Sony's Rob Stringer on the State of the Music Industry

I'm here, Lucas. I'm here.

Well, I try to tell the truth mostly. That would be helpful. I mean, they kind of know because it's such a constant dialogue. But we've had five years of consecutive growth from streaming. We've had ten years of consecutive growth from the company. But the challenges are always what's next. We are at a crossroads at the moment. We have AI, which I'm sure you're going to talk to me about, and we have other challenges of constantly looking how the business moves on. But we're not a new company. We've been around a while, so we've weathered plenty of storms in the past and whatever comes hitting our way next, I think we'll probably figure it out.

Well, I think the threat is the disruption from the next chapter of tech because it's something that happens that doesn't, to my mind, benefit the art. My view, where I come from, was art first. Business and tech are involved in that second. So if I look at the next chapter, I care about what happens with all the tech. I've been at the company a long time. I've been through plenty of different chapters of technological innovation, whether it be cassettes or CDs or downloads or streaming or whatever. So I look at it and say, how is it going to affect the arts and how is our positioning going to be? Because at the end of the day, I look after a 125-year-old company, really, and to my mind it's like a modern art museum. We have amazing paintings from the past in there, and I'm always looking to put brand new paintings in there from future geniuses. So therefore I'm always concerned with that. Sometimes the tech bothers me more and sometimes it bothers me less.

Well, I would have an unusual position on that because in 2000 post-Napster, generally everybody wrote off the recorded music industry, including the investment community. And I didn't mind that chapter because then I got left alone. And actually, I think out of that period, we started to create better art because the pressure wasn't on from the technology to be the most powerful chapter. Then iTunes came in, and iTunes, to Apple's credit, did have a boutique taste mentality about the store, which meant that I think they understood. I can tell you from that period that the artists that came through have a very high quality because it was encouraged to be boutique. Now, ironically, this chapter has made us more money, times five, than the iTunes chapter and the post-Napster chapter. But an algorithm tells you what you want, not what you might like. There's a difference between what you want, because everyone always wants something until they get too much of it. Might you like chocolate chip ice cream until you eat five tubs of it and then you don't necessarily like it anymore. But with streaming, the downside is you have incredible penetration. We have hundreds of millions of people around the world, and that has been very lucrative as a business. But I also miss the sort of 'fuck it up' algorithm where you learn about something that you didn't know about. Right? And I love getting fed more of what you want, more of the same. And I think what you didn't know about and you learned about, certainly when I came to America at a time post-Napster when the industry felt like it was in bad shape, was because musically, growing up with the BBC, they played everything. So I wasn't an R&B guy or a pop guy or an alternative guy or a hip hop guy. I listened to everything because the BBC had a government mandate to play every type of music. So I was kind of open to that experience, whereas I think the disadvantage with automated taste is that you end up being funneled to the same music. There is no reason why when you're 14, you love pop music, that when you're 18 you won't love folk music, or if you're 16 and you love it. I was at dinner with someone Tuesday where he and I are of different generations, but we both grew up loving hip hop, and we both agree that most hip hop right now sucks. Yeah. I mean, well, on hip hop I think that honestly that's a different conversation because the industry funneled so much focus as the industry does. And instead of signing 100 great artists, you sign a thousand artists and you're going to dilute that. I think hip hop will not go anywhere. It's a 50-year-old genre and it's as powerful as rock music ever was. But the truth is that it will hopefully go underground, come back up again with an incredible type of fusion music that makes a difference. We had that we saw in the Old Future franchise that was brand new in hip hop at the time.

You know, and the way Tyler is that is, to my mind, a Renaissance artist. So I think it will change. But do I think hip hop will have to go underground to come back up again? Yeah, I do. And I think that, again, it's the same thing you said, you get fed every if you like a certain type of genre of hip hop from Atlanta. You fed that.

Well, and then there's been this development where a lot of the music sounds very similar because they're all catering to a particular playlist or algorithm to your. Yeah, there's a they have this sort of the same target. Yeah. And I'll give you another example which makes it a little bit more illuminated. When we put the first Harry Styles single coming out of One Direction, 'Sign of the Times,' it's over six minutes long. And we were told that you can't have a six-minute-long song on a playlist because that isn't the way the algorithm works. And I pointed out that Bohemian Rhapsody was six minutes long plus, and that was a pretty good record. But that's the kind of thing I came up against. And as it happens, the public, 'Sign of the Times' has done a billion and a half streams on Spotify. But at the beginning, they did not playlist it. Yeah, they've learned the lesson a bit since then. But to my mind, honestly, it sounds cliched and I work for a corporation and profit is important. The art comes first. Right.

