What Dollywood Got Right About Artist-Led Businesses

0:04Dan Runcie: I'm Dan Runcie. Welcome to Trapital. We're going to get into a few things in today's episode. We're going to share a few updates about our third annual Trapital Summit, which is coming up in a few weeks. Tuesday, September 15th is right around the corner, so I'm more excited to tell you about the event that we have coming in L.A. We're also going to be sharing a few bold predictions in today's episodes where you'll hear directly from some of the companies that will be in the room at the summit. In today's episode, you'll specifically hear from the folks at Shot Tower Capital and Music's Match.

0:38Dan Runcie: Let's talk about the Trapital Summit. Tuesday, September 15th, only a couple of weeks away. It's right around the corner. I always get excited this time of year. And if you've been listening to the show, you already know who you're going to hear from on stage. You're going to hear some of the top leaders that are pushing things forward in music, media, and entertainment. We'll have the president of Ticketmaster. We'll have the CEO and founders of Primary Wave and Chartmetric. You'll also hear from the co-president of the team on the music side. You'll also hear from the former CEO from Capital Music Group.

1:11Dan Runcie: There are so many great speakers that we are going to have at the Triapital Summit. But if I'm being honest, the speakers is only part of the experience. We probably spend even more time thinking about who's in the room and making sure that we can provide the type of room for people to have the valuable conversations to push their careers, push their business, and really get to that next level. Sure, we can all hear great and inspiring conversations. That's why many of us attend events. But why we really take time out of our day to attend these events is because of who's going to be in the room.

1:43Dan Runcie: How do we make sure that it's going to be valuable so that we can meet other attendees? And it's not just people sitting in their chairs, listening to people speak on stage. We specifically made sure that we had a room that attracted companies at all stages of the industries that could be valuable to each other. We have the early stage and the growth stage startups that are pushing things forward with their respective companies. We have the investors that invest in those stages. We also have the companies that are investing in music rights. We have people that currently own those music rights and may be looking to sell them.

2:13Dan Runcie: We also have the service providers that are helping those transactions, whether it's the bankers, attorneys, and others. We have the streaming services, the major record labels, the talent agents, the audio and video streaming platforms. We made sure to cover all the bases. We also have the music distribution companies who make a lot of this possible in the streaming era. We specifically want to make sure that we have the senior leaders at those companies in the room, bringing them together. And we know that there's really only a few places that can offer that. And we're glad that our summit has been one of them.

2:44Dan Runcie: We've heard from past attendees themselves, one of the first years we did the summit, Elias Seaton, who's the CEO of SoundCloud, said on stage, hey, if Dan Interapital invites you to something, go to it. We've made two partnerships at SoundCloud because of the relationships that were made either at the dinners or these events. So again, that is a real value. And I know that a lot of people focus on speakers and the clips and things like that, but the connections and the conversations that happen during the breaks, during lunches, during the cocktail hours and others, that's where the real value is.

3:17Dan Runcie: And we put a tremendous amount of time and effort into that. And the reception has been that that has been extremely valuable. So we will continue to do that as long as we can. So I hope I see you at the summit. Again, tap the link in our show notes and I hope to see you there. This episode of Trapil is presented by Symphonic, which recently launched Next. Their new initiative focused on catalog acquisitions, royalty advances, and indie artist financing. As the needs of independent artists and labels evolve, so does Symphonic. With Next, they're creating new pathways to capital and strategic partnerships, giving their clients the flexibility to grow, invest, and scale on their terms.

3:57Dan Runcie: According to Symphonic CEO Jose Brea, Next is designed to be flexible across a wide range of opportunities, typically supporting transactions from catalogs generating around$25 ,000 in the last 12 months of earnings, up to larger multi-million dollar acquisitions depending on the opportunity. To learn more, tap the link in the show notes. At the top of the episode, we have to spend a few words talking about Dolly Parton. What a legend. A true one of one. She passed away on August 25th at 80 years old. And I have to say, she might be the celebrity public figure that has the highest approval rating of anyone.

