Lifecycle of a Song: Building a New Ecosystem of Services for an Established Market

Nicholas Goubert at UXDX EMEA. Video: https://youtu.be/XF4gPA7DveA

Readable transcript: edited from the recording's captions for readability (fillers and false starts removed, punctuation and section headings added). Wording is the speaker's own. Timestamps are positions in the video. Names marked [?] could not be verified against the audio.

Utopia and the data gap

[00:00:00] Hi everybody, my name is Nicholas Goubert, I'm the chief product officer at Utopia Music, and today I'm going to walk you through a little bit about the music industry and a little bit more about what Utopia is doing within the music industry, what we are working towards, and how we are leveraging big data and advanced technology to level up the whole music industry.

[00:00:25] But before we get started, let me just give you a very quick introduction about Utopia. Utopia is a Swiss based music fintech company. What that means is that we basically position ourselves as a growth partner for the whole industry, and we want to level up the whole industry by leveraging technology and big data, but also by having a deep understanding of the music industry, so that we can really work with all the existing stakeholders in order to make the world better. Ultimately, our contribution to make the world better is to enable fair play for every player.

[00:01:10] As a word of introduction here for those of you who are not familiar with the music industry, just to give you an example, and I think it's going to resonate with everybody: sometimes as an artist, when you create a piece of music and your music is being consumed somewhere — and we'll go more into the detail of the life cycle of the song during the presentation — things can happen like your music gets played and you expect to get some earnings from that through your royalties. But sometimes, for very different reasons that we enclose under what we call the data gap, what happens is that either you never get paid as an artist, or you get paid up to several years after your music has been heard.

[00:02:00] So it's a little bit, if you think about it, it's a little bit like if you were to order a pizza in a restaurant, eat your pizza, and then you pay for your pizza two years down the line. Just imagine how the restaurant will thrive in these types of environment. So this is the core reason of existence for Utopia: how do we make sure that by leveraging technology we ensure fair play for every play, so that there are more creatives who can live from their music, and every single existing stakeholder within the music industry can really benefit from all of us, through technology leveling up the whole industry?

The life cycle of a song

[00:02:40] Now let's dive a little bit deeper into what it means. The whole life cycle of a song is something pretty complex, but if you look at it at a very high level, you start with a creator creating a piece of music, and then for that music to be heard and to be consumed it has to go through several steps.

[00:03:01] Either a creator will partner, for example, with a label to be able to manage their career, and/or, now there's a lot more artists also who are going directly to market, and for that they are using different services like the label will do. We're talking about publishing your music to be able to manage your copyright, distributing your music, and your music can be consumed in all these what we call DSPs, or digital service providers. Think about the Spotifys of this world, or YouTube, or any other distributor out there. But also retailers and physical distribution, and vinyl in particular is really thriving.

[00:03:48] And then of course there is all the piece of the industry that is working towards managing the copyright. The copyright is basically who owns what part of the music, based on if you've been creating the lyrics or you've been creating the music, and generally there's a split around that and different types of right, without going into the details. These rights, through the consumption of the music — if you combine the consumption of the music and the rights associated with this piece of music, then you are entitled to some royalties. There are a bunch of companies and stakeholders in the industry who are working around the management of this copyright and the management of the royalties, to be able to pay out the artist for their work.

[00:04:34] And then there are a little bit more other types of stakeholders in the industry, for example the investors. You probably have seen or heard of a lot of artists selling a catalog for quite a lot of money recently, and there's been more and more of this. It's simply because music is an asset that is pretty interesting, and so there's a lot of investors who are interested in better understanding the value of a catalog, the value of a song, the whole economic value of that. That's exactly at the core of why we are doing what we are doing, is to serve all these different industries.

[00:05:13] Another example here for those who are not familiar is creative agencies. There's more and more content that is produced in this world today, and every piece of content has some type of music associated to it, some type of sound, and licensing this music for this type of specific usage, either for a commercial or for a brand or for an overall experience, is a pretty lucrative business for the artist.

[00:05:38] Just to give you an idea, for example, AC/DC got pretty rich actually, they got a big check when Thunderstruck was used in one of the Marvel movies, from Thor. And another example that has been running around lately is Running Up That Hill from Kate Bush, which was used as one of the main parts of the soundtrack of Stranger Things, the big hit on Netflix. It's a 20 year old song, and it brought quite a lot of money for the owners of this music lately.

Why simple questions are hard to answer

[00:06:15] So there's a lot of different actors and players within this value chain, and it's a very complex value chain. Another way of looking at it is that on top of all these different players here, what is happening basically is that there's a lot of data that is being produced within this ecosystem, but for some reason it's still very difficult to answer some very simple questions, questions that would sound simple to everybody outside of the music industry. Simple questions like: what has been played, where, who owns that piece of music and how much, and who should get paid for that music that has been consumed?

