We Fixed It, You're Welcome - Napster’s Confusing Comeback

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Starting point is 00:00:50 Find out more at Cadillac Canada.ca. Luxury sales claim based on S&P Global Mobility Canadian New Vehicle Total Registrations for calendar year 2025 for the Cadillac definition of luxury. At its peak, Napster reached tens of millions of users globally, fundamentally changing how people access music. The CEO of Napster called me and said, please call off your lawyers and help save our souls. Now Napster's attempting another reinvention, this time is an AI-powered platform centered on creation, interaction, and participation. I think their brand is kind of against the music industry. That's been fairly consistent.

Starting point is 00:01:22 They need to figure out why are they essential. These are the types of things that beset our digital services at the time. And I'm not going to blame your lawyers. But the lawyers were informing a lot of what people like we were doing. Right now, I think you need to focus and have that focus look at how these AI tools can help that creator content. You think about all these people that came up through TikTok through social media, Justin Bieber, everybody. Like, it's pretty impressive. Americans who buy albums don't have turntables in the house.

Starting point is 00:01:50 So they buy it like a t-shirt or my daughter had a bunch of stuff on the wall, Carol Kenykeke or whatever it is. And it's about connecting with the artist in some world for the younger. generation. We're living in the future already, and Napster didn't create that. Welcome to We Fixed It. You're welcome. The show where we take over companies, you come along for the ride, and we try to put them back better than we found them. Napster once operated in a legal and ethical gray area. People wanted to download music from their favorite artists. Napster let you for free. You could just go get it, which made music fans very happy while Napster became enemy number one of the music

Starting point is 00:02:29 industry, which lost millions and profits. So of course, Napster couldn't stay around forever. The loophole closed. Goodbye. Except, Napster is now attempting a comeback and trying to reshape the music industry again. This time as an AI company, it seems like they are trying to take on a lot. None of their ambitions are very clear yet, and AI music already has vocal critics, especially within the music industry, which Napster was an enemy of before, which raises the question we're here to fix, does Napster even belong anymore? And if so, is AI music going to win them a new generation of fans? Are we all going to say hooray Napster? Well, to figure this out, we're joined by Seth Schackner. Seth is the founder of Strat America's, a premier business

Starting point is 00:03:13 development consultancy, specializing in strategic communications, public relations, and partnership development across digital media, entertainment, and technology. Seth's background includes senior leadership roles at Sony Music, and I think he's had some run-ins with Napster from the label site that I can't wait to get into. He also hosts the new podcast Breaking on the Biz where he talks shop in an accessible way about the business behind the biz. Thanks for joining us, Seth. Give us a little bit more info. Great to be here with all you, Aaron, and everyone. Yeah, I'm a business development executive by trade. I've worked at a lot of entertainment companies, including places like AOL in its earliest days. I was actually their first music exec and

Starting point is 00:03:54 and universal music, most a bunch of other places, but a lot of time it's song music in both North America and Latin America, helping them build their initial digital businesses. And Stratamerica's is a partnerships consultancy, so I help, you know, technology companies, software companies, music and entertainment companies

Starting point is 00:04:12 on both sides of the landscape, rights holders and distributors with partnership activity. And I do some communications and public relations works. I've worked with clients like Lig Nation, like Micawks, like Microsoft, a lot of time with something we'll talk today about called Smule, which is social music. And I've got, I think, an unusual amount of experience in Latin America for the typical, typical dude sitting in North America and been based out in L.A. for six years. So that's me in a nutshell. Thanks for hopping on with us, Seth. And while you're here, let's all hop into a

Starting point is 00:04:42 time machine. Let's talk about the original Napster. When Sean Fanning and Sean Parker launched it in 1999, it scaled at a pace the music industry had never seen it, not be denied. At its peak, Napster reached tens of millions of users globally, fundamentally changing how people access music. Instead of just buying CDs, users can instantly download songs from each other for free in seconds. That meant that dorm rooms everywhere were blasting Backstreet Boyd's DMX, Christina Aguilera, whatever was popping at the time, and they were getting it for free. As Napster grew and took a real bite out of album sales, the backlash hit fast. The Recording Industry Association of America and artists like Metallica sued, leading to Napster being shut down in 2001 and filing for bankruptcy in 2002.

Starting point is 00:05:26 The broader impact was massive. With copycat downloads services and peer-sharing services following, the U.S. recorded music industry revenue fell by roughly half over the next 15 years, which was a decline widely tied to the rise of digital piracy that Napster helped pioneer. They opened the floodgates. But Napster, if they were playing in ethical gray areas, they were also directionally right. They tapped into something, right? It proved consumers wanted instant on-demand access to music and a buffet-type model.

Starting point is 00:05:58 All you can consume. The behavior became the foundation for platforms like Apple's iTunes and Spotify, and you could arguably say it paved the way for streaming services like even Netflix. So Napster didn't win. They got shut out, but it showed what winning could look like. Now Napster's attempting another reinvention. This time is an AI powered. They have AI companions.

