As chief digital officer and EVP, business development at Warner Music Group, Oana Ruxandra has been a prime mover in a host of new partnerships and tech experimentation for the major label group.
Ruxandra was the keynote speaker at the NY:LON Connect conference in London this morning, interviewed by Sophie Goossens, partner at Reed Smith about how she sees the evolving music industry. She began with a sharp assessment of some opportunities that have been missed in the streaming era.
“Over the last decade or so, we’ve been in a world of streaming, and streaming has really been defined as a 10-dollar product… that evolved based off of licensing deals that the major labels have given these streaming platforms,” she said, noting that listener habits have also played a role.
“That product has limited what we see as the potential of the music industry quite a bit,” she continued. “The streaming industry has evolved in a fairly conservative way.”
Ruxandra sees this as the result of the mindset in the music industry at the time the original deals with streaming services like Spotify were being negotiated, with the memories of the impact of filesharing services still fresh.
“The industry was fairly risk-averse, conscious of what technology could do to the ecosystem,” she said. “But we have a world today that I believe is feeling the confines of that risk aversion, and a lot of consumers are looking to expand the way in which they engage with music.” And also the way they interact with fellow fans around that music.
“Ultimately, before we were productising music and putting it on pieces of format and product and selling it, what music ultimately was were moments of consumption and moments of experience,” she continued.
“You would go to a show and have an experience… there was an exchange between the crowd and the artist.” It was about a community and about interactivity, as well as about listening to the music itself.
“We’ve gotten a little bit away from what music was. It is an experience, it is a moment, it is interactive and it is social,” said Ruxandra.
The conversation moved on to web3 technologies, and how Warner Music Group is approaching working with startups and artists alike around them. She stressed that she is not purely an evangelist.
“I’m not here to say web3 and NFTs is moralistically good or moralistically bad,” is how she put it. “There are ways to say any of this stuff is good or bad. It’s technology, and we understand that technology evolves… For us, it’s how do we position ourselves in a way to not only learn from the market, but also help to drive the market.”
“How do we invest in the brightest in this space? How do we start using these technologies? How do we start learning? Because we’re really excited about these opportunities,” continued Ruxandra.
“Our industry is vastly under-monetised… based on how much people consume our music, and how much our music changes culture. I think conservatism is out the door at this point!”
Ruxandra said that for WMG, the key appeal of NFT projects is building fan communities with artists, rather than making quick profits.
“How do we allow those fans to not only have access to those artists, but to buy into this community and also have a stake in that artist… and have a real impact on that artist and be activated to be an active community member?” she said.
“For us with NFT projects, it’s really about engaging that community in a more active way… We’re working on a lot of different projects, and none of them are short-term ‘let’s do this quick thing and win these quick dollars’. It’s not about that. It’s about how we engage these communities over the long term. [Solely] exploiting short-term revenue streams is not the way to run a music business.”
Ruxandra has also been piloting a number of WMG’s deals with companies in the games and virtual worlds spaces. She offered a future prediction about how fans are likely to be interacting with these digital environments.
“We as a world will not necessarily be on phones any more, and that hardware device we will be on and will be using over the next whatever number of years will probably be something that has to do with our eyes: glasses, contacts, implants,” she said.
So, the experiences may be about “walking around in space, consistently digitally augmented… and in those spaces, there’s just way more opportunity for the fans and the artists that they love to get together, and experience music together, and experience their lives together.”
Some of these projects bring virtual worlds or games and NFTs together, but not all of them. “If in a metaverse experience that we’re creating it’s helpful that we use NFTs as well, then we’ll use them. If it’s not, we won’t,” she said.
“There are a lot of people who are just using the technologies because they’re there. That’s not what we’re focused on. We’re using the technologies to make the communities stronger.”
Ruxandra talked about the opportunities, but also the challenges, that this will present to artists. She thinks that the biggest impact will be that it opens up new ways to make money for artists of all sizes, rather than just the biggest stars.
“There will be a middle class born out of the music industry of artists. It’s been tough to make money as an artist [in the streaming era] unless you’re really a global superstar, but I think that type of monetisation is going to change,” she said.
On the challenges side, however: “With artificial intelligence, there’s going to be that much more content.. it’s going to be that much more difficult to rise above the content, and to market yourself,” she said.
“The type of content and engagement is going to be pretty high frequency and is going to have to be pretty high quality. You always have to be on, always have to be something interesting and exciting, and that’s going to take a lot of effort.”
Ruxandra sees this as where labels will be able to help artists, but nevertheless warned that it will take effort. “There’s going to be way more monetisation and opportunities in our ecosystem, but those opportunities are going to take more work.”
She cited the games industry as important inspiration, where 75% of its revenue comes from engagement (people spending money within games on in-game or in-app purchases) and 25% from access (buying them upfront). She thinks that the music industry has figured out the access side with streaming, but is missing out on revenues from engagement.
“And I think that revenue will not just go to the global superstars, but to all levels of artists,” she added.
Once raised, the topic of creative AIs was ripe for digging into more. “I think that it’s going to be deeply impactful, and I think it’s going to be this year,” said Ruxandra of these technologies.
She set one principle out clearly. “The industry needs to be paid and our artists need to be paid based on the AIs that are learning off their music,” she said, before making another prediction about the likely impact of creative AI in the music world.
“The amount of music today: if you talk about Spotify for example, something like a million songs were being uploaded [annually] in 2016. Now it’s something like 20 million songs. That [increase] was based on tools that allowed artists to move from studios to desktops, but we’re now going from desktops to mobile,” she said.
“That 20 million is going to be 100 million over the course of the next couple of years… It will be possible to create professional-level content through AI and through your mobile phone… creativity will probably be different, and will change.”
Ruxandra thinks this could be a powerful thing for many people: they’ll be able to enjoy the process of creating music (or other forms of art) aided by an AI without the end product being “embarrassing”.
“I think people will re-learn this value of actually creating, and creating will become an experience. I think that’s really exciting. A lot of us will enjoy the experience of going and creating something in a way we didn’t do before,” she said. However, this presents a challenge for professional musicians suddenly faced by a huge increase in the amount of music being created and released or shared.
“To rise above all of this noise will take that much more focus and that much more drive, and that much more of a narrative that matches with the community that you’re working to access,” she warned.
Finally, Ruxandra was asked about what pings her bullshit meter when talking to potential partners in the web3 space. What are the red flags?
“One time someone was asked for [due] diligence, and they sent me a picture of themselves and said ‘THIS is the due diligence’,” she laughed. “This world of web3 has been so ridiculous: sending a document with a massive hockey stick that goes straight up into the ether! None of those things are substantial.”
She explained another useful filter. “There are a lot of big technology companies with a lot of money to be building in this space. [As a startup] figuring out the thing that will make you work and make you run is going to be the thing that really sets you apart. ‘How do you compete with all of these massive tech companies that are also building in the space?’ is one of the first questions that I ask. The ones that can answer that are the ones that are interesting.”
The NY:LON Connect global music summit is run by Music Biz and Music Ally. This year’s event is held in association with Orfium and Viberate, and hosted by Reed Smith. The Changing Nature of Music Formats track is sponsored by Vevo. You can find all our coverage of the conference sessions here.
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