Back on March 11th of this year, the audio and music software community was pleasantly surprised to see an announcement of cooperation between iZotope and Native Instruments, two of the most dominant players in the music software landscape.
Both leaders in their respective markets of audio processing and virtual instruments, NI and iZotope have developed products for each other's primary markets over the years. NI has marketed a series of effects processing plug-ins and iZotope has developed an interesting take on sample playback called Iris. With the exception of NI's Guitar Rig, the results have been moderate compared to their other brands, so this alliance makes a huge amount of sense.
There are still many things that must be worked out, and even if the companies were fully merged, there are no guarantees of successful outcomes. Given the track records of both companies however, the chance of great future products is quite good.
A particularly fascinating thing about all this is that, due to the Pandemic, the cooperation deal was negotiated online from the respective homes of Mark Ethier, CEO of iZotope, and Constantin Köhncke, CEO of Native Instruments. Mark was kind enough to go over a few of the details with us.
How long had you guys been working on this?
It's funny—I've been thinking about ways for us to collaborate together going back five plus years. iZotope has been a leader in mixing, mastering, effects and repair, and NI a leader in instruments. Instruments have never been our superpower, and effects have never been theirs. We wanted to find a way to take advantage of being so complementary, but it's complicated when you are two separate companies. It was a little over a year ago that we started a journey to figure out something more specific, and then we had to pause due to the pandemic. At the beginning of this year we finally said, okay, let's go and figure this out. Really, the final pieces all came together over the last three months.
Did the original discussions start with Daniel Haver and Mate Galic at NI?
While they were still there, yes, and then of course discussions continued with Constantin, who is a really awesome human. I actually opened up to him in one of our first meetings and said, "Hey, I want to show you this," which was a presentation I had put together that showed why we were all so complementary. At the time, Daniel and Mate said, "Yes, exactly, we should figure out how to do it." So, it's been going on since they were around and then I think became more viable in the last six months or so as things started to simplify for us both.
What does it mean when you say, "working alongside each other"? Will it be independent engineering groups that work together or a common team? How do you imagine this?
We're describing it as sister companies. We both had excellent years and have our own independent plans, so it's important to both of us that we don't undermine them. I think a classic thing that can happen in these sort of situations, independent of any legal considerations, is you take two companies and smash them together, and inevitably it doesn't go as well as everyone expected and you lose some of the talent and the momentum that you have. And it was very important to us that we didn't do that.
And so, both of the companies will remain intact, and the real benefit is that there are no secrets between us. Native has their research team, we have our research team, and we're going to start to share data and learning back and forth. Native Instruments has a huge amount of data that our machine learning experts can then use to create new types of effects and products and vice versa. There are also places where we obviously have access to different customers. In the post production engineering world, we know everybody. If you look at the producer world, they know everybody. We know there's overlap, but we can support each other by sharing our understanding of those groups and their creative needs. Those are the sort of the concrete things that we're doing, and as we go, we'll collaborate to create new products.
I'll use an example, iZotope acquired Exponential Audio not so long ago. Michael Carnes (the founder of Exponential Audio) brought all of his experience and knowhow in reverb, and we put that together with our knowledge of processing and machine-learning to create a new type of product with Dialogue Match—a marrying of those two strengths. So you'll be seeing products that combine the superpowers of iZotope and the superpowers of Native Instruments.
The final thing I would add—I have a strong view that there's a lot of friction in the creative process in this industry. The number of times that I sit down to make music, and I am instead faced with installing, updating, authorizing, figuring out why the settings don't transfer from X to Y, and on and on and on... We know that a large number of people in the industry use products from iZotope and Native Instruments, so places where we can simplify activities or tasks that are not creative decisions will be huge. We have technologies like inter-plugin communication (IPC) which allow us to do cross-track processing, so we'll be looking for ways to get that into Native Instruments' products, because that means when you use Ozone or Visual Mixer and if Native Instruments' products all have IPC, then all of the sudden your entire mix is now available to you on all of the individual components. You can start to imagine how we can do things like that, and our hope is to find ways to bring along other companies into focusing on the creative flow, rather than the commodity stuff that everybody must do. I think it's better for the industry, and for the creators.
Many people can relate to that.
I know, there's not a single person who hasn't said, "Oh yeah, I know that feeling," where you're about to sit down and do some project and then the next day you finally start it.
Will there be a separate board of directors with members of iZotope, members of Native Instruments, and investors?
Back in 2013, iZotope had ABS Capital come into the company. A growth equity firm, Francisco Partners, is taking over ABS's position, and they will be putting additional capital into both businesses to help us grow some of the things we're doing. There may also be other companies that we'll want to bring in to help support what we're doing. In terms of structure, we'll have the same board of directors, which helps ensure we stay aligned at the highest level, while also working independently. The term I like to use is 'highly aligned, loosely coupled.' We're all pushing towards the same thing, but can do so independently so we don't have to check in with each other. That's how we operate our teams, in that sort of principle.
How do you imagine the collaboration products being distributed?
Customers at some level decide where they want to buy the products and so we try to support that with retailers that can add value to the equation. I'm going to bet that there are places that Native Instruments will help us to get better and places where we will help them to get better. It's a lot easier when you can see how things are going and share, "Hey, you've never done this. You should check that out. It works really well."