Starting point is 00:06:20 There's an AI creation engine. There's a creator participation layer. There's fan engagement and immersive experiences. There's an AI platform and an ecosystem with access to AI agents across domains and digital twins and all kinds of stuff. So the challenge is that every one of these categories is already pretty crowded and competitive. The AI assistance, AI music tools, creator platforms, immersive experiences, they're all getting saturated.

Starting point is 00:06:46 They exist. We're living in the future already. Napster didn't create that. And AI music's already taking heat for being digital slop and ripping off artists. And unlike 1999, Napster isn't early this time. It's late under a name that still carries both brand recognition and a ton of baggage. Well, Seth, what do you think? Well, we said a lot there. So that's a good 25 games and digital music history. I don't know,

Starting point is 00:07:12 maybe you'd want me to start on the time worry. But maybe I'll go back to, you know, to the turn of the century, which is, you know, I think where I had, you know, a bunch of interactions. with the original Napsters, with Hank Barry, who ran it for the two shans. And, you know, it was during a time when, to your point, the recorded music industry started to enter a period of free fall, you know, mostly of revenue declines, but certainly profit declines as well. And there were two engines that were driving it, actually. I mean, the one that you mentioned is obviously a hugely critical one as well that was

Starting point is 00:07:48 very much in the public eye, and which people like me, I was. head of a label group called Jive Records at the time. So you mentioned one of the artists, the Backstreet Boys. We had artists like InSink and Britney Spears and Mystical and R. Kelly and a tribe called Kleston, a lot of artists. And me along with all of our industry, compatriots, if you will, and competitors were trying to cede the first generation of this country's download services, digital services, basically. And we were here, we were doing it as this rising tide of digital piracy was a part. us. So to your point, people didn't have to pay for albums. They could select a track and share it.

Starting point is 00:08:27 And a lot of these things were dispersed. They were either centralized or decentralized, peer-to-peer, if you will. And some of them were headquartered in bizarre places. So they don't need the United States legal system to do anything as much you can do about it. And so that was extremely hard period of time because you try competing with that. But the other piece of it, which people don't talk about a lot, but I think was probably equal and important was that we didn't protect those CDs that you mentioned. So those CDs didn't have any ability

Starting point is 00:08:57 to protect what we call ripping and sharing with your friends, your uncle, your dawn, then, whatever the heck it was. Right. And that was probably equal, maybe actually, to the digital stuff. And so that contributed to it as well. And the legal landscape there also wasn't so clear. You know, I don't know if they were sharing

Starting point is 00:09:12 youth flaws that said, Chino can be ended to Vanessa and he wants to get a month a year and then you can all use it for a... The iTunes store flipped the legitimate. to see pretty quick and flip consumer behavior pretty quick because not only did you have the store model, you had the hardware to go with it. So as people had the iPods and then eventually the iPhone, you know, you're creating this closed loop. Appealing and accessible to consumers that maybe had paid $14 for a CD with one good song on it. Now you can buy that song for $1.99 or $99 and

Starting point is 00:09:43 everybody wins. The device was an enormous factor. It was the device first because jobs had this device that was better than all the other devices. I don't know if you know what the Diamond Rio was, or I still, I have a shoebox here in my house with, I should have brought it with all these devices that sitting right over there with, I have a little I Omega disc drive that you'd wear on your belt. I mean, just the stupidest stuff, but the device came through and was easy to use and was simple, and he needed music for the device and had to devise, you know, a licensing plan for it. And that's where all this came from. There was a lot of other factors that people also I don't talk about if you think about it.

Starting point is 00:10:21 Do you really want to be pulling files from a file service? You don't know if they're cleaning with their viruses in them. What information you want to give where it came from? You know, the American ethos is if I pay a fair price for something, I buy a cart and milk. It's going to be homogenized or pasteurized. And I know it's fresh and it's coming. You know, it's not that far from that ideology.

Starting point is 00:10:41 And we didn't have that with the pirate stuff, obviously. Yeah. So there was a bunch of stuff that came along with it. the first iterations of our downloads prior to the iTunes store, this is three years prior, I'm sure everyone would laugh at. But, you know, I'd just sit with people, said, look, we're going to put a Beyonce single out. And for the first 30 days, it's going to be $3.99 to buy the single in Windows Media or in the

Starting point is 00:11:05 Amazon store. And by the way, they wouldn't work with each other. If you bought it into it, it was just stupid. But we had to go from liquid audio, amplified, reciprocal, A2B from AT&T, super tracks from Portland. There's dozens of digital download services vying to be what jobs was doing. They're all gone now. There's one name that survived, which is Rhapsody, that's going to be tied to what we're talking about today. Melissa, do you remember this time when it was Wild West and everyone was kind of trying to figure out the legalities and Napster was still viable? Like, do you remember this time?

