Michael Walker: All right. I'm excited to be here today with my new friend, Guenter Loibl. Guenter is the visionary CEO of Rebeat and a founder of HD Vinyl, which has revolutionized music tech from the heart of Austria. Austria—good time, mate. Put another shrimp on the barbie.

Guenter Loibl: Yeah. Don't. It's so small you don't find it on the map.

Michael: Oh, I love that. I love that movie Dumb and Dumber. I'm guessing you've probably heard that many times from the Austria reference. So Guenter has pioneered digital accounting in music, foreseeing the data surge from streaming platforms. He's a trailblazer behind HD Vinyl, blending analog warmth with cutting-edge precision.

And Guenter, you're the first-ever podcast guest that we've actually had here at the Modern Musician Studio. So thank you for making the trip to be here. Based on our conversation already behind the scenes, it's magic. It's magic happening here and seeing you connect with June Lucas, our Artist of the Year. So thank you for being here and taking the time to have this conversation today.

Guenter: Thank you for having me.

Michael: Absolutely.

Guenter: I couldn't withstand. It's a really, really, really great place here—Orlando. Yeah, that's something I have to say. One of the most beautiful parts of the U.S. I've seen so far.

Michael: Yeah, I'm glad you like it. I mean, it's nice year-round weather. Green everywhere. Cool. No state income tax. So, feel-good reasons to be here. So Guenter, maybe for anyone who this is a first time connecting with you, could you share a little bit about your story and how you founded your company and made your way here today?

Guenter: Yeah. Okay. I will try to make it short because it's not really such a thriller story.

I was trying to make music. Nobody wanted to have my music, so I started my own distribution company back in 2000. A lot of other musicians had similar problems. They suddenly came up with their CDs at that time, and suddenly I became a distributor. I always was very interested in technology.

So when digital—when MP3 and iPod came up and there was a legal possibility to sell music online, downloads at that time—I started the digital music distribution Rebeat at that time.

Yeah, and music and technology, those are the two things that—when you have something like that, you will always find me there. So this was also the reason to start the HD Vinyl project, which unfortunately did not succeed because—and this is quite an unbelievable fact—analog technology is still, when it comes to that cutting edge at vinyl, you still cannot reproduce it digitally. It's still not possible.

That's where we failed. Because the old cutting lathes from Neumann produced—or let's say the precision of those machines was less than one nanometer. Just to compare it, the best microchip machines in the world are the Apple M4. Apple M5 will be, I think, three nanometers.

But they do this on an area of two centimeters by two centimeters, and we had to do this on a 30-centimeter diameter. So the precision to create a vinyl, digitally controlled to create an analog groove, still is not possible.

That will be something a lot of vinyl lovers will like. Because when they have the discussion—what is better, digital or analog—I can say from what I've learned, analog still is.

Michael: Interesting. Yeah, I mean, it's definitely—I feel like that's one of the core issues that we're facing with humanity right now: analog versus digital. And as the rise of AI becomes more and more intelligent, and as we spend more and more time in digital spaces, the more that it kind of feels like our humanness is crying for being grounded, being rooted.

And also, I mean, interesting that we're here right now, you in person, and have sort of experienced this. There's just a different level of connection or ground truth when you actually are together in person.

So, I'd be curious to hear your perspective as someone who also loves technology and the place where music and technology meet. What's your perspective on the direction of the world and humanity as it relates to technology? And what's music's role in keeping us grounded as technology also evolves?

Guenter: Question. Normally I focus on the parts where music is included, but the entire world—well, I think that AI will change our lives. It has already started to do so, and it will even change it more. I'm an optimist, so I don't think that it'll be—of course, there will be few sacrifices possible or necessary.

But in total, I think AI will be a huge benefit to humanity. But all this technology, as you said, cannot replace human interaction. We are analog creatures. And digital helps us to do a lot of things we were normally not able to do, but human interaction can never be replaced.

