Warner Music CEO Max Lousada talks TikTok, AI, A&R and what keeps him up at night

Max Lousada, CEO of recorded music at Warner Music Group, has spoken out on a range of topics shaping the music industry as we know it, from the power of TikTok, the art of A&R, what AI means for the future of the business, and the challenges that keep him awake at night.

Lousada discussed all of these subjects and more at the 2023 International Music Summit (IMS) in Ibiza as part of an in-depth keynote in which he was interviewed by dance music icon and BBC Radio 1 DJ Pete Tong.

The packed-out session saw Tong quiz Lousada, who became the first major label CEO to speak at IMS, on the biggest challenges he faces in today’s market, from breaking new artists, understanding data, and how best to harness social media and new technologies such as AI.

The pair also discussed the role of radio and specialist presenters in 2023, the runaway success of the likes of Fred Again and David Guetta, as well as the company’s commitment to the dance and electronic music scene and the success of its Spinnin’ Records imprint, which was acquired by the firm in 2017.

Headliner had a front row seat for what proved to be one of the biggest draws of the week in Ibiza, and hereby presents some of the highlights.

BIGGEST CHALLENGES & BREAKING NEW ARTISTS

What’s keeping you awake at night? What are the biggest challenges you face as Warner CEO?

A lot keeps me up at night. At the moment there is a big conversation about value and impact and understanding cause and effect. What I mean by that is, what is artist development in 2023 and 2024? What really drives a hit? What does global mean? And in a world that is full of such passive consumption, how do we keep making people feel and memorise around our artists? So, what keeps me awake at night is trying to establish and really diagnose what the artists’ needs are, what the capabilities of the organisation both locally and globally are going to have to be, and making sure we can measure that so the relationship with the artists is equitable. At every given moment I feel like we are creating brilliant campaigns and signing amazing artists and delivering on the promise of why you do a record deal in the first place. And at every given moment I feel we still have a lot of learning to do about how all these different horizons and ways of consuming and fandom are changing.

How hard is to break an artist today? Will there ever be global superstars like Coldplay, Dua Lipa, Ed Sheeran, and David Guetta again?

Yes, of course. We all took the playlisting drug. We all got amazed by this programmatic, amazing streaming world, but for me we sleepwalked into the power of playlisting as a campaign, and we are starting to realise that we are going into a different period of time, where we have to focus on the active and the superfan and communities, rather than look at an opaque audience and the number of streams as having the same value. I’m thinking we're going back to the future. Back to a place of storytelling, a place of curating music because there is so much out there - 100,000 pieces of music hit the platforms every day. And while that is intimidating – it’s certainly intimidating for a major music company – the reality is it’s a massive opportunity. And from a Warner perspective, the campaigns and the artists that are working are using these new mediums, such as short form content, community build, direct messaging, and D to C, alongside the traditional streaming amplification to really build an immersive relationship with fans.

And we lost it for a minute. I used to turn up at marketing meetings and the first half an hour was a playlisting strategy, and it was like, where is the idea? Where is the story of what the artist actually wants to say? I feel the industry got overweighted on promotion and underweighted in creativity and storytelling, and I think we are going back to that place. It’s what fans want. Fans want to engage and dance to stuff and interact with all of our music in a different way and that is something we should continuously celebrate.

FRED AGAIN, COMMUNITIES & DISTORTED DATA

There is probably no better example of that than Fred Again. What’s your view on what he’s doing right and how he’s using all those different platforms? He’s not the biggest streaming act in the world but culturally it certainly feels like he’s moving the needle as good as, if not better, than anyone else. This isn’t an overnight success, is it?

No, it’s been three albums in and five years of signing. It’s really straightforward, it’s simply fan-first at every moment. At every moment we are making a decision based on what’s best for the fan. We’ve never done a music video. We’ve sold out Madison Square Garden and headlined Coachella but we’ve never done a 3.50 music video. We’ve only looked at the live environment as a content creative place. So, when he’s doing the Boileroom session and someone falls over and knocks the desk, us amplifying that moment is far more effective to drive conversation and growth than spending hundreds of thousands of pounds trying to create the new Aphex Twin Chris Cunningham video. So we’ve got to start thinking about how we really want to tell a story.