Starting point is 00:11:38 I do. And Seth, we're really excited to have you as a guest. This is really informative and interesting to me specifically. I come from a live music family. We are all in. My daughter actually right now works at Live Nation. So went to Berkeley College of Music. So she, we're very much about going to live shows. We're also very much about our Apple Library. And we have also CDs, we have records, we have all the things. And I remember the kids getting their iPods. I remember them having the son disc and all the things. And I do think that that's one of the things that's really important to think about from the audience perspective is that we all use Napster.

Starting point is 00:12:26 I will admit to that. Yeah. But it didn't feel great because you were pirating stuff. So I do think that when Apple iTunes came out, you know, even the whole Spotify, the same idea is that you're paying to play and it makes you feel like there's more trust there that you're actually even 99 cents you know we've seen all the lawsuits from the artists against Apple too and saying okay I get one cent for every 99 cents or whatever I understand that you know there's a business to the music side of it which we could go into too but I do think that there's an ability

Starting point is 00:13:07 to create some form of trust as an audience you know as somebody who's participating in the entire ecosystem of streaming music in that you feel better about it than pirating music. I agree totally. I mean, I sometimes don't know if, you know, we're probably of a certain vintage, whatever, if you remember this. I mean, I think, you know, I've got two, they're no longer kids, adult age, young children, whatever young adults. And I don't know if they have radically different perceptions of it. But I think it's fair to say that maybe different generations have different, you know, perceptions of price and value and then maybe ours does for some. No one's going to buy it out.

Starting point is 00:13:48 They will buy an album now, for example, but half Americans who buy albums don't have turntables in the house. So they buy it like a t-shirt or my daughter, a bunch of stuff on the wall, you know, Carol Killi Eck or whatever it is. And it's about connecting with the artist in some way for the younger generation. And not even really understanding to your point that, like, it's not just one song, Aaron, you brought up a very good point that like a lot of people start buying music for just one song versus, you know, a curated album that has, you know, the artist has put it together or the band has put it together in a way that means something to them. And, you know, like there are radio stations that play just B-sides, you know, all that kind of stuff.

Starting point is 00:14:32 And it's an interesting component, I think, to the way we actually take in music. and take in entertainment and streaming of everything. I mean, videos, gaming, all these things. It's like such short attention spans. I'm not surprised that we're all about the 99 cents song, you know. But I think it's an interesting, you know, inflection point for Napster right now as they're trying to recreate some energy around their brand and bring it into this century and into the play, the music ecosystem,

Starting point is 00:15:10 as of today. And so I'd love for us to also talk about that. And I can tell Chino, you have something to say. I got something to say. I think that's a really interesting play. And I think, Seth, you bring it up that generationally, you know, like our kids all grew up, Napster was the thing. It wasn't, like, the turntable wasn't the thing.

Starting point is 00:15:32 So, that's, so I'm that in between, right? I, like, my parents were the ones that had the vinyl. I was a lime wire Napster K, even Napster a little bit earlier, it was like lime wire, right? That's like a story. That's a little bit later. That's a little later. We've got in trouble.

Starting point is 00:15:49 But it's really interesting. And I'm going to the Lily Allen concert tonight, right? Where it was incredibly hard to get a ticket. And we talk about kind of the curation and like the evolution of how we consume music. Right. So for me, it wasn't that, you know, I didn't have the background of like, oh, you're buying. Yes, you're buying albums here and there.

Starting point is 00:16:14 But I was the MP3 download generation. The challenge wasn't even I felt bad for the artist, because again, I'm a kid. I'm just wanting to hear great music. You're exchanging your CDs and your downloads. For me, it was just what's not going to make my home computer crash, which everyone in my generation, Like I've broken at least three computers from all of the bugs that went on it.

Starting point is 00:16:42 So there is something to be said about the security, right? So for our generation, it was just, I don't want to ruin my devices. And so that's what Apple Music and what Spotify has brought to us. And it's interesting now, Seth, going back to your point of how we're consuming music and now understanding that, yeah, only one cent of that song went to the artist. So people are now caring about artists a lot more because the way that we're interacting with these artists is now often being concerts. That's how you get that intimate experience. People aren't buying CDs as much anymore.

Starting point is 00:17:19 You might have a vinyl on a page. But for me, I'm a big, you know, I'm getting some merch. I'm always getting merch at every concert because that's how I get to kind of continue living in this moment without having that physical CD. But going back to Napster and AI and what the challenges that a lot of people are feeling when it comes to music and AI is that we're, everybody is a little bit trepidacious about how they want to experience this AI music. Can we trust it? We've heard a lot of songs, you know, coming out from different artists, quote unquote, that are AI. And so what's interesting about Napster is, you know, I think their brand is kind of against the music industry. I think that that's been fairly consistent.

