Outgoing Merlin CEO Jeremy Sirota Talks Indie Label Consolidation, the ‘Tsunami’ of Gen AI & More

After nearly six years as the CEO of Merlin, the quietly powerful organization that negotiates digital licensing deals on behalf of a network of 30,000 indie labels and distributors, Jeremy Sirota is stepping down. 

His tenure came during some of the most pivotal years of technological change for the music business. Since 2020, he has grown and led Merlin through the rise of TikTok, the fads of crypto and NFTs, and the emergence of generative AI, which he now refers to as an incoming “tsunami” for the music business. “I told our members that we’re going to have to get prepared for some discomfort” as they work to create guardrails around the powerful technology, he says. 

The crown jewel of Sirota’s tenure was the deal he inked with ElevenLabs — perhaps the first AI music license connecting traditional record companies and generative AI. The deal created a framework that other licenses could follow, including the provision that artists can opt in as they wish.

But the Merlin job wasn’t one that Sirota expected to take in the first place. In 2019, he was happily working at Facebook when he got the call to interview for the top Merlin gig, replacing founding CEO Charles Caldas. “When you’re hiring an executive, there’s three types you look at: what you think you want — which is usually more of the same — what you think you need and then a third look, a dark horse candidate that is totally different,” Sirota says. He later found out he was the dark horse, given his background in big tech and the previous decade he spent at Warner Music. 

Looking at independent music licensing from the vantage points of the opponents at the other side of the table, however, made him a strategic pick to grow the indies’ influence — and royalty rates — across various digital platforms. 

But after leading the independent music industry into the age of AI, Sirota says he’s now ready to try something new. “One of the things about me is I like to be challenged continuously, and I was looking ahead, and I was like, ‘Okay, we’ve now built out this next-level of suite of services. We led on AI. We streamlined the operation,’” he says. “The organization is too important for the leader not to wake up excited every day.” 

That next leader will be Charlie Lexton, the British executive who has been with Merlin since its inception and has served as COO since 2020. While Sirota admits that he does know what his next move is, he isn’t ready to share — except to say that he’s “very excited for what’s next, and I’m excited for the future of Merlin.” 

You came from the major label and tech perspective, coming from Warner Music and Facebook. How do you think your perspective impacted your performance in the role?

Dave Hanson, chairperson of Merlin at the time and GM of Epitaph Records, was the head of the recruiting committee, and he was the one who brought me into the process. I knew about Merlin, of course, because I had been doing deals with them with my Facebook hat on. I was only a year and a half into my experience at Facebook when I got the call. What made me stand out was that when I went through the process, I just said exactly what I thought, because I was happy at my job. This interview was a fun thought experiment for me. So I presented my vision, which was, basically, “I don’t understand why Merlin’s not bigger.” 

I told them, “You have this clear vision, mission, support of the membership. Really great culture. Why aren’t you doing more?” I think I kind of flummoxed them a little bit, because there were probably a lot of people who said, “We need to hire someone who truly knows indies and comes from the independent space,” and everything I was presenting through that process was challenging their assumptions about what they thought they needed. I essentially proposed we stretch the dough. 

I think I got hired because they realized, “We already know the inside, but this is someone who’s from the outside — who has negotiated from the majors’ perspective, who did it as a lawyer, who did it from the platform side. We don’t have those experiences in our network.”

You started the job in January 2020. Tell me about navigating that first year as COVID was hitting, and what change you wanted to implement right away.

I started in January 2020, so two months later, I’m entering into what effectively was crisis leadership. It was shutting down the offices. This was one of the worst things that has happened in our lifetime, but from an ability to accelerate change internally, it was incredibly empowering. Instead of being on the road all the time, I could just be deeply focused on the team and building the tools and processes we needed to transform and modernize Merlin. 

One of the things I really wanted to emphasize to the team was the idea of “thoughtful urgency.” That’s the way we needed to be approaching the marketplace. Back then, we were just always on our back heels, always trying to play catch-up. I wanted us to get to a place where we were leading. 

I thought Merlin had such great brand equity, but it was so little known. I came in thinking, how do we build that out bigger? Not so that Merlin can be bigger, but so we can achieve more for the members. It’s a balance: you don’t want to get in front of Secretly or Ninja Tune or their artists — I want the music and artists and members to lead — but at the same time, you can’t do that unless Merlin is perceived a certain way. A lot of year one was about brand building as well. 

Merlin represents 30,000 indie labels and distributors. I imagine a lot of members had differing opinions on what Merlin should do. Among all the issues where your members were divided, what would you say was the most divisive issue of all?

