Trapital - what’s next for AI
what's next for AIHey! The word going around is that Quality Control Music is nearing a deal with Warner Music Group that would value QC around $450 million. I’ll write more about this on Monday, but here are a few quick thoughts:
Today’s newsletter is dedicated to the mailbag. You sent in your questions about AI in music, the future of NFTs, ownership, and more. I answered the best ones on today’s podcast. Here are a few highlights below. Enjoy!
Was this forwarded to you? SPONSORED unfiltered and unapologetic, REVOLT is where culture lives REVOLT is on a mission to curate and share the best of the best in hip-hop, culture, and social justice news. Launched by Sean "Diddy" Combs back in 2013, their multi-platform network offers breaking music news, videos, artist interviews, exclusive performances, and original programming. They’ve got content for everyone:
the Trapital mailbag q&a:Q: Where are we at with NFTs in music? Are major record labels still into them? – Ken Pen A: We had to get through the “dot-com bubble” moment. Listen, we’ve all seen the stats and headlines. NFT trading volume is down 97% from its January 2022 peak. Madonna, Snoop Dogg, Steph Curry, and other celebrities are being sued for promoting Bored Ape Yacht Club. Plus, there is plenty of drama with FTX and SBF. If the web3 skeptics were waiting for a healthy dose of schadenfreude, this is their moment. But there are less attention-grabbing stories that paint a different picture. Warner Music Group and NFT marketplace OpenSea announced a partnership in late September. Universal Music Group just created and hired two new SVP roles focused on web3 and metaverse initiatives. And startups in the space are still getting funding. So what’s really going on? NFTs went through their dot-com bubble moment. The dot-com bubble era had the infamous Pets.com. The NFT bubble had the EtherRock clip art selling for $1.3 million. The hype and excess have been washed away, but the real builders still remain. Just as builders like Amazon and Google survived the dot-com implosion and came out stronger on the other side, I predict the same will happen for NFTs. That goes for major labels, indie artists, and new startups. Those that can use the market downturn to create NFTs with actual purpose can create real value for others and reap the rewards. Q: What’s the full potential for GPT-3 in music? – Joe Edwards A: I have my thoughts, but let’s see what ChatGPT thinks! ChatGPT has been all the rage on social media in the past few weeks. If you’re less familiar, it’s a new AI bot created by OpenAI, who also made GPT-3 and DALL-E. You can ask ChatGPT to answer specific questions or to even write content. ChatGPT is probably writing some of the other newsletters you read on the regular, but not this one! But to explore the question itself, I asked ChatGPT, “how can musicians use chatGPT?” It responded in less than five seconds: “Musicians can use chatGPT in a number of ways. For example, they could use it to generate ideas for new songs or to help them come up with lyrics. They could also use it to help them brainstorm new ways to arrange their music or to come up with unique melodies and chord progressions. Additionally, chatGPT could be used to help musicians write press releases or other promotional materials, or to generate titles and descriptions for their music on social media or streaming platforms.” The baseline answer mirrors my own. An AI-assisted software like this is perfect for songwriters suffering from writer’s block. More so as a jolt of ideas than anything else. But I can also see software like ChatGPT packaged up as a $10.99 monthly subscription service for songwriters and musicians. Think about companies like Splice and Epidemic Sound. Users pay a monthly fee to access their royalty-free music for commercial use. The same can be done with the lyrics for those songs if GPT-3 can use it as its reference point to help artists with any step of the process. Since those songs aren’t owned by the major record label and publishers, they aren’t subject to the impending issues of referencing the music that they own. These are just a few immediate use cases. As technology improves, new ways to unlock AI’s potential in music will emerge, for better or worse. Music lawyers, for sure, are gearing up for the latter. Q: Where are we at right now with music catalogs and investments? – Taf from Paris A: There is still potential, but not at those peak-quarantine prices. Like many other asset classes during the pandemic, catalog sales “faced the music” after rapid growth and heightened interest. The big deals are fewer and farther between. Pink Floyd wanted $500 million for its music and it’s still waiting. Hipgnosis Songs Fund, the face of the catalog buying spree, has declined in market value and hasn’t made a new public deal in over a year. But I’m not writing off music catalog investments. Sure, we may see catalogs sell at 30x multiples again. Interest rates have crept back up and a recession is looming, but there are still sensible deals to be made at realistic price points. Future had a deal with Influence Media Partners that I heard was in the $50 million range. He has a catalog that shares revenue with several other songwriters. That’s a pretty legit number. HarbourView Equity Partners has announced recent catalog deals with Incubus and Sum 41. Iggy Azaela sold her masters and publishing for a reported eight-figure sum. Deals are still happening. But the notion of a single song is an “evergreen asset” may have been a bit overstated. I’ve said this myself before, but I overlooked the fact that every song has a decay curve. Some are less steep than others, but it’s there. Even Michael Jackson’s Thriller, even Mariah Carey’s “All I Want For Christmas Is You.” They all will get less relevant, and less played, over time. As I mentioned in The Culture Report, catalog buyers may have overvalued the music that baby boomers grew up with and undervalued the music listened to by millennials (the largest segment of streaming users). But even that’s temporary. My daughter’s generation will have their own platforms that they are the power users for and the market trends that they will inspire as a result. In the meantime, we’ll continue to watch these interest rates and the catalog multiples come back down to earth. It’s still an exciting asset class, but the price has to be right. These are just three of the questions from the mailbag. I answered even more on this week’s podcast, including:
Listen to the full episode here:
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Or share Trapital quick via text, email, or Twitter. coming soon from Trapital Monday’s memo will be the last newsletter of the year! We’ll break down the potential Quality Control deal in more detail, share some Trapital 2022 highlights and more. want your company featured in Trapital? We are looking for a few more sponsors in 2023 who want to reach the artists, creators, and execs who read and listen to Trapital on a regular basis. Want your company to reach Trapital's audience? Reach out to us here.
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Key phrases
Older messages
overlooked areas
Tuesday, December 13, 2022
Trapital Memo: what music tech startups need to succeed
roll it up
Thursday, December 8, 2022
Trapital Memo: a breakdown on Berner's billion-dollar cannabis business with Zack O'Malley Greenburg, Lizzo's arena status, and more
from good to great
Tuesday, December 6, 2022
Trapital Memo: what's next for Motown after Ethiopia Habtemariam, ChatGPT in music, and more
some type of way
Thursday, December 1, 2022
Trapital Memo: I talked to Rich Homie Quan about his hiatus, comeback, and becoming a CEO.
fan lifetime value
Monday, November 28, 2022
Trapital Memo: a Taylor Swift breakdown by Denisha Kuhlor on how she created fan lifetime value
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