4:36Dan Runcie: Have you ever heard anyone say, you know who I can't stand or you know who I don't like? Dolly Parton. When have you ever heard that? The woman has been beloved across generations, across ages, across different types of people, and you've definitely seen that outpouring in the last day or so. She is a true icon, and when we talk about business and Dolly Parton, we have to talk about Dollywood, the 40-year-old theme park, which now generates roughly$400 million annually in revenue. Dollywood is frequently rated from TripAdvisor, from US World News as one of the best theme parks in the country, as one of the number one places to work in the country as well, and the appeal and the popularity of it continues to grow.

5:19Dan Runcie: And this still is an independent, family-owned theme park. 50 % of it is owned by Dolly Parton and now Dolly Parton's estate, and the other 50 % of it was owned by the Herschen family back in 1976 when it was originally Silver Dollar City. In 1982, Dolly Parton did an interview with Barbara Walters where she was asked what her future goals were, and Dolly said, I want to open up a theme park. I want to do it in Tennessee, a Smoky Mountain theme park, a Smoky Mountain fairyland, I believe, was her exact quote. That caught the ear of the Herschen family. Four years later, Silver Dollar City rebrands to Dollywood, and the rest is history.

5:58Dan Runcie: According to Forbes, which recently pegged Dolly Parton's net worth at$450 million, they say that a bulk of that net worth, more than the music, a bulk of that net worth, is now from Dolly Parton's 50 % stake in Dollywood, more than the music itself. And that includes Jolene, I Will Always Love You, the songwriting for that song, 9 to 5, all of the hits. And Dolly Parton, as you know, has had over 3 ,000 songs, 50 studio albums. and that just goes to show you how impactful these businesses are. The success of Dollywood reminds me of the funnels that I used to draw and create back in the early days of Trapital.

6:35Dan Runcie: And there was one where I specifically talked about how artists made their money and how artists became billionaires. I'm gonna read the high level from this because I still do think it's relevant. There are three levels of the funnel. Build awareness, grow your fan base, maximize the platform. That bottom area, maximize the platform, that's where we would put your investments and your product sales. And I would argue that even tougher than most of those traditional things that fall into that bucket of investments and product sales, starting a theme park is incredibly hard. And if you do it well, though, it can be incredibly lucrative.

7:10Dan Runcie: Look at Disney, the most powerful and respected entertainment company in the world. Where does the majority of the profit come from for that business? It is not the movies. It is not the streaming service. It is the parks. these attractions if you do them right can be very very lucrative they are also very hard to do anyone that has followed this industry knows how tough and unforgiving it can be look at six flags six flags used to be beloved and now six flags is in buyout conversations with cedar point and who knows what the future of that business is going to be so again it just shows the testament to this family-owned business co-owned and now will be run in the future by the hirshend family but then also Dolly Parton and their estate moving forward.

7:54Dan Runcie: It's been fascinating to see how this business has continued and just how Dolly Parton and her estate has managed everything in general up to this point. I think there was one point where she did consider should she cash out and sell her music rights. She did not. She was pretty clear back in 2020 that said, hey, I own these assets outright. These are mine and I can then pass them down maybe for the right check and price I would. I'm sure some of the people listening to this probably reached out to the Dolly Parton estate, had some conversations, and they clearly didn't move forward. But who knows where they may go now in the future now that Dolly Parton has passed.

8:30Dan Runcie: But for all the people out there that are acquiring music rights and trying to find ways to elevate the legacy of these iconic musicians, when we talk about maximizing the bar with business ventures, yes, people can have their own biopics, but this is the bar. Who's going to start their own theme park? which artists out there living or dead is going to be able to get to this level and who can help them get there there clearly are firms that are thinking this big that's how you have things like the abba voyage experience some of the plans that you've heard from pop house or primary wave and others on some of the unique things that they've done with their artists even the sphere where granted the sphere is in a bit of a different category because it's not a music rights oriented product, but it's interesting to see where all of this is going to go.

9:15Dan Runcie: But again, let's see who can match Dollywood. That's the bar. A true one of one, Dolly Parton, 80 years old, rest in peace to a legend. Next is our bold prediction segment of the episode, where you'll hear some grand ideas for where things are heading in media and entertainment. The first bold prediction is from the Shot Tower Capital team. Shot Tower Capital is an investment bank and advisory firm that focuses on music rights and transactions. You'll hear directly from Rob Law, who is a co-founder and partner at the firm. And you'll also hear from Antoine Delande, who is a managing director of business development.

