Farah Nanji 0:02
Nico, thanks so much for joining us on Mission Makers. It's, it's a true honour to have you on the show today. And I'm so happy our paths crossed during ADE. How was ADE for you?
Nico Perez 0:14
Yeah, so great to be here. Thank you for having me. ADE was super hectic in a good way. I haven't been to conferences since before the pandemic. So it was sort of kind of getting back into that groove of meeting people, you know, doing business meetings, going to events, going to parties going to see all these new acts and people. So a lot going on in a short couple of days. But it's always kind of energizing to see so much happening.
Farah Nanji 0:44
What were some of the key takeaways that you observed? People often say ADE is like the thermometer of the industry, especially around this time of year. So what were some of the key things you observed?
Nico Perez 0:57
Yeah, I think there were two big themes that in some ways are larger than electronic music, which is the metaverse and Web3. So that sort of percolated through a couple of the presentations I saw. And then also just kind of in conversations with the people I met, people are thinking about these things, ultimately trying to think about where the future is going and how the wider technology industries are going to evolve. So we saw Richie Hawtin demo live NFT minting that's being pushed to a blockchain platform. Kind of mostly an experiment, but it's cool to see people pushing the envelope.
Farah Nanji 1:56
Yeah, I think we're obviously you know, still quite a few years away from full adoption. And it's right now that what I think is so interesting about ADE is people come they get inspired, they see other people doing things, and it's kind of this experimental playground. And it's and it's a complex topic, obviously, web three and the metaverse. And we'll definitely talk about what Mixcloud has planned with some of these transitions. But of course, talking about Mixcloud, you're the co-founder and CEO of such a, you know, interesting platform. And you've had quite a lean journey with Mixcloud, I learned that you only took funding 10 years after you founded the company. And that's quite commendable and inspiring for many founders who I know listen to the show. So tell us a little bit more like about that journey about that decision to not take funding and also so late on in the game? And, also what, you know, if the vision has evolved around Mixcloud, since the early days?
Nico Perez 3:02
Yeah, so I think we're a relative rarity in that sense that we didn't take funding for a very, very long time. And, you know, part of it was by design by choice, and part of it was kind of by necessity. So when we first started out, you know, we pitched quite a few investors, quite a few VCs, and startup accelerators, and things like that. And, you know, in the early days, we didn't really have a product, we hadn't really built anything. So the kind of general feedback was, like, come back to us once you build something. And then, you know, we built it, got some users, and then the general feedback was like, Okay, come back, come back to us when you got some revenue. And so we were pitching people early on, and then we sort of got to a place where we started to generate some revenue, and we were, you know, not profitable, but like we were not, you know, so unprofitable that we couldn't survive. And that actually helped us really focus on you know, just thinking about the underlying business model, and kind of making sure that we weren't taking an approach which I've seen other companies and platforms take of scale first think about the business model later. So I think that that was overall like a good thing for us as a company. And we actually turned down at one point an investment offer, because we just didn't think it was a good fit for us. So that was the first 10 years and about 2018. In fact, just a little bit before that. The kind of way that we licensed the platform went from a kind of blanket radio-style license to a more direct deal with some of the major record labels. And those deals generally require a larger sum of cash upfront. So in order to be able to afford them pay for that we basically decided, okay, we do need to raise some, some funding. And that was essentially a Series A raise from some folks who were ex-Dropbox, some folks who set up DreamWorks, and then a chap named Anthony who manages NAS, and Kendrick Lamar.
Farah Nanji 5:24
And so appreciate it if you can't share this information, but do you feel like there would be a need for further rounds? Or not really.
Nico Perez 5:32
It's a good question. We've been thinking about it, but at the same time, it's also right now, not the right climate, you know, if you look at everything pretty much like across the board, so many stocks have gone down, like reading about Facebook, or meta, and Amazon, Spotify, and Netflix, like everybody is down, you know, 40 5060 plus percent. And so it feels like the economic climate has changed, there is much more, you know, because of the rising because governments printed so much money during the pandemic, and inflation has gone up. And so to kind of balance that out, they need to raise rates. So the cost of capital is no longer as cheap as it once was. So the cost of fundraising becomes more expensive. And so there's all these kind of knock-on effects, which means that, right now, our focus is kind of really focusing on getting to that breakeven point getting to that point where, you know, we can generate a profit and actually be self-sustaining as a platform.
