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Do Music NFTs Work in Favor of Record Labels?


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Background

Mint Season 4 episode 31 welcomes Paul Zehetmayr, the new co-CEO of LimeWire, the discontinued peer-to-peer file-sharing software that we all loved and abused in the early 2000s. Paul and his partner are revamping the iconic brand, but taking it in a new direction to focus on music NFTs.

In this episode, we discuss: 

  • 00:00 – Intro
  • 2:07 – Step Aside RIAA, LimeWire is Back
  • 11:19 – What Traits Go into Valuing Music NFT’s?
  • 20:02 – What Makes a Music Artists Valuable in Web3 From a Collector’s Point of View
  • 29:23 – Why Experimentation is Key: Understanding the Collector’s Mindset
  • 33:52 – Do Music NFTs Work in Favor of Record Labels?
  • 39:12 – Bringing Back the Golden Era of Internet Interconnectivity
  • 46:35 – How LimeWire Will Tackle IP On-Chain
  • 51:12 – What Would Cause the Downfall of Music NFTs?
  • 54:34 – Outro

…and so much more. 

I hope you enjoy our conversation. 


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Intro

Paul, welcome to mint. My friend. Thank you so much for being on, very excited to have you on, how are you doing?

Paul Zehetmayr: Thanks very much. I’m very good. Thanks a lot, for having me.

Got it. You got it calling in you said from Vienna, Austria. Right?

Paul Zehetmayr: For sure. From Vienna. We just found out you were based in Vienna some time ago as well.

I used to live in Vienna. Yes. But that’s not important. Right now. What’s more, is LimeWire is back, back, better in action. Okay, I want to start this thing with an introduction. Okay. Who are you Paul, I’m curious to learn more about who you are personally. More of LimeWire is rejuvenated team and why you’re bringing back this iconic brand.

Paul Zehetmayr: Sure, happy to. So, I’m Paul actually been in the b2b and tech space for the better parts of the last 10 years, working together with my brother Julian. We’ve done lots of different projects, we’ve had, we’ve launched an e-signature company called ever sign pretty much competing with DocuSign. Overseas, we built an API portfolio called API layer, it was continued like 20 Different micro service API products, also aimed at specific niches in the b2b space, which is sold that off last year to a company called Idera. Based in Texas, we also built a product called Zero SSL, we’re still running that on the side. It’s actually one of the biggest competitors to Let’s Encrypt. So, selling SSL certificates, making it really easy for people to secure their websites. So, lots of stuff we’ve done in the b2b space. But we’ve always wanted to do something actually in crypto, NFTS, and especially, especially music as well. So obviously, having had the opportunity to acquire the LimeWire brand assets, and now relaunching the product. We’re completely excited about it obviously announced, did the first announcement two weeks ago, and we’re now working full steam ahead to obviously, launch a product.

So, I’d say you shocked the world when, when LimeWire came back, the iconic brand, which a lot of us used kind of in the early 2000s, for pirating movies, pirating music, that was essentially the first peer to peer, digital network of its kind, right?

Paul Zehetmayr: For sure.

Step Aside RIAA, LimeWire is Back

And I guess is very reminiscent of a lot of the ethos that’s happening in crypto in web three right now. But why bring back LimeWire? Like, what was the motivation behind doing that? Show me the story behind the up worth of it.

Paul Zehetmayr: You mentioned it, I mean, obviously LimeWire was kind of the was laying the foundation as for blockchain, right, that means it’s peer to peer to thoughts. And that vision, obviously, is really a fundamental thing to where blockchain technology is right now. So that’s really interesting. Uh, why the brand, so we think it’s a, it’s a huge opportunity to revive it, because we’ve just done our research last year, right, and just have the following. And then nostalgia around the brand that’s visible all across social media, all across the media, really, even 12 years after the shutdown. This is a lot of energy to that. And we thought it would be great to take this amazing mainstream brands. to take a concept that is really abstract and not mainstream at all yet, like the NFT space, and try to bring it to a wider audience. Right. Everybody knows the brand’s so we kind of call smiles with everybody. It was what we were talking to. And everybody kind of says they’ve used it in the past, just like myself. So, it’s a real, it’s a real, it’s a real thing back in from the 2000s. Right. So, we thought, let’s take the brand. I mean, obviously, we ended up acquiring all the assets, and then started thinking about what’s really the thing that LimeWire was most associated with, and that’s music, right? And NFT’s is something extremely interesting, something that could be really revolutionizing the music, that the music industry, once again, like LimeWire was 20 years ago with Napster and all those peer-to-peer platforms. It kind of brought about a completely new thinking of how we consume media, and how we also think about like, on demand. And we can do that, again, with LimeWire. So, it’s an amazing opportunity to take that brands kind of use all of that nostalgia and that really positive emotion, and bring something that’s so abstract, like the NFT space to people that are currently outside the space, make it a lot easier to get in. And also, especially also support artists doing so. Right.

Yeah, makes a lot of sense. I want to ask you is Mark Gordon still involved in the new takeover?

Paul Zehetmayr: He’s not no. We’re intentionally, obviously communicated through throughout that we’re a completely new team, we’re completely fresh working, as we’ve mentioned, out of Vienna, Berlin and London, opening up in New York pretty soon. But our intention was also to kind of position the brand and our team completely as a completely new company, right? Especially with the music industry. LimeWire had a controversial past. We want to make sure we turn around that image. We use the brand in a way that supports artist as a company that actually launches for the music industry, not against it. And obviously that also entails making sure we’re a completely fresh team without any ties to the old company.

So, you guys posted a Twitter thread? I think it was on the 22nd, kind of explaining why you’re back why you’re doing this division? And can you share with me a little bit about that? For those who didn’t catch the Twitter thread? Can you kind of like, really quick regurgitate that, for example, why is LimeWire back? What do you guys after I know, we talked, you brought it up a little bit, but I want you to go a little bit more in depth.

Paul Zehetmayr: Of course, so, the reason why we’re bringing it back is obviously we’re excited about the brand, we were big fans of LimeWire back in the day, we kind of see the energy around the brand. So, we think it’s just a great opportunity to take, take that concept and make it mainstream. And why we’re going into music in general is because LimeWire was mostly sales associated with music. And we see a huge opportunity for the music industry and artists as a whole, to uniquely use content that is not monetized at the moment. So, if you think about, like an average band producing an album, pretty much, if it takes six months, for example, they produce so much content along the way. And if they have a really good following, and if they have, let’s say loyal fans, they’re extremely excited about the content that gets produced along the way. And that never gets published, right. So, we think NFT’s as a whole are a huge opportunity for artists in the music industry and in other categories, by the way, to use that content, and to start offering it to those people, right, you could think of like an unreleased demo of a song, for example, that might not be perfect. But that might even make it a little more special for fans that are really interested and that are willing to kind of spend money for that right. Spending money for music is something we that’s not really a given anymore. At the moment, 20 years ago, people would go to, to the record stores and buy a limited LP, we kind of want to take that concept and take digital rights and take that into the NFT space. There are some companies doing that already. We just think that, that web three, and especially the NF T space is just too complicated at the moment for the average consumer. And just from our conversations we’ve had with artists in the music space, we want them to be able to offer their special condyles call it like special exclusive content to 100% of their fans, and not only to a subset of like 55%, potentially, that that might have a wallet already. So, most of the people that are actually fans of music, just like the average consumer out there just doesn’t have a crypto wallet yet. They just don’t own cryptocurrencies yet. And they don’t really know the mechanics behind entities. So yeah, so our ideas, really simplify things, kind of take a web 2.5 approach, just, I mean, we’re coming from web 2, right, we’re coming from web two, we’ve built UX, and user experiences and b2b platforms for the last 10 years, you kind of want to combine the best of two worlds make it really easy for people to get in. And then gradually, also bring them towards decentralization and make them understand the concepts of NF T’s and really use the energy behind owning a digital item. Right, which is an amazing thought.

Yeah, makes sense. So, is this gonna be built on Ethereum? No, he said, I think I read somewhere says Alogrand.

Paul Zehetmayr: Yes. For Sure, yeah.

 Why Algorand?

Paul Zehetmayr: Alogrand is actually a really cool blockchain. So, I’m not sure how much you know about the blockchain. But in general, I mean, there’s a few things that really speak to it, for example, their carbon negative, right. So that’s, that’s one thing. That’s, that’s usually important for us, but especially also for the artists that we’re working with. So, they’re looking a lot at the environment and kind of the impact they have on the environment. So that’s a huge thing for us. And for the music industry as a whole. They’re extremely easy and fast and safe and secure. So that’s also the technology will obviously was incredibly important. We want fast minting, we want minting to be really cheap, because we want to take the minting cost over for our customers, we don’t want our customers to deal with, with gas fees, right? I mean, on other platforms, you just have to calculate if it makes sense to buy a specific item, keeping in mind the current level of gas fees, we want to strip all of that away, let people use their credit card. And Algorand allows us to obviously keep the keep the gas fees so low that we can actually cover them. And they’re just really supportive, right? They’re doubling down on the music space. We’re not the only company they’re working within the music space. There’s really an ecosystem that’s building in Algorand at the moment, and where we can have a lot of synergy effects. And they’re trying to kind of be the big player, the big blockchain player in the music space, we’re happy to obviously launch on them. There’s lots of like joint marketing. We do lots of like internal communications and partnerships we do. And we’re extremely excited about that. Just one more thought because you mentioned the Ethereum. Obviously, maximizing compatibility is extremely important for us as well. So not only will people be able to export their NF t’s on the Algorand blockchain, but they’re also going to be able to do it to cross Chain Bridge, the right to polygon and Ethereum so that’s all.

Do you collect NFT’s yourself personally, like music NFT’s?

Paul Zehetmayr: I do, I have not too many music NFTs, but music NFT’s as a whole for sure. Have been interested in the space for long. And it’s a completely crazy space. Right? Yeah, really early and new space. I think there’s lots of questionable stuff happening in this space as well. Lots of really interesting concepts, lots of lots of content where we think that, that they might probably not kind of make the test of time. But we kind of want to focus on quality, right? Yeah, for sure.

Who are like some of your favorite artists in web three, right now, music artists that come to mind.

Paul Zehetmayr: I mean, there’s lots of them. I mean, what I really like, is not specifically music. But what I really found really interesting is how crypto punks made it. Right. The funny thing is, back in 2017, we actually had contact with contact with the company from crypto punks about another thing that we were doing back in the b2b space. And that’s where we first learned about the product, and about the project and really didn’t, didn’t kind of get the concept at first, because that back in 2017, I mean, NFTs were completely new. Right? They were one of the biggest first collections to come out there. So that’s, that was really exciting. And, and obviously, I mean, we’ve also been looking at Royal and opulence and all those companies. I think the royalty, like the royalty sharing scheme is also really interesting. I think it’s tricky, but But it’s certainly an interesting concept to follow. So, I’ve been looking at that a lot. But in general, really excited about this space.

What Traits Go into Valuing Music NFT’s?

Yeah. Can you talk more about what traits go into valuing music NFT’s like what do you look for? What should collectors look for?

Paul Zehetmayr: For sure, I think what’s really important, I mean, obviously, there’s the, like the typical, let’s say, let’s put it like this, the typical jpg NFT, that doesn’t have anything built around it, that doesn’t come with any access or community or utility, we don’t necessarily see the value in those, right. So that’s one thing where we see a lot of value in the space is if an NFT. And that could be like an audio NFT, it could be an image NFT or whatever, if that NFT actually provides some type of utility. It could be access or it could be membership. For example, at LimeWire we’re doing a lot of like physical events, we were hosting events with the artists that we that we sign for them to play at our events. And we want to kind of open up our physical events that we do probably in a monthly or bimonthly fashion. After the launch, we want to open it up first of all to like traders on the platform that are really active and engaged to owners of specific NF T’s, but also to token holders, right. And that’s where we kind of create an ecosystem around maybe even collections that we build ourselves as LimeWire. And we drop with LimeWire as an artist, so to speak. So, we want to make sure that the NFT’s are live on LimeWire, where we’re also pushing our artists for that because it’s really in their interest as well, to create some type of membership, some type of access that comes with their NFT’s. Because then the secondary market gets really interesting as well. One thing we’re doing, for example, is we’re allowing our artists to open up communities inside LimeWire. Obviously, I mean, some NFT artists have been building their communities on Discord. And that might be really fragmented and sometimes tricky. So, we’re trying to allow artists that would, for example, to a one of one of 10,000 collection, to open up a community that’s actually exclusive to those 10,000 owners. And if that community is really interesting that if there’s content, like announcements that get posted ahead of time, if there’s maybe access to a specific drop, that’s only that may be limited to that group of people, if there’s in general like a vibrant community behind that, that scheme, then then that NFT is actually representing a membership to that community. And if you sell that, if you’re an owner, you have access, but if you sell it, you lose access to that membership and access to that community. And if that’s really interesting that people might want to buy them off of you, right. So that also kind of makes for a lot of secondary market energy and can be really interesting long term. So that’s why what we encourage our artists a lot to do is actually to provide something around the NFT is not just only the content.

Got it, I want to talk more about how you think about like price psychology of a music NFT okay, because there is no yet defined way to kind of structure the right price around a song around a beat, around a loop, around any form of element that kind of gets comprised into a song down the line. How do you think about price psychology from music enough to like do artists risk devaluing their collectibles or excuse me, their on chain collectibles by let’s say, like releasing more songs, not releasing enough songs, because I remember back in the era of like the march 2020 era of the NFT gateway area of the digital art era, a lot of, there was a lot of commentary around artists risking devaluing their collections and themselves, the more kind of drops they did, right, is the same like mentality apply to music artists where a lot of the value behind an artist is producing music, it’s releasing music, right? How do you figure out that?

Paul Zehetmayr: I mean, maybe just to put that first in terms of content. We don’t try to be an alternative to streaming right. We don’t want our eyes to kind of just re mint, all of their content that they have living on, on the streaming platforms anyway, on LimeWire, that really doesn’t make sense. So that’s just to put that first. In terms of pricing, it’s really difficult, right? That means it’s really up to the artist, we kind of see that as a, as a very individual thing. When it comes to the artists, for example, we don’t dictate prices, we’ve seen a lot of artists that are, that mentioned that they did drops on other platforms in the past, and they pretty much provided their content and the NFT platform did the rest, right? We think it’s much more important and much more beneficial for all sides to work with them, to let them actually decide how exclusive is this content really right? Is it unpublished? Is it potentially a bonus track or like a completely new song that might only live on LimeWire? And that might not only get pre released, then it could be more expensive, right? If it’s really limited to 1000 people, for example, or even 100 or 10 people? I mean, you could think of like the Wu Tang album that was sold just one time right before that, right? There was a few million, right. So, if it’s really popular artists, and there’s obviously confidence that a person is actually willing to spend that kind of money for on, then there’s a way of making it really high price. But it really depends on a case by case. So, we’ve been talking to our artists, for example, about creating two types of different collections. Because our, one of our goals at LimeWire is not only to be really accessible when it comes to how the platform is used, and how to kind of get on boarded. But also from a price perspective, right. So, from the last few years, many of the NF T’s like on the biggest platforms that they were going like the average price was somewhere, something between 1k and 10k. Right? We think it’s just really hard to, it’s not attainable for most of the people. So, what we’re pushing our artists for is to create, obviously, one of gold collection that might be really expensive, might be an option. And like a really exclusive piece of a music or graphical artwork. But also, like one of ten thousand that’s priced, maybe below $50, maybe even below, maybe below, maybe even lower than that, or maybe at 100 bucks, so much more accessible to many more people. And make that obviously and open that as well, right? Because we want to kind of have both ends of the line. Yeah, but pricing is difficult. It’s really something that that we need to kind of explore over time.

You know, one of my favorites takes on pricing is from Verta, I talked about this on the episode, I think with Cooper Turley and with Verta herself, who was also part of season four. And she came out with this like end of your blog post on her thoughts around the entire space on her experience, kind of selling out her collection and achieving high valuations and deep pocketed collectors around her art. And she basically came to the conclusion that she’s in favor of letting the market decide what her art is worth if she’s unsure. And by doing that, you kind of place like an open bid mechanic on it letting collectors you know, let them fight for it. Right. I think she just did this with her recent piece on on catalogue if I’m not mistaken. And, and I really like that approach. I really like the approach of kind of keeping a free market point of view, and allowing your audience and your collectors to decide what they think is valuable, which from what I understand, she can ultimately decide what she wants to accept and what she doesn’t want to accept. But like, what are your thoughts around like a bid placement, for example, versus setting a fixed price of whether it be $50 or $1,000 $10,000? Etc.

Paul Zehetmayr: For sure. I mean, I think it’s a really interesting concept in general. I mean, we’re also offering auctions, but as I just mentioned that one of one might be an auction, for example, where you have a specific like base price, like a bottom price that you would expect. And then you can also decide if you want to be able to kind of cancel the auction at the end and say, hey, this is this is not real or not reaching a specific threshold that you might set before. But also, I mean, so auctions are incredibly, incredibly cool. And they’re really, they’re really a way of kind of letting the market decide, as you mentioned. So, I think that’s a that’s an integral part of the whole concept. But also, like fixed prices, it really has to go both ways, in my view, just letting the market decide 100% might be not the biggest, not the best strategy. Also, in the long run. I mean, as an artist, you kind of have a specific grasp of how much your, how much your ad might be worth on a monetary basis as well. And you might want to kind of just dictate that on specific items. If it’s really if it’s an item where you as an artist feel just based on your experience of launching art in general in the last few years. You think that’s a fair price. And obviously, if you set the price and it doesn’t get sold, you kind of known for the next time that you might have to go lower, I think combined with an auction and doing specific drops, I think it’s always about the content if it’s really explosive. If it’s really completely original and in the artists view really go through the roof and do an auction, might as well be an auction. But also, there are other items that you can just price logically and I think mistakes will happen for sure in terms of pricing. Again, it’s probably trial and error thing?

What Makes a Music Artists Valuable in Web3 From a Collector’s Point of View

Yeah. You know, I’m a big believer that with the rise of TikTok came a lot of TikTok artists. With the rise of Spotify came a lot of like Spotify artists. And I think with the rise of web three, there’s gonna be a lot of web three-native artists. My next question to you is what determines a valuable music artist in crypto? Like what makes one music artists more valuable than the other from a collector’s point of view? How do you think about that?

Paul Zehetmayr: So, we tried to generate a lot of value for the secondary market tools. And in doing so we have to focus a lot on long term value, right. So, we we’re not big fans of artists that just use their name that might be big, big to do like a short-term thing to grab a lot of cash, and then just take it and go away. We tried to work with our artists, and we have about 10 to 15 that we’re launching within May, we tried to work them and work with them and actually create, let’s say, a small ecosystem around their content, that we think it’s a good artist in the web three space, or probably a good artist as a whole has some type of like exclusivity around their content, right, it has to kind of have something around the NFT’s as it has to be some kind of access, some type of membership, some type of exclusivity in general, that that just also kind of passes the test of time, just beyond the primary sale as well. So obviously, you have the sale from artists to user, that’s most of all the sale that probably goes the best, unless you have a really, really good long-term concept. But if you keep working with the people that buy your NFT’s, and keep offering them value, then the NFT’s will keep their value or even increase, right. So, I think it’s the same with every other concept as well. Either the art is so limited, that is really just the notion of it changing hands, or consuming that specific content, or with the NFT space, which is completely new, obviously, you can build some type of community around it. And that’s I think that’s probably the where we’re good and bad artists will probably be segregated, because long term value isn’t easy to create, kind of need to have like a loyal group of people following you, or you need to build that. And you need to provide incentives and value and interesting content on an ongoing basis for sure. So, I think that’s probably the challenge. And we’re trying to support them as best as we can. Always looking at NFT projects that are that are interesting and popular, right? I mean, look at crypto punks, as I mentioned before, or bored apes, right, they have this really cult following already. And an incredibly vibrant community around them. I think if if artists are in the music space, are able to create even a portion of that excitement around their, their content in the long run that I think they’ve won, or we’re trying to make that happen for them.

I think one of the biggest challenges that artists face is when you try to become a web three native artist, you risk the pressures of trying to think creatively and be innovative in web three. And part of that is understanding token omics mechanism design down models, all these like foundations that are known to crypto, and really embracing that to be one with them. Right and creating experiences around your collectors that empower their pockets. Right? And that allow them to kind of engage with you on a on another level. The best example of this that I come to is with the artist Daniel Allen. Okay, he’s been on mint a couple times. And he’s been messing around on catalog. He’s been messing around with NFT’s. But he’s been very strategic with his drops on how he releases, he’s been very strategic with the overstep Dao that he set up, right. And the different assets that are correlated to the office team Dao and how the Dao accrues revenue and all these different things that end up empowering his asset holders, right, he’s collectors, right? So, I think like a lot of the premise behind web three, maybe not a lot, but a lot of it is kind of empowering the people who end up collecting your work, right? It’s one thing to empower on a community level for one to fall in love with your art, to fall in love with your music. But it’s another thing because a lot of the stigma around crypto is like how can I make 10x really fast? You know, that’s like what a lot of people have been, I guess accustomed to, for the most part. So, I think that’s one of the biggest challenges for artists like, how do I think creatively and innovatively in the context of web three, using primitives to build an audience, to monetize an audience, to own an audience, which sounds like a lot of what LimeWire is trying to empower?

Paul Zehetmayr: Absolutely. And it’s a completely new framework to work in, right? Yeah, we’ve been talking to our artists and just like the average consumer, the average artist isn’t in web three, either at this point, right. So, they have to learn, we have to educate them on that and kind of explore together with them where web three makes sense for them, where they kind of need to think of new strategies to be creative, or new types of assets that can create and also where they need to kind of stay true to their own music, right. So, we’ve also been telling artists a lot and just from our discussions we’ve had in the last months really, we also want our artists to kind of not kind of break their initial concept. But if they have, if there’s a reason for them to be popular or be really successful in the music space, they should try to not change that. Obviously, in web three, right, there’s just a different format for them to be present, a different format for them to distribute content. And maybe, maybe the content comes with specific perks, but in general, they need to stay true to kind of their own concept or vision. And try to fit that in a web three formats and framework. So, it’s a lot of work for people to get into this space. I think it’s really new. So, there’s going to be many, like case studies in the next few years. what works and what didn’t work, potentially. And many are also skeptical of the concept, right? I mean, there’s a lot.

Many, many are skeptical, many.

Paul Zehetmayr: Yeah, for sure. I mean, just from our discussions as well, many people, many people are open to kind of exploring, but many are also just shying away from the notion at the moment, because there’s just a lot of crap going on as well, right. And you don’t, like an artist that’s, that’s popular. And there’s a lot of like, that has built a brand for themselves, that doesn’t want to risk it by potentially making a mistake in web three. And that’s where we come in, right, that’s where we tried to kind of guide them, we’re doing a lot of hand holding and working with them, actually, to make them comfortable with the concept. And also, to do something that might not be that risky, right? That might be, for sure, a web three concept and a web three assets, but also really appealing to their web two fans. And since we’re opening the platform up to web two fans too and making it really easy for people outside the NFT space to get in. I think that’s probably a good first step for most of the artists.

So, what tends to be some of the biggest questions, concerns, misconceptions as you try to handhold a lot of these music artists,

Paul Zehetmayr: I think probably the biggest issue is, is content or how they how they need to think about packaging their content, right? There is a whole lot of content with each of those artists, right? They have huge gigabytes of audio and video and graphics. The question is, how do we package it that it works as an NFT? How do we price it? Which quantities we use, how we kind of market the drop as well? And how we attach value around the NFT? Because obviously, it’s amazing, if it’s an exclusive song that gets unlocked on the platform, if you own the NFT. That’s, that’s great in itself, right. But if you can create value around it, if that even after listening to it, it opens the door to a community itself some type of membership or members club even then that might be even more interesting. So, I think just packaging the content that they have already. And for most of the artists, actually we’re using content that they have, but that there was never published, some of them are creating like exclusive new music as well. Some of them are creating collaborations, but with graphical artists are creating their own illustrations, for example. But it’s really, it’s really content. So, they have content, but they need the package it. So that’s kind of the biggest, biggest challenge. And they’re also obviously always a little concerned about how crypto is going to see it right. If web three natives that might also be their fans, but a subset of their fans for sure. How they take that and kind of how they get excited about it.

Why Experimentation is Key: Understanding the Collector’s Mindset

Yeah, I think that’s one thing that I advise artists as well, like there’s no need to reinvent the wheel. And just you have a catalogue of existing content that you can upload on chain and try to kind of experiment, throw shit at the fan and see what sticks. And from there, you can learn, you can understand the entire process, you can educate yourself along the way. And there is no, like people won’t remember you for your failures, right? They’ll really remember you for when you really struck, and when you really won. And I think part of like entering web three is experimenting and being comfortable with the uncertain and the unknown, and kind of like taking it upon yourself to innovate within the trenches of what’s possible, right, and trying to find new trends, trying to unlock new experiences, things that maybe haven’t otherwise been explored. And it goes back to like thinking innovatively, thinking creatively in the space. You know, one thing I want to talk about with you and really get your point of view on is like why do you think consumers care about collecting your own music? Like what makes you so convinced that this entire media NFT era isn’t just like a fad, or a wave?

Paul Zehetmayr: Well, think it’s, for one, I think collecting items and collecting exclusive formats or assets has always been around, right? It’s not really that that the NFT space has invented collecting, right collecting has been around in the physical space. It’s been around the digital space to some extent. People used to go, are still going obviously to buy limited LPs and limited art and exclusive stuff in general. So, I think the NFT space in the web three space just has kind of brought a different format to it right. So, so the fundamental notion of collecting special items, showing them to your friends, consuming them, maybe trading them and selling them later on, that’s been around forever. And that’s not going to go away. That’s kind of the fundament idea behind the whole space, I think. And web three kind of provides a new way to do it. And, and just the notion of owning something in the digital world. With all, with ownership having become less possible, really due to streaming. And obviously, the Netflix and Spotify of the world. There’s still a huge market for exclusive content. And I think the NFT space has shown that, and it’s just providing unique and progressive ways from a technology perspective. And we need to pursue that. And also try to find out what makes sense, right? I mean, there’s specific areas also in the music NFT space, probably that just will fall away over time, just because it’s such a new space. So, there’s a lot of exploring and trying it out, as you mentioned earlier, but we think like the fundamental notion of collecting music and art that is not accessible to everybody, and not even to people that might be paying like a streaming subscription. That is probably the essence of the idea. And we were completely confident that that’s going to prevail, and kind of be one of those use cases for blockchain that will stand out and will just stand the test of time also.

Yeah. You know, another thing that comes to mind in this entire movement is there’s an argument around owning something for royalties and owning something for the sake of collecting. Right. And I’m curious to hear how you think about the difference between the two, and is one more superior than the other?

Paul Zehetmayr: I think they’re completely different, to be honest, so we intentionally didn’t go into royalties at the moment, obviously, there’s companies doing that. And I think that’s obviously an amazing thing to do. But we also think it’s a really difficult thing to do. Because it essentially, if you’re, if you want to revamp the royalty game, it’s for sure, something that we’re also exploring in the future. But essentially, you’re also competing with labels, right, you’re trying to kind of take over the whole mechanism of royalties. Obviously, making that more transparent is an amazing thing. Taking that on chain is an amazing idea. We think, so for LimeWire, we want it to go into collecting first and really to provide artists with a new and an extra channel of distributing. And in doing so we need to partner with those labels. But we need to partner with the music, music industry in general, with all the stakeholders, because obviously, the music business is a rights business, right? There are so many people that hold some of the rights to a specific piece of music, as we need to get all of them on board, get all of them comfortable with the concept. And then and then offer assets to fans and buyers that are interesting for collecting. So, I think that’s kind of the idea, it’s not about fighting the labels, is not about fighting the streaming services at the moment. For us, it’s about creating a way for artists to be able to use and to use content that is just not published yet. And that might be excusive, and that might be unreleased, and to give them a way to monetize that, really. So that’s the collecting aspect. royalties, I think will be interesting. We’ll keep looking into that. But we just think that it’s a lot more heavy lifting than the collecting part for now. And for us, it’s just a lot easier and better mission as a whole to kind of work with everybody that’s there already not trying to replace any labels at the moment. And create value for artists and for fans. But yeah, it’s two completely different concepts to be sure.

Do Music NFTs Work in Favor of Record Labels?

You know, speaking of record labels, okay. Do music NFT’s work in favor of the RIAA, the record labels that ultimately fought to shut down LimeWire? Or do they work against them? Because now I see in like, record deals, for example, or I’m hearing at least that now they’re putting clauses to claim a percentage of NFT sales, for example, right? Like, how do you how do you think about that?

