Warner Music Group CEO Robert Kyncl on AI, streaming power, and why music royalties are the safest asset on Wall Street

I think it's like nuclear weapons. You actually should never exercise it. But it's gone on nice to have it, which is why a lot of people are seeking nuclear weapons. Yes, right. In the 20th century, if you were a musician, one of the hallmarks of a successful career would be signing to a major record label. It meant that you could get time in a high quality good studio to record your best work. It meant that the LPs and the CDs would make their way onto the shelves of major retailers. And it meant that you would get serious promotion in the form of radio, airplay, essentially. But in the world of online streaming, the business of running a record label or record label business has gotten a lot murkier. Having survived the online privacy era, record labels are faced with an even more existential threat from artificial intelligence. But there are growing parts of the business too. Back catalogs are allowing people to discover music more easily through streaming. So much so that Wall Street actually thinks that music is a good business again and is now getting back into the game. Robert Kinsel is one of the major players shaping the new music landscape. He is the CEO of Warner Music Group, which is one of the three major American record labels record companies. And he before that was the chief business officer at YouTube where he built YouTube's streaming music business. And he was an early employee at Netflix back when they would still send discs in the mail to people. And because music and music streaming and catalogs are such an attractive asset for Wall Street these days, we thought we would ditch Ben Smith this week, chuck him out onto the heap and bring in someone who actually understands Wall Street understands business. That is some of war's business editor Liz Hoffman who is also the co host of the excellent podcast compound interest if you're not listening, definitely go subscribe to it. Liz thanks for joining today. Thanks for replacing Ben. I feel like this is a good trade that we got this week. Have you been surprised by the fact that music is kind of a growing part of the media business at a time when investors are really scared of media across the board? Well, first of all, it's an honor, long time listener, first time co host thrilled to be here. You know, the interest from Wall Street is really in two places. One is that just like content is still for all the hand ringing you hear out of Hollywood these days, like still still pretty good business, still pretty good quintessentially American business, really good at making stuff that people really like. And it's never been easier as I'm sure we'll talk about with with Robert to distribute that to get that to places and you know watching just the huge rise of Spotify and YouTube and Netflix, I mean streaming is just the defining distribution mechanism has upended bajillion business models. So that's one. And the other is that people are basically Wall Street's run out of stuff to buy. And they're like looking around and in every corner of the company called semaphore dot com. Yeah, I know they can afford us. Very rich value to be here, but they're kind of rooting around in everyone's business model. Be like, do you have anything that like fits this chunk of money we have over here. And music world he's been come a really interesting one. It's it's not brand new. The first you know the David Bowie bonds in the late 90s kind of set that off. But in the last like four or five years, you've seen just like huge pools of all street money chasing essentially like the long royalty that that Spotify pays Warner when you stream their songs. It used to be you bought a CD and see a big spike in sales that first week, but that doesn't only do Wall Street any good. They want like long term cash coming in the door that they can then like go do other stuff with. And so Warner has a deal with a big private equity firm called Bane, but like they're infamously Taylor Swift. And so we recorded her masters because she didn't like who own them. You're starting to see like what we call in finance and asset class. And that's what music has become. And so we want to get into all that with Robert. Yeah, well asked Robert about that. Obviously, which is super interesting. We also want to ask him about how he's thinking about AI because if I'm not mistaken, Warner has been one of the has taken a different direction than its larger competitors by actually doing a deal with a major AI company rather than actually fighting it. That's right. Right. Yeah, it is. And I suspect that this is informed by his past at YouTube where you know, they were fighting this war with ironically the record labels who are pissed that all their songs are being used in user generated content. And Robert, you know, when he was there help build the business of saying, look, this is going to happen anyway. You cannot fight consumer behavior. Let's figure out a way where everyone gets a little something. And so I think that's why they've been way more front-footed and striking AI deals than Sony and Universal, their two big competitors. Well, we got a lot of stuff that we want to get to with Robert clearly, but we have to take a short break. This will be right back with more with Robert Kinsel after this. Hi, I'm Joshua Spaniard, VP of Marketing at Google, and you might assume I have all the answers when it comes to marketing. The truth, I'm just as curious to learn, discover the answers to everything as everyone else. We are living through a total reset of our marketing industry. The old maps don't work, which means we get to chart a new path forward. It's dynamic, it's fast paced, and honestly, there's never been a more exciting time to be in marketing. That is why we've started a new podcast, Frontier CMO. It's from Think With Google, and I promise it's not just a bunch of corporate waffles. I'm sitting down with people who really know what's going on. CMOs, creators, technologists, the lot. And we're having a proper, unfiltered chat about what's working, and quite frankly, what isn't? These are your notes from the Frontier. So do me a favor. Search for Frontier CMO wherever you get your podcasts, or watch us and subscribe on YouTube. Robert, thank you so much for joining us. I think when people think about what a record label is, they picture the heyday of the 60s or 70s, you know, the kind of the big suits. And they think that record companies basically are in charge of distributing music, making sure the LPs get pressed booking studio time, and making sure that the LPs or the CDs later ended up on the shelves of stores and on the airwaves of radio stations. Obviously, that's not really how people most people consume music these days. So I'm really curious, what is a record label in 2026? Sure. So first of all, it's great to be here. Thank you for having me. As you can see, I do not have a big suit. I have a lulong lemon shirt. Aesthetically already very different. Yes, exactly. Breaking the stereotypes. It's reflective of where the music industry is, which is much more flexible than the suit. Ironically, actually, you know, you mentioned LPs. We still distribute vinyl and it has been actually growing for the last 20 years. It is incredible. And what you've seen today is actually the collector market and the desire for physical products and a bit of the nostalgia that's actually most pronounced with Gen Z, including for the times that they haven't lived in. Or songs that they haven't been around for like Fleetwood Mac are really powerful today. But the reason that that is happening and that part of the business still exists and continues to grow. Is that the other part