The obvious one is truly the right answer: AI. If we reflect back on the last six years, what have we seen? Blockchain, crypto, NFTs, Metaverse, AR, VR — every one of these trends that was going to revolutionize the music world. I don’t see a lot of those deals still out there, if any, today, but we were very thoughtful about it at the time. We always had the conversation. But when we first started seeing AI come up more and more in conversations, I just knew right then that this was going to be a thing. This was going to be a tsunami. We had to get ready to dance with discomfort. 

You have a few types of people in the independent space. One was like, “What is this?” Another who understood it but didn’t want to accept it. You then also had people who were cautiously optimistic, and finally, the people who were excited. 

Are there really many indie labels who are excited about generative AI?

Shockingly, yes, there are. It’s the ones who accepted that it’s coming, so they were thinking, ‘How do we use this? How do we lean into this? How can we be leaders in this?’ In fact, it was a lot of those members talking to me that encouraged me to lean into it. 

This is not the first time disruption and innovation have come at us, and one of the biggest challenges we had was educating people who had all differing levels of understanding and differing views about AI. 

Merlin and Kobalt struck a landmark deal with ElevenLabs, perhaps the first big AI music licensing deal ever. How did you come into contact with them?

We first started talking to ElevenLabs last year. We did this pilot phase with them at the end of last year, and then we closed our deal in August.

We did that deal so early because, number one, we found the right partner to start with. Number two, we want to be the architects of the future. I’m kind of surprised that the deal wasn’t treated as a bigger deal. My friend said it’s because most people were waiting for the majors to make a deal. If we were Universal, this deal would’ve been splashed on every newspaper in the world, but we didn’t do it for that reason. We cared about being on the right side of history. I can’t predict the future, but what you can do is try to create structures for the future and work with the right people.

One of the biggest events to happen during your tenure was that TikTok “walked away” from licensing talks with Merlin, citing issues with fraud among your membership. Instead, they opted to do individual deals with your members. It’s been over a year now since that happened. In hindsight, what do you think went wrong there? Why did negotiations break down so significantly?

That was definitely one of the low points of my professional career, because integrity means a lot to me. I’ve always valued also being able to solve any riddle — there’s no problem or dispute that I can’t figure out.

People will say things publicly that they want to, but the reality is that I can’t explain why certain platforms value partnership and others don’t, because everything that was being said publicly was not accurate. It was accurate in a sense of being able to twist things around to present a certain way.

The other thing, too, is we negotiate from principles. I’d rather do the right deal, and members say we don’t want to participate in that, than do a deal that has everyone in it but doesn’t live up to the values and principles of who we are and what we believe. We value music and rights, and [TikTok and Merlin] disagreed on the value of music, and I would rather stand on our principles and lose than concede on that. 

Another big conversation in the indie label space right now is that Virgin Music Group is in the process of buying Downtown. It has a lot of people concerned about the state of independent music and consolidation. What do you feel is the state of independent record labels right now?

It’s never been stronger and it’s never been more challenging. Number one, the cost to compete is going up every year. The investment you need to make into platforms, into artists, into your organizations, that’s all going one direction, and in many ways, the costs are outpacing the revenue increases. The second is, it’s more challenging than ever to break, sustain, maintain — whatever you want to call it — no matter what trajectory or phase of their career they’re at, and so much of that is around fragmentation of audiences and listening habits. What you don’t want to then do is put more pressure onto that system.

Who am I to judge those who build a business and then want to sell it? I’m not, but what I can say is that the more you continue to consolidate this industry, the more you commodify it. That’s what strikes me about it.

There used to be six majors. There used to be dozens of big labels that were outside of the major record companies. With that, you just got more investment in more types of music. 

Let me be clear: I worked at Warner Music for nine years. Some of the most caring people in music worked with me at Warner and the majors — that’s not what I’m saying. What I am saying is that if you have one bookstore chain in your city or you have a dozen independents, I’d rather live in the latter. That’s a dozen different points of view on which books to stock and promote and sell. 

Why did you decide to step down?

I don’t know if this is actually a quote or not, but what I keep saying is, “When you leave, your true impact is measured by how well things run without you.” This company is going to run incredibly well without me. That was always my goal. 

There’s so much that I feel proud of, that we accomplished as a team, and one of the things about me is I like to be challenged continuously, and I was looking ahead and I was like, “Okay, we’ve now built out this, like, next level of suite of services. We led on AI. We streamlined the operation.”

And when I was at Warner for the last year or so, I didn’t wake up excited. I stayed too long. I was just working, and that’s what I wanted to make sure I didn’t do at Merlin. The organization is too important for the leader not to wake up excited every day. And the other thing is, great leaders are replaceable. The whole point of a great leader is building towards being replaceable. You’ve failed if you haven’t done that, in my view. I’m very excited for what’s next, and I’m excited for the future of Merlin.