Farah Nanji 6:41
Sometimes finding that co-founder is, is one of the hardest parts in the beginning, especially. I think you met your co-founder in the same university that you were studying in which I know, what you studied is not necessarily relevant or applicable to what you're doing today. Do you have any advice for like other founders out there in terms of, you know, finding, finding that dream partner?
Nico Perez 7:11
Yeah. So I studied aeronautical engineering, which, on the face of it has nothing to do with, you know, DJ mixes, radio shows, and music. But basically, music was always a passion at university. And that's actually how I met, one of our co-founders, Nikhil Shah through, this hip-hop society he created, and I created a breakdancing society back in the day. And one of the other co-founders, Sam Cooke actually met through breakdancing. And then the fourth co-founder, Matt Clayton, we actually met after university, but we had mutual friends. And he went to the same Cambridge University as us. But it was through a friend of a friend that we met him. And it was an interesting way that we started working together, which I can highly actually highly recommend to anybody who's thinking about doing a startup. And that was the concept of a skill swap. So when we started, I was actually doing a lot of the design work on Mixcloud. And we needed a back-end kind of developer engineer, kind of CTO type. And so Matt was also working on his own separate project to do with kind of web ticketing, something kind of similar to Eventbrite. And so we agreed to kind of swap skills, and I would do design for him. And he would help out, doing kind of the backend architecture and coding for us. And we did that for about six to nine months. And it's a really good way to sort of test out a real working relationship. Because I think a lot of the challenge of you know, starting a startup is like you kind of don't, even unless you've worked with somebody before, you don't really know what it's like to work with them day to day. So that was a really good way of us kind of testing that out, see if it worked. And then eventually, kind of after about a year or so, you know, both services, services had kind of pretty much launched, but it became clear that there was kind of more momentum behind Mixcloud there were more people using it, it was kind of spreading quicker. And so just kind of net we naturally gravitated towards Mixcloud as a kind of core key project. So, overall, I think it was a really healthy way to kind of try out a relationship.
Farah Nanji 9:37
Yes, there's been many great businesses launched from college dorm rooms, as they say. And what I find quite interesting, but yeah, unsurprising about your company is that many people in your team are DJs themselves and artists. And that obviously means that you understand like the key problem that you're trying to solve for your community, right, and like Maybe even in quite an early sort of, like, like earlier than most, right? So what are some of the things that you're focusing on at the moment to kind of help level up the DJ community?
Nico Perez 10:11
Yeah, 100%, I think having knowledge of the space where you're operating, and I guess ultimately kind of being your own end user is so useful and powerful, because you just kind of you get it, you kind of understand all the nuances and things like that. So in our case, you know, what we've been working on a lot is essential, the way we think about MC Scott as a platform is we want to power musical expression, help people build communities, and then ultimately, generate an income from their passion. And so, expression is kind of the foundational base layer. And we have, we have in the past for, you know, 10 years, giving people the ability to upload DJ mixes and podcasts, and we clear the copyright and take care of all that side of things. During the pandemic, we launched live streaming as a kind of new format. And then just recently, about two weeks ago, now we introduced single tracks. So people who DJ, but maybe also perhaps are starting to produce their own music, can start to upload it and showcase it and host it under the same umbrella in the same home. So that is kind of how we're thinking about it in terms of like, giving the people this platform and these ways to express themselves musically.
Farah Nanji 11:33
And with tracks, which Yeah, was launched during ad so So congrats on this evolution of the platform. With tracks, do you see that it will play an important role of like, the kind of current way that artists are treated at the moment with royalties? And kind of how unfair those royalty splits are? Like does? Is there a plan for Mixcloud to kind of be a leader in that?