that wasn't here has grown really big, which is streaming, whether it's at supported streaming or subscription streaming. And the global distribution of music has connected people and the unlimited show space, which basically allowed catalogs to gain much more prominence, including with younger audiences. That really has transformed the business. And there are a couple of ways that it has one, which is our business, which was predominantly in selling LPs or CDs, as you said in the beginning. Now it's predominantly streaming. And we also sell LPs. And actually CD market is also picking up, which is going on. Why is that I've heard this what is going on there? Is that like why 2K nostalgia? Like I understand the LP thing because there's like an audio file argument of, oh, you get really, really good sound much better than streaming. I get that. And I also understand it's big and you can kind of display it and it's fun and you got the big artwork you open it up and it shows something inside that maybe you don't get to see if you're just looking on streaming. But the CD thing what is happening with that. Yeah, it's fairly new, you know, it's a hotel last 12 to 18 months. So we don't have a fully bottom bottom, but why it's happening. But I think, you know, there are probably some enterprising entrepreneurs who've seen the boom in the vinyl business and focused on, you know, because what you have to do is you not only have to have the CD's, but you also need to have the machines to play them. CD players. Right. I want to get out with that 6 CD changer in like my 2002 Volvo. So I think the market for selling new ones is not that big right? You don't find too many of those in Best Buy or that. But, you know, there are people who are refurbishing. And so, so I think the, you know, in the world that is increasingly digital. Young people actually crave physical nostalgic experience. And by the day, experience to themselves or not doesn't matter. It's just something that is more real. less digital. And it's happening and it's not happening just in music, it's happening across art more broadly. And you see it in light music being like really, you know, prominent and extremely popular in the last few years because people just create the in-person experience. So again, it's not digital. So we live in this interesting world where majority of our revenue is digital, but the non-digital experience is actually growing too because the digital ones are growing so much. So it's a really interesting place. But to go back to your question about what does record label and a publisher mean today versus let's say 30 years ago, it's, you know, we live in a world of democratized distribution, you know, anyone can publish, right? You can upload the song to YouTube, you can find a way to upload it to Spotify, Apple Music, etc. Whether it's directly or through a distributor. So it's been largely democratized, which gave rise to a lot more people creating music and uploading music. But what also, and it's not just the phenomenon of music by the way, it's across all media. It's with creators on YouTube and TikTok and Instagram. So it's across all media podcasts, suddenly. Yes, it's democratized the news business as well. This is a discovery. Yeah, yeah, it's a minor thing as well. So it's happening across the board. But and you guys probably will, oh, actually, I'll be interested to see what you think. But in the world where anyone can publish, no one can be heard or it's very, very hard to be heard. It's hard to break through the clutter and connect with audiences. So I think the value proposition for companies like ours has decreased. It's still there on the distribution, but it has decreased and has increased and breaking through the clutter, meaning ending audiences doing so on a global basis, which is very difficult to do, you know, having global infrastructure to promote songs, to promote artists and develop them is a very difficult thing to do in a noisy world. And so I think our companies have sort of morphed into that. And what that means is that you have to start investing into technology that captures information and allows you to leverage it to break artists and break songs. So, so, you know, today the companies are much different from what they used to be 30 years ago because they have to use, you know, company music companies because they have to use technology, which they didn't previously that much. And I have to operate in much more seamless way a global operation to break artists and song writers. You know, and now obviously we're also contending with the advent of AI and how that impacts the industry. I mean, yeah, for just for our audience, can you break down how you make money? Like where most of it comes from, what your big expenses are, how let's change over time, just so we really kind of poke at the business model a bit. Yeah, so, so think about, you know, majority of the money coming from streaming services, you know, whether it's YouTube music, Spotify, Apple, Tencent, you know, a lot of what we call DSPs, digital service providers who have subscription services. And some of them have a free funnel where they serve advertising, right? YouTube Spotify, some don't like Apple doesn't have a free funnel. And so we make money from subscription streaming and from advertising. That's how we make mainly money from the internet. And then we make money from LPs, which have been growing significantly. How significantly? Because I thought that I'd seen on, or maybe you had said this somewhere that, you know, streaming was 70% of the revenue for the company today. Yeah, that's correct. Across both recorded music and publishing, you know, publishing is for where we represent songwriters, you know, people who have created the music and the lyrics, the melody and the lyrics, and the recorded music is for artists who sing it. And so across both, you know, roughly 70% is coming from digital from streaming and then I support it. So the rest really comes from licensing our music to like television programs, movies, etc. You know, where I always say that music makes all video better, whether it's the shortest of TikToks or the longest of James Cameron movies, and everything in between. Everybody has a music there, somehow attached. Other than if it's a podcast, obviously, because it's open-word. We'll be bumping you in and out with John T. Tune. I'm going to get Django going over here. This is what we want to make money on. I don't think it's going to warn a catalog, but it's like it's warning out or something like that. You know, so that's really our revenue. By the way, when you think about it, when we used to sell vinyl and CDs, the business was the business of selling. And now it's a business of rental, with subscription, right? People are paying for access. They're not buying those sounds from the majority of the business as business of rental. And what that means for the business is that when you're investing money into an artist or a catalog in the previous model, the money came back faster because when you sell upfront for a high price, etc. So it comes a little bit faster. But then it dies down. In the subscription model, the money is more spread out, but it keeps going forever. So it fundamentally changes how the money flows, the dating of cash flowing through your system, but also the longevity of it. Is it more predictable business, right? Yes, it's more predictable business, but it's also more durable business because of the subscription. So we love it. You're describing a business of predictable cash flows that Wall Street loves, right? And I think it's really changed how you finance the business too. And I was hoping you'd kind of talk a little bit about that and how this is actually really become an asset class. And