Paul Zehetmayr: I mean, obviously, that’s the big thing is always right. I mean, for our artists, for example, we’re working with 10 to 15 for our launch, and for the weeks after that, we’re seeing about half of our artists be independent and own all the rights to their music and obviously be completely free in what they do. So, they could do audio NFT’s you could do music, NFT’s and they completely are flexible when it comes to that. The other half is signed to a major label, is signed to some other labor contract that doesn’t allow them per se, to create NFT’s with their music, because anything that touches their music is actually bound with a, bound by that. I think it doesn’t hurt or it doesn’t fight against the labels or also the labels will not fight the notion of NF T’s because first of all, there’s a lot of money in it for them as well, right? And second of all, it’s just another format, right? It’s just music, again, that is distributed in a unique way. And they’re going to want their cut, right? I mean, if there’s a, there’s a level contract that involves music that will involve NF T’s if they contain music. And that’s also the reason why many, many of the artists are actually doing the graphical original illustration works, right, that might not necessarily be music based. But I think they can benefit from it. And I think the artists can benefit from it as well. It’s always about the inner workings and about how they hold their partnership looks like in the back end, but we say as LimeWire we’re giving 90% of the revenue to the artist. Obviously, if the artist has an agreement with the label to give 50% of the label, then we cannot change that right. We can just work with them. Try to obviously, try to give them the best deal possible. But still, they have to obviously figure it out in the backend.

Yeah, yeah. It’s interesting to see how it’s gonna play out, I have a bet that more and more record labels are going to end up launching their own marketplaces to empower their catalog of artists that they signed. And this is just going to be a fight for curation. At the end of the day. The platforms who can curate the best artists, the most amazing experiences will end up winning, in my opinion, because marketplaces already becoming, in my opinion, like somewhat saturated, and the ones that are winning and providing unique experiences for the people that they bring on into the marketplace, both from a collector point of view and from an artist point of view. And, you know, I’m seeing an era of like, music, kind of being reimagined on chain, and you’re seeing people revalue music for what some argue is what it’s really worth, right? Never have we really been able to collect their own something digitally, other than the last few years, right, where this entire thing kind of kicked in. And I’m curious from like, lime wires point of view, like, how do you see this kind of, I guess, evolving in the next few years? Like, what does the music industry look like, from your point of view, assuming NF T’s end up taking their toll? And this new collection format is the new way to one own music and listen to music? How do you think about that?

Paul Zehetmayr: I mean, there’s, there’s obviously different aspects to it. Right? I think I think NF T’s will not completely take over the music space, I think there will be streaming and I think there will be obviously records and everything that is in place right now. I think the NFT format is just going to be one of the essential ways of releasing stuff, right? If I mean, there’s obviously streaming rights, I mean, if you as an artist, decide to release a label, release an album, sorry. And you do that on a streaming platform like Spotify, you might just do that with the finalized and finish tracks, right. But you might use your other demos that might create, maybe trade along the way. And it might be completely clear that you launched those as NF T’s or you use your album that will be released on a streaming platform, maybe six months, in six months, you might do a prerelease as an NFT. Because you could have done that, obviously. Or you could do that in the physical space. And you might do that as well. But in the digital world, doing a prerelease for NFT’s is also really interesting, right? If there’s a really big album many fans are waiting for. And that’s going to be released maybe even next year, you could go ahead and create 1000 copies for that, and actually offer that to your unique super fans that might be really loyal and really interested in that ahead of time. And I think just for like exclusive content and for unreleased content for demos, and really, and really content that is that is different to what’s on the mainstream. Streaming websites, streaming services. I think NFT’s will have a certainly a seat pretty much when it comes to how you release music in general. And I think it’s for art as well. And for streaming in general, that does, there’s companies that are trying to do streaming deals, right. I mean, streaming is people are trying to revolutionize free streaming as well, which is interesting, because if you look at the inner workings of a streaming company, nobody knows how its distributed, right? I mean, if there’s a way to kind of make that all transparent and on chain, that’s a huge thing.

Bringing Back the Golden Era of Internet Interconnectivity

Yeah. You know, in the golden era of LimeWire, the number of users was very concentrated and connected. I remember once everything kind of shut down, that interconnectivity was jaded into many tiny parts, it took a long time to really recreate that with new technology. How could the labels have leveraged that internet interconnectivity? I guess, rather than destroy it?

Paul Zehetmayr: That’s a good question. So back in the day, well, I mean, first of all, they were obviously under attack, right. They were under attack when it comes to licensing and right, so I completely understand that was an issue for them right? In general, what LimeWire did back in the day, opened up music to so many people, right. So, it’s a cool thing and 99% of everybody that’s coming touch with it loved it, right. It’s just the music industry, obviously. And people that hold that were holding the rights, obviously had an issue with it because there couldn’t be like a long-term solution? Well, I mean, it’s hard to say that they could have embraced the project. But I mean, they had to take it in some way to kind of bring an end to it. Obviously, it did kind of bring the foundation for streaming and on demand, right. I mean, that’s kind of the way I think the companies like Napster, LimeWire and bear share and all those peers to peer, they really paved the way for streaming and for on demand, and for how we think about content at the moment. I think they did some good, they did some bad. At the end of the day, it’s it was bound to happen in some way. Right. And we’re just excited to bring it back and kind of be again, at the forefront of a big change in the.

Yeah, I remember the RIAA, I was doing some research, they sought basically $150,000 for every song pirated, that was owned by their labels. And it came to a close of like $75 trillion. And just to give context, like the USA GDP in 2021, was $23 trillion. Right? So, like, the judge laughed that off, and I remember they settled for like 105 mil, or something like that, right? So, it makes me it makes me curious, like, what if crypto, what if web three blockchain technology was around during that time? Could it have looked differently? Right, in terms of what value was created, who was chasing what, and what kind of lawsuits came about because, you know, piracy really impacted the music industry, right. And you touched upon it a little bit more, and like you said, Napster, LimeWire, etc, they were a lot of the reason behind this consumer shift in terms of what they thought they wanted, versus what they were actually getting. And nobody really wanted to buy a $15 CD at Best Buy anymore, right? They just wanted access to an unlimited library of free content that was on demand. Hence, the transition into the streaming services, right? Where we pay like a Sas fee to Spotify, Netflix, and other services, just to kind of take advantage of this unlimited content, on Demand. I guess my question to you is like by collecting media related NF T’s okay, can this new technology play on that consumer mindset of getting access to an unlimited library of free content on demand? And if so, like, how would that work exactly?

Paul Zehetmayr: Well, I think NFT’s in somewhere, they’re about being limited, right? So, that’s, that’s pretty important. exclusive content, kind of, they need to be limited in some way. But they might open up the doors for something else that might be unlimited, right? It might be in unlimited way of, of getting in touch with or actually engaging with people that are kind of in the same mindset, and getting access to some type of community that is providing like value over time, right? And but the assets themselves, and NFTs are kind of based on being exclusive and unlimited, hence also a price per piece, right? Because if you had a subscription that allows you to, to download all the NFT’s itself, it wouldn’t really be anything different to where we have or what we had before web three. So, I think limitations probably important in terms of just the sheer quantity of items that is released. But just around that, and only in NFT can provide you with unlimited opportunity. I think that’s really the important thing and that’s probably going to define a successful drop and an unsuccessful drop. If you if you provide value around it, then it might be successful, if you only provide a JPEG, and that’s upload to the blockchain. And that’s public anyway. And anybody can download it. And you don’t provide anything around it. Anything that that that gives you access to anything else. That’s not going to not going to be interesting in the long run.

So, what are we going to get the whole music NFT to mp3 Download sites, where you can input the contract address and get a file as if you were on YouTube. Joking.

Paul Zehetmayr: But they might be popping up though.

Yeah, exactly. You know, my bet here, Paul, is that in the next five to 10 years, the music industry is going to see a complete shift. I think these collectibles are going to be the foundation for new licensing contracts. And while there’s going to be a limited amount to collect, there’s going to be an entire new consumption layer to enjoy music that’s going to be picked on chain and is going to is going to be leveraging the music collectors NFTS ended up collecting or owning or whatever you want to call it from a legal standpoint. And that value is going to be accrued much differently. The second you have all that stuff on chain, you can think about splits differently. You can think about payment automation differently. You can think about ownership and attribution differently, right? All these things that are otherwise very scattered and broken in the very like web two, I guess, outdated music industry. How do you think about the consumption layer around everybody collecting all these assets? Will we have some type of application that will allow people to connect their wallet, listen to their song’s kind of thing. But not just that but tap into the world of songs that other people have collected? Maybe there’s some way to pay through some governance token streaming royalty somehow behind that, you know, you know what I mean? Like where my head’s going?

Paul Zehetmayr: Sure. I mean, we’re pretty early, right? It’s just the very beginnings of how NF T’s can make sense in this space. I think there’s, there’s a whole different kind of world waiting for us in the music industry. But in the in the art space as a whole, right? I mean, that there’s so you could do with on chain assets. And we’re really just trying to get people in initially now. Right. So, I think there’s a, there’s a huge amount of opportunity. And if you look at, obviously what you mentioned before, it’s, it’s extremely important to just embrace it, right? Because people, when I look into the music industry, there’s like maybe five years ahead, artists are going to consider NFT’s in the format of NFT’s when they first create their content, right, right. Now, obviously, most of them, at least most of the music artists that we’ve been talking to, they have a host of content that they might need to repackage, or maybe they create something new, but in the future, I see, obviously, there will be streaming platforms that will be considered, that will be physical records, potentially. So that will be considered. And obviously, there’s always going to be a niche market for that. And there’s going to be the NFT format that will be considered right and, and people and artists need to be open and progressive about that. And in the whole supply chain, in the whole process where they actually create content, they will have to have and will want to have kind of a big focus on where they and how they can publish content in the NFT space. So, I think we’re pretty early, as I mentioned, and there’s going to be so many things to explore for sure.

How LimeWire Will Tackle IP On-Chain

Yeah. I want to talk to you about copyright. Okay. And more specifically, how do you guys at LimeWire think about copyright on chain because remember, at some point back in the day and LimeWire produced like this content ID that tried to identify songs that breached copyright laws, but all users really had to do was just like adjust the pitch. And they kind of like bypass those walls, right? Well, the same actions occur on chain, of course, it’s human nature to find tricks and ways to kind of go around the system. So that probably won’t change. But how do you think NF T’s might solve that, if they may?

Paul Zehetmayr: Well, I think what’s really important to notice is that so just to fight the whole thing, and just because of the history of LimeWire. We’re replacing and especially strong focus on curation and on content, moderation and on copyrights. Right? So, we want to be able to obviously,

Which prevents, by the way a lot of the issues that LimeWire had when you can kind of gate access.

Paul Zehetmatyr: Absolutely.

Who determines gets to upload who gets to sell, but really who gets to buy?

Paul Zehetmayr: Absolutely. But then again, you cannot, you cannot 100% make sure that that buyer that actually buys an NFT doesn’t reproduce, doesn’t obviously, publish it somewhere else. So, you need to have like takedown policies, you need to make use of a lot of the framework that is in place still right now kind of to be able to take content down, right? So, it’s, it’s nearly impossible to have a completely bulletproof solution there. But we’re just trying to make it as bulletproof as possible, right. So, if you, if you, for example, launched as an artist on LimeWire, we’re actually manually betting all of them right. So, a new artist with a new collection is always manually improved by LimeWire, approved by LimeWire, but I’m where we’re trying to do it really quick. So, we have a whole team of curators actually and moderators, that will be just reviewing content 24/7 to make to also make it really easy for artists to actually get stuff out. Right. But say we want to make sure not no copyright is actually infringed on. Right. So right, that’s usually important, I think it’s going to be an ongoing challenge to do that. And it’s going to be one for pretty much all of the NFT platforms out there. And so, for anybody that publishes content on a platform basis, so as soon as you have people uploading, you need to moderate really closely. But then again, you cannot wait, you cannot let customers wait through artists wait, a week to have their content. So, you kind of have to go both ends, be really quick about it, but still be really, really peculiar and try to obviously hold the rights kind of, to the highest extent and be really careful about it. So, we’re doubling down on that for sure. Yeah, sure.

You know, one thing I think a lot a lot about, especially during this season is like how can web three music platforms address copyright infringement while staying decentralized? Right, is there a happy medium between curating in a very centralized point of view, or even handing down curation to the community, and like a governance format, right. But also making sure that the ethos and principles of what web threes so far built upon the decentralization layer, right, stays intact and remains as a core component of that foundation. I think about that a lot. You know, I don’t know, I don’t know if we can come to some type of way forward where copyright infringement I guess, no longer is a problem. While platforms stay decentralized, if that makes sense, right? I’m not sure we haven’t seen that kind of play out just right, because copyright kind of bleeds into many, many other different in industries beyond music, right, yeah, music is just a small component of it. So, if anybody can solve that problem appropriately. So hit me up. I want to have you on the podcast.

Paul Zehetmayr: Same here.

And number two, I’m curious to learn more.

Paul Zehetmayr: Yeah, for sure. No, it’s an extremely difficult challenge for sure. I’d also like to see obviously a way of consuming content that’s on chain gated through NFT’s right. It’s not too easy to, if you look at a JPEG that lives on the blockchain, everybody can access it. And it’s completely transparent. That’s an amazing thing. But how also, that’s why we also work with unlockable content on the platform, right. But things like IPFS, and those like decentralized file storage solutions are really interesting tool. So, I think there’s going to be so many technologies that will be built in the future, many of them will, will probably not work, but to be honest, it’s an ongoing challenge. And we need to just keep a close eye on what happens in this space. And if there’s a viable concept that just comes out at some point. We’re absolutely embracing it. So, solving the copyrights issue is probably one thing that we’ve been trying, as a whole world for decades, pretty much. So, but I think in general with decentralization, we’re moving into the right way for sure.

What Would Cause the Downfall of Music NFTs?

For sure. I have a couple more questions for you before we kind of wrap off, okay. What do you think would cause the downfall of music NFTs? Like, what is the Achilles heel? I know we talked about we talked about infrastructure, we talked about copyright. But is there something that maybe the majority aren’t thinking about yet, that could be the ultimate Achilles heel of music, NFT’s, of collecting music on chain, and what that’s worth, and that could actually end up being the Achilles heel of the entire industry for the most part, but let’s take it one step at a time?

Paul Zehetmayr: Well, it’s hard to say I don’t see one, to be honest, I think it’s going to depend on interest, and what content is created, right, as long as artists that have a following in the world, and there are fans out there. And as long as quality content is actually produced and offered, I think that will be completely fine. And that will be successful, for sure. consumer interest is obviously key, right? If people don’t care about NFT’s. And if they don’t see the value in them, then that might be a huge issue for the market. We’ve seen otherwise, obviously, in the last couple of years. So, I don’t see, like a complete black swan scenario there. I just see a lot of benefits to where it’s the space could be taken through web three. But you know, we all don’t know. I mean, obviously, there’s regulation happening. So that’s sometimes making it easier, sometimes making it harder. And we also obviously need to adjust all of us. I’m also in the crypto space as a whole, right? I mean, there’s, there’s people claiming that crypto in general will go away at some point, because regulation will be too hard. I think actually, regulation helps a lot in the NFT space, but in the crypto space as a whole. So, I don’t see an Achilles heel to be honest, yeah, I see a lot of opportunity. We need to use it in the right way. And I think the right way will still need to be determined also in the music space. But if we, do it right, then it’s certainly here to say.

Yeah, so final question for you. Okay, and we’ll wrap up after this. So, what do you hope NFT’s web three, Crypto, kind of unlocks for the next generation of music artists and overall creators?

Paul Zehetmayr: I think that, I hope it’s going to provide a lot more flexibility and ownership for them, right. Because just talking to the music industry, in general, we want them to be able to have their own content, to own their content and to be completely flexible about their what they do with it, right. We don’t want our artists to give us like a completely like a like a license to do everything with our content that we want. But we want to be a platform for them to get on boarded, to create amazing content and to dictate themselves how they sell it and how they offer it to their fans. Right. So that’s one big goal is actually giving flexibility and giving control to the artists and they have lost a little bit of their control in the last few years really with streaming and everything and just with the contracts are in. So, we hope, we just hope that the NFT space in general gives flexibility back to the artists, allows them to monetize their content better. Maybe there’s new solution solutions that allow them to kind of to market their content better as well, that uses web three in some way. So, I think probably the big headline is probably giving control and giving ownership also back to the artists.

Outro

Paul, amazing. Thank you for being on, it was really fun capturing the story. For sure. I hope to have you on again soon as LimeWire kind of progresses launches. And you guys go through your first few drops. So best of luck to you before I let you go. Where can we find LimeWire? Where can we find you? Give us the spill.

Paul Zehetmayr: limewire.com, pretty much, that’s pretty easy. Just Google LimeWire and you find you find the way it is for now. We’re actually launching at the end of May. So that time we’ll get the marketplace live. We all will obviously have marketing campaigns around. The artists that will be joining they will be announced in May, mid-May end of May. Cool. So limewire.com for sure.

Amazing, Paul, thank you very much.

Paul Zehetmayr: All right. Thanks a lot, of talk soon. Bye, bye.

Categories
Podcast Transcript

The Collector’s Guide To Music NFTs: Owning vs. Patronage


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 30 welcomes Justin Blau, who’s an American DJ, electronic dance music producer, NFT pioneer and one of the most cited and recognized thought leaders in web3. 

Justin is on a mission to revolutionize the music industry. He’s been on this path for years now, but more recently started Royal.io where musicians sell royalty ownership in their songs and give collectors access to special perks via NFTs.

In this episode, we discuss: 

  • 00:00 – Current State of Music NFTs
  • 13:10 – Fun Fact: Most Audio Files Do Not Live On-Chain
  • 19:07 – Why Do People Care About Owning or Collecting NFT Songs?
  • 31:20 – What Traits Go Into Valuing Ownership-Based Music NFTs?
  • 35:31 – Web2 Data Used to Value a Royal.io Drop
  • 42:16 – What is an LDA: Limited Digital Asset
  • 49:30 – Music NFT Price Psychology
  • 52:23 – Justin’s Thoughts On What Will Eat Web3
  • 59:04 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Let’s dive right in.

Current State of Music NFTs

Feeling good man living the dream. Let’s dive right in. Okay. I think a lot of the crypto community already knows who you are. So, I want to skip that intro question. For the most part, I want to dive right into how do you understand the current state of music NFT’s? How are you thinking about that as where we are today?

Justin Blau: So, I think there’s really two ways to think about music. And the intersection of anything that’s web three related NFT’s, like people use this phrase music NFT’s very loosely, there’s like three types of things to think about. There’s the consumption of music itself, because music is ultimately invisible. It’s not like a PFP, or like a piece of art. It’s invisible. So, there’s the consumption. There’s the ownership. And then there’s the visual representation. And all those things kind of can exist in a web three framework in different ways. But the consumption and the collectability piece are distinct in that people probably don’t consume music, in the same way you consume a visual, when a visual is in your profile picture or in your wallet. And you cast that to a screen, there’s a more tangible experience in the ownership. It’s unlikely, in my humble opinion that people are going to listen to music from their wallets. I believe that they’ll probably use streaming services like audience or like Spotify, to consume music, which is a bit different than the way all other types of NFT exist and manifest today. So yeah, again, there’s like kind of three things to think about. There’s the, you know, ownership, true ownership of the rights in a song. That’s what we do at Royal that we’re excited about. There’s the visual representation, which sometimes can be combined with like the collectability of audio, however, that manifests. And then there’s the consumption. So those are the three layers of thinking about music in web three.

Why are you so excited on the ownership layer? Why did you decide to position royal as the ownership layer for music in crypto.

Justin Blau: So, there’s pretty misdirect narrative surrounding like how meaningful music ownership actually is. Okay, a lot of artists have been disenfranchised from, you know, actually owning a large portion of their music. But when you do own your own music, there are significant monetary rewards slash cash flows that accrue over time. The best example I like to give this is I have this song called Is it Love, which was the first song independently released. At the time, I had a record deal in place for blues was 50% of the song for $15,000. And that was in 2015, the song came out, I decided not to do that label deal for $15,000 for 50% of the song. And that song has since generated over $750,000 significant, it’s actually not even on my most popular chart on Spotify. I think people just like don’t understand the flow of income in music. And I’m actually publishing a blog post on like, where money comes from and who takes what and why artists are left with so little. But in most cases, when artists do own their own music, they’re actually our real capitalist. No, in some cases, they might feel insignificant. But there’s a reason why private equity and like, and hedge funds are plowing money into catalog and previous catalog. It’s because they’re that you know, music as an asset class is interesting. It’s not quite the narrative that’s portrayed in the public were like, musicians don’t make money. That might be the case for some independent artists. But frankly, people might hate me for saying this. But like, not everybody is going to have the most popular music. It’s just impossible. I don’t, right? But I’m still able, like, there are lots of artists out there. I think there’s an artist named suicide boys that aren’t central label, they own all their own music, and I’m pretty sure they generate like a million a month from streams, all independently. There’s a lot of stories like that, right?

So, at Royal, like the narrative that like you don’t make money from streams, and there’s all these comparisons about like collectible music, NF T’s and how they they’re valued differently from how streaming is valued. I think it’s kind of a weird comparison to make. Because when you collect a collectible music NFT which I’ve actually never done in my career, I’ve actually never, I’ve never issued just a music NFT by itself. I’ve never just tokenized a song. When you just tokenize a song, I’m not really sure what it does. I’m not sure why it’s interesting. To me, owning a piece of the copyright is infinitely more interesting. And board apes did this first, you know, for visual art. And I think that’s why they’ve succeeded. Why I participated in the initialment of apes, and why we’re so excited about them. I think, you know, on the one hand, you have this, on the collectible music side, you have another channel, another challenge, which is the clearances. So, an independent artist can release collectible music. And people might speculate on that value. There’s no enforceability to the scarcity, the same way there is on the on the true ownership side, right? Like, with true ownership, you can only sell 100% of something. So, there’s inherent scarcity. Whereas with music, because the consumption layer and the collectible layer are kind of analogous to each other, and the consumption happens multiple times, there’s no real way to protect against like the scarcity problem. And a lot of music musicians have actually made NFT’s with the same song in the collectible world. So, I find it quite interesting that like the scarcity isn’t as inherent or obvious, because music inherently is consumed as an invisible thing. So that’s another like kind of interesting fact, on the collectible side.

 But on the clear inside. Music collectibles can scale to independent artists who control their own work. Once there’s another rights holder, you need to get their clearance, if you’re using the audio, what we do at Royal is none of our tokens actually point to the audio files at all. So, when you buy an asset on row, you’re buying ownership in the song from an IP standpoint, and you get visual art that represents that ownership, so that you have something show your friends, like social signaling, emotional value, we still find is extremely important. So that’s what we do at Royal. And part of the reason why we do that is because I went through a lot of stuff on the IP side after I did my auction, stuff that a lot of other collectible music platforms aren’t even really thinking about, because there’s no precedent for it. Right? And so a lot of the experience that I had informed the architectural, Royal, the acid architecture, and we’re excited because it’s working, you know, we’re excited, because with nods, you know, we had 200,000 people show up, you know, 60%, of which had never used a wallet before, to actually participate. And we think that that’s like really key to onboarding the mainstream. Especially because the mainstream doesn’t really understand collectible music when, you know, I say to someone, hey, you can own, you know, a song on like, an NFT, that points to a song on IPFS. But you can also listen to that song on Spotify and audience, it’s not quite the same as an image becoming more popular as more people see it. And there’s one owner, you know, the same kind of value proposition of regular NFT’s. It’s, it’s different. It’s different, because again, it’s invisible. So, you know, my general thesis is, in the long term, people will be interested in owning rights. And that’s mainly because regardless of what the economics you, you think about today for a big artist, or a small artist, if you bet on a Billy Eilish song, before it explodes. There’s real income there. It’s really interesting, let alone the appreciation of the, you know, the asset value itself. So yeah, so there’s a lot of unpacking to do there. I can talk about that for hours and hours. I’m trying to give a quick, brief as possible.

Sure, no, so I I’ve been collecting music NFT’s for the last few months, I haven’t gotten the chance, the drops have sold out too fast on Royal for me to be able to snag one. But I’ve been collecting other music, NFTs across Zora, across sound, etc. And I think a lot of the narrative behind why people collect these collectibles, whether there are additions, whether they are one of ones is because there’s never been really the opportunity to value music for what it’s worth as art, right? Just like you were to value a piece of art within itself. And you’d go to the museum and you want to place a bid or some type of gallery, there hasn’t been a real way to value the art for the art within itself, the song within itself, right? How do you think about that, because that tends to be a lot of the commentary, a lot of the rationality in co collecting.

Justin Blau: I actually think it’s the combination of both, it’s the most powerful. So, when you buy a token, and well, you were buying ownership in the song, that is in a way, you know that ownership is to me more meaningful as it applies to buying the song as art. Because it’s a different medium. I actually don’t, at Royal we do want to enable people to buy music as art, but the participation piece is instrumental. And that’s just the structure of the music business, by the way like this is this is very much informed by like how IP flows in music is very different than visual arts. And so, the idea that like buying music for like for the fact that it is art is still an amazing idea. The problem you run into again, is clearances. And that doesn’t scale. Right. So, it works for independent artists who have had a hard time earning streams. And so collectible music is interesting insofar as it’s basically like a donation to the artist in a way. It’s like patronage and proving that you found that artist first, which is like a both value propositions that we capture at Royal just without the audio file, which the audio file itself is what makes collectible audio impossible to scale. The second you have one other writer on a song, um, who hasn’t given you explicit permission to issue that audio. And I’m like living proof of this. And you know, there’s a lot of contexts that I have on this. So, for independent artists, collectible audio is extremely interesting. Like, but ultimately, you’re just trading, you know, the way that secondary flows. It’s like a user shows patronage for that collectible audio and then they just trade their patronage. They don’t, but they don’t have any right. They don’t actually own anything I think from now here is wrong. Like when you own a music NFT that is all you do. You just own it. It’s like owning a CD on the blockchain, which is cool, but not at the price points that it’s happening for. Right.

So, in my mind, what we do at Royal is really special because it’s the combination of both, you actually get the upside of all the IP that exists in web two, like an IP law, unfortunately, will persist to exist in web two for a while. It’s not as simple as people snap their fingers and put all this DRM on chain. Most independent artists probably would benefit from a publishing administrator, even though it’s a legacy actor, they collect on your behalf when anyone else uses your music in web two, in the web two worlds. If you have a publishing administrator, and you issue an NFT with the song, you need to get clearance from your own admin like, these are like problems that I don’t think anybody’s really thinking about, that I’ve run into personally. And it just doesn’t scale. So, I do think collectible audio is interesting. It’s again, trading patronage being first. But there’s no inherent scarcity. It’s invisible, the consumption layer is the same as a streaming service. And I’m not really sure what you’re buying. So, because no one’s been able to tell me, you know, the only thing people say is you’re buying music as art, and you haven’t been able to do that before. I don’t know how much I buy that in the sense that music is definitely art. But if you really think about buying it as art, why should that matter? Is it synthetic? Right? Is that idea synthetic? And I think for me, at least personally, the answer is yes. However, when you think about one of ones that are collectible for songs, that resonates a little bit more to me, because there’s only one of them. And like, that’s super interesting, in that it’s like the ultimate form of patronage, right, as opposed to 1000 people. And that kind of patronage. It’s literally just a donation to the artist. There’s nothing, there’s no ownership, really, but I can, I can kind of go through this for a while. I guess my question to you is, you know, what do you feel like when you said, you have a collection of music NFT’s? Do you spend time listening to that collection over and over again? Or when you’re in the car like in the car are you listening to your collection of music? Or are you using another streaming service?

Great question. I can’t listen to my music NFT’s. The consumption layer for music collectibles doesn’t exist yet. There’s no way for me to really connect my wallet to something for it to populate my music NF T’s, for me to download them offline to enjoy them. If I’m on the plane, for example, doesn’t exist yet. Right? Now to say whether it’s gonna exist. If someone’s working on it probably.

Justin Blau: Does not matter. Doesn’t need does it even need to exist? I think is.

So, if artists end up doing web three native releases and drops where they only submit their material on, on chain, right, and they ignore the entire web two element.

Justin Blau: How on chain?

Fun Fact: Most Audio Files Do Not Live On-chain

Maybe I’m thinking about it wrong. How does it work from the infrastructure level?