I give so much credit to Fred and his team for saying no a lot, because there was a disconnect between the streaming growth, radio play and cultural impact. I would go for this true fandom and true build over radio play or a hit every day in terms of artist development and long-term growth. But when you think about it, we started with a very clear vison of what his musical vision was on Actual Life. He then started to tell his own stories in his own way and started to build personality, and when we saw that ignition moment of how people liked to see him, we replicated it. We replicated it on how he does his shows, we replicated it at Madison Square Garden, we didn’t deviate from the branding and the story of this phase of his career.

Sure, we added Skrillex and Four Tet and that expanded it. Skrillex is another of our artist so that was a way of reintroducing him to a younger audience and giving Fred a different kind of width, and there was an organic and authentic relationship with Four Tet that was really created by the artists. So for me it is a really clear blueprint. It’s looking and investing where people care and where fans care.

One of the things we’ve learned from that is really about community management, and when we put shows on there is a team of people looking at fan conversation about who can’t get a ticket. And if someone has an engaging story of how they didn’t get a ticket, people are calling the fan up or DM-ing them and giving them the ticket. We are micromanaging communities in order for them to be seen, for them to feel seen, and for us to care about them. So, when there is another show there is even more demand.

It’s about creating a demand curve and creating scarcity in a world where there is no scarcity. Those are some of the philosophical things we are trying to tackle. How do we create demand? How do we create moments? How do we create memories of purchase? I have memories of when I bought my first A Tribe Called Quest record, when I first heard Goldie drop his record at The Blue Note. I have all of these distinct memories that create loyalty, and that also create repeat listenership.

When you are on a DSP, you’re getting 65-70% of listenership which is lean back, so you have no memory of purchase and you barely know the name of the song, let alone the act or the sleeve. Then you accelerate that into shortform where you don’t even know the title of the song or the hook of the track, so you have a whole other challenge of distorting consumption and behaviour that can easily be seen as really positive or an accelerant but can actually be very misleading in terms of how you’re trying to build an act or a campaign or a song. And it’s moving every three or four weeks – the behaviours, the algorithms, the user bases or the cadence of how you put music and creativity out. You have to be curious about that change.

My biggest fear is the lack of attention the fan is having and trying to hold the conversation with them. Research shows that through the pandemic we lost about seven seconds of… you normally had to catch people in the first 15 seconds of a clip, now it’s in the first eight. That’s what keeps me up, the fact everyone is so fast to move onto the next.

TIKTOK ‘NOT CRITICAL’ FOR SUCCESS

Is TikTok good or bad for music? Is it turning people onto great talent or adding to the attention problem?

It’s probably doing all of that. Anything that is huge and popular to young people within reason that gets people talking about music in a macro sense is good. I think in terms of an A&R tool it’s very dangerous. The idea – and we’ve done it a lot – to overly invest just based on TikTok data with no context is super, super dangerous. When TikTok first came into the market there was a very clear correlation between Creates, the way we could predict the growth of Creates, and then we could probably confidently predict what those Creates would drive in terms of consumption. Those paradigms keep changing. And being an A&R company, A&Rs are opportunist individuals, everyone is on the hustle, so people ran at it feeling they truly understood the data. And the data really only reflects a moment in time and a moment of the song.

So, in terms of investing behind it we have become really cautious. It’s a very difficult indicator to really show any engagement about an act pre-signing, for us certainly. But from a marketing point of view, once you have an audience, and for catalogue, it’s been amazing. There are moments that make catalogue songs contemporary through short form media.

The key though, is I haven’t seen any retention or spill over for people who discover music on TikTok to really go on a journey with an artist. It’s an ingredient, it’s just not the whole meal.

Is TikTok so powerful that artists have to adapt to the medium?

No. Sure, it’s important. I don’t think it’s critical. I think it’s a great accelerant. If you make something super culturally relevant, your audience can do that work if you feel disengaged. There are many acts having many hits that we work with off TikTok that aren’t engaging with TikTok, it’s just that they are engaging with the culture and their authenticity and their storytelling, and that’s reflecting back onto these platforms. By the way, the platforms are great partners, and we want them to succeed, but we want the ideas and the creativity and the storytelling and the memories and the personal connections and interactions to be part of what we are trying to do too.

RADIO STILL RELEVANT?

