‘A lot of people are advocating for changes in the models of existing streaming services. I feel like that ship has sailed.’

MBW’s Inspiring Women series profiles female executives who have risen through the ranks of the business, highlighting their career journey – from their professional breakthrough to the senior responsibilities they now fulfill. Inspiring Women is supported by Ingrooves.

Back in the late 1990s, Vickie Nauman, then working in radio in Seattle, started reading about a controversial new music service called Napster.

The service was being slated for allowing people to steal music. Intrigued, she sat down at her Dell laptop with its 14.4 modem and (slowly) downloaded the Napster client to see what all the fuss was about.

“I was scrolling through the interface, looking at millions of people and every song that was ever created. My first thought was, ‘This is going to be the most incredible change that I will probably see in my lifetime, in terms of how all entertainment content is going online. I have to figure this out.’”

Nauman left her radio job to join one of the first legally licensed services, which was called MusicNet — a JV between RealNetworks and the three major labels.

While there, she realised how little she knew about technology and made it her mission to embark on a steep learning curve. Nauman was at MusicNet for less than a year (“it was a really harsh working environment”), before she returned to radio at KEXP to help build out its online streaming offering.

There, she learnt from teams from Microsoft and the University of Washington and went deep into the Digital Millennium Copyright Act. Next stop was to do an MBA in business and innovation, while consulting on the side.

Since then, Nauman has expanded her experience and perspective by working at Sonos (Global Alliance Manager) and 7digital (US President), before setting up her own consulting and advising company, CrossBorderWorks.

Today, her work focuses on the opportunities in Web3 and helping to bridge the gap between the music and games industries. She also works with music and tech companies on strategy, products, rights and data, licensing, partnerships and growth.

Here, we chat to Nauman about the next evolution after on-demand streaming, the most exciting opportunities in Web3, why TikTok might be on its way out, and much more besides.

How has your perspective on the digital evolution developed since that first introduction to Napster and how exciting THAT concept felt TO you?

There are definitely flaws in the on-demand streaming and UGC business models, they don’t work for everyone. I’ve modelled these services every way imaginable and it’s hard to make them succeed if you’re the one that’s putting on the service. I divide artists into this big pyramid and at the very top, there’s the 1%. They’ve always done well, they always will do well, no matter what model it is. At the bottom, there’s probably about 40% hobbyists, people who just want to put their music out. It’s that middle layer of independent artists, which is where my fandom comes in — artists on independent labels who are probably a little less pop — who the business models don’t work very well for.

The streaming models that we have now that are all you can eat for $9.99 per month, or around that price point, were created to migrate people off of P2P. For people who bought one CD a year, it’s a stretch, but for people who bought 20 CDs a month, we’ve removed that ability to pay and express their love of music beyond $120 to $150 a year. The streaming models need a refresh and some of that will come from Web3. Some of it will come from the services themselves as they continue to try to differentiate.

How would you like to see them refreshed?

I’ve worked inside these companies — I know how technology and rights management works. It’s really, really hard when you have an existing model, like an on-demand streaming and royalty model with thousands of rights holders adhering to it, to change it after it’s already been done.

We always talk about how you divide the pie and a lot of people are advocating for changes in the models of the existing services. I feel like that ship has sailed. If you want to add more fruit and less sugar to a pie, you do it at the beginning before you bake it. You don’t bake the pie and then decide afterwards that you need to change the ingredient makeup.

I’m looking at things like Web3 and emerging technologies that can really change the landscape. When I talk about the people who used to buy 20 CDs a month, we’ve never been able to capture that value, except in live music. What excites me about this next iteration of services is things that are scarce and collectible in the NFT and Web3 world. That can be experiential things in the metaverse, it can be in collecting, it can be interactive fan clubs.

“I think of on-demand streaming like radio. It works for some people and it doesn’t work for others, but you can’t avoid having your music on there.”

I think of on-demand streaming like radio now — it’s the baseline for the rest of our digital economy. It works for some people and it doesn’t work for others, but you can’t avoid having your music on there. It’s kind of the same as terrestrial radio, which worked from a promotional standpoint but a lot of people never got paid. Now it’s about finding ways to build more high value goods that users and fans will buy that sit on top of and above on-demand streaming.

Where are the most exciting innovations in the Web3 space for music?

I’m bullish about the experiential side and what we’re seeing with concerts in Roblox or Fortnite. We haven’t seen the true potential of people being able to gather globally in virtual worlds, for music and for live music, and I think that this will be a wide spectrum of things. Right now, we have avatars that we can see by logging into Roblox or Fortnite but this will evolve into hyperreal virtual worlds that we can’t even imagine yet. With the experiential side of it, there’s enormous potential there for us to reimagine what a concert and an experience looks like between fans and artists online.