Justin Blau: This is the myth. This is a myth. I invested in Arpeggi Labs because the actual samples are on-chain, and I think that’s really cool. You’re gonna have to just points to IPFS or with an audio file hosted up, Like, who? It’s just like anything else? The NFT is just a certificate. It’s like, and by the way, you know, I did this for a really long time, right? I did audio visual collectibles. And now I’m actually assigning ownership to all those previous collectors, true ownership. And that was kind of always my vision from day one. You know, I’m happy to be very real about my opinion here. I don’t think I’ve been too public about this. But, you know, I’ve individually done over $25 million dollars of volume for collectible music, audio, that’s more than the entire market of collectibles. As it is today, like by miles. And I think that that’s not the way, why? because I again, think like collectibles are a great way for independent artists to monetize. And I think that’s super powerful. And I would never want to take that away from anybody. If there are buyers for that. Great. I don’t think the mainstream will care. Because ultimately the consumption layer will always be a streaming service. Even if its audience or a web two streaming service at Royal you capture both, audiences doesn’t have monetization enabled today. I’m an original audience advisor, when they do enable monetization, your rights as a token holder still extends to a web three consumption service. So, people were like, why are you doing this thing with streaming rights if it’s dependent on the web two world? No, you actually get to participate in any income that happens in the web three world to, in fact, an artist could theoretically assign a royal token ownership and like future collectible editions of itself. And, like there’s infinite kind of ways you can frame it. But owning rights is the core value prop of royal and I only came to after a year and a half of experience dealing with the IP side of things that I will be very, you know, forthcoming about no one else has dealt with the way I have, um, it’s intense. And we’re going to, I’m going to tell some of those stories in this blog post.

But even if I own the complete master of something, if somebody wrote a couple of words, and they own 7% of the publishing, you need to clear that before you upload an exploit that audio. And that just doesn’t scale. That means every artist that releases collectible audio needs to either have an agreement in place, which in some cases, like a new agreement in place for a new song, with a split. But this whole myth of splits is also kind of weird, like, you can create splits on chain that that’s not enforceable anywhere else. Outside of the originating minting contract in terms of, what happens? Like, right, this whole split thing is kind of mythical as well. And that, you know, let’s say you only release a song in web three, and you have this split contract. But then somebody else goes and exploits your song and uses it on YouTube. You don’t capture that. And anybody can do that. So, it’s actually almost dangerous, I think. Because web two still exist, we can ignore it. Yes, you can create a web three native artist, like Snoop had this, you know, did this NFT with his mix? Like if you own one, you could do every one with it. I mean, he like that. I don’t know what that means. So, I go buy one and upload it to Spotify, do a remix of it, and like monetize it. I mean, if I did that, right? Yeah. Like, that’s kind of crazy. Like, I could do that. But I don’t know if I could do that. So, it’s unclear, right? I think what we do at Royal it’s really interesting is we make we make it as clear as possible. And today, we only support streaming specific royalties. For new artists, I’ve done full master ownership with my previous works. And then in the future, like artists will be able to sell whatever they want, whatever, whatever ownership they maintain in song for writer, who might not even own, it might not even be a featured artist on the song, they can sell their writer share if they want. It’s the flexibility and scalability that we really care about. The second you intersect, the second the audio comes into play. It’s your point of failure.

So, you asked me earlier, why do I collect music NFT’s like, what’s the point if there’s no ownership attached to it, okay. Again, for me, I look at it whether or not the audio file lives on chain or are we were IPFS, the collectible still sits in my wallet, right? If I go to Open see, and I can play that song through open see.

Justin Blau: Proof of ownership.

Proof of patronage Sure. But the way I kind of think about it, and correct me if my mental model is wrong, I lived through the era of one seeing your drop in clubhouse, being able to get one of those like participation and NFT for not making it a top 33. Right, I got one of those, I saw people’s drop, I saw that era of nifty gateway, I saw the era of supe rare, I saw a lot of these Instagram and corporate artists that otherwise weren’t making jack shit off their craft, later transition that talent to crypto to NFT’s. And then a few months later ended up in Christie’s, ended up in some of these, etc. That’s a lot of meat, like capturing those data points and trying to see will that history kind of apply to the music artists, right? So from a creator’s point of view, if I have the ability to support that artist, right, and give them patronage, based on the price point that I can afford, amazing because it’s a win, win. And if that artist ends up continue innovating in web three, they open the Dao, they issue a governance token, they tie all that value back to their collectors somehow, that’s something that I believe might happen, right? And I’ll take that bet. That’s a point one Eth if it’s a one Eth bet, right. That’s how I kind of see it. So maybe it’s not so much on like the IP ownership, more so on the patronage side of things, but I think there’s, I think at some point, there’s value in both, but I’m really curious, like.

Justin Blau: I wonder how the audiences, that’s, that’s my that’s my ultimate kind of question.

Why Do People Care About Owning or Collecting NFT Songs?

Because that’s my question to you to like, do consumers, do retail investors care about owning a song one or collecting an NFT? Like a music NFT? Like, is that embedded in like the nature of a human, right?

Justin Blau: Yes. And here’s, here’s an example I can give you. There’s kind of two ways to think about this, right? This proof of patronage model doesn’t need the audio file to exist, or the or the tokenized audio to matter. So, what I mean by that is like if an artist issued a bunch of tokens that were like proof of patronage, and that proved you were the first person to listen to that artist, and it didn’t include the audio. You remove all the friction points on the IP regulatory side and it does the same thing because you’re not again, you don’t listen to your collectibles. Really, right, you collect them to support the artist.

Correct.

Justin Blau: But the failure point is the audio. So, if somebody just wanted to create badges of, you know, badges of patronage, I actually think that’s kind of interesting in and of itself. And again, my mental model around this is all like, based on failure points, not based on like, the thesis, right, which is like buying music is art is probably interesting. It’s just that you can’t really scale that. The next question is, how much do people care, which is what you were asking? Right? I was just in Austin. Our offices are the real offices are in Austin. And I was looking at a new apartment and the realtor probably 43-year-old guy asked me, you know, what are you doing in Austin? I’m, like, started this company called Royal. Said, what’d you do? I said, Royals enables anyone to invest in music and music. And he said, oh, so like, does that mean I could own like a piece of Free Bird? Like immediately? I didn’t say no, or NF T’s like know that. Like, you can own a piece your favorite music? He’s like, alright, I understand that. Yeah, like, I own a piece of free bird. And by Leonard Skinner, I’m like, yes. He’s like, you know, he asked, Is it like a music? You know? Is it a music market? Right, like, like me stock market. And we’re like, not really, but ultimately, it resonated immediately, with this guy, that he could have an emotional like real and emotional ownership and something that’s meaningful to him without having to use the word NFT or collectible, right? And honestly, like, that’s it. Right? Like, if we want to onboard the next like, opens see still has just above a million users like, that’s, that’s unbelievable. And I’m an open see investment. I’m a huge supporter. And I think that they’re building incredible things. But if we want to onboard the masses to this technology, you have to use framing that makes sense to them. And when you own something, the word own literally means etymologically having control authority over an ownership without suffix ship, as the word as the framing of legal tender to the meaning. We think legal tender is pretty important for music ownership.

 Board apes did this with I mean, the most successful project of all, gave you real ownership in the IP. Think that says something. I think that says a lot. In fact, that’s probably why I minted apes in the first place when they originally minted. Because Ben, my friend Ben Milstein was like dude, you’ve been talking about this IP thing. And this is the first visual project that gives you rights VIP, that’s really powerful. I was a crypto punk Maxi, and then like, then they fucking bought lava lamps. I mean, like it, like my thesis from back then it’s all playing out. I wrote about it. It’s documented, not to like not to pull egotistic I was right. Like, it was I mean, I think, like, I just truly believe that the speculative activity around a lot of this air is interesting and fine. And I even engaged in it for a while, but then abandoned it, because I felt that something more real needed to be built. Because to let, like most people like, you understand the idea of tradable patronage, manifesting support for an artist early in their career, the idea that like someone else might want to pay a higher price, to, you know, support that artist. Buying music as art is a very, very, very interesting thesis. But music is a different kind of art. You can’t manifest something that doesn’t, behaviorally doesn’t already exist. So, one thing that my co-founder and I talk a lot about is no, my favorite band in the world is Radiohead, and Radiohead created a one of one physical platinum vinyl of In Rainbows. I would bid like crazy to fucking win that thing. Okay, but if they made like 100 of them, I’d probably pay for it. Yeah, I pay for it like physical. I’m talking about like physical platinum. They made 1000 of them. I wouldn’t care. You know, um, I think it’s, it’s just kind of a behavioral thing, where, and that’s like something physical that I can hang up on my wall, right?

How is a regular consumer going to distinguish between listening to a song on Spotify and owning a music NFT, I mean, there’s literally no difference. The difference with the visual is like, with a PFP. Specifically, you’re the only one with that fucking image, at least, for apes. And for some of these. With the art prints, like yeah, there might be 100 but I could put it up on my wall. And I can say I own that when someone’s in my house, which I do. I have a lot of visual. I have a lot of visual art NFT way more than PFP NFTs. I actually love the visual art NFT because I can do something with it. With music. I can play you my audio NFT. I could go on one of these websites and play it for you over my Sonos when you’re in my house. And I say I own this but you don’t you own an NF T of it. It’s like when you’re walking down the street. Here’s the best example. And I’ll leave it at this. I was walking down the street with our, with our marketing director, and close friend of mine, Kevin in Austin, our office. And my song is a loved one I brought up earlier came on, on like, we were passing this bar. And Kevin was like, you know, I love Royal. I’m like, why? He’s like, what I bragged to you about having the CD of this in the 90s. If we had the same experience in the 90s, when I brag to you about like having the CD of this song, no, that behaviorally never would have happened. But today, I can brag to you and say I actually own a piece of this song. That’s a way more meaningful social experience. And I would like in collectible audio to owning the CD of something. I don’t think it’s any different behaviorally, with art, right? It’s a different medium. Music is invisible. Art is tangible. So, I think all these different mediums when you think about like, what’s going to be tokenized, and what isn’t and how it’s going to be tokenized, you can’t apply the same scarcity model to every type of media just doesn’t work. And so, for me, at least, enforceable scarcity, with real ownership gets me excited.

Now the people like think about the royalty layer, and like how much you actually gonna make? The answer is we don’t know. Like, if a song works, it works. Some doesn’t. It doesn’t. We think making everyone, giving everyone the ability to be their own record label is incredibly powerful. And that’s not to say that I think record label DaoS are a whole other equation. And that gets very, very interesting. And, you know, there’s a lot of really interesting things, I think that will happen there. But for us at Royal, we just want to make it really easy for somebody to understand you like this Tiktoker and her music. She’s huge. And for 25 bucks, you can own the song. And if she grows in popularity, significantly, those royalties might be significant. They might not but the actual underlying value of the asset. There’s something intrinsic there, we price all of our assets with a model that considers all the actual value from the Royalty world, because that’s the only place the value is manifesting. And I think synthetic value is kind of dangerous. There are only like 5000 people doing this right now.

So small.

Justin Blau: And Royal has almost a million users or people that are waiting to buy things. Not all of them are crypto native. So that should that should say something I think, right? I think that should say something in that like people understand what it means to own versus collect. And there is a difference. And at least with an ape, I own it. Now with my punk that I love forever. I own it. I really do. Do whatever the fuck I want with it. Right? That’s awesome. You own music NFT there, you can’t do shit with that thing.

But like right now, you said you’re going to transfer rights or you’re going to do some type of IP mixture to kind of provide some type of royalty to your previous NFT music collectors. Is that what you said? Oh, yeah, something like that. Okay. So, talk more about that, because can’t technically an artist who just issued collectibles, do a variation of that and apply that IP? Or am I thinking about this wrong?

Justin Blau: Of course, they could. Okay. Of course, they could they need the tools to do that. Okay.

And is that a limiting factor right now? I guess that requires a lot of money. It’s something that you went through, right. And I am a very dumbed down point of view. Because.

Justin Blau: literally, this is a great, that’s an amazing question. Yes, you can assign anything to previous things that you’ve minted. I think that’s cool. I think people should do that. In fact, at Royal we’re building, I can’t speak too much about this. But you’re gonna be able to plug into anything you’ve ever minted, and do stuff on Royal, whether you’ve minted an asset with royal or not, as an artist. We’re building some really, really cool tools for artists that we think, you know, tools that I would want as an artist, right? I kind of I’m building royal in the vision of the future that I see as a musician, and all the tools that I want. But just as you said, you know, I released a bunch of NF T’s last March, unreleased music, we finally released them on Spotify. And I literally give away 100% of the ownership to the holders. And they’re gonna have like now that songs and songs are out there generating income, not significant, but they are generating income and those holders will get paid. They own it, they actually all own the song together. I don’t even own it anymore.

Do the participation trophies get anything? The one that participated in the iconic draw?

Justin Blau: Actually, we did. My little brother included that on the whitelist for his project, which was really cool. These things are on chain. And there’s now proof that you did that back then. And I can do whatever. Like it should be every artists intention to reward those who supported you early. That’s the one thing about patronage that I do think, like proving that patronage is very valuable. But to get this stuff to the masses, I think it’s just a different equation. Now, you own you said you own that participation in NFT. Like, there’s not much I can say here, but I can say like, obviously, obviously, at some point in time, I’m going to want to reward everybody who’s ever supported me. And those participation, NFTs are quite meaningful, and will probably have really cool utility in the future that I’m planning. But again, you know, a lot of the stuff that I wanted to do a year ago, is finally almost ready today, you know, take a year, took a year, building a team at Royal like, basically building all the tools that I wanted as an artist to execute on. Again, I should say, I’ve been a little bit aggressive in this conversation about collectible audio, I actually think that for independent artists, it’s really powerful. And it helps them monetize it helps them survive. And I think there’s, it’s all positive, it just doesn’t scale, which is not the business I want to be in. But I want to be in the business of changing the world. I don’t want to be in a business of a niche business of, you know, donation, like patronage on chain for small artists. super interesting. But if you, but everything we do at Royal captures that end, there’s economic upside, right, like ending on Billy Eilish before she becomes Billy Eilish. That’s a fucking real serious investment. Yes. That’s awesome. Right. So yeah.

What Traits Go Into Valuing Ownership-Based Music NFTs?

That’s a lot of the conversations. I don’t know if you remember, but about a year and a half ago on Blockchain & Booze, it was you and Cooper, we were talking about music, NFT’s right? It’s actually the most watched episode of Blockchain & Booze. And it was funny enough. Yeah. And we, we talked about basically like, what if you could invest in an artist and provably invest, right and support an artist prior to them becoming huge, and ride that success with them? Right? It’s a lot of the mental model that I kind of use to understand from that point on how these things are going to change the world. From my point of view, right? I want to I want to talk to you about also like the value frameworks, like what traits go into valuing an ownership-based music NFT?

Justin Blau: Right now, we just have the web two world, okay, unfortunately, plus, there’s like an emotional premium that we’re gonna, as we collect more data points, we’re gonna find out like, we’re gonna, like pricing is we’re in this like, crazy price discovery mode for like, how does the, like, we still think, well, we’re selling music as art, it’s just not the song. And the reason why we exclude the song is because we never we don’t believe NFT’s will be the consumption layer music ever. So, we protect ourselves from IP, specific things, we enable scale, you’re still buying ownership in the song, which is art, and you have visual art to represent that ownership. But the pricing is right now. Modeled after, you know, web two based income Not gonna lie. What’s cool about it is in secondary, it’s trading way above that. That’s the emotional value difference. But I’d love to let the market price that Sure. Why not let the market price the difference. That’s what I’ve always done with my token sales. When I did that auction for ultraviolet, they could have ended up with 50k. So, like, there was no pricing, the market decided that the market was crazy. I still to this day, think it’s not. But you bet all those people will, you know, some of them have already, you know, gotten amazing utility. Two of those collectors came backstage with me at EDC this past year, that was part of their perks. They had like the best time ever, you know, like there’s real value there. But, again, letting the market value the emotional difference between reality of ownership and web three ownership, I think is really important.

Can we reminisce for a minute on that drop? That was the most iconic drop ever. I remember that was in the prime of the clubhouse era. And it was a bridge between the website that you had which was like a first of its kind type of minting site, backed by Origin protocol. And then clubhouse. I’ve just like, this emotion, this energy of like switching between my phone tabs from clubhouse to my Chrome, my Google Chrome tab and seeing how everything was fucking escalating in real time. You coming on clubhouse crying, your parents coming on screaming, your grandparents. Like, it was like a whole friggin, it was insane. It was absolutely insane. It was that point where I was like, shit, like, what is going on here? Like.

Justin Blau: It was the first time you know? You know, people ask me all the time, like how? Why? You know, it’s just a combination of inputs, the design of the auction? Yeah, it being on my own website, not having a partner. Like that was so risky. I was like, I was scared shitless, I was like, what if this ship doesn’t sell? It’s like, it has to be people that come for me. Like there’s no platform, emails, there’s, you know, it’s all meat. Right? And like, there’s no other way to cut it. And you know, the reason why I did well is I think it’s because the history, you know, me trying a lot of this stuff five years ago with Poe apps at a crypto Music Festival, right, like that’s how this all manifested but that was a really emotional moment. And it kind of set my brain into this crazy I mean; it’s still running from then it’s been a year and it doesn’t stop. It’s like how do you? How do you scale what happened that day to everybody? There’s, there’s got to be a way to do that. Like, it shouldn’t just be me who gets to do this? Every artist should get to do this. Yeah, that’s really the inspiration behind royal is like, what will the math? What will the mainstream be interested in? Not what, what are crypto people interested in? I think there’s like, there’s a big discrepancy. And you know, we do have to onboard the next many users.

Web2 Data Used to Value a Royal.io Drop

Yeah. You know, back to the point of how do you like value and ownership-based music and NFT, you talked about, like the web two data? Can you go more in depth as to what is, what is web two data? Is it like, aggregating all streaming plays? What kind of metrics do you look at?

Justin Blau: Into streams, their sinks, there’s Piros there’s so right now we’re only supporting streaming ownership, but like seven months of is full ownership, okay. You know, people on, in the kind of music NFT to me on music and Twitter often compare, like the valuation of a song as an NFT, to the streams that it would take to generate that much money. It’s such an unfair comparison, because you’re talking about charitable donations versus capitalism, like, just not the same. I’m willing to bet you that not every fan, like, there are still very few people that are willing to buy this stuff at Mass like I couldn’t, I might have sold, you know, I might have streamed my music over a billion times. Which is true across platforms, I may have sold over half a million tickets in my life. But getting those people to just like collect a song for $200, for 100 200, whatever it is $300 That’s hard. It’s like a hard sell. To them. It’s hard to sell people merch, right? Most of us don’t even really make that much money in merch, only the top guys do. So, you know, thinking of this, treating it as it is an investment with real, intrinsic value is powerful. But you asked, I feel like I got away from the question, which was?

Like the question the value, the value frameworks, right? So, you talked about like the streaming data, right? And looking at that, for example, right?

Justin Blau: And then multiplying the cash flows and annual basis.

Got it? Got it.

Justi Blau: And then we let and then we let the secondary market price, the emotional value in.

Make sense.

Justin Blau: What’s on, right? That we’re doing. It’s priced based off based off of a model that takes into account all of his other streaming performances. And the street, the streaming performance of his other music, the trajectory of this song. And, like, there’s payouts for this, these levels of ownership, and the more ownership you buy, like the diamond token has a little bit better. Like, you know, as you can tell, like price, dollar per ownership is different. You go up in the tiers, and then the benefits also change. Right, and you get more benefits being a you know, right, I’m in holding.

The Patronage, so this patronage utility. And like you said, there’s also the ownership IP era, it’s earlier utility.

Justin Blau: Exactly. It’s both, it’s both and that’s so important, we think we think both matters. One over the other is difficult, is difficult to see. But we’ve got some crazy data, where, you know, we did this artist, ollie, and after his drop, the actual string counts escalated, because incentives are now aligned. When you own a beat, when you own a music NFT as a collectible, you’re going to tell your friends about that artist, but there’s nothing they can do to to accrue value to the artist that you bought into. Right, like you own this music NFT, they might go like, listen to that, that musician more on Spotify or on audience, wherever they do, it doesn’t really add value to your music NFT unless someone else wants to buy it. Whereas with royal, you’re an owner, you tell your friends about a song that actually adds value to everybody, instantly, the second you do it. So, the alignment of incentives is something we think is really powerful with real ownership. That doesn’t really exist with collectible ownership. The same like, again, this is different for visual art than it is for music. Visual Art, you tell somebody about your favorite artist, and they might want to go buy the next NFT from them, whether that’s people or thank you x or fuck render, the music, the second the song is done. The second you own the song like yeah, maybe that person will buy like the next song from that artist. But it doesn’t influence the performance of the one that you actually bought, which I think is ultimately and that performance actually kind of matters, right for an artist popularity. So, it’s a weird mind maze when you start thinking about this stuff. But again, behaviorally, there’s history that historical precedent for prints, being valuable to humans, prints, physical prints. My JD owns, my co-founder owns a dolly, I think a dolly print. That’s one of 100. There’s like historical precedent for that kind of value. multitude of physical art, there’s historical precedent for uniqueness in one of one art. And in many ways, PFPs are one of one in so far as you have your own unique visual as part of a collective of 10,000. So, there’s like historical precedent for these behaviors. In the physical art world. There’s no historical precedent for buying music as art.

So, we can imagine what that world might look like. But if you’re dependent on the IP of the legacy world, it’s hard to, and like, again, I feel like I’m repeating myself a lot here, but I did it. And it didn’t work. It didn’t work in so far as you know, I, you know, had to deal with the IP consequences of that auction. And I did, and then it’s all good now. But were a lot of people that were like, how do we even value this? Like, what percentage of the sale should be attributed to me as a writer of this song? And like, there was no, there was no precedent for that. So, you know, some people might negotiate that upfront for collectibles. But again, there’s no historical manifestation of that behavior, with ownership and music there is so like our thesis at Royal is, if you make something that rich people already do accessible to everyone, that’s probably a good model for a startup. That’s like our thesis that JD and I share, like music ownership is limited to record labels and to private equity firms. We open that up to everyone. The fact that we do it with NFT’s is irrelevant. That’s part of it. That should never be the center, right? Of a value proposition. You have to kind of lean into existing behavior. Uber did this, Airbnb did this. Uber is like, calling a cab is fucking annoying. And there’s lots of cars and people that are probably willing to drive you around everywhere. You just have to get over the fact that there’s a stranger that’s going to drive you that in that place. And if you do, this is way more efficient. Right? Yeah. But like the behavior already existed. Buying music is art, is just something I can’t really wrap my head around, on a core level, but on a patronage level. I can. Okay, that’s where I think things really do work. And so, you know, it’ll be interesting to see how everything manifests over time. But at Royal, our goal is to capture all of it, right? Like, all of it without any of the risks. And Max scalability.

What is an LDA: Limited Digital Asset

Makes sense? Can we talk about the limited digital asset that’s unique to Royal? What is an LDA? The LDA, remember, is something that was very revolutionary and iconic to Royals brand leading up to the launch. And now with every single drop, you make all the legal paperwork, like very transparent, you let us know what you’re getting into, which is amazing. But for those who don’t understand the legality, what is an LDA? How do you make sense of it? How can the everyday user kind of understand it, just take it away.

Justin Blau: So, an LDA is, you know, technically they’re NFT’s, we just think that it’s more approachable because NFT’s to most regular people carry all this emotional baggage of like, environmental things. And this and that, we just say, you know, with a limited, with this limited digital asset, you as a real user own a piece of this song, you own music, you actually do. And then we publish the legal agreement that assigns you whatever rights are associated with the contract, minting address, and the token IDs, and so on and so forth. And then the artist is obligated to, you know, assign and upkeep those rights that you own in song, and Royal just the platform to enable it. It’s like, think about eBay, or, you know, even Amazon third party sellers. You know, these are platforms where buyers and sellers come together. That’s what we want royalty be for artists and fans, shared ownership, a platform for shared ownership. So LDA is are essentially just like our, like, I don’t want to call it proprietary. It’s just like the way that we think about these assets, because they are assets versus tokens, which like most people don’t really understand tokens, they start thinking social token, Dao token, and NFT like, these are real assets with real rights attached to them, that also have additional, you know, token gated benefits or you know, LDA gated benefits, right. And that benefits portal that we’re building will be ready soon. And that will also enable, you know, we’re, I can’t speak too much about that. But we’re just excited to kind of, like, unlock all the value propositions that people have been preaching in the media. So LDA is are really just writing a song plus visual art that represents those rights. And it’s really.

Got it, so actually how did it come to the formation of an LDA? Like, what’s the story behind forming this thing? Because from what I understand, there wasn’t some type of legal vehicle that supported a lot of the thesis and the energy that you wanted to bring to Royal right. So can you talk more about like the origin story of forming the LDA because I feel like a lot of what people know royal for, beyond patronage beyond the ownership is that ability to cannot bypass but find a way to actually do it, at least the right way, right to do these ownership things the right way. So, talk to me more about the formation of the LDA What were you I guess, trying to achieve with it that you couldn’t achieve with other legal formats? and kind of around that. Yeah. So, you realize I’m even having a hard time quite asking. Yeah, I don’t understand what the hell it is from, from a very like technical point of view, right?

Justin Blau: It’s just, it’s really just a data point. I think it’s quite simple. It’s like, I do agreements with vocalists, and all these other people on songs. And I have an accounting firm that calculates royalties and sends them out to these people. And if I died tomorrow, God forbid, all these people would still get paid because of the way copyright law works. And that’s probably important. The idea is like, an LDA is really simple. It makes you a collaborator. In the song, even though you didn’t contribute anything creatively to it, it actually makes you an owner, a collaborator with your favorite artists in a song. We think that’s like, so incredibly powerful. And the legal framework surrounding that is the song has already existed. You as an artist, can sell whatever ownership you maintain in that song, as you would in the real world, right? So, people sell catalog or the Bob Dylan, you hear Bob Dylan sold his catalog for $300 million? Like, who are the buyers of that? Well, hedge funds, private equity, right. And I think Bruce Springsteen did it recently, right, so all these activities are happening in the real world, and we’re just extending them to the public. And then the reason why we built the stuff on chain is because it’s actually like way more efficient to send micro payments on an LTO. Or, you know, when people might make you know, $10 a month or $15 a month, or maybe they don’t make anything, we just wanted the infrastructure to exist, so that that was possible, for, you know, so that the gas claim wasn’t as much as the payout, right. And, you know, sometimes like, just as with venture capital, or seed investing, like not every song someone buys is going to explode. But it still has emotional value to you. I think that’s what’s so powerful is like, combining both real ownership and emotional value and patronage is to me like, it captures all potential venues for success as we bring this stuff to the to the mainstream. So, you know, a lot of this activity.

Again, I love like web two behavioral models, because you just project them skeuomorphic on web three, and things start to get make sense. Like, patronage already happens. In Web two, buying merch, it’s really like the number of physical merch is probably the number one method of like true patronage. You extend that into web three, and it’s interesting, there just hasn’t been that much demand for it yet. And I’m not sure when or if or how that will happen, for merch for digital merch. But there’s already demand for rights ownership. It’s just inaccessible to the public. We use web three to make it accessible to public. That’s kind of the mental model that I went through with royal to kind of establish the LDA framework, but an LDA is, you know, we call it a limited digital asset, because that’s exactly what it is. We don’t like using the word NFT. Because we think it confuses the public, it does. When I talk about royal people ask what is Royal? I say it enables you to own your favorite music. I don’t say you can own an NF T of your favorite song. I mean, there’s just as huge difference when you say that somebody. And yeah, that’s kind of the origins of LDAs. But I mean, there’s a lot, there’s a lot to unpack there. But I’m also going to publish this blog question that goes really deep. And it’s easier to write than to say, I feel like I repeat myself a lot. So, I apologize for all of you watching this episode, if I repeated myself too much.

No, no, it’s all good. I think the more context, the better. Does the LDA change for every single drop? Is it tailored per artist?

Justin Blau: There’s so much coming in that department that I can’t talk about yet. But they’re all currently from the same thing contract, for a lot of reasons. But mainly, for a new user to not have to set approvals every time they want to sell something based on how we’re building it. Because when we, when you don’t have a wallet, and you buy an LDA with a credit card, we generate a wallet for you. It’s like really, really cool back-end technology that abstracts the blockchain completely, which we think is important. But we want the flexibility of being able to withdraw and control yourself. It’s very much inspired by nifty gateway. And, and for me at least, there’s a really healthy balance between open sea and nifty though like at Royal we’re really exploring heavily.

Music NFT Price Psychology

I want to talk to you about price psychology, okay, and how artists and creators should be thinking about basically, how does one actually go by determining the price of a song? Remember Verta released a blog post saying that she lets basically an open bid structure to kind of determine let the market decide what they want to collect a song for by song for. How do you know whether to buy something for $1 $50 for $1,000? And I guess it’s different in the ownership context, right? Because it’s completely different.