we obviously going all the way back to the Bowie bonds and the in the 90s, but we've just seen a bunch of these. You have a deal with Bane Capital, yes, to do some kind of log financing. What's going on there? Well, yeah, I think you've described it quite well. It's an asset class. And it's actually one that is completely disconnected from what's happening in the world. There can be, you know, I can tell you is that people are listening to music on both sides of the straight-of-harmouths irrespective of what's happening now, including the sailors on the ships, listening to it. They may be listening to different music. Is that a national security risk? Is that like, I mean, this was like on Strathow. People saw new where the boats were because someone was on Strava running around and logging their stuff on the aircraft carriers. Is this a concern for the Department of Defense/War that they're streaming Warner stuff on the boats? It's interesting. Actually, that you mentioned it. Now I'm thinking about that. It's like, you know, you could probably do some prediction about what kind of music people are listening to when they're getting ready to attack. Oh my god. Oh no. We're going to create a new class of polymarket or calcium-better based on your streams. But you know, the point I'm trying to make is that people love music. You know, I always say that music is more distributed than electricity because even like, cavemen have music. They were singing around the campfire, but there was no electricity. So wherever there's electricity, there's music, but even when there's not one, there's still music. So it's the most distributed thing in the universe, maybe other than oxygen. And because of that, and the ability to personalize your experience through all the different streaming services or just singing and participating in that, it's just like broadly appealing to people. And it also represents their sort of a memory lane, right? Everybody has a soundtrack to their life. So they basically like songs from their past who really listen to them a lot, which gives power and rise to the catalog. And because of that, it's simply disconnected from what is happening in the economy, what is happening in terms of wars or other wars. It's just disconnected from that. And therefore, it makes it a very safe asset class. So I want to ask a very kind of a basic question, which is how much of the business of running, you know, one of the big, big three record companies in the world? How much of that still comes down to signing the best talent, basically? Yeah, so I wouldn't, there's some element of truth to it, but I wouldn't take it as far. I think it's like a really interesting blend of both the technology and culture, which is what makes it a really interesting place to work. And by the way, my counterparts, you know, who run the other music companies and I talk about it, you know, the job has changed from what it used to be. It's a lot harder. There are a lot more things that you have to do. Because not only you have to continue to find great new artists, because that still matters. And you know, we have great new artists, which we've broken recently, Stella, Lifty and Mabelike. Like we continue to do that. And our company has tremendous success in finding artists from Bruno Mars, H.E.R. and Duolipa, Cardi B, and so on. There's so many. A few of those guests. Yeah. Yeah. A few of those. And, you know, and, and, you know, Sombra and Teddy Swims and Zach Brian. So, so as a company, we're doing really great with that. But what you also have to do is, because of the democratized distribution, we also have to play the volume game. And we have to make sure that we we provide distribution to many independent artists that would like to use our infrastructure and our agreements with the digital service providers to distribute our music. So, what we do is, we have a supply chain that, you know, part of our job is to basically ingest the songs from the artists, move it through our supply chain, and then distribute to the digital service providers. and them. obviously made sure that all the money flows correctly and reverse order. What we do is we externalize our supply chain and we effectively lease it to independent labels and artists so that they can hop on our infrastructure and on our deals to distribute. So there's like a digital thing that really in a big way that it exists. It was a little bit in a physical world, but now every major music company has that kind of a division. And but then at the same time, the business of distribution became much more complex because it used to be that, you know, we would distribute through Walmart and Best Buy and, you know, big retailers. And they were large companies, but they were largely, you know, there were worth tens of millions of dollars. Maybe Walmart at that time, maybe a hundred and a couple of million. Now our distributors are trillion, multi-trialing dollar companies. And the game has completely changed. So the level of sophistication that we have to have in order to negotiate correctly and deal with the complexity of it is is completely different for what we used to have. And then you layer AI on top of it, which is a brand new force that sort of entered the industry. We're all making it up as we go. Both sides. But obviously with the right intent, which is how to serve artists and storm gutters the right way and create value. But we're all, you know, we're all students at the same time as world teachers. Right. Like it is a, it's a truly interesting time to be doing this. Most people who have your job or have had a job in the past are music industry folks, background and sort of talent and are your product guy, actually kind of like an ad tech guy, platform guy, a deal guy. Curious like, did you have to, what did you do to convince the creatives? Or what do you think that like your resume brings to the job that other more creative types of that? Well, I don't, I don't really, I don't convince the creatives because I don't metal in the creative part of the business. That's not, you know, we have experts for that, you know, Elliot, who runs Atlantic and Tom and Aaron who run Warner Records and many others in Guy Karyan who run on a chapel. So they know how to do that. So for me, it's not, I'm not, I'm not going to improve them creatively. That's not going to happen. Someone else massages the delicate egos of the talent. No, yeah, I mean, that's that's why they have the jobs that they have. They've earned them and, and they know what to do. I, what I think, you know, what, what, what I think our majority shareholder, Landblava saw in sort of making this move is that you have to bring, you know, in an industry that is changing, you have to bring different perspectives to it. Because if you keep everything with the same perspectives, you will likely miss the next shift that's going to, you know, happen on a curb or you will not, you know, ideally, we actually cause those shifts ourselves. Right. But for that, you need, you need a bit of a fresh perspective and a different perspective. So what we're doing in Warner is we're building a company that has diverse sort of talent of people who are from the music industry and people from outside of the music industry. It doesn't mean just from technology, but also from financial services and just wide variety of experiences. And when you bring it together in a well functioning team, then, then you're onto something and then you don't miss the next turns in the industry. And again, as I say, I actually like to cause those turns. Right. So, so you, you know, you bring in people who are like to do that. So that's the, and that makes it fun because the path is not clear. And we get to chart it. I was listening to another interview that