I remember when I started digital music distribution back in 2003, a lot of artists and also music business people were saying, "Oh, this is changing everything. Nobody needs music labels anymore." And when we look into the present, we see that music labels are more important than ever before, because somebody needs to put a spotlight on the artist. It doesn't help him when he is at the place where all the other artists sell their music as well. Nobody puts the spotlight.

And I think—or even when I go further back, in the era where the personal computer came up—everybody was, a lot of people were thinking that would ruin our society. It didn’t happen. It created a lot of new, high-value jobs instead of taking them away. People were afraid of that in the past, but it turned out not to be right.

And the same thing will be with AI. I think it will, at the end of the day, be a huge benefit for humanity.

And regarding music, I think that—of course, at the moment, a lot of people are trying to play lottery by generating music with AI and uploading it to Spotify, etc. At the moment, it's difficult to name a correct number, but I think it's 30% or even more than 30% of all the music that has been uploaded on a daily basis to the music DSPs is generated by AI—completely generated by AI.

So it's just prompted. I think this creates a situation that’s not comfortable for artists at the moment because it takes away money from real artists. But on the other hand, I think this is not sustainable. The same reason, like we said before—human interaction. It's the same with an artist. People want to see a person on stage, not a computer.

And of course, at the end of the day, AI will help a lot of people to make music. I think that the music market in the future will become even bigger—not only regarding consumption, also regarding creation. I think a lot more people will be able to make music and will make music. And they will use AI as a helper.

So if they haven’t studied music and they don’t know anything about different harmonies and all these kinds of things, the AI can help with that. But the idea must come from the artist itself—the idea about the lyrics, for example, the melody. If that comes from your own side, you sing a melody into the computer, and the computer gives you back the arrangement. That will allow a lot of people to make music that are not able to make music right now.

So I think the market, in both directions, will become even bigger in the future.

Michael: Hmm. Awesome. Yeah. So what I hear you say is that AI—similar to in the past when we've had technology revolutions, like drum machines, for example—we were always afraid that this was going to replace music. And what ended up happening is that it was more of a tool that—

Guenter: Exactly. A drum machine never replaced a drummer. Never.

Michael: Yeah. And so AI is sort of a similar thing that extends what's possible as a creative—to be able to have an idea for a melody and be able to actually generate the music around it.

Guenter: And also to go back to the topic we discussed before the podcast, I think that music is now acknowledged also by the financial industry, by investment funds, as an asset they invest into.

So when the financial industry believes in something, then in many cases—let's say it this way—it's better to have the financial industry on your side than to be ignored by the financial industry. And this has changed in the last, I think, 10–15 years. A lot of investment funds and financial firms started to invest in music because they see that you cannot make the big margins with music rights, but it's steady growth and it's crisis-stable.

So when there was a financial crisis in 2008, music rights grew. The same thing with COVID—music rights were growing. And that opens completely new possibilities also to artists because there has been a demographic change in the music streaming business, which is responsible for, let's say, 90% of the recording revenues.

Fifteen years ago, young people—early adopters—were streaming music, and they were interested in the big hits, the new hits, new artists. That was also the reason why, back in the days, the major labels—the music labels—invested a lot of money to break artists and develop artists.

When we take a look right now at the demography in the streaming services, it's completely changed. Suddenly you have adult people, older people who are streaming music, and they are not so much interested in the new hits. They're more interested in the back catalog. That's the reason why the catalog—why also the big labels—changed their business model. They are now trying to acquire catalogs more than they try to develop new artists.

At first glance, it will sound like that's bad for artists, but I don't think it is. It will just change the way how they start their career. And once they have their career started, they also have the possibility—after 10 years, 15, 20 years—to sell their catalog for their pension or whatever when they end their career, to make a living after their career as well.

That has not been possible for a lot of artists 20 years ago, but it is possible right now. So in total, I'm optimistic. I think that this will be, at the end of the day, good for the artist. And they'll need help with things like your app. And again, we are on the topic of technology.

Michael Walker: So what I'm hearing you say is that there's been a movement in the past 10–15 years around back catalogs, and this has become an actual investment vehicle because there's a steady return that investors can expect.