NFTs is a bit of a dirty word right now because of the crypto fallout but I think that’s very separate from this. NFTs and the decentralised tech that underpins it is going to evolve into a really wide mix of interactive fan clubs. Music is so tribal anyway and we’ve built these huge tents with streaming services. I love the idea of small tents for music and getting more people into the small artist-based and token-based communities. I think there’s a completely different way of interacting with fans, and for artists and fans to interact, and for fans to be the fabric of a community in Web3. All of these things have the potential for being high-value scarce goods that we lost in this iteration of the internet.

When blockchain and decentralised technology first started being discussed in the music business a good few years ago, it was all about its ability to upend the status quo and remove the need for some of the major music companies or have them relinquish some control. Do you see that happening? Or do you think it has a completely different use?

I never believed that and I’ve been a blockchain enthusiast since the beginning. There was that era when there were people going all around the world, doing speeches saying, ‘This is the end of labels and publishers, everything’s going to be on the blockchain.’ It’s ridiculous. That is not going to happen. This happens every time there’s new technology. It happened with AI, live streaming, on-demand streaming and it happened with digital distribution 20 years ago. When distribution became digital, everyone was talking about how there was no need for labels and publishers.

“people were saying, ‘This is the end of labels and publishers, everything’s going to be on the blockchain.’ It’s ridiculous. That is not going to happen.”

I’ve always believed that the blockchain has a vast amount of potential to help us solve problems around rights and to reflect who owns what, transparently. There’s been resistance to transparency from the many traditional labels and publishers but as blockchain technologies evolve, it’s just a different kind of database that I think we could use to help solve that problem. What continually happens is, metadata leaves labels and publishers, it goes out into the ecosystem and when it comes back to the labels and publishers, it’s wrong. Then, some of the labels and publishers are also submitting incorrect information into the ecosystem. So we have something that is happening in this really complicated tangle that’s creating problems around music data.

The other use case for decentralised technology is this ability to use smart contracts. In these worlds of collectibles and scarce goods between fans and artists, they don’t necessarily need to have anyone except a smart contract and a blockchain to reflect what they may own, and then the ability to sell it and make money off of it. And for the artists to participate in the secondary sale, whether it’s access to a fan club, or a collectible good, access to tickets or some sort of other investment in fractionalising rights. All of these things are able to be done really elegantly with the use of blockchain.

What are the biggest challenges in the music and tech world today?

From a rights and rights management standpoint, there’s still an inordinate number of problems that need to be solved. There’s money that can’t be settled, that’s collected and companies can’t figure out how to marry up the sound recording to the publishing to know who to pay out. There’s probably a billion dollars a year in tiny black boxes all over the world, including huge black boxes like the US mechanical rights.

I used to think that was something one or two companies could solve and now I don’t believe that. I believe we need hundreds of companies to solve it locally and there needs to be new systems. Blockchain can help and centralised databases can also work.

I also think there is always a problem around getting new business models to market. Every time we have new technology, whether it’s streaming or live streaming, or now Web3, there are far more companies that need to get through a licensed funnel than there are people at labels and publishers, who are the gatekeepers. That is always a challenge for innovation. If you need rights to be able to light a product up, you have to be able to get those rights approved by labels and publishers and there’s an enormous funnel that has to get shrunk down to get through these gatekeepers.

I do a lot of work in gaming and see no end in sight to how music can benefit from gaming. When you think about these two industries, music is based on friction and that funnel of getting a lot of companies in, who’s going to get rights, who isn’t and who can afford to pay for them. Gaming is about open access and in-app monetisation. The biggest challenge for me, and this is where I’m focusing so much of my time and energy, is getting these two industries to come together better and create new business models that will work between gaming and music.

Have you come up with any new business models? Or is that process still in the early stages?

It’s still early stages. When you think about the existing models that we have, we have an offer of every piece of song, every piece of music ever created, either through UGC, social media or subscription platforms. No-one’s really looking at that anymore. I feel like that ship has sailed and I don’t see metaverse companies or gaming companies who feel the need to have that much music.

Most of them are being much more curatorial, they’re thinking, ‘What’s the small amount of music that I could have in my game? Who are the artists that I’d like to have in my game?’ Then it becomes more like synchronisation licensing, so you’re going in and doing partnerships for a handful of songs. When you do that, you no longer need tens of thousands of labels and publishers to agree to the same model.

Then you have room to be innovative in how you do a revenue share. What is the mix of an upfront fee versus a revenue share? Do you just pay somebody upfront? Are there more innovative ways to be able to do this? What Roblox is doing right now with virtual merchandise, I feel is something that is completely untapped for the broader music industry. They don’t quite see the opportunity yet because it’s mostly artists that are creating the virtual merch and participating in that.

“We’ve not even begun to understand the potential for music with in-game, in-app purchases that are based around engagement.”

With gaming, for years I was one of these people who would flag this to the industry and say, ‘The gaming industry is bigger than music and film combined and they make that money by building engaging and frictionless experiences’. The billions of dollars are mostly being made through engagement around in-app purchasing. That doesn’t make sense to the music industry because the music industry wants all their money upfront. They’re very risk averse. We’ve not even begun to understand the potential for music with these in-game, in-app purchases that are based around engagement.