you did where you said that there are people who know 90%. They're smart people. People, I think you were mostly talking about people in the media, such as us. I'll try not to let my feelings get hurt by this, but you basically said that, you know, there's people who are 90% smart. And this is the kind of conventional wisdom, essentially, that you read from, but that extra 10% is where the real value is. And that's where chain chappens and that's where people make real money. I think this is what you're saying when you're talking about shifting the business, steering the business. What's that 10% what is this move that you're going to make, you know, that you were just alluding to there? Well, for us, yeah, so you're right. Actually, it's one of my favorite things, which is, it's really the last 10% that completely differentiates you. The 90% is the same, which is why you never should go by conventional wisdom because all your ears anything up to the 90%. And so what it takes is extra curious people who seek the remaining 10. And when you do that, suddenly the path of what you should try to do emerges and then you try to make it happen. There are many examples of that from my previous jobs at Netflix and YouTube. At Warner, you know, they're quite a few, but one is how we approach pricing with our digital service providers where we were more like passive recipients of rate increases. And we've become active pushers of that and recipients or how we think about monetization of the long tail of our catalog and optimization of it using AI. Because humanly it's impossible because it's just too many songs to manage. But with automation, you can actually achieve it. So it's the conventional wisdom is focused on the top, you know, and a few hundred of the titles because they represent have the revenue. But what about the other half? And but that one or you can't because you have enough people to manage that. It's like, well, but now with the unvent of AI and AI agents, you actually can't. It's complex. It's very difficult to build, but it's possible. So, you know, we focus on that and we're already having some great results. So it's things like this. Whether it's deal making or technology or how we think about finding a signing artist, you want people who seek to last 10% of any wisdom and then manifested into existence. What is the current kind of balance of power between the labels and the distributors and the streaming platforms? There's only three of you and there's, I don't know, five to eight of them around the world. You would think you would have the stronger hand on that stuff. How has that changed? Well, it also depends on how big they are. So, obviously, there are a few of the big ones which is Spotify, YouTube, Apple, those are the three largest. Then 10 cent in China is actually the largest by number of, well, not total number of subscribers, but out of one country. But the ARPA is a little bit lower. And then Amazon, obviously, is very working. So I would say the balance of power is kind of balanced. You know, we have this coexistence, everybody wants more, right? We want more, they want more. And it's a dance than we do. I think the thing that's really important is, and I learned this from my days at YouTube, which is when you realize that if the partner is going to be with you for the next decade or two decades, then you cannot have a zero sum relationship at that. It doesn't work because, okay, you'll do a renewal for three years and you take a really harsh stance, a very adversarial, etc. But then you have to deal with it again. And then again, and then again, you just can't have a scorched earth type of an approach. Now on the other hand, you don't want to be easy, right? You're not here to just police people. So I think it has to be a mutually beneficial relationship that is for the long term. And I think that is the hardest thing to achieve because people generally focus on the negotiation in the moment versus actually building a real relationship that is based on trust. And I think if you have that, then you can overcome some very, very difficult situations and negotiations. Like as long as you have two very senior people on both sides who trust each other, they can actually be the peacemakers, right? They can hold situations. So I was focused on that. So Robert, I am curious though. I did hear you speak in some other venue and saying, you know, the balance of power right now, Spotify is bigger than you guys. And one of your goals is to kind of rebalance that power because at one point, you guys control a lot of the distribution. Now they control a lot of the distribution. They pay you. I'm curious. How can you become bigger in some ways than a digital distributor like Spotify when, you know, I'm paying Spotify, Spotify is paying you. How do you regain that power? I don't think we become bigger. I don't think that's necessarily possible. I think the way, the way, you know, and again, it's not just the music industry, paying this television is the same way film. When you're negotiating, you kind of look at what is your disruptive power basically. So it's not like that you're bigger, but it's just like how much you disrupt the other person's business. And if you power, just disruptive power is very large, then you have a lot of leverage. Now, on the other hand, you'll get a, well, what is their disruptive power to us, right, the terms of revenue. And also, you know, when that's large, obviously, that's not pleasant. So it's really about those two things. But it doesn't mean that you have to be equal in size in order for that to matter. You just have to be large enough to have significant disruptive power. Now, I think it's like nuclear weapons. Yes. Yes. But it's not. It's gone on nice to have it, which is why a lot of people are seeking nuclear weapon. Yes, right. Well, we have many, many more questions that we want to ask Robert, but we have to take a short break. So we'll be right back with more after this. This week on our branded segment from Think With Google, I talked to Google's VP of Marketing, Josh Spaniard, about whether AI is a threat or a boon to creativity. Let's talk about creativity. There's a sense, I think, in parts of the industry that AI is the death of original thinking. But then narrative feels like it's shifting. The first two or three years of this AI transformation we've all been going through has really been defined by fear. What is AI going to do to me? And what I'm seeing coming out of Cannes and all around the world is a new mindset. From fear of what is AI going to do to me, to more asking, what can I do with AI? And that positivity is bleeding into the work. And creatives inside of agencies and inside of brands are really leading the charge. Now, it's interesting if you go back to the early days of cinema when they first invented the film camera, directors just put it at the end of the sound stage and filmed it like it was a stage play. It took years for the crane shot, for the dolly shot, for the zoom in to become part of the lexicon of cinema. And what I'm seeing is creatives are actually inventing new ways of thinking, new ways of doing with AI. And that's really happening right now. What should marketers do? I think marketers need to think about AI and move beyond just automation. Yes, you can make your processes in current ways of working 20% cheaper and more efficient. But if you're just focused on the process automation games, you're missing the bigger picture. Second, I think you would need to think about inspiring creativity at a whole new level. Second of the day, I worked with a creative team who, for reasons, wanted to do a campaign where they painted the Golden Gate Bridge Blue. Now that idea died immediately. We knew we could never get the