Nico Perez 11:58
Yeah, 100%. So we kind of have pioneered a model whereby you can subscribe to an individual profile or individual channel. And so rather than the kind of traditional DSP model, like, essentially, you take all the subscription revenue, put it in a pot, and then divide it based on everybody's listening overall, we are kind of much closer to this idea that like, if I was to subscribe to your channel, then it is fair, that that revenue, the majority lion's share of the revenue goes to you as a creator. And so we are kind of building and pushing and kind of building out that model as an alternative to the kind of Spotify, Apple Music, these are models like everything going into one pot, and then split by overall popularity. So, you know, I think that it's a much more interesting model for artists and creators who have a very loyal, deeply engaged fan base. And it's kind of ultimately more flexible, it gives them a way to speak to that fan base directly, it gives them a way to kind of build up that community and ultimately kind of generate a living from what they're doing. So, you know, our core mission, and we kind of just how we describe ourselves externally, is we're on a mission to try and make the music ecosystem more sustainable. And it really just isn't, isn't there yet. We've come a long way since the days of piracy. But there's still a lot of artists and musicians who don't really make enough from streaming.
Farah Nanji 13:39
And so would that mean that like label owners or would have to kind of have a relationship directly with the artists will have access to their mix card accounts to know how much splits comes to those labels that are pushing out tracks or owners own the copyrights? Or like, how would it work for those people?
Nico Perez 13:57
So right now, the kind of single tracks feature is mostly based for independent DIY artists. So these are people who kind of like my brother, or people like that, who are kind of producing music at home and want to just get it out there and kind of showcase it. We are kind of exploring and talking to a few of the different labels and figuring out, you know, how would it work for them? But ultimately, it has to come from the copyright owner. So if it's somebody who's not signed, is it somebody who's kind of, you know, DIY, then it's them who can kind of put it up and be the channel owner. If it's a label, then that could also be them. They would be then that kind of channel owner and the one to kind of be running it. So it really kind of depends on ultimately, who is the owner of the copyright?
Farah Nanji 14:55
Yep, yeah, definitely. And so talking about expression how are you guys kind of preparing for that transition to web three?
Nico Perez 15:04
It's good question. I mean, I think it's a very polarising topic. There are definitely some people who believe in it near religiously. And there's other people who near religiously don't believe in it. So I think what was interesting about a lot of the conversations ad was about how it has the potential to give artists, more agency and ultimately more. Let's call it interoperability between different platforms and services out there. So imagine a world in which you could actually take your Twitter or your Instagram following, and bring that to Ticketmaster dice, Resident Advisor and sell tickets that way, or bring it to Mixcloud. And do a live stream for people who have bought one of your NF T's or hold one of your tokens or something like that. So I think that there is a lot of potential there. But I'm kind of happy that we've gotten through that stage last year where it felt so hyped. And there was such a like, crazy bubble that it sort of got it started to get like irrational exuberance, as the economists say,
Farah Nanji 16:26
Yeah, there's still a long way. And there's definitely a lot of hype, there's been a lot of crashes. There's been a lot of speculation and time will only tell just how, how far this can go. And so you did speak at ADE about the rapidly evolving streaming world. So what werel some of those key takeaways that you shared? With the audience?
Nico Perez 17:18
Yeah, so I spoke mostly to a little bit to the past, because I think it's really important to kind of look at where we come from, before trying to predict the future. And really, a lot of my talk was about looking at how the last 20 years or so the last two decades was, in some ways, kind of different model where we've kind of moved from the ownership model to the access model, either first through piracy, or then after that through traditional streaming services. And how I think that in the future, we are actually through what blockchain as technology unlocks also through things like Metaverse, where kind of, you're creating a new virtual world, this idea of kind of ownership will resurface, but perhaps in a kind of different capacity. So what I mean by that is kind of the kind of fundamental nature of ownership. Prior to the year 2000, was really about, ultimately kind of being able to listen to or play a piece of music, right? Like you would buy vinyl, you would buy a CD in order to listen to it. Today, in this world, in this digital world is like hyper-networked, everybody is connected to everybody, there are these online communities that are forming, I think the nature of ownership will change slightly, and such that it's less about kind of functional value of like, I'm going to hit play on this and be able to listen to it. And it has different types of values. So perhaps it has value related to status within a community, like I support this artists, I've, you know, owned and bought, the first of every drop that they've done, or whatever it may be, or might possibly be more around access to the artists themselves. So if you purchase this track, you could potentially join in an AMA asked me anything sort of session. So I think that what is cool about how the technology is evolving, is that we have these kinds of network systems and communities in to grasp the people. And so what the ownership means and can unlock is, in some ways, could be a lot more powerful and a lot more interesting than this in this kind of digital world.