Guenter: And when it comes to data, it's easier to predict. Because you know what this catalog sold in the last five years—so why should it not be the same in the next five years? Maybe a little decay curve or whatever, but you can easily predict it. And it's a low-risk business in comparison to breaking an artist. That is a high-risk business because you invest half a million dollars—and how do you know to predict? You don’t know the outcome. And in many cases, the outcome is less than the investment.

Michael: Yeah. I mean, especially if their only offer that they're making is to try to make a return on streaming investment, for example.

Or live shows, which also can be potentially hit or miss. So interesting. I mean, just like the concept of prediction overall—I just re-watched the movie Minority Report. Have you ever seen that movie?

Guenter: Yep.

Michael: So the whole premise is, in the future, it's easier to predict future crimes, and so they can predict them a few days ahead of time. Then use that prediction to prevent crimes. Then it's like, well, what is free will?

Guenter: You know what's crazy? The British police is exactly testing that kind of software right now.

Michael: Yeah?

Guenter: So it's no longer science fiction.

Michael: Oh, wow.

Guenter: It's becoming reality at the moment. I read it two days ago.

Michael: Yeah. That's so interesting. I mean, I've definitely seen some things that are happening right now in terms of hate speech and that being a crime. And I know there's Orwellian concerns around the thought police and what does that mean. But it does feel like it kind of comes back to this concept of prediction. And what I'm hearing you say is that part of the reason that the financial markets and back catalogs as an investment vehicle—probably even more than new hits that might right now have more traction but they don't have a history, they're not as predictable in terms of returns—is because you want that ability to say, "I know the sun is going to rise tomorrow. I know it's gonna set."

I mean, one of the parts of the tool that we demoed before the conversation was the Forecaster tool—the Journeys. How you can spend $5,000 and literally have a step-by-step, like, based on these metrics, here's what you're forecasting in terms of return if you hit those numbers.

It is really interesting to see, what kind of impact does that have on a financial market when it comes to an investment strategy?

Guenter: I know that you don't want this podcast to be an advertisement for your own product, but let me just say this one sentence. I think that this is really something that will happen in the future. Your tool is exactly what an artist will need. They have everything in there—what is important for them—and they can interact with the audience, which is not easily possible at the moment with any other setup you normally can get as an artist.

And I remember a few months ago I was in Los Angeles interviewing Alby Galuten. He's the guy who brought you—he's a legend. He's now 78 years old, but he's still very fast in his brain.

Michael: Who were some of the artists that he had worked with?

Guenter: He was the guy who produced all the hits of the Bee Gees—Stayin' Alive, Barbara Streisand, Eric Clapton—everything from the '80s, '90s went through his hands. He was the guy who invented the drum loop.

Anyway, he was also talking about the future of music and what he thinks is important. And he said two things, which for me carry a lot of weight, especially when it comes from such a person who knows and has done such successful things.

Alby said two things. He said: don't be afraid of AI. AI will be a helping tool. People want to make music. And people want to listen to what artists are doing—not computers. Of course, somebody might say EDM, what's with that kind of music? But even there, a human is turning the knobs.

And the second thing he said, and that brings me back to your application—to your app—he said: to become a superstar, you need to become the speaker of your audience. And the bigger the audience, the bigger the success.

He said that back in the '60s when The Beatles came up, they were the first ones who were talking about—or singing in this case—about love and all these kinds of things for the young generation in a way nobody had ever done before. They were the speaker for the young generation.

In the '70s, when the working-class people had money and wanted to party, the Bee Gees were the speaker of this crowd.

And when we take a look now, right now—Taylor Swift—young women, encouraging young women, telling them to go their way and do positive things. That means you need to know your audience. Because how can you become a speaker if you don't know your audience?

And that makes your app so interesting. Because, for the first time, there's interaction between the artist and the audience. And that's something that I think will maybe be a really disruptive tool to change the music business entirely—or at least how artists become successful.

So, I don't want to talk about your app anymore.

Michael: No, please, go on.

Guenter: You said we don't want to do this as an advertisement, but I had to say this because it's true.