permissions for it, but we also knew it was so prohibitively expensive it wasn't going to happen. With AI, you can now pay the Golden Gate Bridge Blue if you want it. The ability to think beyond the constraints that we were operating on is really inspiring and creative teams are really leaning into that. Third, creativity has sat with creatives, that makes sense, but there is creativity in every part of the marketing organisation. Design teams, events teams, analytics teams, and inspiring those teams to see AI as a creative tool to actually enable them to bring creativity to every part of their job has been a really big unlock for us and really, really exciting. Where should people go to find out more? We just met with 20 creative leaders from all around the world. We published it in a Frontier CMO Creativity Report available at ThinkWithGoogle.com. Head on over to ThinkWithGoogle.com and look for Frontier CMO Creativity Edition. You've been pretty bullish on AI for the music industry. You know, artists are understandably kind of skeptical, like you're thinking a little bit. Sure. So, how much time do we have? 25 minutes. Unless you want to go longer, we can go longer. So, one of the things that the industry has always had issue with was pricing. If you look at the pricing for music versus let's say Netflix, you know, for video, Netflix, Amazon, Prime Video, etc. It's lagging significantly when you look at total consumption and the price of the consumer's pay, music is a 50% discount to video. Well, somebody who's representing artist and swimming artists are, well, I don't want there to be a discount. I want it to be the same, right? It makes a lot of sense. But it's hard to achieve that, right, to drive it up because the digital service providers are in charge of the retail price as we cannot tell them what those are. So this is like I pay eight bucks a month for Spotify and 15 bucks for Netflix. That's basically the math they're doing. Yeah, except it's about 12 bucks now for Spotify. And it's a little bit more fun if it's, but yes, exactly. But you know, like you also take into consideration the consumption because you consume music so much relative to video. And also in a music service, you have all music ever made in the past in the history of the world, plus whatever will be made as long as you subscribe, which is like an unprecedented offer from any content service. Anyway, AI comes in and gives the opportunity to actually charge people for creating music. By the way, today they do, they pay for a Raj band, right, on that Apple people go into studio, pay the studio, may not be paid for that. So people used to paying for tools to create music. AI is a tool to create music that people will pay for. And now it may be that it's not just professionals paying for it, but also you and I, my daughter, you know, like casual users paying for it. So it radically expands the addressable audience. So that's the positive. The negative is so obviously that's a great thing because now we can sell music creation tools that we as the music companies participate in and therefore auditors and so on, that is too. And it's a new remedy string. So we like that. The negative thing is if it's not done without the rails and it's replacing artists and foreign artists songs in terms of consumption and it's using their identity without permission. That's obviously a really bad world. So this is what I was saying, like for me, as a CEO of a company and saying for Lucien who runs Universal and Rob and Sony, like the job is now expanded to also managing this. I reached with them two years ago. And the important thing here is to figure out how we develop the guard rails together with the people who are seeking to license from us so that we keep the marketplace orderly and create a new revenue stream. And then all of this giving artists and song others to the ability to opt in and make sure that their rights are protected. And then if we do licensing deals that they're done on a really their basis and that obviously we do it only with people who work with licensed models. So there's pros and cons to it. There's a lot of information out there. People having different opinions about it. If you think about artists, someone to use it a lot and be part of it and some don't and both answers are okay because it's deeply personal. Like you shouldn't have to be. You shouldn't have to be forced to use the technology you know what I use and or be part of it in any way. And then for others, if they want to capture the opportunity and have people engage with their music or with their voice, if they want to, then it's a it's a new way to engage with their super fans and monetize it. As you say, you've been moving faster. Warner has a deal with with Suno, which I believe Sony and Universal are still suing over it. What do you think they risk by continuing to as I think you're kind of saying fight the last war rather than try to just get paid from it? Yeah. I think for me, it comes down to the audience. Without, and by the way, artists understand us. Like artists care about their audience. You know, whether they come to concerts or so stream their music, they care about them. And when somebody builds a AI service and has traction with the audience as Mike Hishulman did that Suno, would you and if they're willing to transition to a licensed model, basically go legit. In my opinion, you embrace it because if you have significant traction with users, which is a very difficult thing to do, if you have it, then we have a chance that now we have a licensed regime with a market leader who's growing really fast and we can make this whole new market versus if you try to kill it. The users, they don't really care about all these lawsuits and all the shenanigans happening on the business level. Nobody cares. Users, they just say, I just want to do this. And if they can do it here, they're going to move on to something else. And if that's something else is an unlicensed open source model somewhere in the place that we can't touch, that's bad news for Autos and Sons of others. So I rather support somebody who's building this future as long as they're willing to do it in the way that respects Autos and Sons of others and it's a licensed model and builds the business with us. And I've been on the receiving end of this on I was at YouTube in the early days. YouTube had a lot of different lawsuits over copyright infringement at that time. And I worked on removing those and instead building commercial relationships with all of those people in which we have and it doesn't make any billions of dollars for everybody. So this was the content ID that gave content, gave IP owners a chance to get paid when users ripped off their songs for YouTube or something. Even though I wouldn't use the word ripped off because they let the user. Pay no more to and it's slightly legally dubious way. But anyway, it's a very important distinction, right? Because that is how it was viewed. But really the users, they love the content so much that they wanted to attach it to their videos, you know, skiing or whatever if it was music. You know, they just cared about it and they wanted to show and tell other people. Right? So it was more about how do you harness this to actually support the underlying IP? and also make money from it. We eventually created the ginormous business out of this. So, I view AI as UGC on steroids. And the difference is that with UGC, it was the actual content that was attached to something else. And with AI, it's getting modified. You know, what are the things? Therefore, it's more uncomfortable, right? Rightly so. Which is why the Godrails have to be like really strict. So, Robert, I want to ask about, you know, just kind of a more fundamental question about AI before