Justin Blau: market pricing is always a good model. The problem is there just isn’t enough liquidity or data there, too. There’s like no price discovery mechanism for collectibles. And my auction is proof of that I openly say that the market did price that. So that is the emotional value, like whether we like it or not the market set that emotional, right? I’m saying Verta is right, in that, she and I are very close friends, it doesn’t surprise me that we agree. I also think that with ownership, there is more of a rigid framework for evaluation. The beauty is what’s happening in between capturing the emotional value unlock that the web two world hasn’t yet. And at Royal we want to enable that, but not force it down people’s throats in that there is a limited number of people that are going to spend money on a, you know, collectible piece of music today. They’re their native crypto users, it’s a small audience. With a larger audience, how’s that price discovery gonna change, it’s gonna either go in one direction or the other, but it’s going to be way, way, way, way, way more powerful. And we’ve seen that with all types of tokens, not just NFT’s Right? Like, all like Eth went down to $88 two three years ago, yeah. Look at how powerful it is today. Right? Like, there’s the markets are inherently speculative when they first start. So, for collectibles, it will always be speculative. And to be honest, like that’s most of the behavior. At Royal, we’re excited to, like, while we know that some of the secondary is going to be speculative, we want to let that happen naturally and build in true ownership. So, you know, the prices that we post are relative to a pricing model that considers income related to the song we as it should be, then there’s you know, the artist has a choice in what they want to price things. And there will be a day that we don’t sell out a drop on royal, if there’s an artist will price things too highly. And while we will advise artists, we will never tell them what to do. It’s ultimately a platform for artists. So, there is going to be a day that somebody prices something too high and it doesn’t sell out. And that’s actually great. It sets an example for other artists; I think what’s happening in collectible land is the supply is just so limited. And at the same time, there’s only like 10 or 12,000 people that even are buying these collectibles. There’s not enough data to price anything. It’s just not enough volume and market. So, a real we’re excited explore what that looks like in the millions of users. And the only way to do that is by abstracting crypto.

Justin’s Thoughts On What Will Eat Web3

So, I have one final question for you. I know we’re running out of time here. Okay. And it’s a question that I tend to ask specific. So, I’d love to hear your take on it. Okay, I’m a big fan of the evolution of the Internet. Web one was very much like read only and got taken over by web two. Web two is very much reading right and allowed us to kind of contribute content interact with others on the web. And now we’re transitioning into what we believe or what we coined to be web three, the read or write in ownership era of the of the internet, right, powered by decentralized networks, where we can basically provably own something that’s digital. What do you think will essentially eat web three?

Justin Blau: Hmm. So, I mean, I made a joking tweet about this the other day. Um, you know, the only thing I can conceptualize today is when everybody’s walking around with a chip in their brain that just does things for them. But that was actually like, I was like, what does web four look like? It’s literally think it like the internet is Read Write own, web four is, I think, think do where you just like automate the human mind. I think that’s probably like a I mean, it’s like in like AI type stuff. I think AI automation is probably web four to an extent, but like, how it plugs into the other types of webs? I don’t know, right? I think like, a world that I see is really interesting is I see something in the real world and I can buy it by thinking it. Like, that’s really fucking powerful. I think that’s web four? I know that sounds great. But like, I actually do think that’s, that’s next because you think about like on time horizon, right? A lot of these like changes happen over about a 10-year period, from web one to web two to web three, you think about like 2032 think own think do? Like, it’s the think that I think is going to get automated next, you remove friction of thought to action with technology. That might be like too intense of an answer, but I actually think that’s what.

Will think about it for a minute. Okay, so Bitcoin came in the late kind of or not early 2000s. Right. What was it 2009 or so right around the time where Instagram and a lot of these social networks started popping off and coming out. And a lot of what it aims to solve is to create decentralized networks otherwise owned centrally right, and we’re overpowered and whatnot. A lot of why Vitalik, I guess the premise of why Vitalik kind of created Ethereum two, right is because of the whole entire issue of, or at least that’s like the meme the issue around World of Warcraft, right? And him getting kicked off the game and saying, like, he’s not able to sell his merch, or whatever the hell the narrative was. And I like to think about it of like, from the form of, what’s the, what happens when we’re extreme on ownership, right? Like, what happens on that site? Maybe what happens when we’re too extreme on decentralization? Like, well, what’s the middle ground? Is that a right way to think about it?

Justin Blau: Um, maybe, I mean, in the most extreme form of decentralization, where like, governance is super decentralized, and decision making happens in decentralized way. That’s all still part of web three, right? So, like, when I think about the difference between eras, like web one, like if you really think about it, web one and web two, did two things. Like combined at the same time, to an extent, communication information and content is web one and web two. None of that was value capture, value happen the same way you still pay for E commerce thing with a credit card. It unlocked new markets, but it didn’t change the fundamental way that humans value, like, ascribe and accrue value, web three changes value through ownership. It changes the way we think about valuing anything, really, because you can now value digital things that only exist in the digital space, which I think is like incredibly interesting. And then you like insert Metaverse in certain, you know, quest, meta quest devices, etc, right. But like the next iteration of that isn’t going to be about ownership, like web three is going to cover ownership in some way, shape, or form over time. The next iteration is like, okay, well, like, all of a sudden, after 70,000 years of human existence, everyone has the same information. information asymmetry was like the biggest problem in human history before the internet. Now you eliminate that that’s insane, then communication, right, like being able to email someone. Right? Fuck, that’s crazy. Right? Then content, you can just like, consume parts of other people’s lives at any moment in time. Wow, that’s crazy, right? But all these things serve to connect. And it’s all information. Right? So, information becomes omnipresent for humans. Web three, ownership becomes available to anyone. And frictionless value transfer, right? Was the proposition of Bitcoin, right? Even before NF T’s reef, you could just send value wherever you want in the world without getting permission from anyone whenever you want it to, that was super powerful, fucking powerful. Now we’re extending on the Bitcoin thesis over time. The Final Frontier is, is automation, at least in my mind, and I think automation. It’s just again, like information value automation, like steps. But I don’t really know like, like, the extreme form of decentralization. I don’t know what that looks like. But it’s still what free right now. So, I think like web four I’m like, what’s so crazy, that’s next. And it’s literally like, friction, real-life, real-life friction with AI. And I mean, I think that’s why a lot of likes, the billionaires in the world are exploring it, right. It’s like, I think that is the next frontier.

AI and space, are just gonna be a bunch of robots that are gonna be traveling to space. And I guess just to correct myself really quick, the whole the whole comments around Bitcoin because being born because of the social networks, it’s not a direct correlation more so centralized network, right? The aim to make things decentralized.

Justin Blau: Yeah. Yeah. Yeah, I was kind of separating like the, the disruptions that happened as different technologies emerge. So, like, one web information, communication content, web three decentralization value, you know, Bitcoin, still considering that as a web three tool. Right. But yeah, neither are necessarily connected. I think. That’s the beauty.

Outro

Yeah, Justin. Amazing. I have so many other questions lined up for you, but I know we’re short on time. We’ll have to do this again soon. Before I let you go. Where can we find you? Where can we find Royal? Shout out to Diplo in the upcoming drop on Tuesday. This will come out on Tuesday. So where can we find, where can we learn more?

Justin Blau: Twitter @3lau@join_ royal. Same on Instagram. Easy, really simple. We’re excited if you decide to join our crazy little idea. Great little community of people. And we’ve got a lot a lot of awesome artists coming. So.

Amazing. Thank you so much. We’ll do this again soon.

Justin Blau: Awesome. Thanks, man.

Categories
Podcast Transcript

The Creator’s Tax Guide to Crypto, NFTs, and DAOs


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 28 welcomes Dan Hannum, COO of ZenLedger, who’s on a mission to provide crypto traders and tax professionals with the most user-friendly tax and accounting software for cryptocurrency investments, trading, and fund operations.

This episode outlines what crypto-native creators should look out for during tax season. From issuing tokens, selling and buying your first NFT, to even forming a DAO, here’s a comprehensive discussion on web3 taxation and tips to consider.

Promo: For a limited time, get 20% off ZenLedger when using MINT20 at checkout.

In this episode, we discuss: 

  • 00:00 – Intro
  • 11:49 – NFT Tax
  • 19:22 – DAO Formation and Fungible Tokens
  • 22:15 – Tax Tips for Creators
  • 26:38 – Crypto-native business models
  • 30:32 – Government Backed Stable Coins
  • 32:57 – Ethics Around a Human Stock Market
  • 35:32 – ZenLedger and High-End Luxury NFT Drops
  • 39:08 – Deciphering between a personal transaction and a business transaction
  • 41:45 – Bonus Questions
  • 43:57 – Crypto Tax Loopholes
  • 55:05 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Intro

Dan, welcome to mint, my friend. How are you doing? Thank you for being on.

Dan Hannum: I’m doing well. Thanks for having me on.

Dude, I’m excited to have you on. I don’t jack shit about taxes, hence why you’re here today. So thank you for reaching out. And I’m excited to learn more about Zen ledger, number one. Number two, it is tax season. And what a better person to talk to you then yourself. So let’s just dive right in. Who are you? What does the world need to know about you? But more specifically, how did you get your start in crypto?

Dan Hannum: Sure, sure. So my background already in traditional finance, I went to the University of South Carolina for my undergrad and my MBA and then went up to New York and started working at Goldman Sachs and Morgan Stanley, so more of a traditional finance background. And then most recently was at TD Ameritrade. This was leading up to about late 2014, early 2015. And had kind of got the crypto bug full time around that same period. I’ve been investing personally in crypto since 2012. And then in 2015, was forced enough to make crypto kind of a full time career. So I left TD Ameritrade and moved out to San Francisco and sort of working at blockchain capital, one of the probably earliest and largest funds, and was leading their early stage equity team as an analyst to just analyzing early stage companies and working with the team on evaluating you know, which protocols, which projects would make sense from investment perspective. And that was kind of my first foray into working crypto full time, and was fortunate enough, about a year and a half later, late 2016, early 2017, to be an advisor for an ICO project called Gear, which is a green energy and renewables token and the other advisers on a project for Larry King like the Larry King, Stan Bharti, who runs a company called forests in Manhattan to the multibillion dollar merchant bank in Canada. And then Jim Rogers, he’s one of the, who’s lead, one of the most successful funds in Wall Street, was fortunate enough to get them involved in the project, like most items back in that timeframe, the token value went up pretty quickly. And so they all invested a million, 2 million, 3 million bucks, you know, in six, eight weeks, walked out with 5, 10, 15 million. And we’re really excited about crypto and wanted to get more involvement and had no way to do so. And so kind of parlayed that into Hannum Capital Management, which is a $25 million venture fund we raised in 2016. And then our second fund in 2017, through personal funds of myself, and then our three LPs.

And long story short, that led us to making a ton of real estate investments in core infrastructure plays. And cylinder was one of those investments that we were really excited about. I was using Excel documents, and Google notes and handwritten notes and block explorers and trying to like tie things together. And it was just one a hassle and probably not accurate. And so I thought there would, you know, wouldn’t need to be really successful and really easy to use an accurate tax software for this ecosystem and asset class to evolve. And that was kind of the origin story of Zen ledger. And so we’ve made the investment in Zen Ledger in 2017. And then in 2019, one of the co founders, a guy named Drew Nordstrom, and if that last name sounds familiar, this family owns Nordstroms. His, his uncle had just gotten sick. And he wanted to take some time to really work with their family, all of a sudden making sure that, you know, their generational wealth went from one generation to the next. And I was always looking for, you know, the next entrepreneurial thing and something to really build as much as I loved investing and in meeting with, you know, really great founders, there’s kind of a missing piece of, of my day to day of really building something. And so I ended up joining the team as a CEO in 2019.

Damn, what a journey. That’s like, that’s like the most intricate I think intro, but also really impressive intro that I’ve heard from someone on the podcast in a while. So you’ve been in dip for a while now.

Dan Hannum: Yeah, I mean, full time about 10 years professionally, about seven Coming up on eight.

So, working Trad fi moving to Vc, then falling in love with the ICO era, going and work in advise projects, to then raising your own fund, to then deploying that capital. And one of the projects was in Ledger, CO left, you came in and now you’re the COO of Zen ledger, right. So how did how did it go from making an investment to becoming like a full time executive building the project? I assume you are?

Dan Hannum: Yeah, yeah. So the investment was really kind of core to our thesis at ham capital. And I was investing in really great teams, building really great infrastructure for this asset class to evolve. And so we saw accounting and taxes kind of the non sexy but really boring in crucial infrastructure that we would need not only from a retail perspective, but enterprising governments as an asset class, I think, when I first started in 2015, we’re like, you know, 80 to $100 million asset class, which is like, you know, it’s crazy to think that we’re now like two and a half trillion probably go to 25 trillion 250 trillion, right. And so we saw the value in the time and as it kind of highlighted, you know, we were trying to figure out our own taxes. I’ve always tried to be on the compliance side and was forced enough to be able to be early in crypto think when I started out blockchain capitals before eth IpCO. So, like, eth wasn’t even my first ICO. And so was forcing us to make, you know, a considerable amount of money and wanted to make sure that my assets outside of crypto weren’t gonna get affected as I continue to make more money in crypto. 

And so yeah, I was just looking around and there, there’s probably like two companies on the market that both were kind of buffed up Excel docs, right. They weren’t really product, there wasn’t really a software, they had no customer support, they had very, you know, small, if any integrations, they’re people that were like, kind of trying to be entrepreneurs, but weren’t really. And so I saw that there is an opportunity to really build a very successful product in this space. But at the time, I mean, I was fresh into fun, too, and wasn’t, you know, looking at building anything, I would say I’m going to invest in this project grade team. So we kind of have like a checklist that we look at when we make investments. And they were kind of hitting all the runs, CEO, you know, had led most businesses at Amazon, Chicago, Booth, NBA, navy, helicopter pilot, CTO, Brian was leading Microsoft development teams for 25 years on Internet Explorer at Microsoft hardening. And then his last three exits were a total of four and a half billion. So a guy who sold companies for a lot of you know, a lot of capital and has led team on the way. And so anyway, as long as you’re kind of checklist of things that we look for, for me invest, and then when the position came open,  I was like, alright, well, I already know the team, I know the product and the metrics know what this thing can be. And so my job was to make it from point A to point B.

Got it? Got it. So wow, that’s pretty cool. But from what I understand, you never really dealt with the tax side of things like this is a very tax specific venture. Right? It requires, it honestly requires a certain individual to go into this niche, I could never do it. Honestly, I could never do it. But you came from a Trad fi world, from the VC world to running your own fund to now managing a software product that’s niche for the tax space. So I don’t know I commend you. That’s all I’m saying. I commend you like that’s like, that’s one of the most unsexy things to do. But the most important things to do one of the most important hats to wear in crypto, at least.

Dan Hannum: Yeah, I mean, I sit in a unique position of being able to deploy capital full time as an investor and business. And then there’s not that many people in crypto that get to do both. And so I’m very fortunate and lucky. And the nice part about design ledger is we’re not just a specific protocol or platform that focuses on one aspect, we support over 500 different exchanges over 1200 different tokens, over 60 Different blockchains, over 50 different protocols, NFTs and have DAO related products. So as much as like the core accounting and taxing like all it’s pretty boring, like one plus one equals two, right? It’s like, you get live and breathe crypto from A to Z. Everyday all day. Like we’re building the next new protocols. We’re looking at L one, L two, we’re looking at bridges, we’re looking at everything right. And so the nice part about the job is it’s kind of high level seems boring. But the day to day like we have to build for everything that happens because if you don’t support this one token or this one blockchain, your taxes aren’t accurate. And if your taxes aren’t accurate, doesn’t matter, right? No one wants a 98% complete report, they need 100% on parties, we have to build across the ecosystem.

I feel like you have so many people. So the way I understand and ledger, you connect your wallet, and then you’re able to basically populate a dashboard of  your transactions, what you spent, and then what you owe kind of thing, right? How much you’ve made, etc. Right? That’s how it works. Okay, so I feel like you guys collect such intricate data. Or you actually are able to siphon such interesting data to see what users are doing on chain in a more like discrete kind of concrete, more visual way, for the most part that many other people might not have. For example, if you see like 95% of your customers using, I don’t know some type of protocol or some type of, I don’t know, product that hasn’t really surfaced to market. For example, you could basically leverage that on the fun side, for example, right and tap into that data. Have you found yourself doing intricate plays like that? Does it work like that? Or am I misunderstanding it?

Dan Hannum: Yeah, no, I mean, the  cool part about the ingestion engine that we built is that because of that wide net of support that we have, you can really get an understanding of what’s going on. So imagine like Nansen, but on steroids with real customer data. Yeah, you can see everything that’s going on. We can see what you’re doing, where you’re doing it, what you’re sending, how much you bought it for what you’re selling it for, and as you add 10s of thousands, 100,000 millions of custom that datasets get very large. And so, the fun part is that we can really be one of the few people in crypto that has a very aggregated view of what you’re doing. And so what I mean by that is, if you look at a coin base for a, you know, open scene, right, they only have a sliver of what happened on their exchange or their and so I only see 10 of your 100 trades, or, you know, 10 of your 100 transactions. And because we aggregate every single source that you’ve ever used from your first transaction through your last, and it’s all cleaned up, the accounting and tax IP is like the first step in our journey into a, you know, a different type of company. And so the accounting taps is like a very clear use case. And so once you get that solidified, it’s very easy to layer on portfolio tracking, it’s very easy to layer on, you know, alpha generate event. So partnering with like a coin Gecko or masari, or Delphi, and adding an alpha, adding and trade execution, adding in real time tax analysis. So before you make that trade, what impact can that have. And so the core accounting and tax IP is like phase one of like a 10 phase journey that we’ll continue to layer on. And so that data becomes really important not only on the retail side, but we work with tons of enterprise clients and their data sets. So like Budweiser, NFT dropper, Ralph Lauren’s NFT drop, and then we’re able to use that data sets to build very, very sophisticated AI and ML plot like, you know, integrations within our platform. So you can see and pair up non taxable, so transfers, we can see here up that this asset was bonded, we can pair up that this is two assets going into a liquidity pool and one coming out, and then that one asset going back into another liquidity pool, and then that placeholder token going into an NFT. And so all that takes a lot of analytical frameworks to be able to view and accurately see what’s happening on chain and merge that with your off chain activity.

NFT Tax

So let’s dive into the sexy part the tax questions. Okay, it’s tax season. And part of why I wanted to do this conversation is because I don’t feel like there’s enough people focusing on having or having tax conversation specifically for the Creator side of things, even though a lot of these conversations can be applied to much bigger, I guess problems that’s beyond the niche set of creators, or user sets, excuse me. So what do I need to be asking? Like, what’s going on right now, I know, Biden just came out with an executive order to I don’t know, if you have thoughts on that. Specifically, if you do, I’d love to hear your point of view, we can touch upon that. I’d also love to touch upon, like, what’s happening in the world of NFT tax, for example, I know there was a lot of confusion on that on crypto Twitter for a long time, and people having different conversations, assuming different things. So I really want to give the microphone to you. We can start a bit with Biden’s executive order if you have thoughts on that, and jump more into like more of the traditional tax questions that people tend to approach you with. And then we can kind of go from there.

Dan Hannum: Yeah, yeah, did an interview with New York Times and for yesterday on the guidance, executive order and kind of the ramifications for crypto. And I think one big item specific to crypto tax that many people in industry have been asking about is real time and like real updated guidance on NFTS, on defi, on DAO related issues. And so right now we have to take this conservative approach to kind of fungible taxes, and look how that’s applied to non fungible items. And so there’s not really clear guidance that if I use Ave and I receive a eth in return is at a taxable event, is that not conservatively, you’d likely see that it’s taxable going from, you know, eth to a eth, would likely be a taxable event if you’re getting two different forms of property. And then there’s an aggressive side, right. So a lot of the confusion is not necessarily around how it’s tracked, but how it’s actually treated. And so this ambiguity and gray area creates a lot of frustration or confusion. And so we think this executive order will not only lead to stronger guidance from the IRS, but also from STC also from Fincen, also from other agencies, that will give us guardrails to build on us and move forward. And so I’m definitely kind of excited about it. Because I think most entrepreneurs that we’ve met with, most partners that we partner with, most consumers that we speak with, they just want to understand, you know, the  guardrails of what they’re doing, and then allow them to go in and out of it. Right? People are always gonna break the rules. But if you don’t give them the rules, it’s hard to go after them and say you broke, right. So you guys an industry getting better guidance all around on what’s the security, what’s not, what is this? What’s not, what is that? What’s not? is going to be a better boom for us moving forward. And it’s going to allow these net new individuals that are kind of sitting on the sidelines saying, Hey, I don’t want to get into crypto because I’m not sure if that’s going to impact my 401k or my IRA or my, like my, you know, my saving fund for my children.

And so, yeah, we think like from a macro level, I think the clarity will be super important. I think there’s a lot of things to really get ironed out. Right. And so we’ve seen some really good attempts and making logical things that aren’t very logical. What I mean by that in relation to taxes, we’ve had this kind of reporting regime since 2017 of these centralized exchanges, providing 1099 Ks, 1099 miscellaneous forms, 1099 Bs and then the IRS seeing that you are reporting different numbers. And because you’re using a software that aggregates all your activity, you can have a complete record of your numbers versus queries, that’s just going to report Hey, five Bitcoin came in, you know, five Bitcoin came out, and they may not have the basis because you bought on I haven’t yet, or he bought it on Gemini then moved into ledger, then into Coinbase. And so they’re missing a lot of this, the crucial details provide a really great reporting. And I think that’s going to lead to a lot of audits and a lot of people that are, you know, inversely, you know, affected by that. So, I guess my silver lining on that is, I think directionally, we’re heading in a good place. And it’s just like us and you know, firms like coin center and things like that, that can, that are now getting a seat at the table that we can actually talk to these regulators and guide them on, you know, what makes sense and what actually would work in this industry.

Got it? What are some of the biggest questions people come to you with? Let’s start from an NFT point of view. I just bought this board eight, I sold this board eight, I reboughted it at lower price. I’m just giving out scenarios because again, I know very, very little about this stuff, but what are what are the biggest questions that people come to you with? Or the the most common misconceptions that people have around crypto tax or NFT tax? That you tend to be like, Okay, this is what you do. This is how it works XYZ.

Dan Hannum: Sure, yeah. So I think to start off, it’d be really highlight like the three main buckets of tax. Okay, and so for most individuals, there’s a Fiat on ramp along the way. And so going from dollars into crypto has no taxable event to it, I can take one dollars, ten dollars, a million dollars and put it into Bitcoin eth, whatever I want. And there’s no taxable event for that. The second bucket, which is the largest bucket is crypto to crypto, and that’s going for Bitcoin and eth into uni, uni to soul, whatever, you know, your token of choice. And that’s really where most of the defined NFT related things come from. Then the third bucket is going from crypto back into dollars. And I think for most people, logically, that makes sense. Okay, so my crypto I got X amount more dollars or less dollars, I’ve I gained or loss. And so that second bucket crypto to crypto is really where things get a little bit complicated, and where you need to be aware of. And so what I mean by that is typically with a lot of these NFT platforms, you know, open seas, super rare wearable, nifty gateway, whatever your platform of choice, most of the time, the assets that you’re looking at, are going to have only markets with crypto involved. And so you’ll have like slower dapper, where you can buy NBA top shots with like your credit card. And so if you do that, you’re just, you know, you’re logging in your cost basis of the asset, I spent 10,000 on a LeBron James highlight. And now this assets worth 10 grand if I sell it for 12. Okay, bought it for 10 Sold it for 12, super easy.

The crypto to crypto becomes a little bit more challenging. And so what I mean by that is when you’re buying your board eight in your example, how are you buying it? Are you using eth? Are you using a stable coin? Most people are typically using eth for eth based NF T’s. And so when you look at that eth, when did you buy the eth? How long have you had the eth, what was the cost basis of that eth. And so when you are trading your eth, for the NFT itself, that’s a taxable event. And so you need to be able to record, I bought eth for X amount, I’m selling it for x amount, then your NFT has a cost basis. And then when you go from your entity to another NFT, or NFT, back into eth, those things are going to have taxable events to it and you’re going to need to be able to record these stats. That’s where a software can come into play. instead of you trying to track down how much was my eth worth when I originally bought it? How much is it worth when I sold it? What gas fees went into this? You know, what is the value of this NFT. We automate a lot of that for you. And so those are probably the biggest items is just looking at crypto to crypto bucket. When you look at misconceptions. I think the one that we get all the time is anything that happens in my wallet is not track able. And that’s like the farthest thing from the truth right? Anyone that’s looked at ether scan, BSD scans, snow trace, like your blockchain of choice, entering your address into a block Explorer, you can literally see, this came in, that one out, that was a fee. This is the token or contract address you interacted with. And so all these things are public and traceable. As we’re you know, most of these things, obviously, there’s a few blockchains but those are gonna have NFTs on them anyways. So that’s probably the biggest misconception is, whatever I do my meta mask, my rainbow wallet, whatever my wallet of choice is, the IRS can’t track and they’ll never find me. And so that’s really incorrect. And  probably the biggest one of the yet.

DAO Formation and Fungible Tokens

What about for groups that form DAOs and then basically issue fungible tokens that get distributed and that incur costs and expenses. And they don’t maybe form it legally, because they treat it in a very efficient order. We just, we could just start this thing, issue a token distributed to everyone, we’ll all put in some capital, and we’re all Anon online. Right? How does how does that work? How does that scenario come into play? Because I feel like that happens a lot in crypto. I don’t know if everybody’s an anon for the most part, but let’s assume okay.

Dan Hannum: Yeah. I mean, whether you are or you’re not, there’s a few different factors to, you know, be aware of as you’re going through a DAO right. And if you’re a creator of DAO. And this is something that we work with all the time, whether it’s through, you know, through friends with benefits, or C club or you know, bank lists, or any DAOs that we’ve already worked with. Typically, you’re going to want to create an entity behind this organization. And so as much as we want to think it’s all on chain, we, you know, we run it through discord, we’ve run it through a snapshot, and that’s it, you’re likely going to have some type of meat space entity that you need to wrap the liability of this organization in. And that could be an S corp, a C Corp, an LLC, and there’s various other forms of organizations or entities that you can create. And so when you look at DAO taxes, you have kind of the entity level. And so the actual entity, what is it? How is it being used as an investment DAO like the DAO or, like, see cloud ventures or whatever? Or is it a collector DAO And so how the DAO is used is going to have an impact on how the accounting attacks are that DAO needs to handle. And so we can sit down with a DAO and help them through entity formation, help them through accounting and tax. And then from a member level, you’ll have other forms of implications, right. So if I’m a DAO member, and I am contributing, whatever is valuable in this organization, whether it’s deal flow for an investment, DAO or whether it’s, you know, curation for a collector DAO, I’m likely going to get paid in this DAOs native token, which is an income at the time of receipt. So I may get paid in club and USDC. And so I need to be able to track that. And then I’m likely going to be using that proceeds to either trade or buy or sell or stake or provide yield on. And so that needs to be tracked. So from a DAO perspective, you have kind of like the DAO entity and the accounting and tax that goes into that, or the DAO is going to take K ones and each member going to take a k one.

What’s a K1?

Dan Hannum: So a k one is a form that gets issued to organizations that have mutual partners. And so LLC is typically may have a k one, but typically your S corp or C Corp will have K ones. And so if you own an entity outright, and you’re not a salary, well, you can still have a salary from k one, but typically owners of businesses will have K ones.

Got it. Got it. 

And so long story short, it kind of depends on like, what is a DAO? What is being used for? And then are you starting a DAO? Or are you a member of a DAO? And how can you account for that income and or capital gains that occur through that activity?

Tax Tips for Creators

Got it. So I feel like every question that I’m going to ask you is going to be like very scenario based? Because it really depends. It really depends on the context, it really depends on the activity. It really depends on who’s getting paid what, at what time, at what price, the token was, and all these other factors, I guess in the context of creators, okay. And, and I want to pick your brain because a lot of creators, they’re issuing assets, okay, either their airdropping tokens to their fans, right? Or they’re building DAOs. Like modern day fan clubs around  a token of some sort, whether it be a membership pass NFT, whether it be some type of fungible ERC 20 of some sort. What should creators kind of be keeping in mind as they enter crypto as they continue to play in crypto and building crypto, so that they make sure they basically keep track of every single step that they take? And they do it in the most efficient by the book way? Because a lot of us in crypto are anarchists, for the most part, they don’t care. They don’t care about SCC, they don’t, they care about the law, they don’t they don’t give a shit. For this thing to go mainstream as more users come in, not everybody’s as risky, as a lot of the early adopters in crypto. So that’s kind of where I’m coming from?

Dan Hannum: No, I mean, it’s a great question. And, you know, we’ve seen different ways, like when I first started, it was, we’re not paying taxes off the government and then in Puerto Rico, let them come behind me. So we’ve seen different ways, right, but I think the net new user wants to be able to get in, they are typically coming in through NFT’s. And they want to be able to comply. Obviously, we’re gonna have a subset that doesn’t or chooses not to, but in general, most people kind of want to be able to interact with in crypto, earned a bunch of income or enter a rental of capital gains, and just know that they can get, you know, handled on the way out. So as we’ve kind of talked about a little bit today, you know, NFT taxes for consumers are pretty complicated. But creators have a few extra things to worry about. And so as an NFT creator, you’re most likely going to be running a business, even if you haven’t registered one. And that creates a few additional tax responsibilities. And so there’s a few different distinctions between income and expenses that go into that. And so as we talked about earlier, that entity or wrapper that you have is going to be very valuable for you to really explore. And so if you form an LLC and choose to be taxed as a sole proprietor or general partnership, your income and expenses there may report on your schedule C. And that’s a different form than if you are an individual. And so the big thing to be worried about is kind of like how are you wrap you, how are you interacting with this?