9:52Dan Runcie: All right. We are back with another bold prediction segment leading up to our Trapital Summit. And we are joined today by Shot Tower Capital. We have Rob and Antoine with us. Welcome both of you to the show. Thanks, Dan. Good to be here. Thanks, Dan. Of course. Great to have you both. Can't wait to see you in LA in a couple of weeks. And as this is our bold prediction segment, Rob, let's start with you. Let's hear it. What is your bold prediction on where the industry is heading? Sure. So my bold prediction is that AI is actually going to be beneficial. And I think rights holders are going to find that they're making more money in the future, not less as related to AI.

10:30And I guess a corollary to that, that individual human works or catalogs created by humans will be more valuable than they are today.

10:38Dan Runcie: And why is that? There's a lot of reasons. The first one, I think there is music administration and distribution business is about picking up small amounts of money for music uses all over the world. I think it's the ultimate sort of big data problem. I think the ability to make sense of that data and figure out where money is not flowing the way that it should be is really going to increase the cash flow. I think music's an area that we all know, any media, music in particular, I think has a history with piracy. And that's sort of turned into what we call today streaming fraud and gets back to the good actor, bad actor.

11:13And I think there's been some very highly publicized cases of people using AI to sort of extract money from the system. And I think over time, we'll see essentially the good guys increasingly using AI to make sure that behavior doesn't happen and make sure money's flowing to where it should be. So the combination of better data and frankly, making sure the money is going where it needs to go is going to increase bottom lines just by use of the technology, which then, of course, would the value of those catalogs as they're getting more income streams. And then I think the follow on to that is a two part.

11:49I think there will be situations where you have legally produced and monetized content that's created by machines. I think that type of work, whether you want to call it artwork or not, is going to be not differentiated from human work. So I think the piece of Beethoven's music, right, there's really only one of those. So you think about the value of that and a sea of music that's created by machines. I think it makes the human creative work that much more unique and valuable. So I think you're going to see a situation where the cash flows increase in the aggregate and then the capitalization of those cash flows also increase.

12:30Dan Runcie: And speaking of cash flows, I believe this ties into your prediction as well, Antoine, right? That's correct. My prediction is the music industry as a whole has been really efficient on measuring consumption. However, the next competitive advantage will be reducing that uncertainty around future royalty cash flows. And again, it's really tying into what Rob alluded to about AI regarding the fragmentation and really bringing it together as a full system. And I think the through line that I'm hearing is that right now, a lot of the concerns seem to be about what AI is going to displace, whether that is the creation of generative AI music and then that taking away from people listening to the recorded music that rights holders currently do own.

13:18Dan Runcie: But the belief is that over time, not only will we get better at both the attribution and the payments and the cash flows to make sure that the original rights holders get paid, but as the technology for AI increases and the fraud detection and anything with AI improves as well, that will offset anything that is happening currently right now with regards to displacement. So this would be a net positive overall. Yeah, I think it's a net positive. I think it's going to lead into the A &R side as well, right? I believe that there's going to be a positive push there as well, because again, that information, that flow of information is going to provide more of a ready opportunity for the AR to go out there and promote their artists in the manner that they should with the information that they need.

14:07Dan Runcie: Well, that is definitely a bold prediction, which is what we want to hear, because I think a lot of A &Rs themselves may think about what AI is doing and they may say, oh, where is the taste? Where are the things that I can uniquely do? And what does that look like when everything is more driven by algorithms and now AI can do this attribution? Because that is a lot of the threat, at least from a mainstream idea on what AI could potentially do, according to some people. AI is great at providing patterns and trends and patterns and trends provide awareness. And if the A &Rs have more patterns and trends and that awareness, they should be more efficient in leading their artists to help grow their cash flow or point them in the right direction necessary to do so.

14:54Absolutely. I think it's only human nature to look at a new technology and think about how this impacts me or my job and that and musicians that and call center folks, everybody up and down the stream is trying to figure out how to make sense of this new technology. And, you know, I think you look back throughout human history and we're very good at adapting to new technologies and using them to our benefit. And I think you see a situation where everybody up and down the value chain is benefiting from it, whether it's A &R folks, the administration folks, the royalties folks, the musicians themselves, from a creative standpoint and creating sort of new works that we haven't even thought of yet.