Well, the first album was where we wanted to go, where we talked about him wanting to go, and it was very clear where he wanted to go. And as it happens, the first album has now done great. Right. So in retrospect, as with many proper artists, you go backwards and you say, actually, it was all planned, but the first album was a step to go left, not go down the middle, not go right, not more pop, not down the middle and make it easy, and go left. And we went left and that set us up to go back into the center a little bit on the second record. And then the third record was just completely natural and literally the easiest record. One of these is record of a Met because he had total vision and the experience of the previous two records. So it's always a journey. And you don't necessarily have to start in the most commercial place to end up being a really super important artist.

Well, we held passport control. When I started in 1985, we controlled manufacture, we called distribution. We controlled radio. We were passport control for artists. So we had a lot more power. And I think probably in the pioneer days of the music industry, we abused that power and we probably got a lot wrong. But it was pioneering. And now the artists have at least equal power to us, if not more, because we're part of an overall picture. There's live, merch, branding, there's a lot of streams now in the music business that are super lucrative, and we are one strand. And I'm very comfortable that I wanted to be the artist part. I never wanted to be a cigar-smoking fat cat. I know it's always cliche. We were told the other day, it's like Mike Myers in Bohemian Rhapsody is fantastic. But yeah, there's a bit of a cliche about who we are and you have to work hard not to be that cliche.

It's pretty multidimensional. We have a different path to my friends and competitors because I work for Sony. So the synergy at Sony is multidimensional. We've had meetings with all our heads of entertainment companies for two days, and the conversations are about PlayStation, anime, movies, television, electronics. So at the end of the day, we've always had that. So I actually think that we were first in all those ideas because we have a lot of strands. We're making movies with our picture company. We're doing games with our PlayStation, and anime, which is obviously one of the biggest growth brands in the world. We're doing tons of stuff with anime now that I wouldn't have thought five years ago. So I think it was organic for our company because we were part of a bigger company. My counterparts at Warner Music and Universal are not. So it was in our bloodstream to some degree, and we concentrate on that much more in the last few years. But we have a multitude of different revenue streams, probably 60 to 80 different multi-revenue streams now. So we're pretty dimensional.

Yeah, but they were gold mines everywhere. For instance, we have a share of MJ the Musical, and that is on in five places in the world within the next year. That's like an act touring times five, and that's quite lucrative. And unlike with an act touring, you actually get to participate. That led to a movie which we're making now, the Michael Jackson autobiography. So the Broadway show has turned into something way bigger than we even imagined, and that revenue stream is more lucrative than streaming. Michael Jackson's music has survived all the controversy. I think his music is in the fabric of society. You cannot take his music out of pop culture. It's absolutely entwined.

No, it's not the same because when we are a public company, but when we're talked about on the same terms, it's as much about PlayStation or Electronics or Sony Television. So no, I mean, yes. I mean, what I want to be doing that not particularly, you know, doing court hearings. I'm sure you're aware, Lucas, because it's your job, you're aware of the number of press releases we put out compared to our competitors, considerably less. We frustrate people. We don't even put press releases about the things we do, which I know sometimes is a little bit annoying. So we can talk about that next. We can sign huge catalogues and we don't tell anybody officially because it's not quite the same dynamic. And I want to be in that position? No, not really. I think it's tough. I'm friendly with people in the other companies. I've worked with the head of Universal and I've known him for 35 years. So it's a tough gig, and in the wider entertainment business, how tough it is to be literally reporting back to shareholders and investors every three months. Yeah. No. And you do have to talk your company up. Right. I'm fortunate that I do investor analysis meetings twice a year and I contribute to the Sony quarterlies. But I'm left a little bit more, I think, to be behind the curtain when you're doing my job. It's not a terrible thing. The artists are in front of the curtain. The talent is in front of the curtain. And I think being behind the curtain sometimes better.