Starting point is 00:18:15 But they need to pick a lane. You can't be everything to everyone with AI. You're second to the table. And I think there is a way in which to use AI for good. It was like a playing, you know, people learning instruments and how to kind of. tweak that. I don't see a world where I'm hearing, you know, a Lily Allen inspired album via AIA. I will never care to do that. Support for today's episode comes from Square, the business platform that helps sellers become the best in the neighborhood. Whether you're growing your business

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Starting point is 00:20:01 And it's ready to go from day one so you can hit the ground running. Bring it with SAP Grow. AI Cloud ERP for any size business. I love that you're a Millie Allen fan, by the way. I've done some work with it. So you're a bunch of things there. Let me, because there's a lot of, you guys are all saying comments filled with interesting insights.

Starting point is 00:20:23 We can definitely do an hour or two more. So one thing just about your points about, I don't know, security and feeling secure. I think if you really took a cold hard look back at like, music consumption over the decades. So we used to print CDs without copy protection. And the label I worked at which bought Jive, BMG, we actually, at one or two points put, that's called copy protection on our CDs.

Starting point is 00:20:51 And we got slaughtered in the press over it. And it was like this big public outcry. And there was a big public settlement. We had to offer to the public, like, I guess it was refunds or replacement CDs of which, like, five or six Americans in the whole country took advantage that people just loved having the headlines out there about how bad the record labels were. And I think these security concerns or technology concerns vis-a-vis our personal data, like have rippled throughout everything, including streaming, by the way. I mean, look at all the data you give and the social networks

Starting point is 00:21:23 in 230. And so like that's to me like, that's all is going to exist to me personally. Basically, I sort of see it that way. So the AI stuff is a different conversation. I'll just say generally, AI, you know, has been part of music for some time now. And not just the stuff that's the fake drink or the fake weekend or the derivatives in the Allen usage. It exists in all sorts of quiet, productive ways that everyone under the sun from people creating tailored playlist for advertisers to our own experiences on video to make playlist sound better. you know, to chatbots. Like I've had some clients

Starting point is 00:22:06 to Stride America as though we did Ringo Starr's chatbot or a couple of, you know, easy ease, you know, we'll, you know, tell you automatically when the album's dropping if he's going to be in Houston, stuff that you can automate in a harmless way

Starting point is 00:22:18 that no one's going to be freaked out over. The last Beatles record Revolver was re-engineered by Giles Martin, Sir George Martin's son, with all eyes all over it to place the guitars or the drums. So, you know, McCartney just pulled a demo

Starting point is 00:22:33 tape out of Lenin's apartment and released a track two years ago called Now and Then Came for the A-I-you know, so this is all doing stuff. I don't know if any other than have a problem with this stuff. The stuff that everyone's talking about, the recreations of music, very interesting. You know, there's a bit of a war now in the landscape over it. Universal, the biggest, you know, label group has been very public about basically trying to wall it off with their new partners. The two new partners, the biggest ones being one's called sumo and one is called Udeo.

Starting point is 00:23:09 To me, to your point about Napster, those are probably the likely, whatever the right word is, leaders or successors in this market. Because, you know, at least one of them is going to offer a combination of music that people can create and it'll be licensed. And it'll probably hew to some of the protocols that folks who own Billy Allen's catalog and the artist themselves will be able to look at and say, hey, this is cool or this isn't. Right. For those who don't know, Suno and UDO, they're like studios where you can go in and to an increasing degree have participation in the music, in the AI music that's created. So it started soon.

Starting point is 00:23:47 I'm more familiar with Suno. It started where you could put in maybe some lyrics and then the whole rest of the experience is AI created. But now it's getting to the point where you can add your own voice. You can add your own preferences. You can gather the music styles more and more. and it's becoming more of a blend of an artist and an AI software, but there's still, you can't just go upload a track, a prints track,

Starting point is 00:24:08 and say, make it sound like this. There's a lot of buffers around it. Yeah, and I think that's probably the key thing right now that's out there. But, you know, the major labels, I think UTI is kind of the thing for whatever son right now and that they've agreed to kind of wall it off. If you earn Lily's catalog, for example, you know, I'm using her as an example, but you don't, or Katie Perry, you don't want to see 50 AI derivatives, whatever, Katie Perry's and Lily Allen's next to her stuff on Spotify, because it collides and it hurts the artist. So that's, I think that's where the fight is right now.

Starting point is 00:24:45 You know, I bet the monetization of it will look that differently than streaming, which so it's probably going to be poor if you're an artist. But, you know, the initial, like, I guess Deezer is one of the bigger streaming services globally. Americans don't know about it. It's big in places like France and Latin America. You know, has reported this enormous number of AI tracks. I don't know if you call it Slop that are sitting, you know, on their servers, basically. And there's been research that shows that most consumers can't tell the difference sometimes between, you know, the fake and the real. But I'm also reading that consumers aren't that interested in it compared to the real stuff,

Starting point is 00:25:25 meaning like, are you going to listen to your friends, Louis Allen derivative, or do you want to hear it in a little bit out with, you know? And so there's some obvious things there. Let me talk about Napster for a second because I know that's what this episode. I'm going to play to have the old school so you can push back on me all you want, okay? You know, I think, and to your point, you know, the value there is probably about that brand name, maybe more than anything. Right.