15:34But yeah, there's something inherent in music that humans are drawn to. I was sitting at a stoplight last night, actually, and it's summertime here on the East Coast. And there was a game of pickup basketball that was going on right next to me and sitting there thinking about it and just thinking about the way that we humans interact with each other. And there's just something about that where none of these guys are going to the NBA to college basketball. They're just coming together. Summer afternoon. Everybody knows the rules. They're playing it and just having fun outside. And I think there's something that we crave in that sense of adventure, camaraderie.

16:10And I think music is similar in that way. It's something that people can bond together over. And look, there's going to be entertaining content that machines are going to make, but I don't think we're going to have that same type of connection with that type of music.

16:23Dan Runcie: Do you think that this is a belief that your clients or others that you work with share as well? Or do you find yourself almost needing to convince or tell other people, hey, I know there's a lot of fear right now with what AI will do, but we think this is going to be a net positive? That's an interesting question. I think it's person and situation specific. I think the not just in musician, our clients, just everybody is to think machines can never replace me. Right. It's just a human instinct to say that. I do think that there is uncertain types of music, whether it's sort of background or instrumental.

17:00I think there's more concern on that being replaced sooner than vocal or feature artist music. Certainly that's pervasive in the landscape.

17:10Dan Runcie: And it's interesting trying to get a read looking at the markets too to see, okay, what's the markets read on how it sees AI threat or opportunity right now? And if I look at least on the public side, they've been discounting more and more of these media entertainment companies or even the ones that own rights themselves, to be clear, for a number of reasons. But AI is one of those reasons. But yet on the private investment sides, particularly music, which is where I know that you all focus on primarily, I haven't seen that discount yet in the underlying asset prices, at least for what's been rumored for the prices or even the multiples that are put out from reports that whether it's from you all or Shatow or others that indicate that there is a discount that's being applied to any of these assets because of the fear of what AI might do to the back catalog.

17:59I think that's exactly right. Certainly the feature artist catalogs, we're not seeing a discount priced in. If anything, you could see that there's some folks maybe describing some scarcity value that wasn't there before. Nothing related to AI, but just the fact that a lot of new deals today are not being done for life of copyright. And there are sort of term deals that will last 10, 15 years. So your ability to acquire copyrights for the full duration, in some ways, could be viewed as a limited set of assets today, as opposed to something that is constantly refreshing. That being said, I think there are certain genres and types of catalogs.

18:38You just think of production music or something that's very heavily sync focused. I think there is a little bit of discounting in those from fear of AI on the private markets.

18:49Dan Runcie: So I guess zooming out three, four years from now, for both of your predictions to come to life, what needs to be true in the market or in the landscape? And Antoine, we can start with you. What would need to be true for your prediction to come true? I would say value agent agents are going to get smarter. They're going to get stronger. They're going to become more efficient to be able to model the underlining asset. And I believe that's already starting to take place. We see it with the relationship with Redbrick. We see it with the relationship with Chapter 2. And we expect that to continue as well.

19:24Got it. Makes sense. And Rob, how about you? I mean, I think for mine, it's probably two things. Mainly, it comes down to whether we lose the battle against streaming fraud, that AI is kind of used to extract money from the system as opposed to be additive. And two, if I guess sort of AI music, AI generated music, non-human created, actually ends up becoming more popular

19:49Dan Runcie: than sort of human artist created music. Well, hey, we'll definitely have to follow along with both of those, but these are good. I appreciate you sharing the bold predictions and most importantly, I appreciate you all for making the time coming on and look forward to seeing you both in a couple of weeks in LA. Absolutely. Let's take a break for a chart metric stat of the week. This week's theme is Dolly Parton. It's only right. And one of the things that sticks out to me is how prolific she was and continue to be literally up until her final years. The last studio album that she released was in 2023.

20:25Dan Runcie: And get this. Here's a stat that still blows my mind. Since 2008, Dolly Parton has released nine studio albums. If you count the studio albums released by Adele and Bruno Mars combined since 2008, you also get 9 studio albums. If you count the songs released in those studio albums, you get around 115 depending on how you count them from Dolly Parton. If you do the same for Bruno Mars and Adele, even if you include all of Bruno Mars' features or other songs that he's been featured on, you also get around 115 songs. Think about that. Dolly Parton has released as much music in the past 18 years as Adele and Bruno Mars combined.