Michael: I appreciate that. I mean, it means a lot coming from you, and I know you have some deep experience in the industry, and you've connected with a lot of people who have been a part of the fabric of the music industry.

And what I'm hearing you say—I love that advice that he shared with you—to become the voice of the people.

It just seems like music is sort of... that's almost its role. It brings us together, and it communicates in a way that expresses a collective identity.

And so what I'm hearing you say is that an artist needs to be able to communicate as a speaker on behalf of the community. And in order to do that, there's no way to do it if you don't know who your people are—if you don't have those conversations with them.

Guenter: Mm.

Michael: Awesome.

Guenter: And that's not my intel. That was Alby Galuten.

Michael Walker: Mm-hmm. Cool.

So, I'm curious too—as it relates to music and technology, in particular with financial markets and where investments go—we talked about the power of prediction. And one thing that we didn't demo, because we took a step back from this temporarily to focus on the community building and the audience tools—but I still see as a fundamental opportunity in the music industry—is related to Web3 and blockchain for digital artwork.

The way I look at it is the fact that the Mona Lisa is worth $800 million, but Let It Be by The Beatles has never been worth more than $1. Feels like there's a big gap there in terms of the value of a piece of artwork. And it seems like the reason is because the Mona Lisa is one of a kind. It's original. And even though you could replicate the Mona Lisa, you could print it out, you could appreciate it side by side with the real thing—one of them is worth $800 million, the other is worth $10.

Guenter: I'm not so sure about the blockchain thing, to be honest.

I'm more skeptical about that, yeah, because I hear that for 12 or 15 years now, that blockchain will become the future and blah, blah, blah, and it never happened. Blockchain is something that is great for hardware manufacturers because you need a lot of servers and a lot of hard disks, and you need everything 10 times, 50 times more than with a normal database. And we also tried that business a few years ago. Red Bull is one of our clients, and Red Bull is always trying new things and new ideas and new ways, and they asked us to help them with digital assets. And we tried it, and at the end of the day, the first two or three—when there was a hype—were quite successful, but then it broke down. And right now, we have zero.

And I think that there might be market and a business for digital assets, but in that case, I agree, that might happen in the virtual world. Where, when you buy a skin at Fortnite and you can transfer it maybe to a different game in this world and everything in this virtual environment. There, I can imagine that that might become a business, but not in the way that people think or say that it is right now.

I don't think that an artwork will ever become a digital asset where people are spending money for it. So, when we have the virtual world, maybe then—but that's just my opinion. I know that I'm not the majority, because a lot of people say different.

Michael: I absolutely understand where you're coming from. And I'm with you in terms of when there was the hype phase or the bubble around NFTs in particular, there were things that were ridiculous—like gifs of hamsters selling for millions of dollars that were never valued at that. And I'm with you that I think that it's easy for something like that to become overhyped, and it's lacking tangible value.

And I could understand too, like a company like Red Bull, it's like, what's the point? They have a drink that tastes good, so why do you need a digital collectible or something like that? I think music is actually one of the rare cases where—like, what makes art valuable? Why is the Mona Lisa worth $800 million? Well, because we kind of decided arbitrarily. We decided this thing is worth $800 million. Is it actually worth $800 million intrinsically? You could debate that.

Just everyone decided this is worth that much. Maybe it's ego or reputation—that we all decided that it's worth that.

Guenter: I think it's quite easy. Because if somebody is willing to pay that, then it's worth that.

Michael: That's an interesting way to look at it.

Guenter: I think when the money's—when you really want to sell it, which will never happen. The Louvre will never sell it. But in the case he wants to sell it, then I'm quite sure that he will get maybe even more than 800 million, because it's unique. It's a brand. Everybody knows it.

This picture—this painting—is the most famous in the world. That's the value of it. So, if you are a billionaire and you have everything—you have your two Lamborghinis in the garage, you have your private jet, and you don't know what to do with your money—you will buy the Mona Lisa and hang it in your living room because you can do it.

And it's—of course, it's always—I remember the discussion with football players or sports in general. Why football players are earning so much money. Is the value correct?