[00:07:05] For various reasons, answering these simple questions is pretty difficult, and some of the reasons I listed here on the slide. Of course, like every complex ecosystem, there's a lot of different silos of data out there, so a lot of data is produced but it's living in different silos.

[00:07:25] The licensing is pretty complex and it has some geographic complexity associated to it, so you need to license your music in different territories, the rules are very different in the different territories. So if you're an artist living in one part of the world and you license music in one part of the world, don't be surprised if your music is consumed in another part of the world and you never see the color of the money that you're owed for this type of music, just because everything is happening a little bit in silos in this world.

[00:08:01] Also, as with every data play, the metadata is extremely important, just to be able, for example, to identify who owns what and who owns which part of the copyright, and making sure that the metadata is correct and can be used to process the data and to be able to pay the right person, understand what has been consumed and who owns what. It's a pretty complex thing to do. And if you look at that, and on top of that you look at the amount of content, the amount of music that is created on a daily basis, the problem is just getting bigger and bigger and bigger.

[00:08:35] This is what we call the data gap, and this is exactly the mission of Utopia, because for us to be able to fulfill our mission of fair play for every play, that will allow more creators to live from their art, we need to close that data gap, and that's exactly what Utopia is working towards.

Utopia's fundamentals: the platform and the business units

[00:08:58] Let's look at Utopia's fundamentals, and take a step back after this little deep dive that we did into the music industry, the different stakeholders and what we call the life cycle of a play or song. Ultimately, you can think about music from three different angles. One of them is the creation of the music, on the other side is the consumption, and then the third piece is the payment. The Utopia platform and business units, as you will see in the next slides, the way we are structured to answer this question, is really at the core of it.

[00:09:35] It's very simple if you think about it from a 10,000 foot view. What we want to make sure we are capable of answering is: who owns the rights to the song being played, what was played, when and where, and who should get paid for that? It looks like a pretty simple business statement or question to ask, but considering everything I said before about the data gap and all that, it's actually a pretty complex journey that we are on.

[00:10:02] Now, how do we basically close this data gap? The way we are structured, looking under the hood at how we are structured at Utopia to be able to answer this question: at the core of everything we do sits the Utopia platform, and the Utopia platform is a big data platform with an artificial intelligence and machine learning engine that allows us to absorb the data, clean up the data, make sense of the data, enhance data through metadata, and also be able to answer the question from before — what was played, when, who owns the rights — and then make sure that we can provide the payment for them.

[00:10:43] Around this platform, that is really at the core of Utopia, sit different business units, and the reason why we operate like that is because the platform you can think about really as the heart of what we are building, and the business units are the place where, using the platform and leveraging the platform, we create dedicated services for the different stakeholders that I was telling you about before. We really create these services leveraging the platform so that every single player in the industry can do their job better. Basically we are here to help them enhance their existing solutions by providing dedicated services that leverage our platform.

[00:11:27] Here I'm not going to go through all the different business units, and you can also think that based on this platform and this structure, it gives us a lot of flexibility to spin off new business units as needed and as relevant, and really to cover the whole industry, because our positioning is really to be a growth partner for the whole industry. Because we strongly believe, and we have done a lot of analysis around that, that as we manage to close that data gap we'll be able to level up and grow the whole industry by a multiple of up to four. So by unearthing data, by creating a more complete data source of truth, we'll be able to basically enhance the whole industry and make it grow even bigger.

Scaling up: organic growth and programmatic M&A

[00:12:13] It's a pretty complex organization to run, and how we got there — just to give you an idea of hyperscale, and before I jump into how we scaled up — in the course of the last 12 months we went from about 150 people to about a thousand people. How we get there as a scale-up is a mix of organic growth and programmatic M&A, and by combining these two vehicles for growth we basically are leveraging the best of both worlds.

[00:12:51] We've been using programmatic M&A at first to be able to seed the different business units, so that we are accelerating our roadmap, and we're also leveraging the best companies in the industry to be able to, instead of starting from scratch within each area, really leverage best of class. That allows us to spin off a business unit pretty quickly, that allows us to already start with an existing product portfolio within each of these business units, and then of course it also allows us to grab some market share within the industry and hit the ground running, if you wish.

[00:13:30] And then what we are doing, we are complementing that with organic growth. Also we are really working in that super scale — if you think about it, almost like a 10x growth in terms of employees over the course of 12 months. One thing that is extremely important for us is to manage the culture, keep our culture, but at the same time being able, through the structure that we have with the platform and different business units, to give enough leeway for every business unit to continue working and to basically run.