And so if I’m an NFT creator, I’m more likely going to want to have some type of legal entity that I operate my business through and not just my  address, right? And so that’s probably the biggest one, the ones that we seeing a lot of issues with is having like separate business accounts. So a lot of NFT creators are like, okay, my address is 0x 123. And I’m going to run my personal and my professional things through this address. That’s a huge no, no, because when you need to separate that what happened from your business, and you know, you can’t, because it all flowed in and out of the same wallet. So you’re going to want to use separate wallets or separate business accounts, and really not mix your personal business finances. And that’s going to put you in a really good position. When you get into NFT itself and you look at like minting and selling and NFT. By yourself, it’s pretty straightforward. Typically, it’s can be taxed as ordinary income that you need to report and so you know, let’s say you sell an NFT for five eth and one eth is worth 2500. And so now you have 12,500, in ordinary income to report. And so if you later sell any of that eth, if you have a gain or loss on the basis of that eth, and then you’d be able to duck, the duck gas piece, gas fees, excuse me required to mint that NFT. Or to, you know, consult with another creator of the NFT, maybe on a visual side, or a contractor helping you mint, the NFT and get the contract live. And so that’s the biggest item for creators is really to be able to understand, you know, how are you interacting with in crypto? What type of entity are you using, if you’re not, you should likely have one. And then generally most of the NFT related items for creators are all going to be income that you’re selling. And then that income is going to be taxed in order your income and then track moving forward. So if I sell NFT for eth and I took that eth and put it into compound, you got to be able to track them moving forward.

Crypto-native Business Models

Got it. Okay, so one thing that I do with mint since the genesis of the podcast is I’ve collected all revenue on chain, okay, it’s all connected through a separate address than my personal address. And I’ve done that intentionally without honestly knowing that I felt like at some point, it’s gonna like catch up and there needs to be that distinction. But it’s all been paid out in stable coins too intentionally right, I’ve never accepted any of a native companies native token of some sort all been through USDC, the way I do it is I basically sell sponsorships in the form of NFT’s, depending on the NFT the sponsor buys, determines the level of promotion for the season. And it really works with them sending me USDC, and then me just sending them an NFT, there’s no real place to basically purchase it, quote unquote, intentionally. So in that scenario, I treat that as basically income for the business. Right? Right, it’d be you’d be taxed the same way as if it was a USD payment kind of thing, right? So it doesn’t really change. The only part that gets tricky, I guess, is when things start to fluctuate. And the  inputs and outputs at what point you kind of bought in at what price that was at and at what point you sold and what price that was at and how that kind of fluctuated in between. That’s kind of, that’s kind of like where the  confusion kind of comes into play.

Dan Hannum: Yeah, I mean, that’s going back to misconceptions. I think that’s the biggest one, is that the IRS only cares about your dollars, even if it’s in currency, right. And so if I’m accepting USDC, I’m getting 10k 50k, whatever, you know, your sponsor rate is, and so that’s just USDC, right. And so you’re not going to have a lot of fluctuation, if any, maybe if you have like USDT, maybe you’ll have like, you know, .99 or 1.01. Like it’ll fluctuate a little bit, but relatively not much. And so when you start to collect eth or crypto, that’s where you start to run into issues. And so that’s a big misconception all the time, right? Even on the investor side, I bought, I minted this asset for money, I sold it for two eths, I must have had a profit, right? Maybe  you minted it for money when it was trading at 5k. You sold it for two eth when it was trading at 2k. So you bought it for 5k. You sold it for 4k, you went from one eth to two eth. But you lost $1,000. So the artist doesn’t care that you went from money to two eth, they care that you bought it for five, you sold it for four. And so that happens on the flip side, right? I buy it for 20, I sell it for 80, I must have had a loss. Maybe  you bought it for 20 when he was 1000. And you sold it for 80,000 when eth was worth 3000, you bought it for 10 you sold it for 24. And so you have a gain even though you lost Ether and so to kind of circle back to  your side, if you’re accepting and stable, you’re going to be very straight. Yeah, but if you’re not getting eth today, and then eth becomes, it goes back to 45 or 5k tomorrow, and you sell that Eth you just made a gain on what, you received it as and what it’s trading worth. So just to give some perspective to like the fun with crypto.

Got it? What do you think the IRS is gonna start determining things in eth? Is there a future or that will happen? And taxes based off the point basis of eth versus the dollar amount?

Dan Hannum: I don’t think so. I think the most likely is that though except stable for taxes. Right? And so you’ll be able to pay your taxes in USDC or if, you know as you kind of walked it mentioned earlier the executive order. It sounds like we’re likely going to put a lot of effort into a US dollar that’s not USDC and so like a government backed stable coin. So I imagine they’ll likely allow you to use stables, but for the same reasons that it’s tricky for us, the government wants that as well, right? So if they, if you owe them a million bucks, and you give them a million eth and, you know, crashes 99% tomorrow, that million bucks isn’t worth a million bucks. They have to go pay their bills, and they’re contractors and build roads and hospitals, all that fun stuff with dollars. And so if I had to guess, like, we’re likely to see stable coin related tax payments. Wait, we see anything that has major volatility to it?

Government Backed Stable Coins

Got it. Got it. Are you for a government backed stable coin?

Dan Hannum: No.

 No? Okay. Why?

Dan Hannum: I mean, I’m not for really government involved in a lot of things. That’s funny, leads a crypto. But like, we’ve seen time and time and time again, the government is irresponsible with the funds that they have. And that’s, that’s most people’s biggest pain point and taxes, right? It’s not just that you’re paying taxes, it’s that your taxes aren’t being used adequately. And so we pay X amount and like the roads don’t work, the hospitals are still over staff, like are understaffed, right, the library doesn’t have new books, like, it’s, I’m speaking generally. But I think in general, most people probably don’t have a problem necessarily with just tax is how much is getting paid? Because they’re not spending it and using it wisely. And there’s no, you know, there’s no transparency into that. And so I am not for having the government dictate the funds anymore. That was kind of how I first got into crypto in 2012 was like, wow, we just went through a major housing crisis and a major recession. And we saw that the government has continued to be irresponsible with any type of budget constraints that they have. 

The debt ceiling isn’t a debt ceiling, right. It’s something that you can raise and lower. That’s not  like stuck, right. And so we’ve seen even in the pandemic, billions and trillions of dollars being printed. And so I don’t put any faith into a government backed currency and 99% of my net worth is crypto backed. And so I would put my trust and algorithm over a senator any single day. Yeah, do I think that like stable coins have a lot of value? Yes. Do I think that there’s a lot of challenges with our stable coins? Yes. Like we’ve seen the FUD around tether forever, right? Is it actually back next to positive tether. Crash tomorrow, like the industry will be in really, really, really bad shape. And so I think we need a stable coin. And now we see different forms. So you have like algorithmic stable coins, you have dollar backed or like collateral denominated stable coins. So I’d rather have entrepreneurs create actual products, then rely on the government to give us like a CBDC, and then you start to see like, China’s DC EP, and like, the social score metrics, if I don’t do this, I may get shut off from my life. Yes, kind of Black Mirror. I’m all for removing any type of financial capability from the government. Because I’ve shown time and time again, they can’t know they can responsibly handle it.

Ethics Around a Human Stock Market

Do you actually, do you truly believe in the extremist version of a black mirror episode happening, where we do have like a point space system on  ourselves? It’s a lot of what I talked about in season one based off like creating a human stock market with all these social tokens, these creator coins, and what that means in the grand scheme of things. I think we saw like a glimpse of that with the launch of BitClout and all the tokenized people that that were on the platform without their consent, for example. But do you really see that happening as a reality?

Dan Hannum: I mean, I think there are certain steps that lead us more toward that direction, right. And so when you look at what China is trying to do with their stable coin, it gets pretty black Nearly pretty quickly, right? You can’t ride the bus because you’re like, your digital currency score isn’t high enough. You can’t own house because of this. We have like web two, like analogies, right? You have credit scores in real life, you have income levels, all that fun stuff. And so I think that the only setback that we have within crypto is that some of these things can be used, you know, in kind of nefarious ways, right? And so if I have a token, and we’ve seen this, just like Alex, I feel like like Alex, Alex, you run into issues where like, people think they now own you, right? Like, I invested X amount of eth into your token, and now I dictate what you do with your luck, like, yeah, I don’t want to, I don’t want to add them to like now have 10% of Dan tokens, and you get to say, like, what I eat for breakfast, and like when I go to sleep? So, I think you can get like kind of crazy, but in general, like these technologies can be used for good and bad. And that’s the same thing we hear all the time with crypto is you know, it’s used for money laundering and terrorist and Russian oligarchs. Right, like, that’s the point right? No one’s saying that you can or can’t there’s no guard like.

VR is also used for that, too. Like it doesn’t that doesn’t change the game.

Dan Hannum: You should use ours.

Yeah. Like, only the criminals will be using cash. Down the line. Yeah.

Dan Hannum: Like you should use cash if you want to do anything illegal. And like, disclaimer, don’t do anything illegal. We see this all the time, right? Like, I’m gonna you know, I’m gonna take eth as like a form of payment for like ransomware. Like Good Luck. Yeah, we just saw like the DAO hack get surfaced six years later and couldn’t find exactly who did it right. We’ve seen that the Bitfenix hack, we’ve seen those cryptopia Like things happen, and they are traceable on chain. And so every time you see like a wrecked article, like they track it on chain and like, here to there, and then we went through like tornado or tumbler and mixer, and now it’s here. Yeah. And so yeah, using crypto for like illegal activities is not very smart.

ZenLedger and High-End Luxury NFT Drops

Is not the move. And can we talk about the experience in the in the projects that you guys launched on the enterprise level with Budweiser, Ralph Lauren, can you talk more about your experience doing more more high level NFT drops with, with more normies in the space? What that experience was like, and what were some of the biggest questions or hesitations they had going into NFTs that you kind of picked up early on?

Dan Hannum: Yeah, so I think we’ve seen a bit an explosion of web two or corporate clients that want interaction within crypto, right. And so you see, like, the micro strategies, and the Tesla setup, put their, you know, balance sheet into Bitcoin. And so that was kind of the first early phase, right, and you started to see more institutions that want allocations to eth or access into eth. And for a lot of them, the best way to do that is to use your existing brand in the tone NFT drop and collect eth that way. And so because of the robustness on our platform, we’ve been able to really leverage this core IP with, you know, 60 blockchains, and all these different tokens to these enterprise clients that come to us and say, Hey, we are Budweiser, we are alpha N, we’re a fortune 50, fortune 500 company, we can’t afford to get this wrong. Like if we’re going to do an NFT launch, we need to be able to track every single thing, account for it and pay taxes accurately on that, because we don’t want the other $50 billion business that we run to be affected at all. And so the value that we provide to them is providing this accounting and tax tool that allows them to seamlessly create these NFT drops and real world experiences using crypto and account for that easily and accurately. And so we’re excited about the future of x, we think as and you know, Nikes getting into the metaverse and like digital shoes, we think these big brands are can continue to get into crypto not only through a NFT drops. But as crypto becomes more of a payment system, we’re seeing more and more companies accepting crypto as a payment, for mortgages, for auto loans for dah dah, dah. And so all these companies gonna need to account for that. And so we’re kind of primed in a really good position as the next web two company comes into crypto, their 80 year old accountant named Bob in the back office, like has no clue what any of this stuff is, right? And so they’re gonna need a software and the team that like lives and breathes this stuff, to be able to help them and make sure that they’re there okay.

Got it. So what was it? So you guys came into the picture after the drop, or you guys holding their hand during the drop as well for both Budweiser.

Dan Hannum: A little bit of both. So as you can imagine, like, imagine these, these major corporate clients, they don’t want to get into something without knowing every detail, right? They wanted to know who the devil was, what the contractor this was, what happens, who has control what to do? Can someone steal this from you? Like, they are very curious, but also very under educated in crypto, right? And so they want people to kind of guide them through that. And so I think it’d be like extremely, extremely risky to drop an NFT if you are a fortune 50 company and have no idea what you’re doing right? So we are able to kind of sit with them and be like, Okay, what is your idea? Right? What do you want to do? Is it a one 100? A one of 10? A one to 10,000? Do you want to provide any type of like access to events? Like how do you want this NFT to be working and what is the utility to NFT because we need to account for that. And so we were fortunate enough to be kind of like early on with them and kind of guiding them through the process largely from the accounting and tax side like I’m not the creative director I wasn’t like here’s how it should look or like you should use this color, that color but it’s like as you sell these NFT’s you need to account for that and make sure that you’re paying your taxes on that. So yeah, you know, we’re fortunate to be able to kind of sit there and really work with them and make sure that before they want to launch before the men actually happened that everything was kind of already checked off and they could just go.

Deciphering between a personal transaction and a business transaction

Got it. You know as you were, you’re telling me about this example on you holding your hands, another question that came to mind with doing stuff through your personal wallet versus a business wallet. Let’s say you actually end up conducting all of your activities, your business activities through you’re your main dot eath personal wallet, okay. Tax season comes, you need to start deciphering what was a personal transaction versus a business transaction? Is there any real way to do that efficiently and to kind of separate the noise without you having to individually pick each transaction out taking account on a spreadsheet? Or can a software like like yours do something like.

Dan Hannum: Yeah, I mean ideally you’re using multiple Andre and that’s like the easiest.

Ideally, right? But a lot of people don’t necessarily think like that, right? They think okay, it’s just wallet I’ll just send it to this. I don’t even know I can have multiple wallets in my meta mask like, you know.

Dan Hannum: We’ve seen some horror stories, especially around like shared wallet, right? Me and Adam want to go in and buy a pump. So you give me 50 eth own the punk. And now like who’s responsible? The taxes, right? Technically the person who owns the wallet. So now I need to call you and be like, Yo, the pump we bought for 50 is now worth 500 eth. And you owe me 200 grand because I have a 500 grand tax bill. There’s no documentation, there’s no legal.

And that’s without you selling that happens even when you, like that always happens if you sell.

Dan Hannum: Right now there’s no unrealized gain or loss. So if I buy acid A for 10 bucks, it’s not worth a million bucks. I don’t owe 900 grand right? Only when I sell or dispose, okay, well, we’ve seen a lot of horror stories with that, like, oh, I met my buddy, you know, Ruby, whatever on Discord and like, they wanted to buy this NFT with me, so I gave them 10 eth or they gave me 10 eth into my wallet, I made all the transactions in my own wallet. And now my tax bill says I owe 200 grand, because we bought and sold and put NFTs. And so it’s like, you’re going to see if that guy is actually guy or girl is actually a friend when you call them and say I have 100,000 million dollar tax bill and you owe half of this. Because you already gave them their benefit, right? So it gets like, what the personal stuff, there is ability within the software to separate out what is yours and what’s not. So you can go on and say okay, on August 2, I know that, you know, in my head, I had 10 grand and eath being paid for this service on September 7, I had this and you can separate out and ignore those and then just have just your personal and then just have those transactions imported into the into another account, and basically ignore all your personal ones. And so you know, ideally, you’re using separate ones, but if you are using a joint one, there is ways to kind of separate.

Bonus Questions

Got it. Got it. Yo, this is super helpful. I’m trying to understand what are the questions should I be asking you that I’m not asking you?

Dan Hannum: I mean, I think we covered a decent amount, right? I guess the ones that we didn’t really cover is like defi related activity. Right.

Okay. Let’s touch on that for a minute. 

Dan Hannum: Yeah, I mean, that’s a question we get all the time, right. And as we talked about earlier, there’s no clear guidance, there’s no like IRS section two, paragraph three that says if you use Ether Ave, like, here’s how it’s treated. And so the defi can get pretty complicated depending on how you’re using it. And the example I always use is more of like a placeholder token versus like just yield. So what I mean by that is, let’s say you have 10 eth playing around, and you want to put that 10 ether into compound or uniswap, or Ave whatever, or you want to put it into like a block phi or Celsius or Nexo. And so even though you’re earning yield or interest on that, you can have different types of tax treatments. And because on the centralized side, you’re not really getting a placeholder token, I put in eth, and I get, you know, point one eth along the way, whatever, and I get back eth, you’re just gonna get taxes interest, at the time of receipt through those payments, the defi side gets a little bit more complicated, because if I put my eth into a liquidity pool, or just, you know, loan it out, I can typically get a placeholder token in return. So my eth Into Ave I get eight, put it into compound and get CDs. And so for conservative perspective, swapping one asset for another asset, it’s gonna have a taxable event. And so even depositing liquidity could have a taxable event on that eth and then you’ll have the income generated along the way. And then typically another asset, new asset coming back. And so the defi stuff can get pretty complicated depending on how you’re using the defi, are you doing borrowing or doing lending or your loans. How are you using this liquidity and then mapping the  gas fees along the way? So for some items, if I want to use like tote Mac, for example, and it’s my first time I have to spend like 200 bucks just to like approve the contract. And so how is that tax and then I deposit my liquidity. And so the defi side gets, not necessarily complicated to track, but it’s just a few things to think through as the way that the defi protocol operates can have a difference in how the taxable events are treated and how they’re accounted for.

Crypto Tax Loopholes

Got it. So another question that we didn’t touch upon, what are the loopholes Dan? What do people like to take advantage of that might not be so clear? What should we be keeping an eye out? What should we what should we quote unquote, abuse? Walk me through the loopholes.

Dan Hannum: Yeah, I mean, the best thing to views right now is the wash sale rule in crypto. And so most of what we talked about in that second bucket crypto to crypto becomes this hot topic because the IRS in 2014 stated that crypto is going to be treated as property. And that’s why if you sell Bitcoin to eth, you’re selling property and getting a new piece of property right. And so because of distinction there’s property and not currency or commodity, it kind of opens up to this complexity, right. But it also opens you up to a nice loophole, whereas in stocks because it is securities, if I have a stock that’s trading at 80% down, I can sell it and buy it back today. I have to sell it. Wait 30 days, hope it’s still down and then buy it back. Do with crypto because of the volatile, the volatility bonus of the asset, you can have assets that are up down 20% 40% 60% in the day. And because these aren’t treated as securities, but property, there’s no wash sale rule in crypto yet.

 And so if I buy eth today, and it drops 80%, tomorrow, let’s say I buy two eth today drops 80%. Tomorrow, I sell my two eth, I lock in an 80% loss, then I buy back that same eth the same day at the very, very low cost. And so I get to lock in these losses along the way. And so that’s a nice part about crypto is because we’re up and down even like the first quarter, right, we’ve been Up 80% down, 6% Russian Ukraine happened, we went up and then down like we’re getting in such a choppy market right now. So the experienced operators and investors are using our tax loss harvesting reports to show what’s going on. So we’ll actually show you once you import your change in wallet and say, hey, Adam, you have these five assets that you own that are all trading down at 60 at 40, 20. Here’s how much you can sell it, that’s a lock in the loss, here’s how much loss you can lock in. And so you’ll use this die to then start to make these these losses. And so that’s something that you need to be aware of throughout the year, it’s not just buys and sells, right, it’s each buy in each sale has an impact, if I buy for 10. If I have a $10 gain and $1 loss, I have a $2 gain. And so all these gains and losses go into play to get your total, you know, number at the end of the year. So the biggest loophole in crypto is using tax loss harvesting and using the ability that there’s no wash sale rule right now to maximize your losses throughout the year.

Got it? So that’s the biggest loophole what are some of the most like more hidden loopholes that tend to benefit a lot of people because I feel like Dude, you’re so well connected. You have such a voice in this space, you have a big network, for sure people come to you for tax advice, without a doubt. So that’s like the most, that’s the most I guess, known loophole? What are some of the more discreet low key loopholes? For example, if any? 

Dan Hannum: Yeah,I think that the next one probably is donations. Right. Okay. And so a lot of people that have made wealth in crypto want to have like a the ability to provide wealth and give back to their communities or organizations that mean much to them. And so if you donate your crypto to a 501 C three or a charitable organization, you can write off that crypto. And so that’s really impactful, right? So if I have 100 eth sitting around and I have a million dollar tax bill, and I donate 100 eth worth a million dollars. I just kind of erased my tax bill while giving back to an organization that really needs it. So donations are really valuable, not only from an accounting tax perspective, but from the actual impact, right? Your organization of choice, some are providing she was a kid, so now she lives or like health care or like food or housing, right? Yes. But donations are a big one, because you get not only the tax benefit, but also the real world impact of your wealth being diverted into better use cases than just sitting in your Metamask.

What’s the downside of donating them? Why don’t people why don’t, if that if, because that sounds like really golden on the surface, right? So why don’t more people do it? You think?

Dan Hannum: I think it depends on like the person, right? And it’s the same thing in real world, right? I can make a donation today to the Red Cross or something, right, and get it right off through my taxes. People don’t do it because like, unfortunately, people just don’t care, right? We all like want to post thing on Instagram. But when it comes time to like, given our own dollars to someone, other than ourselves, we don’t really do it. So it’s unfortunately, whether it’s crypto or non crypto, a lot of people just don’t want to donate and that’s your choice, your capital, right. But within crypto, you’re gonna have this really big element. And I think most of the people in crypto that we’ve dealt with really enjoy that fact and have some kind of greater costs outside of just adding an extra zero to the bank account. I think you have this kind of zero to one of like, I get into crypto want to make some money I got like student loans or like a mortgage or car payment, you get kind of comfortable level of like, okay, I’ve I hit off on a few amenities I did a few smart things and now have wealth, right? So once you get to a stage of having wealth, it’s like, Okay, the next million dollars into my bank account, it’s like, my life’s not changing, right? Yeah, have the house, have the car, have like the child’s you know, payments are all handled like, so I want to give that wealth and my time and expertise back. And so, you know, I think for most people, they just, they either one don’t have the  wealth to give away, or, you know, or to they just aren’t aware that they can do that and locked it in. And so we work with like the giving block and other organizations to kind of highlight that. And so within our software, you can actually mark that. So if I see.

So, I was about to ask that right now. I feel like that’d be such a good add on to the to the product

Dan Hannum: Oh, it’s beautiful, right? So I can let it go on and say on like December 10 of 2021, you know, I donated 10eth to my favorite charity and I can mark it a donation and they’ll provide your donation form and so that you can have the charity sign off on that. So, the nice part of the software’s will automate that for you and allow you to  donate.

Got it. That’s really cool. I feel like so many, so many Anons online, so many people thinking they’re not going to get caught. But if it was like a few years back then maybe, but now it’s so advanced to the point where you could literally trace anything. I feel like almost anything. There’s projects like, like chainalysis, right, that come to mind that are just like the FBI on chain. They’re able to crack down and provide insight to things that you would have probably never imagined could have been surfaced. 

Dan Hannum: It’s crazy. You definitely have those like blockchain kind of focused forensic analytics, like a chain assets, if you’re an elliptic, whatever. Yeah. But then I think for most people, like, what I always bring up is like, Have you ever used eth scan? Have you ever used Nansen? Right? Like, there’s public tools that you can use and see that like, it’s not like, you don’t need a billion dollar business and like a chain analysis to go look on chain, like, I can literally look at your wallet and see every single USDC payment you’ve received for your sponsorships, and see what your liability is, right? And so the on chain traceability is super easy. And because it’s the IRS and the government, they move slow, but they’re not necessarily stupid as we think they are. Right? And so they have the benefit of time. And so if you file your taxes this year, and you didn’t file in 17, 18, 19, 20, and you file okay, that I did x, y, and z, we can like look back on ours and look back and see, okay, well, you bought 10 eth in 2017. We sold it for Bitcoin in 2017. You didn’t follow that, right? And so it’s easy to look back. And then what we’ve seen in the last few years is really the IRS kind of allowing you to really, like fuck yourself. Yeah. And what I mean by that is, if you looked in 2019, they moved this question to the top of the schedule one, they ever bought, sold, traded or acquired a virtual currency. And so the schedule was kind of a subset of  reports. So not every American had to use that. But then in 2020, and then again, in 2021, the very first question on your tax form for every single United States citizen, is that question. Have you ever bought, traded or cargo currency? And you click no. And the answer is yes. That’s tax fraud. And so if I’m like, Oh, I use Coinbase. I bought etg, I sent it to a meta mask. I’ve done all the stuff in meta mask, you’ll never know. Coinbase is sending out 1099, they’re saying, hey, Adam bought and sold crypto with us. And then they’re looking at their attack from and saying, I didn’t buy yourself crypto, and I’m saying no, immediate audit, immediate, like penalties, immediate, like jail time, like.

But how do they? How do they know once it hits? Okay, I get you expose yourself from once a KYC exchange to anonymous Metamask wallet. Okay. But even then there’s, how can you like make the argument that it was my anonymous wallet that I sent money to? And it’s not some other random anonymous wallet that I just paid for whatever activity?

Dan Hannum: Yeah, I mean, that’s like part of the the way that the IRS works, right, is that all this is self provided? Same thing with with normal taxes, right? If you work at a restaurant, and I get paid in cash every night, I can easily not report that right? Is that legal? No. If the IRS comes knocking and says, like, you know, looks at your pay stub, and you’re making $2 an hour who you just bought a $40,000 car, they’re gonna like put two and two together, right? There’s always a ways around it, like not reporting your taxes is an option. It’s just fun one I wouldn’t recommend right. And so the ability happens because you are self reporting your activity just like you do with your w two, I take my w two, and I file it and I say, here’s what I earned. And they start to see major discrepancies, then they’re gonna audit that and investigate it, right? So if I say I earn 100,000, and I go buy a $2 million house, where does that come from? And they’re gonna look in and see, okay, I had another business, I wasn’t reporting. 

And so it’s pretty easy to kind of track the flow of funds. And so the biggest thing that they do is they allow you to indict and incriminate yourself. And so if you don’t report it, the IRS isn’t like, oh, okay, like, they’re gonna go look and say you did X, Y, and Z. And so especially now, when we look at on chain identity, you know, identity and reputation, that’s having a kind of adverse side effect into your ability to pay taxes, right? So if I look at Adam dot eth, and you’ve associated your five addresses with Adam dot eth, pretty hard to say you that’s not you, you just publicly announced that these are all you. And so I was just like reputation comes into play, it’s gonna be easier and easier to track because you’re going to associate that this address belongs to Dan dot eth And so it’s we’re only kind of putting ourselves into more of a prison, you know, presentation of what we’re doing. And I think like you talked about, like, most people, I don’t think are that, you know, turned off by it. They just want to know that they can use a software that will automate and do it for them and they just want to eat or DJ and into whatever they want. And throughout the year, and at the end of the year, just get it done for them. It’s got the value that we provide is like you don’t have to worry about it. Go use Tomfan, go use open see, go use superare, go use whatever and know that you can just ingest that into a software. Hopefully you made a million or 10 million or 50 million or whatever, pay your fair share and move on.

Outro

Yeah, Dan, I think that’s a perfect place to end off. But before I let you go really quick, where can we find you? Where can we find Zen edger? What do we need to know about Zen ledger? It is tax season. So I want to provide the best value to the audience. So give me the takeaway. Sure.

Dan Hannum: So I’m available on Twitter, D Hannum, d h, a n u m, maybe we’ll link it in the show notes or whatever, we’re available on Twitter Zenledgerio So if you follow our Twitter account, we’ll you know, we’ll highlight Twitter spaces or whatever we’re doing, discord AMA’s you know, new product releases or whatever. And then our website is zenledger.io So the nice part about our business is you can ingest all your activity for free, there’s no credit card upfront, I can sign up for free import my coin base, my meta mask, whatever. And then look at my high level short term long term gains and if I make a pretty accurate looks like close then I pay for the tax reports and I get all like the magic behind the scenes. So you can try us out for free we love to help you, you know our support team standing by 12 hours a day seven days a week via email, phone and chat. So if you have you know, need questions or if you have questions or need help, let us know. Then the other, only other thing I’d say is we do have tax professionals and tax attorneys on staff, so if you’re like hey man, I’m you know, I’m a DJ and I don’t want to do any of this. I want to pay someone to do it for me. Let our team do it like will literally sit down with you. We’ll get your, you will have you import the API’s, we’ll have you give us a list of your addresses, will import it, will reconcile it for you, will handle all your non crypto and crypto taxes solid. Yeah. So if you’re just like, I don’t want to do any of this pay our team will do it all for you. Make sure you’re all squared away and then you’re getting a CPA or tax attorney signing off at all this stuff is accurate. So we’re definitely here and happy to help. 