Well, using the modern concept, I think this music is priceless. And we bought name and likeness on two of those acts. So we own all the logos, merchandising, experiential potential, event potential. There is no price, as far as I'm concerned, for Pink Floyd. What price can you put on a Picasso? It's relative. And interestingly, which backs up that process, is that Spotify now, as it hits maturity in particularly the English language markets, the audience is older. Spotify is now ten years old and the audience is getting older. So if you look at the dynamics of the marketplace, the percentage of people listening to older music is much higher. So I think it's a foregone conclusion. We have relationships with every one of the ones you mentioned. We've had recording and Michael songwriting. We have had the recordings for 50 years. Pink Floyd has been signed to us in America for 50 years. Bruce Springsteen has been signed his whole career for 50 years. We took the publishing of another company with Springsteen. We took the records of another company with Queen and Pink Floyd. We had the records in North America. We didn't buy the publishing. And we bought Bob Dylan's recorded rights as well. So they all had a relationship. So Universal did the publishing and you did the records because Dylan released a lot through Columbia. Historically, Dylan's been on Columbia from one record in the seventies with David Geffen. But we have a lot of numbers, a lot of artistic understanding, a lot of expertise on the structure of those artists' careers. So they felt like a good fit. And quite frankly, I didn't want any of those artists to go anywhere else. Bruce Springsteen's been on Columbia his whole career. It's not going to leave. It would be like in the museum saying there's the Basquiat, it's someone else's now. That wasn't going to happen. So we think it's lucrative. As we move into incredible areas of digital exploitation, we think Dark Side of the Moon or Thriller or Bohemian Rhapsody or Born to Run are going to be experientially very exciting for generations. My generation, your generation, will see those in different guises for the next hundred years.

We're getting paid for it differently. And people are discovering catalog on all the platforms, whether it be Snapchat, Instagram, TikTok, or Spotify. The chart is random with catalog because we've got records in the chart from 30 years ago, 20 years ago. Let's say in the top 50 Spotify from four different decades. Because people blame catalog. There's this narrative in the music business that it's impossible to break new artists, and part of it is that catalog is crowding them out. No, I think it goes back to my original point. I think sometimes you need to have something coming up on the ground and not being overexposed quickly. Social media exposes things very quickly, not always for the best purposes. When I was a kid, you could look at rooms around genres of music, and in that room would be 28 people, and 15 of those people would end up being painters, sculptors, musicians, filmmakers. Those rooms are tough to make now because someone's filming them automatically. One of my friends in a band from the eighties once said to me, 'I think everyone who said dance and social media was shit, and so they wouldn't like us, and we would have never been successful because people would have judged us on the first hour we ever stood on the stage in front of a bunch of people who were tastemakers.' So I think tech blows it up and it's great for that minute. Is it great five years on? Who knows?

I'd like several tech platforms to pay me more.

I think the debate on that would be did we start off with TikTok on the right note and did we allow them to become what they think they are, which is a promotional platform? And we probably did. They are not promotional platforms. They are a hugely profitable corporation and we allowed them to be MTV and we shouldn't have done that. And now we're backpedaling from that. But the truth is, we should get paid more by several of our DSP partners. And that's part of my job, to make sure that we're paid and then turn the eyes to pay.

Oh, I had lunch with Daniel Ek in the summer in Stockholm. I constantly say to him, and I think they've done a spectacular job of building a business around music. So I would not be critical of what they've done, but I think it should have been going up a dollar a year for the last five years. I think it should probably be much more akin to Netflix pricing because Netflix pricing is not based on the entire catalog of content for television and film. And Spotify has every piece of music you could ever want. So yes, I think Spotify should be more. But they're making ground on it now and they want to be competitive and get their share price up. So they didn't put the price up. We obviously wouldn't agree with that, but we are where we are and they're finally putting the prices up and that's great.

No, no, probably. I mean, it's like, I can talk to everybody individually, but we're in a position where it's going to be super important to our business. I hope it's most importantly going to be exciting and make new creative vision and be fantastic. For the meantime, I'm sorting out the rights model and my team and I are supporting the rights model, making sure that we get paid for whatever the training models on whatever comes out of AI. But do I think it's going to be exciting for making great music? Yeah, I think there's a 14-year-old in the bedroom somewhere who's about to make amazing music using the tools that AI provides. But we have to get the business model sorted out first.

I think we're waiting for the artists to experiment and then we'll follow the artists when we know that experimentation is absolutely exciting. We will follow them.

Yeah, that would be really bad for me because then some other artist is going to say, 'You never mentioned me and I'm ready to.' I know I usually have a rule against these questions. Yeah, I figure this is promotion. We have a thousand. I'm not going to. But every label boss, I know this, you guys all make a list of the five biggest. But I can tell you, we have a huge independent distribution arm as well and we have a lot of artists. The mythology that we are signing less artists is not true. We have more. Okay, I'll give you something that my head of Latin told me the other day. Because we have a very big Latin division. We have Bad Bunny, Rauw Alejandro, Shakira, Peso Pluma, and all these artists. And he told me his musical tip that the next blend coming from Latin America, which is a huge musical movement right now, is reggaeton mixed with tropical music. Artists are starting to blend Argentinean Colombian tropical music with reggaeton. It's going to be hugely popular. Okay. I look forward to it. Was diplomatic, wasn't it? Not to mention one artist.

Thank you very much.