we move on to a few other things that are kind of interesting to us. Which is, I mean, does it, is any of this stuff any good? Like, I know that there's been some, there have been some AI songs that have charted and have, you know, streamed a bunch of times. But these kind of seem like one-offs. They're not, you know, it's not like full AI artists who, you know, can move beyond. It feels to me like, this is just one or two random songs that are kind of like a formulaic country song that is managed to do decently. I mean, how big is, how big do you see this actually becoming? And I mean, but what make the case for the fact that, you know, these are good and we should be, I guess, excited about them. Yeah, so, statement number one is whatever I say can change in six months and can be totally, totally invalidated. It's a podcast. You don't have to be right here. You can just, you just have to talk. What I want to say is, it thinks about, right? I would say today you're correct because it's very hard. You know, I mentioned to you one of our key value propositions is breaking through the clutter and doing it on a repeated basis. That's a hard thing to do. You can have like one viral success and, you know, almost anybody can have to add somehow if they get lucky, but to repeat and repeat and repeat. It's a very difficult thing to do. So I think that's what we're seeing with AI music that it happens here and there. That something gets through, gets into the charts, etc. But then you don't see it again. I think the more risky area could be that there's just a whole bunch of, I don't have any music. It just sucks up a lot of time, you know, passive listening time and eats into the content pool from which artists and songwriters get paid. And again, this is where our negotiations are focused with the DSPs because this is like the real meat and potatoes of how money has made and how this could impact it. But, you know, technology keeps on improving. Things are getting better. But without marketing on a sustained basis, it's hard to just like crank out songs out, you know, and think that they'll all will succeed. It's hard. That's the one part. The second part is that just like with vinyl and CDs, in an increasingly digital world where robots deliver your food and drive your cars and all of that, people actually seek out more human experiences than before because it just makes them feel more human. And art is like the perfect vessel for that. And music is like great because an artist touring is like a blue checkmark on identity. It's just like, oh, okay, that's a real person. And people like to follow the real person because of not just the music, even though that's the main reason, but also what's happening in their life. Look at Taylor's with people are like following the wedding. I was happy with it. It kills me. You know, and that happens without us of all sizes. And so I think the human connection is really important. So I think, look, we view AI as an existential threat, even though we don't believe at this one, because we have to be ready for anything. That's our job to protect the audience from others from any kind of harm that can come from it. And at the same time create opportunity, a revenue opportunity. But at all the while, we're focused on our core business of discovering audience and song others and making them stars because we believe ultimately that is the business that we're in that we will be in, but we will be we will be ready. We shape the future of AI and we're ready to take advantage of it and make sure we protect our essence on others. Just in case it's you know, gets out of hand. Well, the you know, if the other end of the spectrum of AI is is obviously I think Max's favorite words convening live events. That's the part of business. Obviously, it's you know, it is a growth engine for lots of folks. I think you've done some stuff internationally, but what are your ambitions in live music events? We actually have quite a lot of business outside the United States and live like in Spain, Finland, China, Hong Kong, Japan, France, etc. So, but we've gotten into it organically where our very enterprising and skilled management directors in those countries saw the market opportunity. So we we serve artists both from recorded music, respect it as well as from life. And so it's we kind of wrap them in services from us and it's working very well, but there's no globally coordinated strategy to it yet. We may over time, I would say right now we're working really hard to to make sure everything is set up correctly with AI and both on the protection side as well as on the revenue generation side. And so there's a lot of effort that goes into that. We also acquired a platform called Surreal, which helps manage and monetize copyrights and name image and likeness at scale for AI. So that's an acquisition we completed two months ago. So we're we're busy building out more features. So we basically want to have a platform based approach to managing both copyright as well as name image likeness and voice permissions for AI. Is that nice way of saying that you just do not have any desire to run straight at the behemoth that is live nation? Yeah, I mean you have to you know when you run a company you ultimately have finite number of resources and it forces you into prioritization right and today AI is one thread right which means we need to manage all the thread parts of it and on the other hand it's a huge RQ opportunity where we can have new revenue stream that all the sensors can participate in and increase the average revenue per user. So we want to capture that correctly. Both of those things take a lot of effort a lot of time and resources to set up correctly and we know because it's digital it's going to be here forever right it's going to grow. So so you dedicate your resources there and a little bit less so to the other parts. You worked previously before this as an executive chief business officer at YouTube which has always been a big business but is really exploded. You also were pretty early at Netflix when it was still sending DVDs in the mail. I remember that actually. These are two companies that have kind of been circling each other seemingly somewhat in in competition. Now we're seeing things like Netflix paying a podcasters a lot of money to go and you know be on the platform take their stuff off of YouTube. Which company do you think is in a is in a better position right now and I'm curious what have you thought of the moves that they made over the last several years whether that is YouTube moving more into seemingly news and podcasting and really emphasizing that as a as a part of its business and Netflix also kind of seemingly acting like it's you know being threatened by YouTube and competing for some of the same talent. I'll start with YouTube it's obviously because of its open nature which is a very expensive and difficult proposition to build and YouTube obviously has been out of 20 years but because of its open nature it has the largest content offering of any platform that there is and that lens in cells to personalization which just then lends itself to keeping users for a long time and monetizing. As we built the subscription services like YouTube TV and YouTube premium and YouTube music on YouTube it's now giving them extra opportunity to basically bring other content that wouldn't come through the open nature the deal that they just did with peacock to be bundled into YouTube premium. It's a good example it just wouldn't happen organically but now because they have this you know large subscriber base on YouTube premium they can figure out how to absolve it with that which then sends them a little bit more into the space of where Netflix is right suddenly it's all of it