[00:14:05] So an interesting mix of organic and programmatic M&A has helped us to get started, and now the acceleration and the scale continue. The only difference now is that we are using programmatic M&A to even accelerate the roadmap within the business units, now that we've seeded the different ones of them, and also to accelerate the roadmap within the platform. There are different components within the platform and we're always on the lookout for the right companies to acquire that will allow us to either acquire technology that we would have had to build before, or grow faster and accelerate our roadmap. So this is really what has allowed us to scale up that fast.

[00:14:46] Before moving any further in the presentation, another thing that might be interesting is that the way we work within the platform, and as well within the business units, obviously within the product creation space, so between product, data, design and engineering, is through cross-functional squads, giving a lot of autonomy within the different squads and within the different business units.

[00:15:10] Linking that to M&A: when we do an M&A, of course, there's sometimes a transition from the way the company we acquired was operating before, and bringing them into the way we operate. But because we do that simultaneously in different BUs, we are learning very fast to do the right integration, and we are really pushing the boundaries when it comes to cross-functional work. We can go deeper into that space at some point, but it's really interesting for me as a product officer, and working very closely with our technology officer and our data officer, it's really an interesting challenge to be able at the same time to give enough autonomy to the different teams to move forward, and at the same time, within this ecosystem of business units, making sense and driving that with a coherent strategy. So, a very interesting challenge for any product creation leader out there.

Supercharging the platform and the network effect

[00:16:16] Ultimately what we are trying to do through all this scale-up — remember the platform is really the core, you can think of the platform as the heart, and then it's pumping blood into the different business units — the idea is by supercharging the platform, by acquiring these different companies and different capabilities, but also by creating network effects between the business units and the platform. So not only do the business units leverage the capability of the platform, they also pull back and bring back data from their services and from the customers into the platform, so that we create that network effect between the platform and the different BUs. That allows us to always improve the platform services, and then in time that will also improve the dedicated services created in the business units. So, better service for the customer, and then the customers will trust us and share more data with us through the process, and here goes the flywheel that allows us to grow the data capability, grow the data set that we are working with, create more insight by combining more data sets, and then enhance the existing services and also spin off new dedicated services. So it's all about supercharging that platform that is at the heart of our ecosystem.

[00:17:34] Ultimately, if you think about it and think about what I was saying before about the data gap, the role of the platform is really to basically destroy all these silos that exist — or, not destroy, that's a bit of a strong word, but just to eliminate the silos and bring as many data points as possible into a central place of truth, so that we can create insights that allow us to simply answer these questions that were on the slide before, which seem pretty simple but require a lot of data processing and a lot of data crunching power. Which is: what was played, where, who owns the rights to that play, and who needs to be paid for this consumption of their art.

[00:18:22] So ultimately that's what we want to do, and that's why we are looking at aggregating and create agreeing[?] as many data points as possible, so that we can create this unique source of truth that every single stakeholder in the industry can leverage to better serve their own customers. So we are really building an engine and a data platform and dedicated services within the BUs that help the whole industry to level up, and we really want to position ourselves as a growth partner for the whole industry.

A long journey towards fair play for every play

[00:18:57] Now, by doing that and by closing that data gap — of course it's not a journey that is going to end in a day or two, a week, a quarter. We're in it for the long term and it's going to take a while to get there. But every single piece of data that we can leverage and create more truth with, and that we can create data insight out of, and that can be leveraged by the business units, will get us closer and closer to this utopian view where there is fair play for every play, because there is full transparency on the data, there is completion of the data, so the data is consistent, coherent and complete, so that everybody can benefit from that thriving ecosystem.

[00:19:42] And just as a reminder, by doing that, not only do we power the existing business around the music industry, but we also allow that ecosystem to grow overall. The number we have in mind and what we are working towards is, once we close that data gap, we believe that we can grow the whole pie, if you wish, by a factor of four or five. So that's really what we are after. We're really trying to close that data gap in order to be able to create a more thriving ecosystem, so that the whole industry can benefit from it.

[00:20:23] Ultimately the creator is the ultimate beneficiary of that, because our goal every day is to enable creators to live from their art, and to produce more music, and for that music to be consumed in the best way and to be monetized, so that they can be paid fairly. So we really are a steward of the data, we are just here to enable the whole industry to thrive.

[00:20:50] It's pretty exciting to leverage big data, artificial intelligence and machine learning and all the other types of technology to enable an industry that we all really love, right? It's pretty hard to find anyone who doesn't love music, who doesn't consume music or create music or anything. Music is what brings us all together. So it's really an interesting journey that we are on, and it's only the beginning. But we already see the results of our work and the fruits of our work, and we are at the beginning of the journey, so we'll keep on pushing in that direction. Ultimately everything we do is towards providing fair play for every play, and that's really the mission we're on. I would like to leave you with that, and thank you very much for listening. Bye.