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Music tech is the new music industry

The New Deal: Why Brands Will Buy Artists Airtime at SXSW

Technology has been pushing music forward since the advent of electricity. Records, radio, cassettes, recording technology, CDs, and finally digital and streaming have all disrupted the norm in music. Yet, the industry has always been reticent to adopt new technologies.

With the rise of music tech, the music industry can no longer stop the march of technology, and businesses and corporations are now working together with musicians and artists to further blend brands and bands. The fact that venture capital companies are finally investing in music tech startups, like startups Amper, MAX and Dubset, which have announced fund raises, while TechstarsMusic just announced a program to invest money in music startups, says volumes about music moving forward.

One panel at SXSW will address the blending of technologies, brands and music. The New Deal: Why Brands Will Buy Artists Airtime brings together artists, marketers, and record label thought leaders to discuss how music and advertising work together in an increasingly-connected world. George Howard, associate professor at Berklee College of Music and Brown, and head of music and co-founder at Music Audience Exchange (MAX), will moderate the panel.

Howard has had a long career in the music business, helping connect artists with labels, businesses and the public.

“I was put on this earth apparently to help creative people build sustainable careers and that began in the early 90s as a guitar player who had just enough on the ball to figure out how to get seven inch 45 RPM singles pressed up for my band and my friends’ bands,” said Howard.

From there he started a small indie label, then did a joint venture deal with label Rykodisc. When the company was sold to Warner, he co-founded a company called TuneCore, which helped artists get their music up on the iTunes without label assistance.

What bugged Howard throughout was the payola – pay to play – aspect, that independent labels could never break through compared to the major labels, and a lack of distribution for smaller labels and artists. What TuneCore allowed was for artists to get into retail, iTunes and more recently Spotify and other streamers without label intermediary.

With technological advances, it appeared to him that artists were going to have to start doing a lot more legwork to get ahead, which is when he set up a consulting company working mostly with music and non-music companies.

“I worked with CVS Pharmacy or Brown University or lots of non-music stuff because I have this thesis that the music business is sort of a canary in a coal mine. As goes the music business so go other industries, so I've managed to sort of help companies in a lot of industries with strategies based on things that have happened in the music business,” he said.

Around that time, he got a call from Nathan Hanks, who was successfully running ReachLocal, a marketing technology company with over $500m in annual revenue. Hanks read an article Howard wrote regarding the problems artists have being played on the radio. He wanted to take some of the expertise of ReachLocal, in terms of data and technology, and apply it to the music business.

MAX is born

“The initial thesis was, ‘How can we facilitate better, authentic and durable relationships that benefit all the stakeholders leading with the artist as the most important staple?’” asked Hanks and Howard.

They saw the artists being misrepresented and underserved in the traditional music, radio and branding ecosystem, so they looked for ways to increase frequency of ad spend, but without the artist having to pay for it. That’s when they looked at brands, because for too long, the way brands used music didn’t intersect well with the success of the musician.

“MAX's value proposition is to be a coordinated agent. To take these parties – brands, musicians, fans, media and coordinate it in a way that actually has powerful and measurable ROI. That has not happened in the history of the music industry for whatever reason. It's taken a real unique set of characters to come together, myself with my experiences, Nate with his, the rest of the team and then to build a real business,” he stated.

MAX is a company with sales in the millions of dollars with real brand partners, including Dr. Pepper, McDonald’s, Jack Daniel's and many others. They want to make sure that both artists and brands get valuable ROI from their relationships.

The rise of tech is the end of the music industry

“People will be frustrated by this comment but I don't care. I don't believe there is a music industry anymore. I believe there's a tech industry that certain companies are focusing their technological efforts on; I believe that's what's going on. You could make that argument that that's true of all companies, all industries. There's no education industry, there's just a tech industry…But I think it's still sort of a useful framework,” Howard stated.

“Music and technology has had a very disquieting history going all the way back to piano rolls…technology that was transformative from sheet music. The music industry tried to sue pretty much every technology that became its salvation.”

He said up to now, the music industry has never been able to embrace technological change to its benefit. As soon as music went from analog to digital, it converted to information, and people axiomatically share information. That changed the music business from one of a sale of recorded goods to sharing of information.

With the rise of social media, platform-based companies allowed and encouraged people to share, and the companies earned millions and billions by either being sold or going public. But one important sharing platform, SoundCloud, has either yet to go public or be acquired. The company hasn’t shown demonstrable ROI, which may be keeping investors away.

The rise of music tech, however, is gaining, with MAX getting $6m in VC funding, Amper getting $4m to use AI to write music, and Dubset raising $4m.

“Maybe there's a renewed interest in investments of venture money into the music space. My theory would be it's because now we are quantifying it as investible technology that just happens to be focusing on music rather than on the music business itself. MAX is a hundred percent a technology company that just happens to be deeply passionate about the music business,” he said.

The rise of data in music makes a more structured focus and easier ways to measure ROI, and the panel at SXSW – with artist Madame Gandhi, entrepreneur Ryan Leslie, Gregg Latterman of Aware Records and Nathan Hanks of MAX – is well-equipped to tackle the subject of building relationships in music while looking for opportunities and still honoring the stakeholders.

The New Deal: Why Brands Will Buy Artists Airtime starts at 3:30pm March 15 at SXSW.

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Kyle O'Brien

I am a reporter for The Drum covering a wide array of topics but always trying to tell the best stories possible. I am a former west coaster from California and Portland, Oregon, now living in Pennsylvania — with time spent in NYC each week.

I also play saxophone professionally.

All by Kyle