content. Nevertheless at the same time because YouTube is so big both in subscription and ads it is eating at the attention of the Netflix users right so like it's really just that eyeball competition. Netflix closed platform so complete opposite from YouTube. Everything is contracted for individually and you know produced in Hollywood and now all around the world you know there's smaller versions of Hollywood in Korea and Spain and Norway etc. You know they're seeing YouTube growing faster and faster or faster than Netflix. So you know obviously you started analyzing what are the content types that are making that happen and when you look at YouTube obviously podcasts are podcasts are a big one but when you really think about it podcasts is just a new name for the thing that has existed on YouTube forever which was basically talking ads you know on the screen because that was the cheapest form of content if you have to produce something with action sequences as it's expensive versus sitting for a camera and talking that's not as expensive. So that's how YouTube was built except later it's just got called podcast. Finally so I actually think that Netflix is missing one huge count and lever in our fight with YouTube which is music. All of the music on YouTube is not exclusive. All the music videos you know of everything the entire history of music including concerts and different versions. You're also non-exclusive. And I think, you know, and for when I was at YouTube, obviously music was a massive portion of YouTube and big contributors to its growth. And that's one of the things that's missing on Netflix. What would you do then if you were, you know, if you were running Netflix, would you, I mean, you know, there's always been a lot of talk. Would you buy a Spotify essentially? I guess that's what when we talk about a streamer, we're really talking about mostly Spotify because your obviously Apple is, you know, kind of a whole other thing. YouTube is what you're competing with. I would, I wouldn't buy a service. I would, because they already have a service called Netflix. So they don't need another subscription. I would simply license all the same music that YouTube is licensing. They have the ability to do that actually fairly concentrated in the industry. So it's pretty easy to get their hands. It's, it would be the single largest content ingestion that anybody could go through. And it would give, you know, imagine a section on Netflix that's purely music dedicated that you can create a lot of consumption around and then create a bunch of super interesting original programming on top of that. Once you have that. I just think it's broadly appealing. It goes from niche to broad. It's like everything. Massive volume. So you have frequency. You have a region frequency that music provides you. And then you can differentiate with doing extra exclusive specials on top new music releases every every week, etc. So I think there will be a button to leave for fun. Obviously it's self-serving. Yeah. Right. But I've been on the other side of that. I know exactly what it does. Right. So, you know, that's a friend and you'll see on Netflix. And it's like totally thing they should do that. But anyway, it's great to watch both companies succeed. I'm so proud to have been part of both and and still share older involved. One question I've had around the financialization of all these back catalogs is, isn't the risk that a bunch of artists pull a tailor swift and re-record everything and then the collateral is worth a lot less? Like what happens to all of that? The protections come with the deals. Oh, okay. They literally can't. That's interesting. That is a good lock box. Okay. Why would you otherwise, you know, that's what I've never understood. Like it just feels like you could re-record the masters and then the whole thing is underwater. They layer kind of highlighted the need for that contractual requirement. That loophole got that document tight. Does that say? Having said that, the buyers over original catalog have gotten great return on it, even though she re-recorded. Because the rising tide lifted old boats. It was like one of those things that, you know, up front you would say, no way it cannot happen. And when you look at it, it retracts. It was like, wow, this is amazing. The underlying catalog has grown. And then people, plenty of people kept streaming the old one anyway. Right. Oh, I want to compare the old version to the new version. Let me listen to both of them and see what they're like. I don't know if you're thinking that you shouldn't really change anything. I was like, what a missed opportunity. And then someone said, no, you want it to sound exactly the same. That's the whole point. So it's very interesting. But yeah, I'm glad that it actually worked out for everybody. For her, for Shamrock, which was the bottom there. And it was great. One of our theses or theories here at SEMIFOR that Washington is really the center of a lot of global business right now. You know, one, because of just globalization in general. And two, because we are living in a time where we have a president in the White House who is not shy about seeming to get involved in the business of big companies. We saw this with Netflix's attempt to acquire Warner Brothers Discovery and Paramounts, you know, saying it was going to be able to get the, it's deal through because it had better relationships with the Trump administration. You seem pretty interested in, you know, it's still in international relations. And obviously your global business player, do you think that having that background has better prepared you for a moment where global politics is just very obviously influencing businesses like yours in kind of a major way? I like to think so. But look, we live in much more global world than in the past. Our business is entirely global business. There's many different issues. And the more you're versed in what's going on around the world, A, the better you can actually manage the teams around the world because they just have completely different experiences, right? And their lives. But B, you can navigate geopolitical issues. I'll be giving an example in Australia, which is at a big fight where some of the AI companies were pushing for weakening the protection of copyright, or even the exchange for sending up data centers over there. And so we went into a whole drive on lobbying against it. I was doing hours of video meetings with the highest officials in Australia, talking to them about that. You AI act last year. There's been months in both traveling there as well as doing video calls, Germany, France, Brussels, and same thing in around the TDM exception. That takes them data mining exceptions, sold by the air companies in the UK, so same thing in Tendoning Street. So to be able to converse with them in a way that's engaging, not just on the business level, but also understand politically what they're up against and how that works, I think extremely useful. I mean, just look at the political involvement of all the CEOs of the technology companies, not just technology companies like Boeing and like Tartepiller and industrial companies. I think it's a must basically at this point. That's the new normal that we're in. And it's good for analogies. Yes, it makes for great podcast analogies. Well, Robert, thank you so much. This was really great. You've been really generous with your time. It was a fascinating conversation. Thank you so much for joining us. Thank you. It's been real pleasure and a lot of fun. Thank you. Thanks, Robert. We spent 2025 talking to people who channeled the excitement and belief in AI in media and marketing. A lot of that conversation in 2026 will be about the hard work of building with those tools. Think with