Dan you are a legend. Thank you for being on. We should do this again sometime soon.

Dan Hannum: Absolutely. Thanks for having me on.

I’ll cut it there. Awesome.

Categories
Podcast Transcript

Why Creators Should Build DAOs to Empower Super Fans


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 26 welcomes Yury Liftshits, Founder and CEO of SuperDAO, an all-in-one DAO formation platform that recently raised $11.5M in seed and pressed funding. Before Superdao, Yury has started four companies with one major exit, is a YCombinator alum, Ph.D. in Computer Science, and was teaching grad-level cryptography courses even before Bitcoin was invented. A long time ago he also won two gold medals at International Math Olympiad. 

In this episode, he shares why creators should leverage DAO models to build fan clubs, and why owning your monetization channels and incentivizing aligned participation is the future foundation for building a community.

In this episode, we discuss: 

  • 00:00 – Intro
  • 02:05 – Yury’s Previous Startup: The Discord Killer
  • 05:39 – How Yury Got Started With DAOs
  • 17:16 – Building Products In Web2 vs Web3
  • 22:57 – Thoughts on The Emergence of Creator DAOs
  • 31:53 – How To Do an SEC Complaint Token Raise (Not Legal Advice)
  • 33:41 – Strategies for Generating Revenue in DAOs
  • 42:59 – Why Creators Should Build DAOs to Monetize Super Fans
  • 48:35 – DAO Trends for 2022
  • 54:26 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Intro

Yury, welcome to mint. My friend. Thank you for being on, how are you doing? How are you feeling?

Yury Lifshits: Think great. Thanks, Adam. I excited to be here and share what I know about DAOs.

Dude, I’m excited to have you, you made a lot of noise online in the last few months, one from the race two from the product that you’re building three from a different Twitter posts that you’ve kind of like circulated online and your thoughts and opinions on what’s happening around DAO. So an exciting time to be in crypto. I always like to start with a quick intro. Okay, who are you? What does the world need to know about you? Because you have a lot of credibility as a startup founder. So I’d love for us to, for you to tell us more about your background, and then how you got into crypto and we can kind of go from there.

Yury Lifshits: Awesome. Awesome. Yeah. So I grew up in the family of mathematician. I was also in math early on, won two gold medals and international math olympiad was like professional competing mathematician as a kid. I did PhD in computer science. I was teaching grad courses about crypto before crypto was crypto. So I was teaching about cryptography things like zero knowledge proofs and Byzantine general tolerance. The things that back in the day felt like completely theoretical and useless. That was before Bitcoin was invented. And I was like, Yeah, cryptography is just for math nerds. It’s completely useless. But turns out that is more useful than I thought. And yeah, then most United States, was a scientist at Caltech and Yahoo, and then started four startups before Super DAO, all my startups are kind of all my kind of life. theme is about community. So every startup that I build was about community infrastructure in some way. So I’ve built co working spaces have built big events up to 100,000 people together. I’ve built education projects I’ve built, most recently a direct competitor to discord. So chat for communities. That was backed by Y Combinator, and it is now open sourced both on GitHub and figma. So you can kind of borrow our designs and our code, and most recently started super DAO this fall in October, and it’s been more or less a rocketship trajectory. It’s nothing like I ever built the company before.

What’s so different between building like DAO infrastructure to the last four startups that you did?

Yury Lifshits: Market timing, right now like it’s really the thing that needed pay like the   market pulls the  product from us if we don’t need to push anything, if everything comes to us.

Yury’s Previous Startup: The Discord Killer

Got it. Can you talk more about your time building the discord competitor, I feel like a very common sentiment is a lot of people don’t like discord. And a lot of people are trying to go to competitors to discord as a way to build up their communities. Walk me through what your like your learning processes were. Why you decided to sunset the project and open source everything, and how like the different points of things that you’ve learned from building the chat application that you’re applying now to this down infrastructure.

Yury Lifshits: Yeah, so discord competitor was almost like our organic story didn’t it started that way, and was in big part led by my co founder, who was previously at telegram, lead developer at telegram. So he’s building messengers his whole life, and his dream was always built in next grade messenger. And so a lot of the ideas behind the previous company that was called open land, or coming from him. We tried a bunch of stuff. We tried chat communities for creators, like YouTubers and tick tockers, we try the you know, pay walled communities where you need to pay to join, we tried business to business messaging where like people from different companies would message each other and like build a partnership channels between companies like guest channels and Slack I guess, but just much better in like a single inbox where unlike discord and enlighten, it’s more like telegram in the way where it’s like everything comes to you a single inbox, you can create a sub folders if you like. But by default, it all comes to a single inbox rather than you know, switching between 100 workspaces which like you know, no, no one has time for, yeah, but we couldn’t we couldn’t get the traction it was before the NFT boom, primarily and before the crypto Renaissance let’s say and so the timing was not great and like we couldn’t wait, like we build a great product people praise the  quality was all platforms like super performant fast and really clean design, but not enough momentum and back then. So our pure company was probably something like circle.csr, which is another community platform less chat oriented, the more like workspace and content sharing, but circle is doing all right, and then follow the journey. But another thing was like my co founder was much more drawn to b2c approach while maybe the successful beard in the in community messaging was b2b and that And then convinced them to move more b2b. Much more sales and marketing. Oh, I didn’t do a good enough job to convince him.

Sure. Okay, so now you’re building down from okay. I feel like a lot of discord today, a lot of chat applications that are obviously necessary for 1000 Online organizations to live and thrive. So if you like there’s a lot of learnings that you took from building like BTC communication to now building a data infrastructure to host online communities but in a different form, right?

Yury Lifshits: Yeah. Yeah. People would, some people describe dollars as communities with shared bank account or community with financial layer on top. It’s like social layer plus community layer. It’s very powerful.

How Yury Got Started With DAOs

Yeah. So, when you kind of like transitioned out of the chat application, how did you find yourself jumping into DAO? Like why DAOs?

Yury Lifshits: Yeah, so the last three months, and on open land, were basically a sale process, we’re looking whether we can sell open land for any, like meaningful way. And so one thing we’ve learned is like our best acquisition offers are all coming from crypto. Number two is like we couldn’t, we struggle to convince those crypto company to buy a seven for like 1% of their capitalization. And I felt like I can do no worse than them. I like I felt like I can build a comparable business, not a 1% of their business. So I was like, secretly started exploring. If I go to crypto myself, as opposed to selling ourselves as less than 1% of the acquiring company, how that can look like and what I can do in in crypto, and there was an NFT boom at the time, and I saw that most NFT, most successful NFT collections become in Dallas, and DAO infrastructure is missing. So I went through this process when I was list like five to 10 ideas, and I will go talk to smart friends and say, Hey, I haven’t thinking about those five ideas. Like if you would be me, which one would you pick? And they’re like, Yeah, idea number three. Sounds good. Idea. Number five is like no way and like whatever. And so I would rotate those, like, put another five ideas. And then some of us are like, Hey, I’m gonna build something like Shopify for dollars, like all in one tool that is make it super ridiculously easy to start and operated DAO. And as soon as introduced that idea, it was always number one. And like no other idea was seemingly comical. Everyone will say, do that. And not only that, but some of my friends were like, not only this is our favorite idea, we will be your customers. And I’m like, All right. That’s there was something there. And then the other thing I realize is that soon there will be you know, a few 100 of people with, you know, teams, startup teams with this exactly. Same idea. It’s not a very original idea. It’s the right timely, it’s a very timely idea, but not very original. And so it’s all about execution. And I felt like execution is something that people know me for, other startups who would not maybe business wise, the most successful, but execution wise, they were good. And this is a time when the idea is obvious. And the  one who will win is the one who executes the best. So I like that type of market.

Yeah. So how do you think about the different types of DAO. There is  service DAO, investment DAO, creator DAO, this DAO, that DAO? All these different DAOs each have their own needs and wants, but are the underlying themes behind all of them?

Yury Lifshits: Yeah, so I would say there is a playbook on how you go to market. And that is generally like repeatable across many verticals. So this is probably one of the most important bits in this podcast. So essentially, if you have a DAO idea and you just starting and you have the audience and maybe you have the presence, and maybe you you know, have the following and expertise and recognition in your professional or creative and artistic field. So this is generally the steps that you do, the first you do free Airdrop for founding DAO members. So you have kind of our allies, the people who like more engaged who will put work in, who would put effort, who would spread the word who might be even you look up to whom, is like people who are even more famous than you and or at least the same pure level and you give them free NFT of your future DAO, you say hey, I want to recognize you. And you call it not just the NFT but some extra level of NFT, like VIP NFT and if to like legendary epic limited black diamonds, will you name it, you can be very creative about this is like super extra double, triple mint. Yeah, and so you give it to them, they feel very special and say at some point, I will ask you for one tweet. And then you’re done that and then the second thing you do, you do NFT sale. So this point you introduced, you extend the same NFT collection from like the founding epic to your to regulatory or  like couple of regulatory, different price points. And you say we’re selling the NFT is now for money. And we give three things in exchange. We give governance rights, we give social benefits and we’ll give product benefits.

 So governance rights is like hey, we’re still in the you know, building process of the DAO, if you grant what’s the value that we bring to the market and we want you to guide us, like choose between A, B and C between covers of our album, cover art or like our, you know the name of our conference or like the shirt design for a soccer team or something like that. Number two, you say, Well, it’s a it’s a social club now you will meet other people including those from legendary tear. Like we all hang out, we’ll have like, you know, private zoom events or Twitter spaces or discord meetups, whatever physical meetups in big cities. So you kind of bring people together, they basically the NFT acts as a pass, like you know, is a member pass to certain kinds of social events. And number three is, you promised the future product based benefits. So if it’s music, you’ll you know, you will be the first to hear it though if it’s a book, you will send the free edition, like a free copy of a book or like premium edition of the book, if it’s like, a concert is free, free tickets, if it’s like co working space, it’s like five free days of work, things like that. So it’s not like a distributed Hottel chain, or we work type stuff. So again, maybe three, three free nights for every NFT holder in this country.

So that’s what they offer. And that’s a pure utility promise, you don’t promise a percentage of future profits, you don’t promise that NFT will grow in value, you say, Hey, you buy this NFT as an early adopter, like similar to Kickstarter, like purchase as like utility, governance and social benefit. And then that’s kind of number two, and they typically sell anywhere from a few 100, a few 1000 of total sales volume from few 100,000 to a few millions of dollars, maybe like you sell for a million or five million and then it might be not enough to fully kind of deliver on your vision. So then you go to professional venture capitalists and investors and say, Hey, we just sold a few NFTs, we got a few single million dollars in the bank, probably not enough, we want more capital, can they give us more money? And they say yeah, fine, but we don’t want your NFTs, give us something more. And you’re like, Alright, all right, but I’m not fully ready for the token stuff, it feels like very high pressure. And I need to promise like the growth of the value of the token I don’t want that. So you sell them equity in the operating, operating entity with token words. Say right now I set up like Delaware C Corp or LLC or Cayman Islands or British Virgin Island or whatever, I already have an agency or whatever an existing operating entity, I’ll sell you equity in the existing entity, traditional entity and then I’ll give you promises of future tokens when and if I’ll have the tokens and investors typically say yes, they will buy the equity in your operating entity with token warrants for the future kind of foundation slash, you know, ecosystem and then it’s fine and then you also might promise future tokens to the core team from operating entity and to some strategic partners if it’s like you know marketplace kind of chicken and egg kind of situation. And then you do work now you have a bunch of capital from professional investors, a bunch of capital from NFT sale. Yeah, you also leverage the firstly epic collections for people to promote your sale and maybe to help you out with investor interest as well and investor credibility.

 So yeah, it’s kind of NFT drop first,  NFT sale second, token warrant sale to professional investor third, then you do a bunch of work, then the next step can take anywhere from few months to a few years, where you actually build the the actual product and utility or like record the album. So should they feel more built the building or city or village or whatever you’re kind of building. And then once you build it, you can reintroduce the token now available for trade available for everyone to buy and sell as a utility token, because you can make it as a form of payment for your actual service, now that you have, like, the book is only sold for the token or the like I didn’t the music only available for the token or something. And  then then the token become tradable either on uniswap decentralized exchanges like uni swap or centralized exchanges like coin base or you know FTX finance. You can also instead of going with like tradable token and going to exchanges you can merge. So you can say yeah, we have the token, we about introduce you but there are three other token based projects. They also have this private pre exchange token, let’s all get together and introduce one token for five projects that we have and become a single network. So there are actually up and coming wave of m&a between token based projects when they all kind of merge together. So general idea is fewer tokens and a lot NFT collections. So if you have 10 artists and each working on their DAO project, they can all start with an NFT collection to NFT drop them, then NFT sale, If they feel strong, if the small artists join them, they can keep going as a single token, multiple artists and multiple NFT collections. If they feel like they become a too small of a fee, like, you know, too small of a pond, they will merge with other. Remember, like early 80s, I guess 70s When they were virtual record labels, and then they were merging and merging and merging and merging. And there was like big three, like Universal Music and whatnot. So basically, I would say, DAO can survive as a small and medium sized operation with private token. But if you want to get listed, and if you want to have a high like solid kind of low volatility, high liquidity trade of the token on exchanges, you need to be big, like valid the billion plus and or like half a billion plus.

And I  think, by the way, that’s a great place to kind of end the podcast, like you just gave everything away like that entire playbook. I mean, it’s really it’s really well said.

Yury Lifshits: Yeah, there was some modifications, if you like doing like investment DAOs or Metaverse or whatever. But the general playbook is always start with the roadmap, then the free airdrops, then NFT sale, then private tokens for teams, strategic partners and investors. And then you introduce the actual product and you make the token form of payment. And then you’ll listen exchanges.

So it sounds very much like what we talked about on the podcast is a lot is like building a minimum viable community, right? You said find your people that can help spread the message is right. And that align with the theme and build a core.

Yury Lifshits: Borrow. Build the borrow.

Build the Borrow? 

Yury Lifshits: Yeah, so if you’re a complete, unknown, but you have 10 friends who have big following, and you can convince them that you’re high energy, like running trains on time, kind of project management person, and you can actually make things happen. And then you say, I’ll give you the like this premium and N. And they give you the future tokens, and you need to support me on the social media and they want I’ll produce most of the content and most of the activity, but I need the following, your credibility from other people. So you can, it’s like conference organizers, you  confirm like high prominence speakers. Who knows? Who know personally? Do you know like, I don’t know, organizer of web three, summit or something? Sure.

Building Products In Web2 vs Web3

Sure. Okay. Makes sense. So, you know, it’s what’s cool about your background Yury, like you have a very traditional startup background of producing products for web two, and you’re building something in web three. And I’m curious as a builder in web two transition to web three, what are some of the biggest differences or similarities that you’ve kind of come across with building? Let’s say, for example, DAO infrastructure building for decentralized organizations versus building more centralized products for example?

Yury Lifshits: Yeah, I would say there, there are cultural differences, because there are technological. So the first one is a culture of speed. So the the web three is insanely fast. Market. I remember like when I was starting to, you know, scaling sales calls and people were scheduling primarily next day, or the day after, when someone’s scheduled with you next week is almost like an insult in web three is like, I’m not important, they are not important. Like this is not really a serious conversation here. So people expect people and response next day and like telegram or Twitter, DMS, like if you reply by a week later, you have to apologize. Like in the web two, if you reply by email in one, like seven days after, it’s a norm, like thank you for reply. But in the web three is like, what are you doing here? Like, what are you sick or like something, did something bad happened to you, So people exceptionally fast. Another one is the spirit of collaboration over competition. So no one feels competitive to each other. It just feels silly. And so you can build on like nearly the same thing. And they still feel like there is so much more you can do together rather than competing. So it’s channel speed. And because it’s like things on block chain, they’re more transparent, more open, there is a less culture of, you know, holding secrets. So it’s, and then you’re still still in the minority, like majority people still don’t have wallets, majority of people still not in crypto. So we still feel like the early pioneers, we’re still a call on the kind of same side. So the this camaraderie of web three, I guess. So those are great things. violations are better. Yeah. So you can like easier to raise as a web three company. So you’re like the same idea. And you say you’re web three or your DAO and your gap like, like, try to say that your direct competitor to YouTube and your web two company. You probably wouldn’t raise $1. And you say, well, we’re distributed web three native version of YouTube. And now you have a line of investors.

So you guys, you guys actually raised 10 and a half million, right?

Yury Lifshits: Yeah. 1 million precede and then 10 and a half seed, so 11 and half. So, yeah.

At what valuation were you public with the valuation? 

Yury Lifshits: Yeah, we weren’t like, this is pretty unusual. We were public with a valuation, the valuation on the seed was 160. And that’s equity valuation. So the implied token violation is even higher.

So how, how, I think everybody’s asking like, what. Everybody in web two that’s looking at this is like, what the fuck is going on? This is madness. Everyone in web three is like, Oh, just another valuation, another race? Yeah, no big deal. How do you? How do you make sense of that?

Yury Lifshits: Yeah, well, a few things. One is the the late game looks very healthy. So the the endgame for token base, the token bound project is to be listed at Coin base and, you know, FTX and binance. Devaluation for late stage mature projects, like you know, Solana and polygon and Neo or an avalanche. And I’m primarily naming you know, chains, but also like uniswap, or one inch or things like that. So there are no single billions 10s of billions, sometimes approaching 100 billion and that’s just the start. I don’t think that this Solana reached the peak or polygon or whatever, I think they still have 10decks, 00 decks ahead of them, you know, not maybe tomorrow, maybe 10 years, 20 years, but I don’t think they reached the peak. And, and so, and they get become public in 2, 3, 5 years, not seven to 10 like traditional, so investors thinking All right, so yeah, it is, you know, it is very unproven, it is very early on, is like pre revenue, but the winner in data infrastructure space will be token traded probably within three years, probably within two years. Who knows. So our investment will be liquid or partial illiquid any anyone who is a category winner is probably traded towards 10 billion or more like, you know, look at Metaverse like sandbox or decentraland. They are not that hard, like far along in terms of product, they have strong ecosystem and brand and snowball network effects. But product wise, it’s not really a fully polished product just yet. And how many people like really as users, not as you know, speculative investors, so builders are really going their daily basis. It’s not like comparable with traditional gaming or anything. But the promises there, but so the trading at the late stage, or mid stage project is very high, and it’s liquid. And so investors like, do we believe that this project within two years will be token only, like exchange listed and be a category leader in their, you know, respective category, if you can make a case that you will be the category leader, you’ll be exchange listed, and you will be traded at the levels that you know, other category leaders on. So my comparables are like, you know, decentraland and sandbox which are traded like close to 10 billion or sometimes above, sometimes below and fully go to coin market cap. And, yeah, I’m thinking like, the  number one dollar infrastructure projects will be token listed and will be traded similar numbers of higher. I think the DAO infrastructure is as important if not more important than, you know, one of many meta verses. And it has strong network effects. So.

Thoughts on The Emergence of Creator DAOs

Yeah, make sense. I hear you, I hear you. I want to talk more about like use cases. Okay. We’ve seen a lot of, I guess, like social clubs, social DAO form, we’ve seen a lot of investment DAOs form for the most part, and we’re seeing more and more creator DAOs form. This is something I’ve been talking about for like the last year publicly, but we’re really starting  to see it come into shift in the last like, three, four months. And I know one of the things that you guys offer on your platform, part of the  infrastructure play is catering towards creators. Yeah. So how do you think about the Creator DAO space? What’s the current state of creator DAO, for example, and played me some use cases like that you’ve seen work, not work?

Yury Lifshits: Yep. Yeah, so creators, I think the endgame here is platform DAOs. So the two tier system does. This is what I’m gonna talk about is not the same proven by this is in development. So like maybe it’s a developing story where like the, the trend, the recommendations might change for the next few months. But this is what I see today. The platform level is more like at this distributed record label or distributed metaphor, like a Metaverse or distributed like I don’t know the platform for virtual characters or something. So it’s not a single artist, it’s not a single character. It’s not a single like virtual city, it’s not a single game. It’s not a single event. It’s not a single book. It’s more like a publishing house. It’s a look at distributed you know Penguin Random House or something or distributed YouTube or distributed like Activision Blizzard or distributed Spotify or something like that. So, there is a platform level play when you say we are a set of technologies and distribution kind of ecosystem for artists or you know writers or filmmakers and so on. And then and then there is an artist level and the artists level or creator level is a single individual or a single small group that will produce certain content on brand, like under their full creative control and whatnot. And so, for individual creators, the dollar setup that’s recommended, is purely NFT based, so no token or token later. So don’t try to emulate like rally or bid cloud. I don’t think that’s the direction where things are going. And instead, like, introduce NFT collection, give special premium grade and NFTs for supporters for free, who will support you on the distribution side and on the creative side, and then sell NFT’s to super fans for governance, like, you know, helping you design like the name of your album or you know, the  sort of like level? Yeah, yeah, kinda like, yeah, cosmetics level or like, you know, declaration level, let’s say, like, what to wear, like, things. It’s like, if you like, it’s like a sports theme is like, selecting short designs and things like that.

 Yeah, so it’s kind of lightweight governance, and then product based utility, and then social kind of membership of being the early or super world class kind of supporter of that. And then if these can be tradable, but  they can grow in value of the artists become more popular, but they are not designed to be like the equity in the artist work. So I don’t recommend sell the NFT’s for artists that will take a percentage of artists driving. What they can do though, is the artists can direct the percentage of their revenue to the DAO treasury, but not to be distributed to the DAO members, but for DAO members to vote on how to spend the money. The artists can say okay, 5% of my revenue or 5% of my like album sales goes to the DAO and you guys decide to together, maybe we will give grants to superfans, who create additional artwork, who write remixes, who write like local performances. Who will you know, for example, like let’s say you have Tik Toker and you invent like a new type of dance. And you like invented 10 moves and you say, Hey, I like this, like I’m getting my, you know, advertising revenue. I created DAO for my superfans. And I put like 5% of my advertising and whatever revenue to the DAO. And then if you helped me to fill the invent those dances and like expand or record them, or like, teach them or whatever, then the DAO can pay you, you know, from the grant program or from contribute on a budget, the salary. So it’s more like for DAO members to earn money from you. But for the effort, not because they just hold the Dow you know, NF T’s. It’s not as an investor’s, but more like as a contributors. So the DAO Yeah, so that’s kind of the individual artists setup, set up a DAO, selling NFTS distribute free NFT’s and then eventually create the community government treasury. Together, you can also say, Hey, I put 5% of my revenue to the DAO. And then I let my superfans to decide which charity will be supported. So instead of Lady Gaga saying, Okay, I put 5% to charity, and I decide as Lady Gaga where to go.

Y’all decide?

Yury Lifshits:  Yeah, my superfans will decide where my revenue and so now you know that when you support Lady Gaga on social media, you actually will be in charge of 5% of your revenue that goes to individual causes and you actually decide which causes to go the the the real world example for that would be green brothers, Jonathan green on YouTube. So they have this thing called project for us on which is an annual fundraising campaign on YouTube and they do half and half, so I think the half of raised money, the green brothers decide where to go. And the other half is the community that decide where the money raised, which charities they go.

Got it. What does it cost to set something like this up for creator?

Yury Lifshits: Yeah, so right now, like we were about introduced the pricing, super DAO and it will be super like, the basic tier will be super affordable something like 50 to 100 bucks per month.

Okay. And it does include all the legal fees and all the legal setup, everything that’s that comes into play with the abnormality.

Yury Lifshits: The basic. The basic plan doesn’t require you to have a legal setup. So, this is how it typically. There is like three levels or three levels of complexity. The basic setup is just DAO, especially if you don’t have a community treasurer, you just sell in and distribute and NFTs for free. You just you know, you set up a DAO, you issue NFT’s, you have smart contract, you describe the ownership and membership structure, you’re good to go. You can do it just with us. You don’t need any lawyers. Step number two is like you have a DAO and then you have the operating entity. The operating entity can be already pre existing. I think most successful artists they have a certain LLC or whatever, so existing LLC, existing Delaware C Corp, existing entity on Cayman Islands or British Virgin Islands, so or like whatever you have, all good, so it doesn’t need to mirror the ownership structure, the core team owns the operating entity maybe alongside within like professional investors and then the DAO members they are members of the DAO but not the operating entity. Like Solana has Solana labs and polygon has its own room and you know, every like, x infinity has I think sky mob, so yeah, so they’re like every  like big, you know, crypto project has a big operating entity behind it, or many, or several. And I think Brain Trust, which is a recruiting decentralized recruiting network has like six operating entities  behind it. And yeah, so that’s kind of step two, you can use any service to register operating entity can be like Legal Zoom, or corp base or quirky, or whatever you like, and a lawyer friend. And then the step three is when you create a special purpose. at DAO oriented legal company, it’s typically a foundation, and typically Cayman Islands, Singapore, or Switzerland, or something along those lines, typically not United States. And that is for issuing an exchange bond tokens. This is very late stage, this is like, long after you have the NFT’s and you sold token warrants to investors, this might be 1, 2, 3 years down the road, we can recommend some, you know, legal providers for that. And that’s when you like actually polish your tokenomics and figure out the allocations and number of tokens and whatnot. So you don’t need to do that day one because you can run as a DAO or DAO plus operating entity for a very long time.

How To Do an SEC Complaint Token Raise (Not Legal Advice)

Makes sense? Okay, so I’m starting to think of like so then how do you run like an SEC compliant token race. So for the membership, NFT’s is just utility based, you get cosmetic, you get cosmetic features and whatnot. But when it comes to actually doing a token distribution, doing a diversification round a lot of DAOs like to call it and taking it to like the next level raising money. What’s the process of doing an SEC compliant token raise? It’s setting up that formation going through those steps, like you just outlined?

Yury Lifshits: Yeah, so sometimes you do this extra step. So you, you do like roadmap and free AirDrop and NFT sale, then token warranty on operating entity equity, and then you do a private token round. And then you do exchange listing. When you do private token round, then yeah, you can sell it a little more broad. By that time, you’re very close to exchange listing. So you have already built the utility case, and you say, Hey, we’re just about introduced the token, as a form of payment for future services and smaller, selling gift cards for your future, you know, future token that has now utility value. Typically, still, people who do private rounds, many cases, they explicitly exclude the United States. So they will do a private round that doesn’t allow the United States based people to buy it to kind of be outside of the purview of SEC. But generally, yeah, don’t sell tokens early to anonymous public buyers, especially in the United States before you have utility value of  already fully built the product and before your token, it can be used as a form of payment for the actual existing functional value? Because that case, it is like super close to unregistered security, which is not generally speaking illegal.

Strategies for Generating Revenue in DAOs

Yeah, yeah. I want to talk more about like revenue sources for DAOs, a lot of sourceful DAOs form because it’s fun to form a social organization. And then yet once they have like minded people, they try to build something and ticket next level. Okay, first thing that comes to mind is FWB. Another one that comes to mind as forefront, is all communities that I’m a part of. And I think now FWB has kind of explored the product route doing event ticketing, plus much more forefront has a myriad of different services that they provide. But what is like the most common form of like, revenue models, for example, that you’ve seen DAOs initiate from the Creator side, I’ve seen artists start their own DAOs, right, all the revenue, part of their artist share their catalog sales, sound XYZ sales, whatever, NFTs sales, go back to the Treasury, right. And that empowers the entire community. But it doesn’t really directly correlate to let’s say, like the governance token, per se, that’s a whole another kind of form of value accrual. Right. But when you when you think about revenue generation, what are some examples that come to mind?

Yury Lifshits: Yeah, so by the way, I like what you just described, so when basically the artists, so I think we need to change the mental model. And so I think I’m gonna introduce something modestly controversial, and I hope that it’s like, really like.

Let’s do it.

Yury Lifshits: Yeah. Yeah. So, I think the narrative was wrong on creator DAOs, like completely wrong. The , the DAO is, was pitched as a way for fans to buy equity in an artist, when artists works and fans are kind of investors in an artist, they give money to the artist. And then they share profits from the artists. That’s kind of the narrative. You give the money to the artist early, help them get off the ground, support them socially, promote them. And an artist becomes successful, they share back the share of success to the DAO and DAO shares, a share of that to superfans. So do you like, so the  metaphor was, you invest in in artists. I think it’s the wrong metaphor. I think the good metaphor is employment. Think of that, like, I’m Lady Gaga, I’m already rich. I don’t need investment. I don’t need like, you know,  like, get more money from fans. So however, some of my fans are amazing. They just incredible. They they invent the answers and costumes and memes and they are awesome. I want to give them career opportunity. So but you know, I’m not Lady Gaga LLC. I don’t have management time. I’m not gonna you know, manage people. So instead, so I’m getting like, so I don’t know if you know, like Lady Gaga has the nickname for our fans, little monsters. So you don’t do Lady Gaga. 

Are you a little monster?