There’s talk of TikTok being banned in the US and there’s been dissatisfaction from major music companies about the level of royalties it pays out. What’s your perspective on that platform?

I have long felt that it’s a promotional platform that will lift streaming. I’ve also thought that the industry wants it to be something more than promotions – so this is a change that is afoot. TikTok is not going away but I believe the industry is pressuring for something more. We saw it with SoundCloud where it kept growing organically, had a lot of venture capital funds and didn’t really have a license model with the industry. The industry wanted more. When companies are using music, once they reach a certain threshold and labels and publishers start to understand, ‘How is this going to be valuable in the landscape? How is our music being used?’ Those kinds of loose relationships, where there’s maybe no reporting and no licence structure around it, they almost always evolve into something that good or bad becomes more defined by music companies. I think we’re at the beginning of that with TikTok.

“I have long felt that [tiktok is] a promotional platform that will lift streaming. I’ve also thought that IT’S TIME AS PURELY PROMOTIONAL WILL EVOLVE.”

You’re an advocate for more female leaders and diverse leaders generally in the tech and startup space. What are the hurdles that remain in place?

If you are a first-time founder, you have a harder climb than if you have founded a company before. Part of [the reason for a lack of diversity] is that a lot of first-time founders are women and people of colour and so they may have a harder time raising money. Fundraising is so critical to this and I’ve seen over the years such a marked difference between first-time founders and founders who have done something before. Getting more people of colour and women into startups in general, so they’re exposed to it, is going to give them a higher likelihood of success to be a founder.

The other really difficult statistic is that funding for companies that are founded by women has actually gone down. It does not feel like we’re making enough progress. It’s not dissimilar to when I speak about more about women trying to get jobs in technology companies or as senior level executives and people tend to say, ‘Does this woman have the experience that we need?’ If you compare her to a man, you might say, ‘Well, he looks more like me, he’s got more experience that is similar to mine and so I’m more comfortable with him.’ It does create a homogenous workforce. People have to start seeing that if you get women and people of colour around the table, your products are probably going to be better. You’re going to have different perspectives and different understandings of the landscape.

what do you wish you’d known at the beginning of your career that you know now?

At the beginning of my career, I didn’t completely understand that the only way that a woman, especially, is going to get anything, is if you ask for it and, in some cases, demand it. I started out at Procter & Gamble, right out of college. They said, ‘If you do this, this is how you climb the ladder. Here’s how you make more money, here’s how all of this works.’ I took that as a given. It wasn’t until probably 10 years into my career, when I did an MBA, started getting exposed to different kinds of companies and all sorts of different people, that I very quickly realised there’s more money and more ways of getting experience and into positions of power. Now, I understand. If I didn’t advocate, sometimes demanded, and made a case for myself, I wouldn’t have anything right now. If I had just gone with the flow and taken whatever people were willing to give me, I would have nothing.

“If I didn’t advocate for myself, I wouldn’t have anything right now.”

Also, I have quit every single job I’ve ever had without another job to go to. When I was working full time in companies, I’d get to a point where I’m just done. I’m not learning anymore, this isn’t working anymore, I need something new and I need a palate cleanser. I know that my brain works differently to people who can leave one company on Friday and start a new one on Monday. I’ve never ever had the appetite to do that.

I think we’re entering into an era in which work is going to really change by adding AI into the mix and a new generation that thinks differently. I feel like there’s room for people to carve out their own path. For many years when I was so interested in technology and was doing projects in China, an MBA programme and working for these unusual music technology companies, there were many people who were like, ‘Why are you doing that? Why don’t you just go work for Microsoft or Google? Why are you doing all these weird things?’

I didn’t want to do that because I know that when I go and work for a big company, the vast majority of what you learn is how that company works. I have such a huge appetite for learning things that I want to and my career path has always made sense to me. It’s been like, ‘Okay, I want to learn about streaming and digital and I’m going to do that at KEXP. I want to further my education so I’m going to do an MBA. I want to learn about hardware, software, content integration and I’m going to do that at Sonos. I want to learn about the ecosystem and the back-end systems of music, so I’m going to do that at 7digital’.

When taking on jobs or even new projects sometimes, I ask, ‘What am I going to learn?’ Not, ‘I can be thankful to you for hiring me’ it’s, ‘How are you going to give me new skills? How are you going to give me new knowledge?’ If I can’t answer that, if it’s just another job or another project, it’s way less interesting to me.

It’s funny because the same people who used to ask why I didn’t just go and work for Microsoft or Google, now say things to me like, ‘How do you know so much? How did you gain all this experience and all this knowledge?’ I feel like it’s because I didn’t go to work for a company like that. I don’t begrudge anyone who does work for these big companies because they can be phenomenal ways to advance careers, make money, get stock options and understand how to navigate a big corporate environment. But it isn’t the only way to work.

Virgin Music Group is the global independent music division of Universal Music Group, which brings together UMG’s label and artist service businesses including Virgin and Ingrooves.Music Business Worldwide

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