As long as people are willing to pay them, then they will get it. It's the same with music. When an artist is on stage, there are artists who get $2 million for an evening, for one show, and there are artists who don't even get $2,000.

Why is that the case? Because the artist for $2 million—the venue is willing to pay him, because he attracts so many people to come there. And the same with the Mona Lisa. And the same with everything.

Michael: Yeah. It is interesting. I don't know if it's fair, but it's the way it is. Yeah, it's super interesting. I mean, the fact that money itself is sort of like an abstraction, and the only reason it has value is because we decide that it does.

But then also in a market—supply and demand—I think that's one of the reasons streaming has devalued the monetary value of music so much.

Because effectively—Is it really doing that?

I think so, from a standpoint of the monetary value of the experience of listening to a song. Because you effectively get unlimited streaming, where you can stream as much music as you possibly could ever want.

Yeah, but I don't actually think it's a wrong thing. I think it's great that you have access to be able to do it. I just think in terms of supply and demand, the supply is unlimited, therefore the demand, in terms of economic value—what are we willing to pay for it—is a race to the bottom.

Guenter: I think there are—this is like—let's say it that way:

With streaming, you gave people legal access to what they had before without paying. That's the first thing.

The second thing is that streaming is replacing, more and more, radio. And when you take a look at the vinyl sales—which have been going up for the last, I think, 20 years now—and have overtaken, especially in the US, the CD sales.

So there are physical sales, and they're becoming more and more. We still get revenues that we didn't have before from music streaming. Although, like you said, it's accessible for everyone, and the per-stream rate is very low—that's true.

But when you compare it with how much you got from radio plays—especially in the US, you don't get revenues from radio plays from the recording. In Europe and the rest of the world, you get that.

But when you just do the math and calculate how many listeners were listening on the radio station to that song and how much you got, then it was even less than what you get on music streaming today.

So music streaming—I think this access was one of the best things that the music industry has done in the last years. And it was forced to do it that way, because illegally, everything was available. That was the only way to generate a business out of that.

And it also encourages people—because they don't have to pay for it extra—to listen to artists they normally would not have listened to.

So the encouragement to dive into music and find new artists, new music that you love, is much better on music streaming than it has ever been before on CDs.

Because just imagine, you go through a CD shop and you don't listen. You maybe look at the CD, but you don't take 200 CDs and listen to them to find out if you like them or not. Nobody has done this. But in music streaming, exactly that is happening—especially with the playlist-driven thing.

So I think music streaming is great. Yes, we can talk about maybe the price point. That could be higher. I agree. But that will happen anyway.

Michael: Yeah. And I don't want to come across as saying I think that streaming is a bad thing, or like we shouldn't do streaming. I agree—I think that it's actually an amazing platform, technology. The fact that we can have access to music across the world is amazing, especially as a fan, being able to discover songs and listen to them, 100%. And as we've talked about, I think it's led to an issue where there's so much music to be able to stream, and it's multiplying every year. Now it's getting easier to generate it with AI plus a human, and we have the same amount of time in the day, so it's kind of hard. And so, yeah, the way I look at it, specifically as it relates to the value of something tangible, and why I think vinyls are having a comeback period, is because there is still something about the collectability of owning something, holding it, displaying it—definitely the tangible nature of it, the limited quantity nature of it—that creates extra value there that I think is going to make a comeback. It has already happened years—

Guenter: —ago. Yeah. Maybe that's an aspect I didn't tell you. I founded the Vinyl Alliance. This was back when we ran this HD Vinyl project. That's why I know a lot about the vinyl business in total. The idea was to set up a platform where all the stakeholders in the vinyl business are sitting at a table. It was, at that point, a test run. We invited a lot of heavyweights in the industry to Vienna to discuss the possibility of starting a Vinyl Alliance. At the beginning, I was not so optimistic, but the funny thing was that nearly all of the invited people came to Vienna. We had a great evening, and then the next day we had a great discussion about the Vinyl Alliance, and we started that.