Google is here to bridge the gap between inspiration and implementation. This isn't fluff. It's a rigorous look at the mechanics of growth to help CMO solve the hard problems, like navigating complex consumer journeys and proving value through better measurement. Make this the year you turn potential into performance. Visit ThinkWithGoogle.com. I have to admit my ignorance here, which is when we got this on the calendar, I kind of realized that while I understood how the music business worked in terms of how the artist got paid and in terms of how I paid for music and how I listened to music, which is paying Spotify every month and listening to every song I could ever think of almost, I realized I didn't really know what a record label did anymore. And it dawned on me as we were preparing for this interview and as I was talking to Robert that this was identity crisis that the record labels have been going through for the past 30 years essentially is what do the distributors of music, the people whose primary job was to record the music and make sure that you could buy the album. What do they do in a world in which it's the distribution has been democratized. So Wall Street has really liked the music business recently. We didn't actually talk about this, but Robert has talked about this in other places that the stock has really performed really well over the last several years. Why do you think that the music business and music labels in particular seem to be doing really well right now at a moment where they actually no longer do the primary thing that they used to do, which was distribute music. Yeah, it's interesting. We talk a lot on on Confidentress, our business show about sort of the two halves of a business model or content and distribution. And I've always kind of a believer that you don't have to have a perfect product or perfect content, but you do have to have a way to get it to people that make sense to them. And so a lot of the value in a lot of businesses is in distribution. And we could pick of like Walmart is a great example. They have like a bajillion customers. And now they're using that network to sell TV ads or something, right? But literally, yeah, TV ads business. They have a financial services business. I mean, they are, right. But what he was saying about essentially, I think that the distribution part of the job has gotten not totally uncomplicated, but a lot easier. It's a lot easier to ship the file over to Spotify than just to make sure all the CDs get on the shelves on Black Friday. And also the power dynamic there is just totally different. And that like so much of the value they have now is on the content side. And really, I think like tastemaking and gatekeeping a little bit, you know, you're saying everyone can self-publish. But like, we all know the difference, you know, self-published book, you know, YA novel and Simon and Schuster imprint. And I think they are really firmly trying to plant their flag in the content camp. And which talks about breaking artists. The other thing you said that was super interesting was they kind of have seem to have like a light version of that. Or if you want to be not part of the Warner, fill it into the network, you can kind of ride their rails all the way to Spotify and, you know, maybe like have a lawyer look at some stuff, trying to sort of take something they've been doing internally and commercializing it in a lower calorie way. Which I thought was pretty interesting. And this obviously just, you know, incremental dollars for them. One of the things that surprised me was that live music and the live music business. He essentially conceded he doesn't have that much time to really think about it compared to because he's spending so much time focused on you know the threats essentially from AI and making sure that they insulate their business and their artists from You know the the disruption from the AI business did that surprise you how much he's thinking about it in a really real way not in a kind of a theoretical Oh, we've got to make all of our junior associates get used to doing things with AI way Yeah, I mean, I think ever see over tell you that it's items one two and three on their list I just probably the clearest example. I've heard of CO saying I'm doing I'm focusing on AI and thus not doing these other things because I think it is so Existentially important I was surprised to hear him kind of lean out of live events It's you know, they are doing a lot of things internationally tried to poke at him a little bit on this you know going up against Live nation here. It's just really really really hard But obviously Spotify is trying to do more live stuff. It feels sort of culturally what people want it's it's it's Insolace it's an insurance policy against getting labeled you know an AI slot machine And which I typically don't think they are he's being very thoughtful about it But I think you asked the right question was just like who's asking for this? Who is this for I totally understand companies You know that when he said right now we only get paid in people buy music But now we can get paid when people make music right yes, that is twice as good. That's a whole Like services model right I don't know who this is for right we saw open AI had their video creation things Sora they shut it down also because of a lack of resources They just had too many things going on and also the video sucked so I don't know Is the music you make with suno any good I haven't really done it. I don't know But I mean that's the joke with like you know the studios are dealing with this on some level two can can AI Not only literally generate the movie but also write the script and tell you we need a car chase here And you need a love scene there and ever and you know as you saying music is kind of at the cutting edge of tech because it's tiny It's small it's iterative like and there's only so many chords you can put together in so many different ways I'm sure the internet will yell at me for saying that but every Taylor Swift's song is just like the same eight chords telling you I play the guitar. They're not that it's not rocket science. So you do wonder how much of that can be Really derivative with AI well is thank you so much for filling in for Ben today I can confidently say with love to Ben the co-host of the show I think you may have prepped a little bit more you know Ben likes to kind of roll in here really really loose It allows him to kind of flow during the interview But I respected the fact that you you stayed on our questions and you seemed to have done Some of the some of the reading in in preparation for this I do try to do the homework and also, you know, we just wrap a season one of our show you guys are on like season four or five So like you know, I'm I'm still in need trying to prove myself a is that on the side of the mic So obviously we reminded people at the top of the show But just tell people where they can find compound interests. Yes, wherever you're listening to this right now You can find compound interests. It's our show on how business and finance are changing. It's out weekly with my co-host Rangaswamy Well, that is it for us this week. Thank you so much for listening to another episode of the mixed signals podcast from us here at Semaphore Media our show is produced Expertly as always by Manifidel with special thanks to Josh Billinson and Braoli Rachel Oppenheim and a casino Daniel Hayve Garrett Wiley Chulzerne and Tori Cora our engineer is Riquan and our the music of course is by Steve Bohn If you like make signals, please follow us wherever you get your podcast and feel free to leave us Five star review and if you want more you can always sign up for Semaphore's media newsletter, which is out every Sunday night