Yury Lifshits: Not like partially? Yeah. Okay. Yeah, I’m like, how to say, associate. Yeah.

Monster associate.

Yury Lifshits:  Like, associate little monster. Yeah. Yeah. And so yeah, so, yeah, so you do little monsters DAO. And so Lady Gaga will fund it, Lady Gaga is the investor, not the recipient of the investment, Lady Gaga, we’d put would put 1% of the revenue to the DAO, and then your most engaged fans can buy the NFT or like join the NFT for the effort or like through giveaways and, and then they together will produce extra value. So they will do more album designs and costumes in advance. And these and then they can also create revenue streams that no longer from Gaga, but maybe from like licensed Gaga concerts by cover bands, right, or like the local concert. So supporting aspiring musicians from the fans, like, you know, scholarships, like musical scholarships, and then that becomes like a musical college or that becomes like a school of music, like alternative Berkeley college, you know, and, and that thing, and so the people who and then when you introduce a token, you introduce the token as a form of payment out of effort. So you can’t buy a lady monster token, you can only earn it if you’re actually a real contributor there. And then, and then, then the revenue can be shared to the token holders, but only to those token holders who actually worked for basically a little monster DAO and together created mobile. So it’s a way, because for, if you look at essentially, what I’m trying to say the big creators can create the career opportunities for early career crimes through the brand of theirs is another like, like a famous rapper will start a record label and try to grow up the the next generation of, you know, street artists and bring them to the next level. And yeah, so that that’s kind of the mental model that we should.

So let’s, let’s play on this for a minute. Okay, I’m gonna share my screen for a second. Okay. Let’s try to take a an example of what’s happening now and how they can conform to what you just described. So we’re on Facebook right now we’re looking at different Facebook groups, we see.

Yury Lifshits: Go closer to the screen. 

Yeah, I’m gonna go like this. Okay, so this group is called, I’ve met Lady Gaga has 6.1k members. This one is just Lady Gaga has 22k members. This one is Lady Gaga 28k members, Lady Gaga 50k. Okay. There’s 1000s of people creating different fan clubs on behalf of Lady Gaga. 

Yury Lifshits: Yeah, exactly.

But the problem is Yury, how do you create a coordination effort to bring all these people together to let them realize that wait a minute, they don’t just need to be posting for fun. There’s also monetization involved, right? Lady Gaga can kind of get involved because personally, I don’t know how involved Lady Gaga is today, with all these groups. These are just like independent fan clubs around her brand and what she’s created. Right. But what you’re suggesting is that these people feel in love and actively posts in these existing communities can use DAOs primitives as a way to kind of take it to the next level.

Yury Lifshits: Yeah, exactly. Yeah. So I think the model here is very, very much similar to Facebook group. So Lady Gaga is not initiating those groups. What she can do is she can endorse one of those groups as an official group and say, I will work with that group. And together we like, I will put either, l’ll give the preliminary access for future music or private concert or like this and that and so on. So essentially with DAOs I would say something similar. So I would say Lady Gaga can make a single tweet saying, Hey, I love this new concept of DAO, I want to start a little monsters DAO, I don’t have time to recruit and select the core team. So what I’m looking for is a core team bits. So you can organize your own core group on any platform like discord or Twitter or Google Docs and notion or whatever. And make a tweet about your organizing core group, how you want to do a little monsters DAO and ask your all your friends to retweet, I will review Top 10 DAO competing bids that I feel like most credible and best done and most retweeted, and then I’ll select one or two. And I designate them as an official lady monsters kind of DAO project, and I will feed it with my like exclusive content and private dances and performance rights,  licensing rights and things like that.

But there’s a problem here. Okay. The problem is, is that all these people have been doing it for free. Yeah, they’ve been they’ve been loving doing it for free. That’s what gives them energy. There’s actually an interesting like component to this, once you introduce mining to the picture, it gets complicated and weird. It’s not as fun as maybe.

Yury Lifshits: So you can do it softly. So you can introduce money that is not going to the contributors and say, I’ll put the money in your DAO and you guys decide how you want to spend it. So you don’t need it to give it to yourself, you can send all of that to charity, you can sell it to, to scholarship, you can send it to grant making program, let’s experiment with, I’ll give you like, you know, 50k 100k to play with the grant program, season one, you can vote for what you want to spend it on, you can spend it on salaries, on core team, you can spend it on, you know, supporting young musicians or like artists exhibition or, you know, find that like more imaginative, like higher budget, installation. So it’s like a money to play with.

Yeah, and that makes a lot of sense. But we’ve yet to actually see this used case, this actually very cool. And scalable and powerful used case being practice. I haven’t seen as an artist do that. Have you seen an artist kind of execute on that in theory?

Yury Lifshits: Well, I’ve seen a lot of like L1, L2 chains who have like a system font or grant making? Or? Yeah, so basically, if we’re talking about software creators there like a huge amount of companies who would initiate essentially. So another close analogy would be actually creator funds from platforms like tick tock or YouTube or reels, like  Instagram reel. They would put a creator funds, so it’s like, it’s like a creator funds for little monsters creative, right?

Why Creators Should Build DAOs to Monetize Super Fans

Makes sense. Makes sense. So that’s for a more of established artists that has a fan base. What about for a lot of the independent artists, which honestly, the market tends to favor more, intensive support more? What about the everydays of the world that are coming into the space, trying to use web three primitives as a way to build monetizing on the audience? They don’t have the pleasure of 1000s of people creating groups on their behalf, they have to form that excitement. How can they use a platform like either like super DAO or general, these DAO,  primitives to kind of, to kind of move forward?

Yury Lifshits: Yeah. So I would say you need to find an idea that is already recognized and understood that is bigger than the artist. So for example, you know, there is a political event, and you want to save the victims of some big tragedy. And so you want to build a DAO that helps the victim of this big tragedy in the moment. And so if you’re like foster Sargon, artist for X, artists to support, like, for example, some time ago, there was you know, border crisis in the United States, and they were like kids in prisons, like separated from parents and you know like, artists for kids or artists for immigrants or something, so if you build that and you bring me in even more established artists, is like second order contributors and whatnot. So yeah, so basically, you find an idea that has a Zeitgeist so that have a temporarily high demand to high need or high attention. And you try to rally up a lot of artists around certain thing it might be, might be something like maybe there was a big premiere of like, you know, Marvel film and you want to do something around that or like cardboard or something or something like a fanfic type of stuff. So you can attach yourself to bigger movement or bigger theme. So that’s, that’s something. Let’s see.

I think that’s a good example. You know, another  example that comes to mind is referencing what has already worked and Bring back in Daniel Island again in the overstep down, okay? Where his, his crowdfunding mechanics are questionable in terms of legality, but a lot of it was betting that he’s just, he’s very small and the SEC is chasing like, like, dollar, billion dollar issues like the Bitcoin shit that happened a while back as to. But so that’s an interesting example to where you’re able to actually share the ownership, the upside, the financial upside, where it’s questionable, okay from a legality point of view, but it’s actually a very favorable.

Yury Lifshits: There is a very easy hack to make a super illegal so you just split your audience into like hands on contributors to whom you have free.

A proof of work that kind of thing. 

Yury Lifshits: Yeah, yeah proof, yeah kinda free NFT’s that will receive the revenue from the DAO based on the contributors, contributions and the paid and FTEs that act more like tickets. So you either have volunteer on event or like oh, like contributor to event or your ticket holder who is more like you know, receiving benefit from it. And using your sell the utility and NFTS and you distribute effort and NFTS and they effort in NFTS can receive the revenue.

Yeah, so proof of work that comes back to that verifying your effort, right to be able to actually receive a contribution proportionate to whatever it is that you’re on, which is also an interesting thing. We’re seeing platforms like royal, for example, exploring the boundaries in the gray area behind tokenizing, ownership decent XYZ. But we see other platforms like catalog and sound XYZ just experiment with, with collecting wav files that were collect art. And I’m very much in the boat of, I see the opportunity for both. But I think once you get more mainstream, and you bring in bigger artists into the picture, and the bet is that they’re going to be building up their own DAOs and bringing their fans and having them kind of share the upside of whatever it is that they’re doing. It kind of makes things more complicated in that matter. And while there’s issues with like a coordination effort, I see like the opportunity behind doing it, but I’m skeptical a little bit as to what that looks like on a scalable level. And I don’t know if it’s going to be this generation of artists or the next generation of artists that are more technologically native that spend a lot of time on the computer more than this, the millennial generation or whatever, but I don’t know, these are just some of my thoughts. What do you think?

Yury Lifshits: Yeah. So there are again, there are two use cases that I am very bullish and one that I’m bearish. Okay, so the things that I’m bullish is the utility buyers, right? Well, when you buy and NFTS or memorabilia or governance rights or future product rights, or from artists, it can be future books and music and film and Premiere access and behind the scenes and decision power over a small details of the creative work that artists are doing, like you know cover art and naming and things like that. So I’m bullish on that so it’s like pre buying design edition of a book you get a special token of special connection with an artist and the artist you believe you believe like you know like have a signed first edition of Beatles first musical album is like you know cool stuff. And so I totally see that and the second one that I believe is that super fans become loosely employed by the the  favorite artists is like the top 100 believers I don’t know are the making money from believers DAO, whatever. So yeah, I’m aging myself by giving reference.

Are you believer?

Yury Lifshits: Before, I grew up, I’m MTV generation.

DAO Trends for 2022

Yeah, I feel you, I feel, so what are other like big picture things that people need to like keep  an eye on in 2022 for DAO? Like what  are some trends that we should keep an eye on? Maybe like, like regulatory things that may or may not have been filled me on.

Yury Lifshits: yet. So the first thing and I help myself from what I hear myself a little bit is free, free and NFTs Airdrops like if you like doing small projects, large projects, medium sized project, free NFT AirDrop is a good starting point. It can be a single artwork, you don’t need to generate 10,000 Like differently shaped boards, you can have a single artwork and you distribute it to 100 people, you can update the artwork later, individual personalize it later. It can be like a like an image of a key if it’s like a pass to a secret kind of society of your theme. And super DAO, my platform allows to do that. So you can do free airdrops, currently for free with us. So basically, you know, name your DAO, send us one image and send us you know, 100,000 wallet addresses where you want to airdrop that you can collect them you know, privately in Facebook’s and Twitter, DMS and discord and whatnot. This will catalyze the community and brings that to web three. And so if you’re listening to that podcast or viewing us and you can excited about the future web three, your Creator and you haven’t use any of the products that discuss on that podcast, you can DM me or direct message @ SuperDAO on Twitter, or fill the form on SuperDAO.co. We’ll get in touch and then you just set up just the name of your DAO project and then you do the airdrop with you know, 100 close friends. And that, now the 100 people are thinking okay, we now want to sell NFT, now we want governance, now we want Treasury, now we want grant making program. So now you’re no longer alone and you have other people who are as excited as you are about making this thing work. So free airdrops is basically a tool that every creator should master. Because it was hard you like it before Super doubt, you need to like, hire a smart contract developer and figure out like as highly customizable artworks and think about everything in advance. So the smart contracts that we provide are upgradable, modular and extendable. That means you can start with a simple kind of smart contract. And then you can customize the artwork later, even for the NF T’s that you already distributed. And then they add governance and that Treasury and add this and that and tokens and raise more money privately in public in a variety of ways. But the free AirDrop is always the starting point. And if you want to not just to listen to podcast, but you know, play with actual tool, you should start working, like this is the easiest tool to master.

Go it, free air drops, that’s going to be the number one trend. I think another trend is, I think 2020. Yeah, 2020, 2021 we see a lot of people experimenting with ERC 20s as a form of access, or we’re gonna see membership passes as a form of access.

Yury Lifshits: Oh, yeah. NFT fills DAOs. Yeah. So this is another difference. And this is, by the way, why super DAO was so successful, fundraising wise, is the competitors that were in DAO infrastructure before us. They were all token for us. What else? They were assuming DAO is something that is built around tokens, while the older new DAO second generation DAOs, which I call flexible DAOs because they don’t start decentralized or autonomous. They all run by humans and by operating teams initially. You know, they always NFT fillers token later.

Yeah, makes sense. I’m also curious to see like, one how super DAOs kind of evolves and the different solutions and services you guys provide to all different types of DAOs? I think we’ve only scratched the surface of what type of DAOs kind of looks like we see a lot of like reoccurring ones like services, media DAOs, investment creator, etc. But it’s just the beginning. I’m also super excited to see, like I said earlier, the membership side of things and how they kind of prevailed from offering free mints to payed mint what tiers of access look like and how a governance token gets introduced down the line and what that kind of plays. And if governance tokens needed to say will they die out, liike Will they die out eventually? Or will the NFT kind of poison the most of the value? Are you are you agreeing to that? Are you referencing something else?

Yury Lifshits: Yeah, yeah, I would say I agree that early stage DAOs will be NFT fillers and the early stage DAOs will have NFT based governance, the late stage DAOs that have billion plus and value, they will have token based governance.

Yury before I let you go, anything else we should cover that we should keep an eye on for Super DAO or in general that you’re focused on specifically?

Yury Lifshits: Yeah, and so for DAO, Yeah, we’re gonna introduce our smart contract framework more publicly, we’re gonna produce more educational content, we actually host weekly private workshops for traders. So if you just apply as superDAO.co, you’ll  get an invite right away. So basically, if you need more educational help, and advice and personalized kind of case, so basically host the AMA.

You host it yourself?

Yury Lifshits: Yeah, yeah.

Cool.

Yury Lifshits: Oh, yeah. Every every week, a couple times a week on zooms. We have typically 50 to 100 projects each night. And it’s pretty cool. 

Amazing.

Yury Lifshits: In terms of like the general. Yeah, I would say NFT fill DAOs. That’s a huge turn for this year, as I say. And another one is, I think there will be even more excitement from investor side. So there will be more investment in DAO. And basically if you’re a startup and you are not a DAO, you’re not, don’t have a DAO strategy of how DAO factors and what you’re building, you’re probably missing out. So again, you know, apply on SuperDAO.co,  go to a workshop and we’ll figure out something together.

Outro

Amazing here and where can we find you online personally?

Yury Lifshits: Yeah, I’m pretty active on Twitter, Yury Lifshits, in one word and super DAO on discourse. Yury is our corporate handle. I kind of ghost manage that as well alongside with my team. So DM so open, pretty active.

Amazing

Yury Lifshits: I’m also active on telegram, just my last name Lifshits 

Okay. Yeah. And I can subscribe to that, you are very active on telegram. Yury. Thank you so much. We hope to do this again soon.

Yury Lifshits: Yeah, good luck, everyone. Let’s build DAO.

Categories
Podcast Transcript

Why Creators Should Own Their Minting Smart Contracts


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 25 welcomes Richerd Chan, Co-Founder at Manifold, Punk #6046, Professional NFT Degen, and smart contract artist. 

Manifold enables web3 creators to have true creative ownership, preserve on-chain provenance, and interoperate with all major NFT marketplaces. The company is known for building some of the top creator drops in the early NFT days alongside leading figures like Mad Dog Jones, Jay Z, pplpleasr, Steve Aoki, and FVCKRENDER, to name a few.

In this episode, we discuss: 

  • 00:00 – Intro
  • 00:20 – How Do Creators Get Started in Crypto
  • 08:51 – Richerd’s Thoughts On Why NFTs Took Crypto Mainstream
  • 10:51 – Richerd’s Inspiration Behind Starting Manifold
  • 15:02 – Are There Benefits That Come With a Self-Sovereign Contract?
  • 19:46 – Richerd’s Thoughts About the Creator’s Class That Has Yet to be Impacted by the Web3 Primitives
  • 21:28 – Richerd’s Point of View On Music NFTs
  • 23:43 – How Collector Stats Can Enable Creators to Build Their Audience
  • 28:23 – $9.5 Million Crypto Punk Offer
  • 37:06 – The Future of NFTs and Crypto
  • 40:28 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Intro

Richerd, welcome to mint. My friend. Thank you for being on. How are you doing?

Richerd: Very well. Thank for having me, Adam.

How Do Creators Get Started in Crypto

You got it; you got an exciting time to be alive part of season four. You guys are spearheading a lot of the Creator, initiatives happening in web three. So really thrilled to have you on and kind of talk more about manifold. But before we get started on what manifold is who you are, I think a good place to start is how did you get your start in crypto, okay, give me a little bit of a background of yourself. And then your entryway to crypto will take from there and we’ll go.

Richerd: I got into crypto maybe about like 10 years ago, it was this thing that people are talking around. And I was working in San Francisco. And you know, it’s a little bit of oddity, but one of my friends convinced me to go to the Bitcoin Conference, and I end up going to this Bitcoin Conference, knowing nothing about Bitcoin at all. And, you know, I bought my first Bitcoin a week before, but this conference and just saw the energy that blog developers were had in the space. And, you know, this is early 2012, before, you know, like, finance hadn’t really taken group of Wiktoria was, and it was really just like the hacker mentality of like, here’s the cool technology that we all were able to play with. And you’re coming from the startup world, creating applications that had anything to do with, you know, transactions of the financial nature were really hard. You got to go through intermediaries and you have that bank, you know, it was just really hard, but with Bitcoin as a program where you can transfer money from A to B without anyone kind of be in the middle of that. And so really just enable this like really kind of interesting wave of innovation for programmers to like, really create cool finance applications. And so no, I started looking at Bitcoin and then ended up kind of being a programmer in this space and just pretty much of the coin apps. And yeah, they’re went out eventually Bitcoin they end up turning into crypto and crypto turned into FTEs. And then that’s right. Yeah.

So, you got your, you started building on Bitcoin. That’s how you got started. Right? And you said, what year was that?

Richerd: 2012.

2012 Oh, geez, so you’ve been in this space since 2012 actively building?

Richerd: Yep.

Wow. So how do you make your transition from Bitcoin on to Ethereum? Very, usually, it’s like, either or that’s like, typically the sentiment. So, how’d you make your transition comfortably?

Richerd: Well, you know, when I started Ethereum wasn’t even a thing. Right?

Right.

Richerd: I was actually there around the Ethereum ICO. And I couldn’t find the ICO cuz I was like, what is this? It just makes no sense to me. But you know, I kind of regret that now. Because I had the opportunity I was there. I was literally on site looking at buying this thing, right, but I never did. But, you know, Ethereum ended up becoming the kind of like, big secondary chain or a secondary network. It could be worth at that point, right. And so, I actually did a few kinds of, like smart contract work, you know, before the whole ICO craze, just playing around with things. But I largely pan until NFT’s came along. Right? And NFTs came along. I was like, okay, this is like, crypto is killer application, right? Because, you know, to be honest, there was a point after the whole Ico phase, where I just kind of dropped off the crypto because I just didn’t believe in what it was doing anymore. Okay. Maybe that didn’t believe it. But the applications I was working on just became really boring. He was just moving money back and forth, right? Just looking for new schemes, new different ways of moving your funds from A to B, right. And this tells you really just like wasn’t exciting from that perspective.

Got it, got it. So then, so then wait, so you were building financial applications? Because the financial side of crypto is very different than the Creator side of crypto? Yeah, it’s very, like it’s very black and white in my opinion. I think there’s a lot more culture, a lot more class. A lot more fun and magic that happens on the creative side of crypto versus more of the defi traditional financial side of crypto. So, what was that like that aha moment for you to make that transition? versus building like traditional, like, I guess decentralized financial products to now building products for creators and empowering creators?

Richerd: Yeah. Because that’s my first discovered what an MC was, right, okay. And it’s actually funny because, you know, I have I learned what NFT was right after crypto Plex came out. All my friends were like, hey, he’s actually the creator of crypto kitties, which was the creator of the ERC something one. Yeah. So, he told me what this product called crypto punks. And I was like, what is this right? And he’s like, I want to make a project that crypto punks, but with cats on the blockchain, and I was like, this is stupid, right? Because I had no idea any of this, anything was going on, right? And I told him that and he went ahead and did it anyways. And then now we have crypto kitties or sentry one. So, it’s funny how that all came full circle. But no, for a while there. You know, like I said, I got bored of just doing financial applications because there was no actual creativity involved with it, or it was more like how do you move money from A to B? Right. And, you know, actually left it another startup in between there which is not even related to crypto at all. It was like Uber for babysitting. But you know, it didn’t work out and I ended up going back to crypto just to work with for a few projects with few of my friends, but when I discovered what NFT was right, at first, it made no sense to me because the viewers, my co-founder, Eric is one he sent me. The first thing he ever kind of like looked at, and he bought his NFT theory for $1,000. And I was like, what did you buy? It was like, just like, what did you buy? Right? And like, you bought this image, but what did you actually buy? This is my very first like impression of this, right? And it wasn’t until he actually got me to buy one with him. Then it made sense, right? Because after I bought one, right, I had this emotional connection to this asset that we ended up selling, it was a slice on the PC bottom gateway for like, $4,000. And we flipped it an hour later for like 11 or $15,000. So, this is my first 20 minutes NFT by the way.

Wow

Richerd: Right? It’s just this crazy rollercoaster ride. Like, what just happened here? 

Wow. What NFT was that on NFT Gateway?

Richerd: Yeah, so the NFT was, it was called fishing part two. Okay. And yeah, so the whole story is I bought NFT for $4,000 as a one on one. And my very, very first NFT, right? After I bought it, I told Eric, were useless. He’s like, well, you can do three things. You can hold it, you sell it, or you can transfer it right. And he’s like, selling is probably the most interesting thing. And I have no idea how much it can cost. I don’t even know why. I bought it for $4,000. So, he told me that, I know you had to purchase things, right? And so, we sold it. He’s like, put it for $15,000. Right? And I was like, what’s about $15,000? That’s like, ridiculous. So, we ended up selling it, or we ended up, after we hook the call. But 10 minutes later, I got an email notification said it had sold. And I was just like, what just happened here? Right? And it’s funny, because my emotional response was like happy, I just made $11,000 You know, 20 minutes’ worth of whatever work, you know, work. And I was like, my first response was like, oh, no, I sold it too low if someone bought it that fast. Right? And then a second response was, I have this thing anymore, right? It was just like, interesting thing where I had this, like, this thing wasn’t in my life an hour ago, I had it for an hour, and it was gone. Yeah. But I had developed an attachment to it. And emotional attachment to it. That was like very interesting for me to have that because I don’t have attachment to like, you know, digital object or digital goods. 

And from there, I was like, that aha moment, just like clicked in me was like, well, you know, it’s all about ownership of digital assets there. And this has never been done before, you know, on this level, right? And art just made so much sense. Right? And because of that kind of moment there. I was like, okay, this makes sense. This to me was the, the application of crypto that, you know, everyone in the crypto community was looking for, to really be in crypto easily. And so, from there, it was like, okay, I just dove right into, like, you know, what NFTs were the technology behind it, and probably started off as a collector at first and trying to understand the space. And, you know, at first, I started as a collector, just to like, you know, repeat what I had done and kind of like things, you know, because there is value there. But as we started collecting kind of more of a works and dedication to take the artists, we realized that law is ours, they actually understand the technology that they were, you know, building there, they’re, you know, like building off. For them creating NFT was strictly creating artwork and attaching it to a token, and then having some other platform sell that token on their behalf. But from my perspective, you know, the blockchain and NFT is the brand-new medium that can be explored that when you combine artwork and technology that creates, you know, brand new ecosystems and brand-new means of expression that can then be kind of packaged and created for distribution in a simple fashion. Right. So, it became more of a consumer app rather than a financial app. From my perspective.

Richerd’s Thoughts On Why NFTs Took Crypto Mainstream

Yeah, makes a lot of sense. I’m curious to hear your thoughts. Why do you think NFT’s to crypto mainstream more than I guess, buying and selling traditional assets on an exchange or investing for the most part?

Richerd Manifold: So yeah, that’s the whole idea is because you know, when people are buying tokens, right, tokens are very abstract, the idea of a token is extremely abstract rate. And the value proposition of a token dystrophy is value. And so, when you buy stock, you don’t really, when you buy stock, it’s like you want the value of the stock to go up based on the company’s activities for its token right, you have no kind of connection to the token itself, right? Especially in crypto because a lot of is focus was purely abstract tokens. And so, you know, when I was like dealing with like, when I was dealing with like, more like, you know, token based, you know, like systems is certainly how to move money back and forth, but I had no connection to the money itself, the value itself right. But now with an NFT, you all of a sudden you have a lot of interesting psychological effects. So, you know, one having a connection to the creator, the token itself. Two having connections to the ecosystem of, you know, other collectors, that you have to share current commodity with. And it’s up to you have, you know, a really cool piece of artwork, you know, or like immediate that is tangible, right? You can actually look at it, you can actually, like, keep it in your head, right? You have, you know, when I think about, you know, certain NFTs, I actually like, imagine what it is in my head, right? You have the orientation of it. Whereas if you have a token, you’re like, what is this token represent? It really just, it’s a piece of data that has no, an abstract representation. Yeah, so I go, I think we’re creating an emotional connection to what these are doing. Right and being kind of irrelevant to consumers, you know, and collector’s ends, is that that tangible thing of having that media attached to it really creates that connection to, you know, these communities? And what NFTs are general?

Richerd’s Inspiration Behind Starting Manifold

Yeah, so incoming manifold came to the picture, having this realization that creators don’t own the contracts that they issue their projects on. And I remember explicitly manifold came on my radar around projects, like fuck render around projects like Mad Dog Jones, really iconic pieces that that made, like, set the narrative and tone for what NFT drops would look and feel like, what experimentation would look and feel like, and it very much came from manifolds wheelhouse. So, talk to me more about like, the inspiration behind starting manifold. Okay, it’s to create sovereignty. That’s your mission. Right? That’s you guys are, but what does that really mean in the grand scheme of things?

Richerd: Yeah. So, you know, like I said, before, a lot of these artists didn’t actually understand the technology behind, right, you know, what NFTs were. And they would rely on different platforms to kind of provide that technology and that kind of vision for you know, what, this token infrastructure might look like? You know, that Q in when we first started working with our Jones, you know, our big flagship project that really was a startup manifold was the replicator. And with replicator, we really wanted to show that, you know, NFTs can be so much more than just what everyone thought NFTs were. And so, you know, the replicator is, it’s a conceptual art piece, that can only be expressed as an NFT itself, right? So, there’s no other medium that you can create the replicator in, you know, compared to some other, you know, compared to some others. The NFT medium is just the image itself, but in the replicator, the contract actually plays a very important role in running the art, the conceptual art experience. And, you know, we lost our alternator. And then we realized that, you know, this was probably one of the very first times that a sovereign contract, you know, had such a valuable artwork attached to it, right. And we ended up selling the replica for $4.2 million at Philips. And it was a complete standalone, you know, smart contract for the series itself. Right? And that was really kind of like this, like aha moment of, well, you know, why don’t creators really have their own smart contracts? And, you know, we look at the ecosystem, right there, a lot of creators, you know, they have to go through these platforms, right, at the time, at the time, you know, in order for you to, in order to get a drop on like 50 gateways, you had to apply them to Gateway, and, you know, they had to choose backlog of people, they want to get dropped, right. And, and really, you know, people are creators really beholden to, you know, platforms at the time. You know.

The other side of things is, you know, you have shared contracts, right, but same sort of yours is on the shared contracts is that, it’s the platform, who owns the implementation, these contracts, who always token and kind of controls the distribution of the contract, right? And the whole idea behind you knows, web three crypto was that you should be able to realize self-sovereignty, and for NFT’s, what that means is, is creative sovereignty. And so, we thought it was crazy that these creators didn’t actually own any of the technology that they were selling their NFTs on. And so, you know, we said, we have a working replicator, we now had this like base idea for what creative sovereign contracts should look like. And then we can create the metaphor creator contract, to allow each creator to have their own self sovereign contract timid, you know, a few things about that is, one, it increases the provenance of the piece itself, right? Because now, in order to verify the authenticity of a piece on the shared contract, you actually have to go to that property, you know, that web property to verify that that piece was created on that, on that platform, you have to verify that that piece wasn’t, you know, a fake on that platform itself to and, you know, it was really reliant on this external system to verify authenticity and peace, right? Like for example, like say, say NFT gateway just disappear off the face of the earth, right? What reference would you have to these tokens that says that this is a gateway token, okay.

Got it. 

Richerd: Right. And so, you know, our whole concept was that the contract was the root of all kind of creator. And then that could be used to trace verification and maximize profits for entities itself.

Are There Benefits That Come With a Self-Sovereign Contract?

So, beyond tracing verification, beyond maximizing provenance, is there anything that like any other benefit that comes with a self-sovereign contract that you could do from like an experience play, that you can do from a composability play that you can do, I guess from a more experimental play that you otherwise wouldn’t been able to do if you were launching your product or your project on a non-creator owned contract? Can you walk me more than an asset from a very like dumbed down point of view? Just to kind of, introduce how you’re thinking about this stuff internally?