21:10Dan Runcie: This is how prolific this woman was. Truly an icon, one of one. We may never see anyone like her again. Let's get back to the episode. Thank you again to Robin Antoine. Now, you'll hear from Music Match's co-founder and co-president, Marco Paglia, with another bold prediction. We are joined by the co-president of Music Match, Marco Paglia. Welcome to the show. I'm excited to be here. I'm glad you're doing this with us and looking forward to seeing Music Match at our summit. And as you know, this is our bold prediction segment. And I know you have a good one. So let's hear it. What's your bold prediction?

21:48Yeah. So here's my bold prediction. Within three years, every I-generated song will be licensed before it's dated and not after.

21:58Dan Runcie: For, not after. So all of the discussion that we're having right now, all the debates about what's going to be labeled, not labeled, you're saying this will be taken care of before the song is even released. Yeah, right. It's a pretty radical change. Music's match, just like many other music rights administrators, we tend to get the rights information after a song is released. And when it comes to publishing, as you know, sometimes it's even months after a song is even played on the radio. It's a long process. So what happens with generative AI, if every rod is generated before, at the time of creation, that's a pretty radical change that will really change the way that the money and the royalties are generated for the right holders.

22:43I think today, a lot of the energy is put into either licensing data set for AI training, and that's a different story, or to stop AI creation from being generated, right? Like, for instance, if you go through a sooner type of experience and you try to maybe use the lyrics of a popular track, you will be stopped. Because there is no reality associated to what it would be essentially an AI cover or AI remix. But as rights are figured out and the parties are involved, that moment where not even just the musician, but even a consumer, a leader like me, wants to regenerate maybe a popular track. But according to his or her own tastes, that's the moment where royalties could be generated.

23:30That's why I say a royalties could be generated at the time of creation and not after creation.

23:36Dan Runcie: You're talking about in terms of knowing what the split is, because we wouldn't have the actual royalty generation until we know how well the song is performed. Yes, that's right. But there certainly will be permissions for that song to be generated. And also, if you take maybe a consumer mark, perhaps, though it might not be related to how many times I listen to that song, because that experience might be unique for myself in that particular activity. that might be royalties generated because I am personalizing a particular track to my taste. I do a parties set in the 20s and I want to take all the music I know today that I listen to that make it 20s style, right?

24:19That's the royalty that will be generated for me as a consumer for adapting those tracks into what I like. I think it's a different type of monetization perhaps, and also different types of plans that may offer based on these new paradigms, which may not be even associated to how many times you listen to a particular track, because everything will be more ephemeral.

24:41Dan Runcie: That really does flip the model a bit. And maybe I shouldn't say flip because these things could live concurrently, but it more so creates an additional monetization opportunity that we aren't really thinking about right now, because I think we're just so focused on how do we figure out what works within the two things that you mentioned, right? The actual data set that the AI music is based on. And then, okay, once it's actually produced, how do you figure out what the splits look like, the revenue moving forward? So this is, I think, something that people would welcome to hear because when everyone talks about, okay, AI can create more opportunities for revenue generation.

25:19Dan Runcie: These are the type of things that they're talking about. Yeah. I think that a lot of the research has been focused on trying to settle on the training data set, which is what you need essentially for being generated and whether those data sets were using music from one corpus or another. And, you know, there's been litigation, but hopefully there's a consensus. But now I'm going to focus at being, I think, put into what happened once you have a legal established generation model that can be used for many different contexts, right? And I think the music creator might not be the music creator that we recognize being creator today for artists.

26:01It might just be any regular user who has capabilities for changing the style, changing the beat, and maybe doing things that until now were domain of DJs or people with certain skills. But definitely AI could extend the territory for these more regular people that will not be DJs. They will not have those tracks to be listened by millions of people. It might just be for themselves, maybe to have a children while I'm meditating, but we wear the tracks.

26:31Dan Runcie: So in some ways, this is similar to what we may see for, let's say there is a highly sought after producer or even a feature artist where in those situations, the talent would get paid in advance because someone is paying them for the services that they are doing for this particular track or for this particular album. And this is a version of that where it says, hey, given these AI tools, if you are an expert or have talent in this, you can be compensated in that same type of way. Yeah, I haven't thought about this, but in a way, it's like if I'm giving advances to the original singer because I'm taking that track and I'm making it personal for myself.

