to their music because of the viral moment. So those are the types of events that you can\u2019t predict them. You can\u2019t plan them down to a very granular level, but you can certainly start developing opportunities around them. Not everyone\u2019s going to work, but that\u2019s what that team is focused on.<\/p>\n<\/div>\n Alright, last Decoder<\/em> question. Maybe the most important one. How do you make decisions? Do you have a framework for making decisions? What does that look like for you?<\/strong><\/p>\n<\/div>\n Yeah, that\u2019s mine. I feel like every CEO on the show wants to say, \u201cI don\u2019t know, man. I just make it up.\u201d And then they tell me about Amazon or something. But what\u2019s yours?<\/strong><\/p>\n<\/div>\n I like to sit on things. I think it gives you perspective. I definitely see myself changing my mind. So when I have time, I really take the benefit of that time. I\u2019m super conscious about not focusing on the wrong thing and not focusing on the noise. When I\u2019m making decisions, I feel like I\u2019m looking at a bucket of stuff, and I need to take everything that\u2019s irrelevant out that\u2019s really clouding my judgment. And once I do that, I do certainly have a lot of clarity. I walk through a lot of consequences with decisions because I think that real-life walkthrough helps how you think about the outcome. So that kind of sums it up.<\/p>\n<\/div>\n An enormous set of decisions you\u2019re going to have to make in the future is around AI, is around fighting through the courts to change copyright law, is about deciding whether to sue some of the generative AI companies around training. I want to come to that because I think that\u2019s a huge, thorny problem that you are well suited to speak to. But I first just want to get a sense of how you think it\u2019s going in the industry right now.<\/strong><\/p>\n<\/div>\n So we just had <\/strong>Larry Lessig on the show<\/strong><\/a>. I know you listened to that episode. His view is that fair use in the music industry is the worst of it all: that the things that I can do in text by quoting The New York Times<\/em> are just not allowed by the norms of the music industry, and there are infinite stories about publishing rights getting taken away from songwriters because they quoted a song. There\u2019s the Ed Sheeran lawsuit, you name it. It\u2019s bad. And we\u2019ve come to the place where major record labels are setting up songwriters with catalogs to do interpolations in new songs. So all new songs are now built on old songs because everyone\u2019s terrified of copyright lawsuits. Is that workable? Is that a steady state? Does that need to get fixed? Because I feel like if we don\u2019t talk about that part first, the AI conversation just begins on really shaky ground.<\/strong><\/p>\n<\/div>\n I don\u2019t think any of us are changing copyright law anytime soon.\u00a0<\/p>\n<\/div>\n The people who would be leading that charge from my conversation seem to be hesitant about going down that road because of the unexpected results that could come about in other changes in that exploration. So it\u2019s almost the devil you know is better than… What\u2019s the saying? I\u2019m very bad with my idiomatic phrases.<\/p>\n<\/div>\n The devil you know is better than the devil you don\u2019t. I think it\u2019s that simple. I might get it wrong, but I think\u2014<\/strong><\/p>\n<\/div>\n What you know is better than what you don\u2019t know. So that\u2019s a little bit of the conversations that I\u2019m getting. I think you\u2019re always going to have these types of infringement lawsuits come out of the woodwork. I do think technology is going to help predict what\u2019s happening there. I think that we might live in a time where songs get delivered and they actually go through some kind of assessment of likelihood.<\/p>\n<\/div>\n You have to tell the computer how to measure that likelihood.\u00a0<\/strong><\/p>\n<\/div>\n And that feels to me like right now, the likelihood is a bunch of copyright owners like yourself deciding that the value of the catalog is suing Ed Sheeran for a new song that has nothing to do with the catalog but might sound alike or share a chord progression. And that feels like it\u2019s on the shakiest ground right now.<\/strong><\/p>\n<\/div>\n That\u2019s very much on the shakiest ground. That\u2019s not enough. I mean, there are a finite number of notes, chord progressions, combinations. Every creator today, consciously or subconsciously, has been inspired by something in the past. The extent to which a work is a derivative of work is what is that gray area and where there needs to be a decision. I think we\u2019re always going to have these types of infringement cases. The degree to which they have legs to stand on today has certainly been compromised, I would say.<\/p>\n<\/div>\n Yeah, it feels like fair use in music is more of a coin flip than ever before, and the risk of going to court, maybe you\u2019ll get the \u201cBlurred Lines\u201d verdict, or <\/strong>maybe you\u2019ll get the Ed Sheeran verdict<\/strong><\/a>. <\/strong><\/p>\n<\/div>\n And that is a total coin flip. I couldn\u2019t tell you why Marvin Gaye\u2019s estate\u2014<\/strong><\/p>\n<\/div>\n … got the money in \u201cBlurred Lines\u201d and didn\u2019t in Ed Sheeran\u2014 <\/strong><\/p>\n<\/div>\n Because Ed Sheeran was in the courtroom.<\/p>\n<\/div>\n But that\u2019s what I mean by the coin flip. If you can only win if you provide Ed Sheeran and not on a legal basis, to me, that\u2019s weird. [As] an ex-copyright lawyer\u2026 and what I see is the music industry is like, \u201cScrew that. We\u2019re going to build our own private copyright law system where we\u2019re going to do all these side deals, and people will never really know.\u201d And you see young artists have to give their publishing to older artists just to avoid the controversy.<\/strong><\/p>\n<\/div>\n Well, I mean, whether that has to do with what\u2019s happening today for a young breaking songwriter, that\u2019s often been the cost of entry. So I don\u2019t think that\u2019s necessarily unique.<\/p>\n<\/div>\n