By: Alan Milstein
The following transcript is taken from an interview conducted by Berklee student Alan Milstein and industry veteran, Zach Katz. Zach talks about his journey from Moscow to Hollywood, what lessons he learned from his wide range of experience, and his thoughts on the future of the industry.
Alan: I’m Alan Milstein and I’m talking with, Zach Katz, right now he’s the CEO of the Music-Tech Investment Fund Raised in Space. Zach was a music attorney, manager, the cofounder of Beluga Heights and former President of BMG US-How are you?
Zach: Very well man. How’s everything in your world?
Alan: Oh, very good. I read that you were born in Moscow and you moved to LA at a very young age. My first question is: Did moving to the US as an immigrant have anything to do with how you approach decisions in life, and did moving to Hollywood have something to do with your interest in the entertainment industry?
Zach: I moved here from Moscow at the age of seven as an only child of immigrant parents, and none of us spoke any English whatsoever. Watching my parents in their mid-thirties from scratch in everything from learning a new language to getting their degrees for the second time had a massive impact on me. Seeing that kind of commitment, that kind of humility, that kind of work ethic definitely taught me discipline, focus and drive. Being their only child, they expected quite a bit from me. They expected me to become a professional in their eyes: either a lawyer or doctor. That is what made me go to law school. At the same time, I knew that I needed to fulfill my passions and interests as well, and I have always loved music. I think growing up in Hollywood, just being a kid that was born in the 70’s and growing into a teenager in the 80s, I fell in love with a diverse repertoire of music. Everything from early hip-hop when it first came out, like the Run-DMCs of the world, to hard rock and heavy metal, like Iron Maiden, at the other end of the spectrum. I was very interested in creativity and wrote poetry when I was a kid. And so, if I was going to become an attorney, I would need to do it my own way and become a music attorney, something that came from all of those early passions.
Alan: Awesome. Having worked in so many different areas of the industry, being an attorney, an executive and a manager, what do you think is the most difficult thing facing the industry today?
Zach: I think the industry has an opportunity to rise again…and continue rising. When I look at it, I see opportunity everywhere. There was a time when the music business went through a massive overhaul in which we really lost our path. We lost our genuine connection with creators as well as with the consumer because the industry was stuck in an old school mentality. We didn’t recognize the change that was happening around us, nor were we seeking to proactively create change. We were married to an environment that was quickly becoming obsolete. Prior to Napster, the music industry took jurisdiction of the consumer by controlling the medium in which they experienced music. It put the industry in a dominant position where they could ultimately dictate terms and set the dynamic with consumers. The industry wrongly believed this would last forever. During that time, there wasn’t independent distribution or alternative ways for artists to get their music heard. It was very expensive for artists to create what they wanted to create, whether it was music or videos or anything else. The music industry was ultimately in control of both, and in the driver’s seat of their relationships with the creator and the consumer.
Then technology, as it always does, came in with a new vision for the music space. In this case it was in the form of Napster, which disrupted the music distribution/consumption model. Since that time, a variety of tools have been emerging over the past 20 years, and that has kept enabling artists to become more and more self-reliant. This took the the music industry from a place of full control to one where it is constantly having to prove its value to both consumers and artists. We believe the music industry can become more powerful by aligning with technology rather than having technology change the music industry without the music industry’s participation. For us, that’s really what Raised in Space is. Raised in Space is creating a new industry. Our mission is to marry music and technology, which will give birth to the next generation of transformational tech companies. These new companies will be co-parented by music and tech as equals. If you look at what happened with the first generation of tech companies that were working with music, it feels like the music industry was a little bit late in embracing them. The music industry is now working overtime to build a win-win dynamic that it could have had from day one.
Alan: On another interview you talked about a “working for creative people” mentality rather than one where “creative people work for me”. How would you say Raised in Space would follow this vision that you have?
Zach: To me, one of the biggest changes in the psychology of the music industry over the past two decades, is that the music industry works for artists and not the other way around. I think that old school ‘boss’ mentality has completely been flipped as we see technology empower creative people to become self-reliant and independent, stand up for themselves, and create their own businesses. Now, any music company who wants to continue being in the music industry and continue to thrive in it has adopted this new “put artists first” point of view. A big part of that has been created by technology being put into the hands of creators. Raised in Space is a massive believer in supporting creative people and the new music industry which nurtures, guides, and empowers creators. We will be investing into technology solutions in the form of tools, marketplaces and platforms that are specifically created to continue empowering artists and modern day music companies who want to be their partners.