Farah Nanji 19:46
Yeah, yeah, definitely. And so I'm sure you get asked this question a lot. But what kind of tips would you give to artists then to then leverage that next card and really hone in on that audience get that community engaged at through their mixcloud accounts.
Nico Perez 20:02
Yeah. So the number one tip that I give to everybody is consistency. What are we seeing like, through all of the data that we look at the people, we're consistent, the people who build up a habit of doing either weekly, monthly or quarterly uploads or radio shows with DJ mixes, those are the people who do well, because they have they build up that audience, they build up that loyalty, like, if you only if you do like 10 things in one week, and then leave it for 10 months and don't do anything else. There isn't the same type of like, loyalty and community that's built. So consistency is definitely number one. Number two is like take advantage of the tagging system that we have on the platform. So you can tag and upload with a primary genre, you can actually tag it with anything you want now, so take advantage of that, and put in all the metadata and all the description and an image and all these things because it makes a difference. It helps people find it, it helps people discover what you're creating. And so don't be lazy about it don't just like upload the file and leave it as is actually putting a little bit of you've done 99% The work to that last little 1% just to give it that discoverability
Farah Nanji 21:23
Yeah, definitely. Yeah, I think that's important tips. And I think yeah, with anything, consistency is key. And like, especially when it comes to content, like humans are creatures of habit, they want to know, like, yeah, I can listen to John Digweed show every like first Wednesday of the month, or whatever it is. So yeah, having that consistency, I think is pretty key. And then obviously, the platform offers so much in terms of metadata, that you should just go out there and make sure it's also fair to the other creators, you've made that music as well as like, you know, to fairly recognise and credit those people too. So what do you think are like some of the misconceptions behind some of the work that you do?
Nico Perez 22:03
Well, actually, to that last point, you said, I think a lot of people don't fully realise the length and extent to which we go to help artists get paid when their music is played. So if you use a platform like Facebook, or Twitch, or many of the others, and you play music, they're most more often than not pretty much all the time, the underlying artists are not receiving any royalties for that. So we're different. Whenever you live stream, or upload anything to Mixcloud, we run our content ID system on it, we figure out what tracks are in there, we figure out what labels on them, we figure out what artists created them, we figure out what songwriters wrote them. And then we have to figure out okay, who do we pay for this in what country over what time and, you know, run a huge amount of like servers and computation and processes in the background that isn't necessarily visible to anybody in the front. And so there's a lot of like, complexity there. That is either misunderstood or people just aren't simply aren't aware of it, because you can't really see it. So that's something that we spent the best part of the last decade, building and refining and improving. And so I'm really, really proud that we are pretty much one of the only platforms that can handle user generated content with music, and properly pay out rates for it.
Farah Nanji 23:35
How does that like kind of impact the competition? Because like, obviously, your competition is like my personal opinion, but they don't necessarily go about it in the most Fairest ways, right. And there's obviously a lot of scrutiny around these platforms and the DSPS. And like, even some of the conversations we've been having on this podcast has been like a lot of artists don't want to tour in the crazy ways they do. But they have to because that income doesn't come in from streaming. And therefore, it just puts an enormous pressure on performance fees. And obviously, we saw what happened in the pandemic when performances were taken out of the equation.