27:09So, yeah, I think that in a world where we're used to, you know, it is not much, right? We understand that, in fact, a lot of the industry has been thinking about the comparison between how much money we spend for Netflix, the TV subscriptions versus music. And it's crazy because when was the last time that I even watched Netflix, right? When music, you listen to that every day in every moment. And so it's always with you. I think potentially adding these capabilities for consumers, again, I will also, and it's already helping for users to create music and to create demos and everything. But also to think about that, to be pushed to the consumer level, could definitely add more possibilities also for monetization.

27:52Because I think consumers will understand their enhanced capabilities. Just like when I use Google Docs, I expect it free or almost free. But when I use Cloud or ChatGPT, I can see that there's more power behind it, at least for the time being.

28:07Dan Runcie: And I do see some alignment with the work that you all do at Music Match as well, given that you are making sure that lyrics, whether they are embedded in the DSPs or just having access to them in general, are using the latest technology to make sure that that is synced up in the moment. and there is work that you're all were naturally doing that shows that, okay, this needs to be done ahead of time to make sure that it's there. So even though it's a bit different from your, and I do see some alignments with, okay, how you're coming to this, just given the nature of the work you all. There is definitely an alignment here because traditionally what we do with NewsMatch, as you know, we provide an API for parties like DSPs to display Linux and they will provide us back the views so we can administer royalties for publishers.

28:56However, we recently launched a product we call Sentinel, which allows essentially AI generation tools, in particular, working with some of the major ones, to identify if a user is inputting a no lyrics when generating a song. What I say that problem is today is that because there's no framework for monetizing wealthies within this particular use case, which is the one that I described before. I want to create a new cover from Billie Jean. And so what companies do with, they will stop the user from doing that. So they do it for protection. The next way though is to enable that use case because I think it's a great one, right?

29:37Not every user who comes to Suwon or Woody or those tools, they come because they will rip off Michael Jackson's music and to be Michael Jackson. I think they come because they want to make a joke to their friends and maybe instead of Billie Jean, is going to be them and it's got to be a little bit different but with the same song. So the creativity, if you see, is huge, right? Because people, you know, they come with all kinds of ideas when it comes to personal life and connection. But these use cases today are not possible because the framework doesn't allow that. But definitely, there will be a point where when you enter into these use cases, companies like Musesmatch may become a model for the lyrics being used.

30:18Is it copyrighted and is the songwriter giving authorization for that song to be generated and is what is the loyalty that needs to be generated. The same for the recording part so that people like me might not become great DJs, but they might enjoy a more personalized experience.

30:36Dan Runcie: So in order for this prediction to be true, but is there anything else that needs to happen in AI, in music, in media for this to play out? Yeah, definitely you need every part is involved to agree that not all the parties have agreed on a model, but you see that the trend is on an agreement path, right? There have been different news about soon having certain deals. There's Clay, which is another AI generation company, hasn't released the product yet, but they have already determined deals for the majors. So the models need to be created and this will take a little time, but it will happen. I think AI today is seen a little bit black and white, like it's bad or it's good when in reality when talking to you we recognize that there are a lot of different use cases some may be good some may be bad so me creating a surprise song for my daughter's birthday using Billie Jean may be good me impersonating Michael Jackson pretending he is alive and is making a new record that's bad right but that's the use of AI and like everything it can go into both directions I think today as humans we're still a little bit, I don't think there is a good vibe generally about artificial intelligence.

31:53Like me, you work in technology and then you love it. But I think generally there's racism and I totally get it. So I think we need to understand the technology better if we're comfortable with it. Companies need to come together and agree on a royalty distribution model. That's why I said three years and not three months. I think if you were just a technical problem, it could be solved tomorrow.

32:16Dan Runcie: I will definitely have to revisit this in a few years to see how things play out. But Marco, this is fun. And I appreciate you coming on to join us. And yes, we're looking forward to having music match at the summit. Thank you.

32:32Dan Runcie: Thank you.

32:59Dan Runcie: follow button. Make sure you follow us on Spotify, Apple Podcasts, wherever you get your podcasts. Trapital is there. Thanks again. Talk to you next time.