What is the role of radio and specialist presenters today? How important is radio for breaking acts?

Radio is important to elongate the consumption of music, not on a mainstream level to spark discovery. It’s very different when you are talking about specialist shows because people are leaning in. Commercial radio on the whole elongates. I cannot see any market where there has been no activity on the whole, and then radio has started to play it and that’s made it a hit. Back in the day that’s exactly what could happen.

What it does do is make the experience of the live show that much richer. There is really clear data that it drives ticket sales. Of course, hearing a DJ you adore or respect evangelise on a song and giving it relevance is wildly important. Having it just played amongst another five is less effective. For me, we can sell more if we get radio later. Every genre and market is slightly different, but on the whole I’m very cautious of radio holding too much weight in terms of the development of talent.

THE ART OF A&R IN 2023

How do you encourage and coach A&R in today’s climate? And how do you balance championing creativity when you’re running a public listed company?

It’s really challenging to be an A&R at the moment. It’s probably the most difficult it’s been for decades. I think it’s about trying to hold on to what is the defining brilliance of that artist. Is it production, work ethic, vocal, lyricism, melody, performance? Trying to find something that truly differentiates them in the market is something I’d always look for. Being really clear about trying to get the right data with the right context. I use the analogy to some of the younger A&Rs that you can look at a sold out Pacha or Brixton Academy and feel like that has a certain value. But if you’re not in the room and you can’t see the audience singing the song or how high they’re jumping, well that is a critical part of knowing whether they are growing or whether that’s the last Pacha or Brixton they’ll ever do.

It’s always a collision between creativity and technology. When I started, data was what was hot selling out of Black Market Records. That was data. All of that created an architecture of a scene. For me it’s about being specialist as an A&R, being very immersed in the culture, not being a generalist. I don’t think there is a place for generalists anymore. You have to be authentically passionate and clear about your proposition, your value, and their talent, And then you need to look at it in the round.

Artists have so much choice, so you need to be very clear about what you can deliver for them in order to create a relationship and create a deal. You have to be able to identify talent. If we’re talking about signing single songs or copyrights, there is a different skill there – those songs can develop into an act, you just have to be clear about what you’re doing and who you’re putting into those opportunities to build a roster.

SPINNIN’ RECORDS AND THE STATE OF DANCE MUSIC

Tell us about Warner’s commitment to dance and electronic music. What have been some of the highlights under your stewardship, starting with buying Spinnin’ Records?

I was always as an observer so impressed by the entrepreneurial spirit of Spinnin’, and how they were everywhere. They were like this aggressive independent coming out of Europe, having a disproportionate amount of hits, they were building both a brand and a community. They were the first really to look at an MCN (multi-channel networks) - their YouTube MCN is up to 30 million subscribers. I was just really interested in this being a new way of breaking records. They had started doing the volume play before streaming really peaked, and I thought this is a company and a leadership team that we really needed to be in business with.

You just did a catalogue deal with David Guetta, who has such phenomenal output. What’s the secret?

He’s a really thoughtful human being. He is hungrier now than any younger artist, but not in a way that is desperate for fame or success, it’s not about that. We had a meeting around his kitchen table the other day and we’d set up this huge writing camp, and the passion for creation and making songs is infectious. He’s a DJ and producer who loves to DJ and produce. Every day. That’s the secret. That’s the success.

SHOULD AI BE FEARED OR EMBRACED?

AI – are you excited or fearful of its impact?

I’m really excited. The first way we think about it is ‘how do we protect artists’? We’ve been very successful as an industry to have good copyright legislation that protects audio and music, so if we have machines that are learning from our copyrights or we’ve got people using deep fake and name and likeness, there is a lot to unpack, and we’ve got to figure that out. We need to get that right.

The second bit is the visualisation and productivity of labels and independent companies with AI, like visualising albums, doing mood boards. It’s going to be brilliant, it’s going to fast-track things and hopefully we’ll regain time to exert into other areas, so that’s going to be a huge multiplier. And creativity and tech is what wins. I don’t buy into ‘tech wins over creativity’. And I think the best creatives engaging with AI will probably make the most compelling collision of music. But it’s a fascinating thing that is unravelling. It’s a great marketing exercise at the moment. We have to work out what artists feel comfortable with and what is equitable in terms of the remuneration from their creativity.