Nico Perez 24:08
Yeah, yeah. I mean, I think that there's other larger, you know, huge platforms out there that are owned by, you know, these big kind of multinational tech companies. And ultimately, for them, music is a quite a small part of what they do. And so they just don't give it the proper attention. And so what ends up what ends up happening is that as especially a DJ or radio presenter, if you're playing other people's music, you're caught up essentially kind of rolled the dice and if it gets picked up in their content ID systems, then chances are your stream or your upload will be taken down or muted or blocked. And we see this time and time again. And everybody always asked me like, you know why Why don't? Why don't they get the licences? Why don't they do this? Like, why don't they do it properly? And, you know, I just got to tell them like, maybe it's because they don't really care about you or about music that much, which is kind of like tough, tough love tough news. But I think that over time, the number of people who are aware of copyright as something that actually is important, actually, is deserves to be solved properly, is growing. And so I think over time, we see more and more people come to Mixcloud as a platform for that very reason.
Farah Nanji 25:36
Yeah, I mean, I don't know if you've seen it as even a new show on Netflix about the journey of Spotify and some of the psychologies behind the the founder, and that whole journey, which is, you know, it's quite interesting. But it's also sad to see like, you know, maybe something that might have happened to someone in their childhood, it affects billions of people around the world because of the way that they've designed their particular system. So yeah, and what do you think, in your opinion, is the single most important change that needs to happen in the music industry? One year from now, five years from now and 10 years from now?
Nico Perez 26:15
Good question that I remember, you asked me. Wonder if I'm gonna say the same thing. So I remember metadata, the importance of metadata was definitely one of the answers I can't remember is one year or five years. But I think that asking or raising awareness around the importance of metadata and how like when you create a song, that's kind of half of the, the journey, but you know, and I'm talking, when I'm talking about metadata I'm talking about beyond just the name, title, genres, things like that. I'm talking about SRC code, I FWC code, the kind of underlying rights metadata that ultimately helps you get paid as an artist. So I think spreading that message, raising that awareness is super key. And I'd say like the one in five year timeline, and then like, 10 year timeline, I think, I think, you know, this. I think there's like a growing, growing awareness that there are different models out there that kind of work for different types of, of creators. And so, you know, if you're Drake or Taylor Swift, like the major label model, works really well, you know, like, you have these promotion machines, and you get distribution, and you get your music out there, and it works really well. But if you're, let's say an artist that has a smaller audience, or following to say it's only like five or 10,000, people, major label model probably doesn't really work that well for you. And in fact, if you have a very loyal but smaller audience, a kind of direct relationship, and there's this concept of 1000 true fans, yeah, that's kind of been around for a while. But like that model of like speaking directly to and generating income directly from those 1000 true fans, I think has a lot more promise, if you have that type of profile as an artist and a creator. So I hope that in the kind of like, next 10 years, people recognise that there's not a kind of one size fits all, single solution, or approach as a as an artist.
Farah Nanji 28:52
Yeah, that definitely isn't. And that hopefully, is some of the exciting elements around web three is to create value for each fan in a totally different way. That's, you know, that can be generated through NF TS or a different Yeah, basically different ways that isn't, you know, just based on it on a penny per play type thing. Final question is, what are the Mixcloud office parties like and do does your team get to see you DJ?
Nico Perez 29:25
Yeah, I like to think they're pretty good. We, we, I want to say like maybe 70% of us are so we, we DJ. We take turns, we kind of switch it up. And we actually host a quarterly party at a venue called brilliant corners, which is in Hackney in London. And so, if anybody's listening to this and is based in London would like to come down. We are doing our final one for the year on the sixth of December. Brilliant corners. And yeah, it's all vinyl, which is kind of fun to kind of like a retro kind of feel to it. And yeah, they're pretty good. Like, as you can imagine, most people are, you know, deep into their music. They have vinyl collections that some of the people on the team, like have hundreds if not 1000s of vinyl. So, you know, there's a lot of there's a lot of good music that gets played. And it's pretty, very to have ranges all over the shop. So yeah, if you're, if you're interested in checking it out, 6th December at Brilliant Corners.
Farah Nanji 30:40
Nice. Nice. Well, we'll definitely plug in a link to that for a little Christmas party with max out. Nico, thank you so much for your time. It's been great hearing some of the insights and movements for Mixcloud and wishing you the best for the future.
Nico Perez 30:54
Awesome. Well, thank you for having me again.