Starting point is 00:25:52 Because I think in this landscape, that's probably, and I don't know how much it means anyway, in the new AI landscape. Napster itself, after it died, it went down, right? I already mentioned 2002, something like that. The name was extracted without all the liabilities that were associated from all the copy infringed, right? And it went into something, this, I think was a game maker called Roxyo bought it. This is ancient history and renamed the 2.0. It was briefly part of a retailer called Best Buy as well, and then it went into something called Rhapsody. It's had a bunch of iterations. It went through some Web 3 companies, and I knew those guys that were in Seattle.

Starting point is 00:26:34 And I don't, infinite reality, I think, is what it, I don't even know who owns it now. But, I mean, unless there's something they're doing with their product that's super engaging and is going to compete with bigger entities like UDio or Suno, all of them are going social and TikTok, we got to mention all these guys have got to have legit AI strategies. So that's a big, big, big mountain to scale, if you ask me. What I think too, and like Seth, again, as a consumer, I only know Napster as a way to rip music or a way that used to be there. I think, again, because they've gone through all of these iterations, this is, you know,

Starting point is 00:27:16 we're trying to fix Napster right now. If I were at the head of NAFER what I would say to them is there's a great opportunity for you to lean in on the other aspects of AI that people don't know of. I don't think you need to be, you know, there are players that are creating music. But when you talked about, you know, finding and streamlining, you know, if you were a DJ and you want to, you know, host a party. And I know, again, I have a lot of friends who are DJs and just the science that goes behind, you know, creating a beautiful. curated an hour of music. Why don't you do that? In office, like work from home. There's always different opportunities. Like, why can't they rebrand it to something that's not doing what other players are doing? You're not going to be second and third fiddle there, but rebranding into a

Starting point is 00:28:06 way that we can use the AI in ways that people aren't talking about. Like, you know, I love what you're saying, Chino, because Napster's brand is known for specifically, for being an outlier, right? And for kind of upending the industry. So they should lean into that. But I do believe, you know, Seth, you've kind of brought this up as well. It's really only going to be realistic that they can actually monetize this and actually make it successful if they focus.

Starting point is 00:28:38 So offering a whole bunch of different things, just to say that their AI, you know, you know, congruent, it doesn't make sense. So what they really should do is have a very disciplined strategy underneath this with the shared tech, with their shared brand on identity, the shared music data. Otherwise, all these different five offerings that they have currently, it's all just going to become mud and mixed up. So I really say that they really should focus on the strongest offering, which is the repeat thing that keeps coming back, which is the AI collaboration, right? like the editing, refining, you know, how do they do that within the tool? Become like a place where you can, you know, Napster's new app is explicitly built for participation. So it's got the AI companions, AI generated audio, co-creation tools,

Starting point is 00:29:34 and those are meant to be used repeatedly. And that brings people back to their site and their platform time and time again. And we know from an operations, from Abysmal, perspective, repeat customers are your bread and butter. That's what you need. So really, they should watch, you know, how they are focusing on that and what that strong retention signal is off of those types of things versus one-off listening because I don't know that they can really, you know, compete with the Spotify's apples of the world. They're not going to be able to do that. But they can, and if they can figure out their niche and why they're so important. You know, so to me, this is the only realistic way that they can really help to get that focus.

Starting point is 00:30:23 You know, I would add to it, I love it. I think, you know, there's two areas I point out in music that, you know, we haven't touched on, that to me are probably the most promising areas of opportunity. And I don't define them around the individual technology or kind of the product, you know, uses that they're allowing. There are just big buckets of opportunity in general. There's this thing, I guess I call it collaborative music or the music creator's economy, if you will. It's actually not particularly new. I'll mention if you know what Ban Lab is.

Starting point is 00:30:57 It's owned out of Taiwan, but it's a global entity. Splice out of New York, which is a creation, a creator economy. I worked with an app called Small that has gotten smaller, but it's all about singing and creating your own songs together. And these are all fabulous things where music's being created. They're not reliant on licenses or IP from others. They're aligned on people recognizing those abilities to create together and share, basically. AI could, of course, be a part of it. It probably be a core part of their offering.