A few weeks later, in New York, we had the constitutional meeting. And since then, the alliance is growing, growing, growing. They have now, I think around 60, 70, 80 members—all the heavyweights in there. So from the music industry, you have Universal, Sony, Warner. You have turntable manufacturers like Audio-Technica. You have pressing plants, mastering engineers—everyone involved in the music industry or in the vinyl industry is a member of the Vinyl Alliance. And it's really funny to see that kind of thing growing. I'm no longer in there because we stopped the HD Vinyl project, but it's good. And this is still the world's biggest vinyl association. And it's from Austria—Austria, which you hardly find on the map. But just a few great things are coming from Austria, just a handful. Red Bull, for example, is an Austrian company.

And it makes things difficult from a small country to start internationally, because nobody takes you seriously at the beginning. But on the other hand, this makes you put more power into it. And when the idea is good, then this overpowered idea is not stoppable. That's my theory—I don't know if it's true, but—

Michael: —Mm-hmm. I mean, I think it's gotta be. It kind of boggles my mind thinking about how often a giant corporation or company that has all—it's like David and Goliath—they have all of these resources behind them, every reason to win in a battle for new technology. And then some small company with a great idea comes along and is able to topple this Goliath.

Guenter: That exact same thing will happen with your app.

Michael: I mean, I feel like it's always a delicate balance. I wonder sometimes how we might come across to a Goliath. Especially right now—we've been kind of building underground. And I've heard stories of a separate situation, but like, major record labels who might acquire a similar-sounding artist to one of their artists so they can shell them. So for me, I've got my radar, instincts, body senses tingling. But if I was one of these companies and I saw what we were building right now, I feel like my instinct would be either to squash it or maybe try to acquire it.

Guenter: It depends on how much they pay for it, because in many cases they are public companies and they have to justify what they're doing with the money. And just to buy it and close it—that is difficult to explain to your shareholders. So, but I don't think that this will happen to you. I don't think that you will be bought and shut down. I don't think so. But I think that your thing will be quite a disruptive thing. And at the moment, it's now good to come up with that. Warner is really hard trying to build their own app. Others will follow. There have been some tests in the past, but they didn't really think this entire process through until the end. And all the things I've seen before stopped halfway, where you are already. So I'm quite confident that next time I come here, there will be a Ferrari in the garage. Though I'm talking—I don't know if you like that, but Cybertruck.

Michael: I'm gonna ruffle some feathers.

Guenter: Well, thank you. I appreciate that. But when you talk about this artist thing, I can tell you a funny story. There is another company I co-founded years ago called Legendary. It's specialized in revenue analysis—AI analysis of revenues. We find irregularities in streaming reports and all these kinds of things.

And we had a situation where a German rapper approached us. We should analyze his streaming revenues because he thinks that one of his competitors is trying to cheat him. We said, "Why do you think that could be?" He said, "Something is strange in my revenue numbers. Please analyze that."

And the funny thing was that we indeed found out that—it was his YouTube streams in the U.S.—they had artificial streaming behavior. And it's funny because a German-singing rapper has no streams in the U.S.—maybe a handful, but not 10,000, 15,000, or 20,000 a month. And it really looked like one of his competitors wanted to—how to say this in English—shut him down by faking his streams.

Shut him down by making people believe that he's faking his own streams. So a competitor bought fake streams for this rapper to get him out of the business. And we could give evidence on that because of the data. But the funny thing is that this really happened. That's an issue that nobody's discussing. Because everybody's talking about fake streams and how we can prevent and avoid that.

That's one thing—and everybody's thinking that the artist, by himself, is buying the streams. But it can be the other way around as well. The competing artist can buy the streams just to get you out of business and say, "This guy is cheating, he's cheating—please take him out of the charts." And this really happens.

Michael: Wow.

Guenter: Not very often, hopefully.

Michael: That’s pretty wild. Yeah. We talked a little bit about the moonshot ideas of the platform—having a mechanic where a fan in a community can upvote with more than one vote, and using a form of currency that actually equates to some form of monetary value. It could be a way to map actual user value and intent so that it might help avoid an issue with artificial legs or artificial streams because they're literally paying extra money for every stream that they do.