Alan: Raised in Space is also partnering with Ripple, the cryptocurrency company, and I wanted to ask: how do you think cryptocurrency and blockchain will continue to play a role in the music industry?
Zach: Lots of people are talking about blockchain, and what it means for the music industry. We have seen lots of confusion around the term, including some misuse and even abuse. I think there needs to be a very simple and practical way of looking at blockchain. Let me try here: People have been exchanging value and keeping track of what’s been exchanged since the beginning of time. Simple questions like who ones what, whats been exchanged for what, and what’s owed in connection with the transaction have grown in complexity with the globalization and digitalization of our world. Our new digital economy can no longer be supported by an outdated admin/transaction-keeping system. We are now using pipes that are hidden behind computer screens to be able to exchange digital value and keeping track of that value exchange in a globalized economy is become more and more difficult.
Blockchain is a modernization of the outdated admin/tracking systems that can no longer support our modern-day economic transactions. It provides us with what a current creator and music company would require from a transaction recording/reporting system…full transparency, decentralized verification of everyone and everything involved, and unquestionable security. Not to mention, much more efficiency and much fewer layers of redundancies and middlemen. And, as we continue innovating and expanding the nature of economic interactions between artists and fans, Blockchain will support this modern music industry by being able to track payments and data like never before. In time, blockchain will become the industry standard that artists, music companies and fans will come to expect. Blockchain will power the music economy of the future.
Alan: After being an entrepreneur for most of your career, what made you want to go into an “office job” at BMG? What made you want to get back into the entrepreneurial life?
Zach: I’ve had an interesting career. I started out as a music attorney, then I moved into management, after which I co-founded a Record Label and Publishing Company – all by the time I was 40 years old. To me, the guiding force behind my career in all of those steps has been really two main drivers. One of those two is continuing to learn, and the desire to continue growing. The second is searching for environments where I can be impactful and make a unique difference. After my chapter as the co-founder of Beluga Heights, I came to the realization that as much as I loved having my own company, my learning was slowing down and I felt like I needed to get into rooms with people who were smarter than me. I was looking for a more expansive environment where I could learn more and collaborate with teammates who were actively working to figure out the future of the music industry. At the same time, I was looking for an opportunity to continue being impactful by bringing my entrepreneurial DNA and experience to the table. BMG presented the perfect opportunity for both. Coming in and being able to learn from everyone that worked there, being given the responsibility to guide numerous other executives, while also being able to bring my entrepreneurial frame of mind and understanding of the artist’s need, was what made BMG the ideal next step at that time. The BMG chapter was me coming in and continuing to learn and grow in the music industry. I looked at it as earning my PHD in the music industry. And my various roles there ultimately led me to head the company in the US. After nearly seven years at BMG, I felt like that was a mission that I completed. I wanted to stay in the music industry, but again, the same two criteria came up in deciding on my future. Where can I learn the most and where can I be the most impactful? To me, the future of the music industry will continue to bank on finding the next great recording artists, writers or producers. At the same time, the future of the music industry is also going to rely on working more collaboratively with the tech industry than ever before. That’s where I wanted to go, and that’s where I saw my next level of learning and my next level of impact to be. I found that there very few people in the tech space with a music focus who truly understood the why, what and how of the music industry. Nor did they have anyone in the music space to effectively guide them towards gatekeeper or music fan adoption. At the same time, you have a ton of music industry players whose reluctance to lean into technology has put them behind the ball in innovating in their own domain. They too need a trusted guide who can lead them to the next generation of transformational tech companies, together with who they can build a stronger music industry.
Alan: Finally, I wanted to ask you about the future of Raised in Space. Coming into this new market and wanting to create a new industry, what other hurdles do you think you’re going to find in the future for your company?
Zach: Our primary mission at Raised in Space, which is also one of our biggest challenges, is to succesfully serve as the bridge between the music and tech industries and to bring them together in a sustainable and mutually empowering way. They key to this is helping each industry understand the other. One of our biggest challenges is creating a common language for both industries to be able to understand each other’s challenges, ambitions and greatest needs. And in doing so, see each other as allies rather than competitors or obstacles in their individual path to successes. Raised In Space is here to be a partner to both industries in building the new industry of Music-Tech.