Starting point is 00:31:27 But I think that would be an area that I would say, you know, make your partner with a splice or buy band lab or partner with whatever it might be, have them by you. Those are super important areas that I think are applicable, you know, really broadly. And really different from streaming, by the way, just big creation platforms, trying to own that music, too, whether it's the copyrights or the recorded music, which are the two trees of rights that are so important. But the other area is, you know, they call it streaming 2.0. Universals dubbed it their strategy, but it's this idea of artists and artist's independence

Starting point is 00:32:07 from their labels and artist's ability to create their own content, whether it's social content, whatever it might be. And, you know, for a cost, I mean, Spotify's talked about this idea of a premium tier. So if you like Willie Allen or Katie Perry or Taylor Swift or Metallica, maybe you do pay five bucks a month more. And you get all this stuff in it, including AI, by the way, might be merch. I mean, some of us are older, I remember fan clubs. I'm going to remember some really embarrassing fan clubs in the 70s when I was a teenager. But whatever, I used to love getting my kiss t-shirt in the mail.

Starting point is 00:32:39 it was the most fantastic thing in the world to me is a 12-year-old or whatever. And that's one or the two that, like, Napster or some entity could really partner in. Band Camp is something that I've mentioned that's done a little bit of that, and SongTrader, which owns them. There used to be something way back

Starting point is 00:32:58 called Artist Direct that was always trying to do this, that kind of went the way of the do-no as well. But those are the two things, like, if I were at a point, if you're saying that we're trying to fix Snapster, that's where I would send them. I'm not sure I'd say, go down the path of licensing music. You want to license music, by the way, eventually. You want to be friends with rights holders. So you don't want to go in and come in the door as someone who's, you know, offending in some way.

Starting point is 00:33:26 It's interesting when we talk about music, right? My friends and I, like, friends who are DJ talking about, you know, what are the kids listening to these days? Often the top songs right now on Spotify are songs that have derived from TikTok, their TikTok songs. And I think where Napster would be really strategically inclined is to, if you can create kind of this content, music creation for people, using these AI tools to help people who don't have a record label to hopefully, eventually, you know, maybe you do it enough where you can get to a point of having rights, as you've said, Seth, but if you can introduce the next wave of these like viral TikTok songs

Starting point is 00:34:12 that everybody downloads for those three months, because that is a huge opportunity. Influencer marketing is not going away. I don't, you know, especially as universal and these bigger social media sites have, you know, struggles with the rights where you can kind of come in with a gap is having unlicensed songs where anybody can create leveraging all these AI tools. that you've built to create these songs and music where, again, you're still leaning into the like bad boy, you know, outlier. You're leaning into your brand, but yeah.

Starting point is 00:34:52 You're doing it in a way that works and eventually hopefully you've done it enough. It's become more legitimized where down the road now you can actually create rights for people who want to jump in and then lean on these AI tools. like that's that's myself. Yeah, I think the value proposition for Napster really is they need to figure out why are they essential? What is their purpose? Right. And I think, Chino, you've really hit on a potential, like a huge, huge opportunity for them. To be essential, it's when you solve something and you do it better than everybody else, right? So for them, it's again about defining kind of What is that narrow wedge that, you know, it could be like, make me a song in this style,

Starting point is 00:35:41 Lily Ellen style in 60 seconds using this poem and own that use case, right? Like do that well. NAPS are, you know, saying that they are going to be, they're the app that's going to be built on collaboration, experimentation, publishing, and doing it with ease, needs to prove that. and they need to show musicians and artists that they can stitch these things together, all the tools, AI tools and other tools. You know, in the music industry, there's a lot of, you know, digital engineering. There's a lot of stuff that's going on behind the scenes.

Starting point is 00:36:18 And how do you take all those separate things and put them into a collaborative platform that's easy to use? And it's repeatable. They're going to want to come back. They're going to want to keep coming back. And it's going to be like, to your point, you know, it's going to be something like powered by Napster, right? The song comes out on TikTok and then it's like a powered by Napster would be like amazing for them to be able to be very focused on that area and not be afraid of the AI tools,

Starting point is 00:36:47 not be afraid of all of the things that are coming in the forefront. And that kind of leans into their brand, right? That they're like pioneered. I love that, Melissa. If they came up with something powerful that was creator driven, that actually, you know, was of the moment and it stood out and then it said Napster. Like that's a defined, that would be a defining moment for them. Right.

Starting point is 00:37:09 You know, that would be a seismic shift and everyone would say, wait, well, that's. You know, like their little logo, whatever it might be. I mean, it could really be, you know, where, you know, and creators, to your point, you know, influencers and creators today are coming from everywhere. It's not that you just have to have gone, you know, into the village recording studio. in L.A. and gotten in time because nobody's going to get that time, right, unless you're somebody good. Right. So again, this is for the people that you think about all these people that came up through TikTok through social media, Justin Bieber, everybody, you know, like it's,

Starting point is 00:37:46 it's pretty, it's pretty impressive. Are you one of those media strategy people clicking through slides, scrolling spreadsheets? Yes? Good. This is for you. Because on Spotify, there's an audience that's different, locked in, loyal, invested. They're called fans. Fans don't just listen to music. They feel seen by it, like it belongs to them. So when your brand shows up on Spotify, that's who you're talking to. And you're right next to artists like me, Lizzo.