I'm curious to hear your perspective on the rise of AI as it relates to agents. I know it's sort of a catchphrase at the time of recording this year. It’s all about this intelligence extending beyond just a simple chatbot where you can have it do one or two things. You can actually just say, "I want to do this," and then it'll go use a computer and do things on its own.

What’s your take on what that means for musicians and their communities? How can an artist that's listening to this right now not resist or hide from AI, but actually use that tool in the right way?

Guenter: Well, with technology, it’s always the same. You can use it for good or for bad. It depends on what you want.

This AI agent thing will be one more of these things. It depends on how you use it. You can use this technology to hide that you are buying fake streams, or you can use it to promote your artist, or you can use it to do whatever you tell this agent to do.

I think that, yeah—with great power comes great responsibility. Exactly. And normally, in the history of humans, there's always been a situation where technology has been used to the extent to create something bad—let’s say, the nuclear bomb, for example. But on the other hand, this technology is also used to produce carbon-free energy. When you take a look at medicine, it’s used to heal people.

So it depends on what you do with it. It's the same with these kinds of things. I think the important part is that AI will not replace artists. That's not entirely true. I have to say that AI will replace not-good artists—let’s say it that way. But a real artist, a good one—the value of a good musician will even become higher than it is right now because it will make the difference.

AI has a problem. AI is not creative. AI is learning with millions of tracks how other musicians are doing things, but it cannot invent or create new things. It can combine, and maybe that combination is new, but entirely new—it’s not possible. Not with the AIs that are available right now. Maybe in the future, I don’t know.

Music has something to do with emotion—not something, a lot to do with emotion. I’m not so sure if AI can feel. Can they feel? If they can, it might be tricky. But I think they don’t, and if they’re not able to feel, then how will they express emotion? Impossible.

Michael: Mm-hmm. I love this conversation. Philosophical—my favorite things to talk about.

Yeah, I mean, what I really appreciate about conversations like this is that this isn't just pure theory we’re talking about. These are actually questions we need to be asking and figuring out because we're approaching this point of artificial general intelligence.

This conversation is going to be happening more and more and more as the intelligence gets greater at communicating and articulating. And if we're sitting across from an intelligence that appears to be articulating itself as naturally and emotionally as a human, then it brings up some questions.

What is that intelligence? Does it actually express and feel things the way that it’s probably going to claim that it does?

Guenter: Yeah. I think that hopefully a lot of artists are listening to your podcast. What is interesting for the artist—and that’s a more important thing at the moment—is that we have quite a bit of content about compensation of the music AI has used to learn from.

That’s something we will fight for. Hopefully, all the record labels and publishers are fighting for that, because there is a second stream coming up that is claiming that China is getting so important on AI because they are using all the training material for free and they don’t have to pay for it.

That’s why big US AI companies are claiming to use music to learn from—also for free—so they don’t face an uncompetitive position, or so they can remain competitive in the future.

If lawmakers agree with that, it will be quite a catastrophe for the music industry, because that will mean that no matter how many songs the AI has learned from, there will be no compensation for the composer or the artist for that training material.

I think this is something every artist should be aware of when that topic comes up—especially here in the US. Make up your mind and take a look at which of your senators or whoever is fighting for your rights instead of for the AI companies. Because that will be a huge income in the future.

A lot of parts of music will be generated from existing material. And it’s only fair to compensate the artists, the songwriters, the composers. I think people should know that we are standing at a crossroads. Are we going into a future where the learning material is free and there is no compensation—a bad situation for artists? Or do the AI companies have to pay for the learning material?

I have to say, when AI companies claim that the Chinese do not pay for it—that’s not true. We had requests from China. They wanted to use our content as learning content for their AIs, and they agreed to pay for it.

We didn’t do it. We refused anyway, because at this point it wasn’t clear how the law would develop in the future. Of course, I don’t know if they used it anyway. That’s something I cannot say right now. But at the beginning, they were willing to pay.

I think this should be something important. And the US is more important than maybe the UK or the rest of the world, because the laws in music that are made here will be copied by the rest of the world.

