Well, the world's biggest music companies such as Universal, Warner, and Sony now looking for partnerships with major AI music firms that they aggressively sued just last year. For more on what the deals could mean for the music industry, let's welcome in here Seth Shackler, Strat America's founder and managing director and a former Sony music executive. Uh Seth, it is great to see you on the show. So, maybe start high level, Seth, you know, because there is there is no trend that investors are more excited about than the mega trend and theme of AI. So I'm curious, Seth, to get your high level thoughts, how you see AI impacting the music industry moving forward. You know, positive, negative, too soon to say. And maybe start with with what it means for the big labels.

Yeah, sure, great to be here, Josh. Um, so you know, it's mixed. It's guardedly a positive thing, AI. In my view it isn't something that is wildly destructive. It's not what what some people would call like a Napster moment where, you know, the industry's looking at it from the perspective of destruction and really declining. Um, but I also just want to be, you know, kind of guarded because I think it's a positive constructive thing, but I don't think it will be a complete game changer for the recorded music industry. I think what's most important right now, uh, is that the industry, the rights holders, the labels and the publishers, um, you know, need to set legal benchmarks so that the thing can kind of emerge, you know, out of the muck if you will, as a legitimate business. And I think that's what the gist of um, it hasn't been officially reported. It's sort of been on some reports out there, but the gist of this is all about it. Looks like the three majors right now, um, are looking to kind of do deals with rather than sue out of existence the two major AI platforms in the States, Suno and Udio. So it's guardedly positive.

And and so if you were still at Sony, Seth, I'm curious what moves you would be making as you try to leverage and and profit from AI. What would it be those kind of deals?

Yeah, and just to be clear, I don't speak for Sony anymore. I got a lot of good friends over there, but I think what what I see with this right now, it takes me back um, to the time when YouTube was launching actually from 2007, 2008, and it kind of hit us as rights holders over the head. I think in a bigger way than this AI stuff is done because we had tons and tons of artists and content that were being viewed and played all over the world, which to be honest with you, weren't on our radar, weren't even in our active catalogs and kind of hit us over the head like, oh my God, what's going on here? And I think the benefit of that time, maybe it's going to be like this now, I don't know, is that Google kind of came in and said, you know, we're sorry. Here's something for the past infringement and then here's a big kind of advance if you will for the going forward and for going forward usage of it as well which will be legitimized. And um, you know, I don't know, don't have any inside information to be clear, but that would kind of be my bet as to kind of the top level as to what will go on. Subsequently, there'll be some commercial terms around it as well.

I'm curious so that's the labels. What would be your advice to artists? And maybe start with let's say you were a bigger more established artist. What would you be telling them to do? Because some of them have been coming up with some interesting ideas. I remember Grimes, Seth, if I remember right, um, she had this idea like maybe she was telling fans, okay, make music with AI versions of my voice, but then register on my site so we can sort of share in the royalties. What do you think of these different models the artists are experimenting with?

I think, you know, anyone should be encouraging the artists to like experiment with this stuff in a constructive way right now. I think that's what actually Universal is doing. Um, I think Sony's done a little bit of it as well, offered some some platforms for the artists to experiment, because personally, you know, I don't see uh, a mashup that you can create with voice of Tchaikovsky playing in the style of Miles Davis with a heavy metal band and it, you know, is going to be taking over the charts. I think some of this is going to be incremental stuff, but I think the real thing going forward in music, Josh, is that the landscape has really changed. So artists have a lot more power now. They don't need labels actually. And so they can go to their fans or their fan clubs and create lots of stuff whether it's B-rolls, you know, artist content, you name it, merchandise. And there's a real opportunity there. I think I think some of this AI stuff could play into that. And um, so I would I think it's more about, you know, trying to seed the market, making sure your rights are protected if you're a Universal or a Sony or a Warner. But it's also about trying to create an ecosystem for artists so that they can kind of play with stuff and experiment. And so there are kind of two streams going on and it's it's pretty positive. I don't think anyone's going out of business from this specifically.

Last question, Seth, you know, we talked about what this could mean for the labels, for the artists. I'm also curious, how do you think this ultimately plays out for Seth and Josh, for the consumers? What's this going to mean for us?

Well, it's a great thing. I think there is a larger strategy coming that Universal has publicly avowed. It's called streaming 2.0, and it includes a lot of cool features: high fidelity audio, fan clubs, merch. Um, it will include AI stuff and I think you'll see it, I think, as a, you know, premium tier within Spotify and perhaps other streamers, Deezer, others that are out there, and you'll be able to play with this stuff, whether the artists are doing it or you'll do it. I think that's my hope that it becomes kind of an incremental positive add-on to the ecosystem right now, um, as opposed to something that's a messy destructive thing. But, you know, we're we're early, copyright law, regulatory stuff isn't there. Um, but I do think if these partnerships happen, it would be a very positive thing.

All right, big, complicated but exciting topic. Seth, thanks so much for joining us today. Appreciate it.

Great to be here.