Starting point is 00:38:14 So, are you ready to talk to fans? Spotify advertising. You're among fans. Yeah. And on the flip side, if they flood the feeds and Spotify is with Napster music, you know, If AI music that just looks cheap, sounds cheap, is easy to make, way too easy to reproduce, you can make a thousand of them a minute. And it all says Napster, that's going to have the opposite reaction.

Starting point is 00:38:40 Right. But definitely to Melissa's point, too, I've seen just enormous appetite in some of the international markets for collaborative music. I worked with this Absmiel for six years, bringing artists to them for their looks like live karaoke artists, things. half the track and then people join to upload on their own. And the numbers that I saw in markets like Indonesia, Malaysia are phenomenal, just enormous. Just people want to sing, they want to share. And so I think that's a really critical thing. I do think if you focus on the collaborative aspects and creating, you know, a lot of that

Starting point is 00:39:18 is not necessarily dependent on right. If it's one track, you got to have it licensed. You know, music publishing license for the copyright. a master from a label. It's a very powerful proposition. I do think that TikTok is in such an enormous spot, influential right now. But I think there are a lot of questions around the longevity of artist and some of the

Starting point is 00:39:42 music that comes out of those, you know, those hit-making, taste-making platforms. It may not be something that goes for decades. Some of the initial stuff has been its shorter lifespan. And so it's something to think about, you know. Yeah. And the Suno and the UDO, the AI tools that are allowing people to come in and make what we'll call AI music, they're either going to learn to play nice with the labels and allow artists content and everyone gets a cut in a royalty, or they're not.

Starting point is 00:40:12 And they're going to have to figure out, is that a viable enterprise anymore if they can't have what everyone understands is popular music or mainstream music or the music of their interest? And they're just playing with AI music. and it never gets legitimized. Are they going to stick around? Maybe they go away. So for Napster to say, we're that too and we're all these other things, I think that it's, they're just not hitting the right notes right now. But let's, all right, let's fix it.

Starting point is 00:40:41 So we gave them, you know, let's pull on the advice we gave them. So Napster does want to be, we'll call it still the bad, bad boy of the music industry. Like they still want to rub it in your face a little bit that we're not, we're not going to play with the labels. because even if Suna, like I said, Suno and UDO do, and then Napster says, we'll talk to us too. Seth, he said, like, historically, that's not going to happen. Like, people are going to say, Napster, get out of here. So we'll stick with that.

Starting point is 00:41:08 But there are lots, lots, hundreds, thousands, millions of unsigned creators, independent creators. There are tools out there that help you do different types of production and things like that. But sometimes they're like a one and done type of tool where they're really expensive. So why don't we create this kind of like level the playing field for independent creators and say, look, we're going to sit side by side with labels. Maybe we're a label or Napster. And you're going to come in. AI is going to be a component of what you do. But if you want to play with the AI interface, go ahead.

Starting point is 00:41:42 It's sitting here. That's not what we're here to do. That's a toy or, you know, experimentation or something to help with your creative process. We're here for serious artists. We're going to help you. let's just say with mixing, with mastering, with production, with remixing, with curating, licensing, distribution. We're going to do it our way. There's some anarchy involved. There's an edge to it. They're going to need someone. We'll say, well, we'll stay with Lily Allen. They're going to need a Lily Allen to come say, you're right. I've dropped my label. I'm going with Napster. You know, I'm not saying she'll be the one to do it, but they need someone to cross over and say, what you're doing is the future of the music.

Starting point is 00:42:24 industry, everything that my label gives me and supports me with, I can do here. I remastered my album. It sounds incredible. I'm team Napster. They're going to need someone to, you know, to make that declaration. And then they're going to need others to follow. Otherwise, that person is going to say, whoops, didn't work. So, but Napster, let's let's let's make them a label. Let's give them artists, not just AI outputs, but real artists that are they. to have a seat at the table alongside the majors and we'll run with it. So if we do that, Melissa, do we fix it? I think we got them on the right path to being fixed because I do believe they need to pick

Starting point is 00:43:11 a lane. I'm very much about the AI co-creation or AI companion led music creation because I think this is a repeatable loop that will be easiest to explain. And it's also interesting and it's of relevance today. I would cut all the different options that they have right now when you log into Napster. I replace their Five Betts homepage with more of a guided, curated path that's really personalized with a couple secondary options. I think Napster needs to build trust rails, Chino, you know, labeling AI. clearly copyright issues, et cetera, et cetera, because that is going to be really important for adoption

Starting point is 00:44:02 later on, especially if they blow up. And you really want to design for return users and return visits. So have, like I said, personalized experiences, journeys, you know, save your progress, personalized prompts, just like a lot of different apps we have today. This is what everybody expects in their responsiveness and CX is do you want to continue your track like Netflix, right? Continue your show. Resume with your companion. Anything like that I think is really, you know, suggested for you, new artists suggested for you, those kinds of things, I think are really important. So if we do those things, yes, they're on the right track. Okay. Thanks, Melissa. Yeah, Chino, what do you say? So I don't think Napster needs to recreate.