So I just want to say this is an important fight for compensation for the learning and teaching material of AI.

Michael: Mm. Yeah, thank you for sharing that. Yeah. I mean, some of these issues are so big, and I'm glad that there are people who are smarter than I am that are bringing it up to my awareness, like yourself, here on the podcast and also across the world. I know this is a big dialogue right now that we're trying to figure out because it's new territory. And I know there's a little bit of gray area around copyright—like if it creates original work that doesn't exist somewhere else, then it uses training data. One argument I've heard is what makes the way that we learn from our influences—how we listen. We might listen to someone and then create something that was influenced by them. But if it's new and it's different, then we don't have to compensate the original artwork. It's a little bit different if you're literally training a system based on that tool and then using this tool to sell subscriptions. I can see that being a different case, but I also can understand both sides of the argument.

I wonder if there's some way to create a way to track—like almost a fingerprint or something—with different pieces of artwork that, when it's used in the training data for AI, that it has hints of that so then you can compensate for it. What that would look like... maybe something in the Web3 world with that.

Guenter: I don't understand it fully. Well, let's say it that way: our quality control at Rebeat is by human. So humans are listening to music and are doing the polishing before we upload that to Apple and so on. And the guys at the Quality Control—they can immediately tell you if this was AI-generated or not.

Michael: Wow.

Guenter: Because they hear it. So that means, when a human hears it, you can theoretically also analyze the differences and create an electronic tool or a software tool that detects artificial or AI-generated songs as well. But the problem is that AI gets better, and the learning curve of AI-generated songs in the last two years has been unbelievable.

The quality of those songs has exploded. And right now, they can say if this was AI-generated or not. But I'm not sure if they will be able to do that in a year. So the only way to make sure that a song has human interaction is when you do some watermarking in the digital audio workstations. Because when that music is generated, you have the finished audio file. No DAW—no Digital Audio Workstation—software has been involved.

And when you start with recording, you watermark every recording that has been done. Then you can collect the different—when you mix it on an audio workstation—you can collect the different sources, and at the end, the result can tell how many percent of the result has been generated by AI.

But nobody is following this idea at the moment. I've not heard that Apple, Steinberg, or anybody else—or Pro Tools—is moving into that direction. So I think it'll be very difficult in the future to detect AI-generated songs.

The only thing that will be important is: will people like it or not?

Michael: Mm. Yeah.

Guenter: And if people like it... I think in the music business or in music history, everything has happened. So there will be a situation where a completely AI-generated song becomes number one.

And there will be also—but it will be—you will not be able to copy that thing. Music has always been very difficult to predict or unpredictable, like the numbers of the lottery.

So if you find the right mixture, then maybe an AI-generated song can become number one. But I don't think that this will be the majority.

Michael: Mm-hmm.

Guenter: I think that 90%, also in 10 years or 15 years, in the charts, will still be real, existing artists.

Michael: Hmm.

Guenter: I hope—at least I hope so. Nobody can predict it, not even me, because nobody knows what really happens with AI and how good this thing will be in the future.

Michael: It's so interesting. I mean, it definitely comes back to that through-line we've been talking about with prediction and what lands, musically, is sort of a representation of the cultural zeitgeist of the time. So if you can predict that, then I guess you'd be predicting the collective consciousness of humanity at the same time.

Guenter: Yep. That's too far away to predict.

Michael: I cannot predict when this will happen. This has been a lot of fun. Thank you for coming here and for sharing some of your wisdom and experience in the music industry, and for being our first ever guest to come here to the Modern Musician studio.

If there's someone who's listening or watching this right now and they're interested in learning more about either the Rebeat Legendary or something else—if they are interested in reaching out and connecting—what's the best place for them to go to learn more? The best place?

Guenter: LinkedIn, maybe.

Michael: Okay.

Guenter: Yeah, they can get in touch with me over LinkedIn.

Michael: Okay. That's the easiest way.

Guenter: Yeah.

Michael: Awesome. Well, like always, we'll put the links in the show notes for easy access. Cool. Guenter, we did it. Thank you.

Guenter: Yeah.