Separate offices? Will you have a group that's in Berlin? Will they have a group in Boston? Or is that all going to be through the Internet?
At this point, we're still planning to have separate offices. I know this speaking to you from my home as you are speaking to me from your home that you've been at for a long time. As iZotope, we are moving to a Remote Equal policy where, to put it simply, employees get to choose if they go to an office or they work from home. We expect that the nature of being in an office is going to change pretty fundamentally for us over the next year, so that's actually a bigger change than whether we share an office or not with Native. I know that both Boston and Berlin are two very important markets and places for us to be, we're not going to have only one of those offices. We'll definitely have both of them.
It's not the norm for institutional investors to invest in the MI space unless there is a broad consumer component. For the purpose of this collaboration how would you describe the music consumer? Not the prosumer, not the pro, but the consumer of the kinds of things you could do going forward.
I have a very specific definition about that. A pure consumer for me is someone who could walk into a store and say "I'm either going to buy an electronic device, media, a video game, or hey, this is a cool, little music thing that I could buy." When I think about a music consumer that we focus on, I call them maybe more hobbyist or aspirational creative. For me, it's someone who has an intent to make a piece of music or piece of media or art or podcast or video.
Take Harmonix. They are clearly a consumer company trying to bring the experience of creating music together in a band to music consumers. For us, that's not a market we're focused on. When we say consumer, we think of people for whom it's not their full-time job to make money with music. That's what it means in this case, but I understand the word consumer can imply—as you know—the number of musicians, or even electronic musicians, who think it's going to be a thing they do and then a couple of weeks later, they've moved on. We tend to draw the line at someone who has decided that they want to record or make some piece of art. We won't try to market to you just because you bought a guitar, because as you know, a lot of those guitars are going to end up in the closet or never played.
What gets you the most excited about this from a personal level?
I started this company because I was a musician trying to make a recording back in my dorm room—20 plus years ago at this point, if you can believe that—and I found the experience way harder than necessary. My science brain went, "Hold on, this should be way easier." And my musician brain said, "I just want to make music. Why do I have to know how to use the registry to make the DirectX plugin work?" Remember that?
And, for me, that's really the excitement, because we've been chasing that dream and that idea for such a long time. If you look at what music production is these days, it's a digital audio workstation, it's plug-ins that do effects processing, and it's instruments. That's a huge part of it, and the hardware ecosystem around it. If you think about Native Instruments being the lead in that instruments side and iZotope being the lead in that effects side, both companies have integrated hardware and software.
For us, that's what Spire Studio is, it's an integrated hardware and software ecosystem. And all of NI's pressure and force on the instruments side has been to create these really tightly integrated hardware/software tools. The more that we can connect some of these dots together, the easier it's going to become for that version of me 20 years ago to sit down at a computer and actually start making music as opposed to getting frustrated and walking away, which to me was so sad. Maybe it's just selfish. Maybe it's unattainable. But we keep trying to get closer and closer to that ideal, and I think this partnership brings it so much closer for everyone who has ever struggled, including me personally—so that's what I get excited about.
We all feel this pain. You mentioned Spire Studio, which begs another question. What about future hardware products versus future software products? How important is the development of new hardware from your perspective?
They're both very important. At the end of the day, there's some music making or media production for the film side where it can all happen in the box. But there tends to be either an analog component because someone is singing, rapping, speaking, playing guitar, or an analog component where someone wants to bang on a thing or play keys or something like that.
I think hardware is a fundamental part of the equation of how music and media get made. It's never going to go away, so we have to embrace it and look at how we make that experience as awesome as possible. Some of that experience we'll design, and I think we'll also look for ways to explore industry standards or protocols—as Native has done with NKS, as an example—to get that integration to be as smooth as possible for the rest of the industry, too. I think there are lots of opportunities to come up with common ways of working and interfacing between products that other industries have figured out. All I can think of is things like Zigbee and Z-Wave for smart home platforms. Why doesn't that exist for our world? We have MIDI for sure, but I think that there's so much more that we could be doing with how devices can communicate and work together.
Any final thoughts you would like to share to sustain us until we can see the results of your first efforts?
I mean, I'd say that the most surreal part of this whole experience is just that it all happened in my attic. Obviously, the groundwork was set for years, but it's been really amazing to forge this huge move, and then walk downstairs and play blocks with my three-year-old. I think it's going to be good for musicians like you as well, in the same way it's going to be good for us.
I just love the idea of someone helping me actually make music when I sit in my little room here with all of my little devices that don't always speak politely with each other.
Yeah, it's one of those things that we really want to focus on and get right. There's this funny conflict and desire of people to always have the latest and greatest: "I want to have the latest and greatest, but don't distract me." It's one of the things that our designers think about a lot — how do you add features and value in a way that doesn't make people feel like the first thing you have to do is upgrade every day? It's a tough engineering problem, too, to figure out how to get that balance, but that's something that we're focused on solving.
Cool, well that's it, and that's great. Congratulations, of course.
Thanks Chris, I'm really excited about this.