Starting point is 00:44:51 create Lily Allen's West End Girl, then create an East End Girl. That's a title of her current album. I think as everyone has echoed, you need to pick a lane. I think leaning into this gap of this creator market, these one-off songs, I don't want Lily Allen to be the face of Napsin's AI. And if you're going to take real artists and their music, you better pay them a really pretty penny to have that adapted. So again, I'm not sure that is the lane at the state for them to go down.

Starting point is 00:45:26 But I think looking at an opportunity, like Seth had mentioned, about all of these different apps, whether it's a karaoke, it's a collaboration, and helping real people kind of maybe get a step up in this weird creator economy, these one-hit wonders that are three months long and leaning on those AI tools that they're powering those musics to kind of fill that kind of gray space when we're looking for unlicensed music that we can use in other areas, right? And eventually down the road, maybe it's five, 10, 20 years from now, then you can start looking into copyright. But for right now, I think you need to focus and have that focus.

Starting point is 00:46:09 Look at how these AI tools can help that creator content. All right, Seth, what do you think, Napster, as a label, as a reasonably priced alternative to the one-off tools or the really premium price tools that are a barrier for creatives that keep their work from being heard, can they bridge the gap there without over-excessively relying on AI? I'm much closer to, you know, what Cheetos saying. I think the idea of relying with or creating themselves, branding themselves as a, you know, a. a creative kind of collaborative platform. You know, I think I mentioned BandLab and Splice. I think that's an area where there's still

Starting point is 00:46:51 some opportunity with that brand name and whether that's a partnership and acquisition just creating yourself that way. I'm much closer to that. I think, I think, you know, music discovery is a really important piece of the pie, and

Starting point is 00:47:05 that could be part of the strategy as well. But I think you've got to pick something very specific that you're good at and not be all things to all people. If you go too broad, don't like the idea of being labeled, by the way, because I just think it's, labels almost like a black, a black word these days.

Starting point is 00:47:21 Or, you know, a name that's like a, you know, on the blacklist, whatever you want to call it in terms of like people looking at it. A lot of the artists I joke with don't, don't want to hear the word label actually. Don't want to partner with, you know, with labels. They want to just go independently. But I think I sort of hear you closer to like the discovery and creation platform. You know, I think about like, if you, can put yourself into a very, very specific, like, Mitch that's useful to people.

Starting point is 00:47:50 I think about, for example, you know, that Shazam is, if you guys still use it. Shazan is around for, like, 20 years. Apple bought it. I still use it when I'm sitting in front of Netflix. And, you know, if you can think about that type of utility and gravitate closer to that, that's what I'd say. And I also agree to still agree from licensing for as long as you can, just work with independent artists and creators and build.

Starting point is 00:48:13 whether it's a catalog of your own license music, and you can use it for a lot of different things, discovery, and you can play the licensing game as well. We didn't talk about TV sinks or license, but there's a lot of uses that can come out of it. So that's where I'd come down on. Yeah, there's long tail revenue. If we talk years into the future,

Starting point is 00:48:34 they're creating a nice base for it and a space for creators. Maybe it's an anti-label. Well, that's going to wrap up this episode. Once again, we want to thank Seth Schachner for being such a great guest. Seth, how can people hear more from you? Thanks. It was fabulous being on this on this. We can definitely get you on LinkedIn.

Starting point is 00:48:52 It's Seth Schachner. It's a more complicated story, but it's a C-H-N-C-E-R. And the new podcast is called Breaking Down the Biz. So we're available everywhere, and we're going out twice weekly. We'll have a lot of great, not just music, but entertainment and tech guests as well. Thanks so much for having me on, Aaron and everyone, Chino. Thank you, Seth. Thank you, Melissa and Chino.

Starting point is 00:49:14 Couldn't have done it without you. I also encourage you to check out Seth's podcast, breaking down the biz. It's a fun lesson. For those of you writing into our show, thank you. We read everything you send us. If there's a company or topic we haven't fixed yet, and it's keeping you up at night, send it on in at we fixeditpod.com.

Starting point is 00:49:31 That's we fixed itpod.com. We'll be releasing an early 2000s playlist of time with this episode, so look for that on Spotify. Then we will see you next time. We hope you enjoyed this episode of We Fixed It, you're welcome. We go into every episode somewhat cold, and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble. All trademarks, IP, and brand elements remain property of their respective owners.

We Fixed It, You're Welcome - Napster’s Confusing Comeback

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