Richerd: Yeah, so one of the things is that a standard industry meeting contract is just that, it just literally just takes an image or a link to an image and makes it as an NFT, right. But you know, as I was mentioning earlier, there’s so much more you can do to NFTs if you consider kind of the smart contract as part of the NFT. So, one unique thing that manifold does is that we have a contract is called the manifold creator contract. And when kind of like, the final feature of it is that we had the ability to install what we call extensions onto that contract itself. And what that does, it creates an application like interface to a smart contract that another contract can then hook into, to, you know, run different kinds of business logic and, you know, programmatic interfaces to that original smart contract to create new traces, like new NFT traces, and add that to it, it also enables like, very cool mechanics from, you know, how they how contracts can hook into a bigger ecosystem, and be more composable go for the creators at large. And so, an example of this is that, you know, if I had NFT contract, you know, just standard NFT contract, every time I want to kind of do something new, I’d have to deploy a new contract with that kind of logic built into it. With our contracts, what you do is you have one base contract that does all your routing, that you can deploy another contract that hooks into it, that will let you do some things like you know, sell your NFT on our website, we have an extension that lets NFT gateway makes out it contracts. So, you can literally sell on the CBOE and have it been minted from your own tower contract. Cool. We have other things to do with like royalties for you, you can do your customized royalties from that perspective. And, you know, the thing is that you can create really interesting candidates once you start kind of creating like multi system, or like multi contract systems. Whereas, you know, the data entities right now, is everything, just kind of, you know, singular contract where you take the base functionality and code all functionality into it. And then that’s it.

Yeah. Is is the bet manifold that more and more creators will become more technically native. And they’ll understand the underlying infrastructure as to what happens behind the projects. Is the bet more to make it as like no code and seamless as possible, so that anybody can come and plug and play. I’m just trying to think about it from like the mainstream creator economy crowd. It’s like a lot of creative entrepreneurs, bloggers, journalists, video content creators, musicians, etc. And while I believe that the word creator, it’s a very general word, and anything, almost a thing can fit into that category, I’m trying to understand. So how do you guys think about it. Is it the bet that more creators will become more technically native? Is it a more of a no code play? How are you thinking about it?

Richerd: It’s been both right. Okay. So, if you just take medical studio directly, medical studio is designed so that you don’t have to understand technology to kind of do what you want to do in the Web three NFT ecosystem. Right. But that being said, though, we did all of our technology is on the contract level is open source, right? And it’s open, right? And so, as a creator, you own the contract itself. And so, you can actually want to go deeper into the technology, you’re allowed to do that. Right? Yeah. And our goal is to create tools and infrastructure for developers and creators to kind of push the bounds of what NFTs can be. You know, but I think the whole vision here is that, you know, as a creator, you shouldn’t be beholden to any sort of middleman platform, or, you know, external, external body unless they actually are providing value to you. And so, we want to give creators the choice of who they partner with, and, you know, what platforms they want to work with, if they are actually truly providing value to the creators themselves. Yeah, so you know, I’ve heard from other creators that, you know, they’ve worked into her platforms, and said, you know, at the end of the day, find this platform for taking like huge fees from them, but not actually providing any value. Right. And so.

That was two platforms. 

Richerd: Yeah. So that is there, it should really just be, you know, the creator is the one doing all the hard work, right. And so, they should be paid for their hard work right, and not have to be, you know, have all these NFTs taken away from them, you know, our whole goal is to enable self-sovereignty, right. And self-sovereignty means full control of creators to choose, you know, their own destiny.

Richerd’s Thoughts About the Creator’s Class That Has Yet to be Impacted by the Web3 Primitives

Yeah. Yeah. Makes sense. I want to get your point of view. Richerd, what do you think is a creator class that has yet to experience the full potential benefit of web three, we see photographers, we see, we’ve seen like journalist or mirror, right? We’ve seen musicians, we see, of course, digital artists and artists and in general, what is a creator class do you think that’s yet to be kind of like impacted by the primitives of web three?

Richerd: I would say more like, you know, the thing that I think are now is more like book publishing and authors, right? Because they know that they are very similar model, right, so how book authors work is to get an advance for your work, right? You know, after that you have a distribution, you know, once you finish your works, you have to pay back that advance, and then, you know, it’s up to the publisher now to kind of do the distribution promotion. But you know, they take a huge cut of pretty much every single, like sale, right? You know, I heard that for most publishers or authors, right? They’re only making like, 20% of every dollar for every.

That’s crazy

Richerd: Right? And so obviously, if you have that, there’s a big inversion that’s possible here, where funds can actually go towards the creators themselves, rather than all the middlemen, the publishers and the agents and so on. So that’s one thing. You know, music is an obvious thing. Right, I think a lot of the music industry is very, like rooted in tradition, right? And you haven’t actually adapted to the new age of, you know, what does distribution look like on the internet? And, you know, I think web three is kind of like, again, inverting that, that power, the power of creators, right.

Richerd’s Point of View On Music NFTs

You know, I had the two-time Grammy Award winning producer, Ill Mind on Mint alongside, I think we published this episode, today. And one thing that we talked about, speaking about, like the industry of like the music industry in its tradition is he creates beats loops, he’s a producer, and the way kind of like, beat artists, loop artists, stem artists, they share beats with one another is by uploading the file to Google Drive, and then sending that to the individual that they want, potentially using it. And all the terms and agreements are very like scattered. They’re like in the email itself. There’s no real standardization behind it. A lot of people get screwed in the end. And it got me thinking like, how can web three solve that? How can blockchain primitives solve that, the ownership layer, the verification layer, and being able to build if you buy a beat, or loop on chain, being able to build on that song in verifying ownership from molecular level, as it kind of trickles down all the way to the foundation of what the song is beat, drum, track, etc. So, I’m curious to hear your thoughts like, what is your point of view on the entire cycle right now? What’s happening with music NFT’s right now? How do you kind of like make sense of it? Why don’t you think it’s had as much success as like NFT’s did during the NFT gateway era? For example, when kept platforms like SoundCloud, XYZ kind of replicating the addition model and platforms, like catalog replicating the super rare model for example? What are your thoughts on that?

Richerd: No, I think for one thing is like, what does it mean to own a song? Right? Like, what is the actual ownership of song kind of get you, right? And, you know, if we think about kind of consumption of music right now, consumption, music is pretty much free. You know, because you have platforms like Spotify, Apple Music, who pretty much, you know, give you unlimited access to songs, right? And so, ownership of song is just a complete very different kind of mental model for people to like, think about. Right. And, you know, with the art market, we have a good metamodel, which is, you know, the traditional marketing, like physical art market that we can replicate off of, but, you know, for music, that it’s like, it’s a very disjoint between what is royalty for song mean, what is royalty for a song mean, right? And how is it as a owner of media really benefits from owning a song?

How Collector Stats Can Enable Creators to Build Their Audience

Yeah, makes a lot of sense. One thing I want to talk to you about, Richerd, so we talked about the manifold creator contract. You guys recently released the collector stats, which I thought was a super interesting tool for a lot of creators, because many times they have a bunch of collectors and they don’t know anything about them. It’s just an anonymous address. But the blockchain is rich with data. For example, I did this campaign, I guess this drop with this independent music artist, her name is Queen George, we sold NFT tickets to attend her concert, they were free to mint and attend at Eth Denver, okay. And she got about like 150 collectors just based off that contract alone or based off those tickets alone. But these are 150 addresses that she has no idea who they are, what they do. And we were thinking like, what if there was a way to actually upload like a CSV file, be able to see how many of these people are in FBB in forefront? How many? What NF T’s do they collect? What things are governance proposals have they kind of voted on etc? And to really understand on the granular level, who her audience is, something that Spotify and Apple Music, let alone many other applications don’t provide that in depth level analytics, but it’s free to tap into on the blockchain. How do you think about that, as creators’ kind of build their audiences on chain, what kind of tools, what kind of solutions do they need and how does the creator, the collector stats kind of empower that?

Richerd: Yeah, yeah, so we went that is that we work with a lot of creators, or, you know, I’ve personally worked with hundreds of creators on various projects or different capacities. And, you know, one of the things is that these creators are all have no idea where the countries aren’t in most cases, right. In some cases, they have, you know, very personal relationships with them. And other cases are just like these addresses right there. And so, you know, we pre apparently built tools internally for ourselves, because we run a lot of campaigns for artists, for them to kind of reengage with their audiences. And what we’re doing with these is just surfacing kind of, like who these people are, that they’re kind of in within their network, then on top of that, too, is a lot of platforms aren’t actually giving proper stats for these creators. Because if you think about a platform, where the big things is that they’re kind of focused on themselves, and so, you know, they have stats within their platform, they don’t have like, macro stats outside of their platform itself, for who you’re talking collectors are. And so, we’re really trying to enable, you know, creators to understand their whole ecosystem of, of creators or collectors themselves. Right. You know, one of the things we’re manifold is that we’re very platform agnostic, right, our contracts are compatible with pretty much every single platform out there. And you know, this is just kind of the next iteration of like, how do we provide more value to creators to really understand what is actually happening within their token ecosystems? You know, I thought that that’d be thing is, you know, a lot of collectors have no idea about their sales stats, right? How many tokens have they sold? And we’re just trying to sort of state information so that it’s more useful for them, you know, for example, for taxes are important.

Yeah, makes sense. Can you talk more about like the the level of like, it’s the intricacy of the data that you can collect and present, and the insights and knowledge that you can kind of capture by analyzing on chain data? What are some of like, the biggest, beyond understanding how many tokens you’ve actually sold? And putting, I guess, more data points behind collectors, like what other metrics are important to recognize as a creator, when you’re building an auction audience?

Richerd: Yeah. So, I think the obvious one here is royalties, right? A lot of creators have no idea what the rules are, right, they literally just end up, you know, have in some cases, you know, open sea has their own kind of private system for handling royalties, you’re working to be called the royalty registry to kind of democratize royalties, and make it really easy for other platforms to figure out what these are, you know, but that, all of data is on chain, right. And it can be kind of filtered down to creators. So that’s, that’s like one thing, that’s like a big odd, that’s a big thing. That’s a big amount of data on chain that can be kind of surfaced, with a garden kit collector, where, you know, a lot of these creators have no idea how much money certain collectors actually spending under tokens, right. So that’s everything, right. So being able to reward their top collectors, their biggest supporters, you know, and really just doing something special for them, right. So, you know, myself, I’m always, you know, I’m always very happy once, when these creators will reach out to me so, you know, thanks for being one of my early supporters that have helped enable their careers and just like got them to where they are. Right. And it’s okay, so they give me like, some special like, you know, a physical print or, you know, even an NFT right as like, thank you. And a lot of cases, some of these creators have no idea of just how much you know, some of these collectors have invested into the livelihoods of these artists. So.

$9.5 Million Crypto Punk Offer

Yeah, that makes a lot of sense. Can we Yeah, can we pivot into talking about the punk sale, and the whole, the whole, the whole PR and fun conversation around that I had put Tracy on the podcast, I think last season and he came on Around the time where he made the bid, and a lot of the positive controversy online happened. Can you talk more about that? I’d love to hear your story on that.

Richerd: Yeah. Okay. So, here’s my story from my perspective. So, I believe it’s a Friday and I was actually doing an engineering interview for an engineering candidate from Enfold. And as these interviews just pretty much all my notifications just started going nuts. Like just really nuts, I’m like, my DMs are going off, my Discord is going off and my Twitter was going off and my phone was going off right? And it was like everyone was just trying to get hold of me, right? And I had no idea why right just like, no idea why. I’m in this interview, by the way too, right? So obviously gonna like take a break and just like go outside and see what’s going on because like everything’s just blowing up and so, then I’m looking at this, I’m looking right and everyone’s like, go check larva labs, right? Like, is this real? So, I go looking, I go look and I see that there is a $9.5 million offer for my crypto book. My first reaction was like, this isn’t mine, right? This is not the, like this is something, there’s something fishy going on here because I had no idea like why someone do that. Because you know, I obviously know the value my pocket, it was a banquet $5 million. Anyway, so I was a little distracted because I was interviewed. So, I you know, I explained the situation to the interviewer and I’ll deal with this later. But then we finished interview and then e actually had time to breathe in, like, actually, we got it. I was like, okay, my first reaction was like, Is this a scam? Right? If I accept this, I’m just gonna get right into it like, front ran by my bot. But you know, as I looked into it and actually like looking at what it was you, I saw it was from the panda repo up Patricio. And I was just like very confused of like, you know, like why, right. And as I looked into it, I realized that it was because of a comment I made earlier that said, I would never ever sound like punk, right? Because my punk is kind of like, tied to me and my identity. 

And so, you know, my first thing was like, okay, so what is, after I assess the situation is more like, why? Like, who is this right? And so, you know, I had talked to Patricio, like, once before, or email, cuz he’s trying to introduce me to somebody. But I had no idea that, you know, they don’t take his background of, you know, where he came in crypto. And so, I realized it was, it wasn’t a job offer, I talked to a few other people and says, you know, this is like, completely legit. Patricio is 100% Serious, he’s a little crazy, but he’s 100% serious with this offer. And, you know, I was left with thinking myself, like, you know, should I accept this offer? And, you know, obviously, it’s a very, very respectable offer, is one of the highest offers for good like that. So, I actually like a lot of consideration. But it was interesting, because I was convincing myself of why I should accept it, like, my default was to reject. And I was trying to figure out, you know, in my head, the reasons for accepting this, you know, and I went through all the carriers here of like, well, you know, I guess backward by moving to dollars is the big thing, right? Which is, see everyone’s big thing. But then I thought, well, you know, what I said earlier was like, no, I’ll never ever sell this thing. And so, it’s kind of like really testing my integrity and making me put my money where my mouth is, in real time and publicly on the blockchain to right, which is like, really interesting, because, you know, this was there for the whole world to see, right? This wasn’t like a private deal where he offered me something. But you know, for that time, that money was in the smart contract of the crypto punks. And if I would have just went to the site and clicked accept, you know, it would have been instantly transferred to me right. But, you know, as I thought about it, you know, what it meant, you know, I had built this kind of persona and brand around by crypto punk, you know, what the three glasses, manifold in general, right, and I became really attached to punk, it looks just like, and so, you know, I thought about it for a lot and thought about, you know, at the day, it’s not something I wanted to do, to accept it. Because, you know, I just thought I really, you know, like something all the memes of people being like, oh, you know, he says, he once, I was offered $10 million. And I was like, well, you know, I got a little bit more integrity for that, you know, I respect. You know, I respect the offer. But you know, the other day, I was like, no, this is not how I wanna be remembered or like to sell my punk. Right. And so, you know, I projected it.

So. now, now that you’re rejected, what does that say about you now? What does that say to the community? So, if you would have accepted you, you would have had those types of memes. Excuse me? Yeah. Now that you rejected it, and you you’ve held your stance, you’re firm on your integrity? What does that say about you now?

Richerd: I think it’s a very good, the thing about me on my online persona and my real-life persona is that, I see myself as exactly the same person. Okay, I know, a lot people have very similar personalities, but I pretty much act exact same way online and offline. Right. You know, I got to the point where it’s like, the money was just not a factor in these decisions anymore. Right? You know, I live very comfortably, you know, I’ve never been about trying to make a whole ton of money, I have my needs met. Right? And I’m able to really just focus on the things that I really care about, right. You know, and then a few spaces creation, you know, being an entrepreneur in general, like, really build the future. Right? And I think that, you know, one of the big things with manifold is that reason why I think we’re successful is that each of the founders has the exact same mindset, like we’re not interested in the short-term gains of how can we get rich? We’re thinking about, you know, how can we build a lasting company that has an impact in society in the world and crypto for 5, 10 years, right? Like, we’re thinking really, really long term from that. So first of all, and you’ll meet my co-founders, if you’ve all silver companies before, right? And so, money is not the driving factor between all of our actions free. And I know, I just really wanted to show that, you know, that’s part of you knows, who I am and what I stand for. You know, and I really think that, you know, my reward in the crypto space will come from delivering long term value to pretty much everyone that we interact with and are able to help.

Yeah, I love your long-term mindset. I feel like if it was almost anybody else, that bid would have been accepted, despite the tweets that they surfaced online and how it pertains to their identity. I really, I really commend you for that. I really applaud you to that. Because there’s a level of, I guess, bravery that comes with not accepting that offer and realizing that there’s more than just money to living fulfilling life, right? And you’ve really exemplified that. I’m curious, we didn’t really touch upon this. How did you guys meet? The co-founders? What’s the uprising story behind that?

Richerd: Oh, my company has been friends for like a decade now. It’s actually funny because I still work at a company in Vancouver. for like, two years, they tried to recruit me their company to join as engineer. But, you know, just the tire never worked out. It’s actually funny, because I have an email thread with, I have an email thread with one of them, where we play email tag for about two years, right? And it’s like, hey, we should meet up, right? And then like, three months later is like, oh, sorry, I forgot this email. Right? Right. And then, you know, we just like go see each other. It just is, like, really funny to thread. But, you know, in the tech scene, it’s not really that big a time. So, we became friends, I eventually end up being in my own entrepreneur, right, and then became close friends. And, you know, we never really had an opportunity to work together. It’s not constructive, you know, if they were building their company free, then some kind of cool, you know, tussle, you know, points up together. But it wasn’t until, like, NFTs came around, and my co-founder, Eric really introduced me to it. And it’s really funny, because he’s like, I noticed as soon as he introduced me to it, he just went all in. Right? Like, it was like, before that act, before and NFTS, I actually wasn’t doing anything. I just like sitting home things all day. I literally.

Why do I find it so hard to believe.

Richerd: I had nothing to do, right. So, it’s kind of working, I work in projects, but just not really. Like really, really like, I guess, like, driven by the projects. Okay. Right. And it’s really funny, because I had some Perkins project for like, a year. But you know, I know, knowing myself, if I was actually motivated, you actually got done two projects in a week, right. But this whole project, I’ve been, like, just dragging off not really like working on it. But then, as soon as NFTs came along, I was like, oh, my God, I just, like, dropped everything. And went back and felt like full build mode. Right?

The Future of NFTs and Crypto

Yeah. I love that. What do you think are some of the biggest opportunities that we we have yet to see unfold in the next few years in the NFT world, the crypto world? How are you thinking about the space in big picture?

Richerd: And I think web three companies are gonna kind of, say, or stop the kind of web two platforms. Like, for example, right now, if I think about web three business models, you know, in web three, I have not seen a single ad, or I don’t, I guess, traditional ad, from your sense of like, you know, Google, you know, Software as a Service is not kind of it is not a predominant business model. Right, it’s really about ownership, right? And I think that this is going to permeate to like different kind of areas of, of the companies, right? Because it makes sense, because, you know, as a participant in the token economies for companies, that I am now able to participate in the growth of the company and outside of these companies, rather than being, you know, having to pay into these things or be advertised to, for, you know, I am the product. Right, you know, the big thing about two, is that, you know, consumers are the product, right? But in web three, it’s the consumers are the owners, right? And they have ownership control on these things, right. And I think this makes a lot of sense, you know, from business model innovation for how you can create brand new engaging products. So.

You know, my perspective on that is so yes, we haven’t seen, like ads on platforms like we do on Google or Facebook or Tik Tok. Whatever. My business model for mint is I sell ads in the form of NFT’s. So, depending on which NFT the sponsor buys determine the level of promotion for the season. All revenue has been on chain since day zero, since the birth of the podcast. And it’s interesting, because Forbes reported that creators are still like overwhelmingly dependent on advertising revenue. They surveyed like 2000 creators, and they found that 77% of the creators still this brand deals as their highest earning revenue source. So, a form of ads. One thing that I’ve been trying to think about very intimately deeply is like, how will advertising change on the Creator side of things with the introduction of web three? Is someone like Ali McPherson, who launched an alley coin, who’s a gamer, Twitch gamer, who has a community of people who hold the Alley coin, she hosts gaming tournaments, will brands now buy into the token supply of the Creator versus her doing ads like so that the entire audience wins? who’s holding the token? Like, how do you kind of imagine brand deals, for example, in the advertising side of brand deals and creators’ kind of emerging with web three, with ownership with all these primitives that are kind of forming?

Richerd: Yeah, so like, one of the things is that with the token economy and the blockchain, you actually know who your customers are, right? It’s all on chain, right? And the thing is, you can reward them like you can board them directly through kind of, you know, different kinds of incentives and tokens instructors. And how that to you can provide no real-world kind of value to these holders themselves. Right? You know, it really depends on the brand, right? I think most brands have kind of tangible goods that they sell at the end of the day. Right? And so, you can imagine that, you can turn fans from another, another economy, another, you know, another kind of platform or, you know, as holders of tokens into fans of your tokens that you can offer kind of, like, secure, like ecosystem where, you know, you’re better off by combining forces than just being independent.

Outro

Got it? Got it. Yeah. Make sense. Richerd, before I let you go. Where can we find you? Any last words? Stick it away?

Richerd: Yeah, yeah. You find me on Twitter. Right. So, my username is just @Richerd. Right. And then you’re my company’s manifold. You can find this on Twitter. Also, @manifold XYZ. Yeah, no, I think the big thing right now is just really focusing on, you know, thinking with a, like devotee of the web three space. I think we’re still super super early in everything we’re doing right now. Right? Like the systems for NFTs and web three, and crypto in general are just still very, very archaic. It’s very kind of like in the stone age’s, even though it’s been around for, like, you know, over a decade now. You know, we’re just getting to the point where people are thinking about usability and long-term functionality and long term, like thinking of use cases. And, you know, I think that we’re just going to see more and more innovation in the space, you know, as more people come in and understand the technologies are building and so, you know, I’m really excited to, you know, be here at the forefront of, you know, all the exciting things that people are creating right now. So.

Amazing, and we can find manifold where? @Manifold XYZ. 

Richerd: That’s what I said. Yeah.

Okay, cool, Richerd, thank you so much. We’ll have to do this again. But until then, have a good one.

Categories
Podcast Transcript

Here’s How NFTs Are Enabling a Better Future for Music with Catalog


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 24 welcomes the two co-founders of Catalog.works, Mike Mckain and Jeremy Stern. We had fun recording this one in person during Eth Denver where we got to explore how they’re enabling a new era of valuing music for what it’s worth. They’re legends and the music NFT movement wouldn’t have been possible without them and their hard work.

In this episode, we discuss: 

  • 00:00 – Intro
  • 09:29 – What Is Catalog?
  • 10:32 – How Does a Music Artist Get On Catalog?
  • 16:59 – Music Industry On Chain; What Happens When One Uploads Someone Else’s Song On Chain?
  • 21:36 – Does the Music Industry Need Its Own Protocol?
  • 28:20 – What Does Streaming Look Like Through Collecting and Owning Music NFTs?
  • 34:10 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Intro

Jeremy. Mike. Welcome to mint. How we feeling? How are we doing?

Mike Mckain: Feeling good.

Jeremy Stern: Fantastic. Thank you for having us.

Thank you for being on. We’re at Eth Denver and Eth Denver right now. Give me a quick recap what has Eth Denver been like? You guys threw a killer event.

Mike Mckain: It’s been good, we got the whole team out here that line to get in was a bit ridiculous. Took three hours to get a ticket that I haven’t used yet, but it’s been solid. Just good to connect with the whole team out here.

Jeremy Stern: Yeah, definitely different than previous years. Like a lot, lot, lot more people. I’m not quite as easy to catch all the things you want to catch. On more side events which has been fun or more fun, but really great seeing everyone. Always good to have an opportunity to connect with people, catch up with people, party with people

Yeah. No better experience and partying with people that you chat with and make friends with online Alright, let’s dive right in. Okay, who are you guys? Give me a quick intro on yourselves but more specifically, how did you get into crypto? We can start with Jeremy and then go to Mike.

Jeremy Stern: Yeah, so in early 2017, one of my computer science partners, like homework partners was like asking if I want to buy some solid the dark debt and looking into it. First up was buying Bitcoin but yeah, I ended up buying some bitcoin started looking to other cryptocurrencies we were roommates in college at the time, just looking at different a different option learned about like CA Coins, Storage coin. One point Mike was like, what’s this Ethereum thing? It’s only $8.

Mike Mckain: $80 at the time.

Jeremy Stern: $80, April 2017. I was studying, like taking classes on distributed networks, always been a big BitTorrent fan and fan of just like peer-to-peer technology generally. Come from a computer science background. So yeah, that was kind of our introduction to it. Went through that cycle stuck around, you know, learning about different projects, dabbling with development. But I come from, you know, both of us are big SoundCloud heads. Definitely spent a lot of time in kind of golden era SoundCloud. Finding a lot of new artists and diving into a lot of those different communities. I make music in Ableton, been DJing, since like high school, play a little bit of bass guitar, but.

What’s your style of music?

Jeremy Stern: It’s all over. I’ll send you some after.

 Okay

Jeremy Stern: Recently listening to a lot of house, more laid-back stuffs, some R&B, Drum and Bass cool lover.

Nice mike.

Mike Mckain: Yeah, I think for me, I bought Bitcoin in 2013. Early on, just like $500, let it sit for a bit, a minute. And then like Jeremy was saying, I think I bought Ethereum on Coinbase, April 2017. Just as like, you know, I had bought a little bit of Bitcoin and I saw it on Coinbase. I had no idea what it was. But I just, you know, threw a couple 100 bucks and went on a trip where I was offline for about two weeks, and came back online. And that Ethereum went from 80 to $240. And so, it was like a good chunk of money in a couple of weeks. And so, I think a lot of people get into this space through speculation originally. And that’s how I kind of entered in through 2017, just fell down the rabbit hole completely, was completely enthralled and absorbed in Ethereum, specifically. And this was my last year of school in Boston and was kind of figuring out what I wanted to do. My major was an entrepreneurship and music after bouncing around a lot. And by the time I graduated, I pretty much committed like I’m not gonna not take a job in crypto, I’m going to work in crypto, whatever that is. So, I got out of school, I moved out to Denver. And for a while for a couple months, I would just scroll coin market cap, click on every interesting project I could find and go to the jobs board and reach out to somebody.

Oh, no way

Mike Mckain: My background like my education isn’t in product design. But we’ve been working on side projects for a minute. And I’ve kind of just always done, you know, design work, whether it be for my music production, cover art, or, you know, just side projects trying to kind of flesh out, build my skills. And it was like probably 100 applications in that I applied to Coinbase for an internship, I got rejected. And I was kind of like at the end of the road. Like I think I was applying to places for four months, I still didn’t have that much experience. And one of the last applications that I put in was an organization called maker Dao. One thing led to another I eventually got an internship. Shout out Henry who hired me, really put me on and like I just Yeah, I ended up working as a product designer maker Dao for three and a half years. And it was a really just incredible experience, the ups and downs of that organization and really just learning a lot about defi. Always knowing like, again, like Yeah, produce music and DJ a little bit and music had always been kind of the passion in the background. And I knew I wanted to build something. And also knew I wanted to build it in crypto. So, it was all these kinds of things happening at once. I was working as a product designer full time and crypto, was making music. And, you know, working on side projects throughout the years, which we’ll get into, but all that kind of combination of things happening in parallel led to eventually, you know, where we’re at now.

So how did you guys’ kind of butt heads then? Prior to catalog, was catalog actually, the first thing you guys started building together?

Mike Mckain: So, we met, we met in school, my sophomore year of college, and pretty early on started working on projects. I think we always wanted to build something we had. We went through tons of things we went through, like subscription box ideas we went through, we had a candle making era, where we’re like, yeah, making candles and labeling them, just trying to like put stuff out there and make good things and see what happened

Candles. 

Mike Mckain: Candles. They were good candles.

 Were they?

Mike Mckain: Yeah, we might have to bring them back at some point, some low-key catalog merge. Yeah, we went through them on our kitchen stove. It was it was great. It was an era 

Jeremy Stern: Candles are expensive to buy, but they’re actually really cheap to make, and not that hard. But yeah, we were we were very deep in SoundCloud world, you know, budding producers, but recognize a lot of the problems that SoundCloud had sort of just the user interface and user experience level, and got the feeling that they weren’t really listening to their artists, or, you know, power user communities. And from a lot of those frustrations, you know, aside from just the artist don’t make very much money. From a lot of those frustrations, we set out to kind of build a better version of SoundCloud. And we’re obsessed with this idea of micro tipping. So, like what if you could leave a small tip on every single song you listen to, or potentially to add a song to your likes, you give, you know, pay which you want type of tip. And a lot of those, we started looking at ACH transactions for that kind of stuff. Turns out it was relatively expensive, you know, if you want to send like a 10-cent tip, you’re paying roughly the same amount, and just transfer fees. That actually led us to one looking into cryptocurrency as an option, because back then, you know, transaction fees were less than a cent. And also, just taking that idea and boiling it down a ton, because it was the first you know, real major project that either of us have done. We kicked around other business ideas through school, but none that really felt as important. And yeah, that led to our first sort of project after college called Love radio, it’s a 24/7 Beats Radio, kind of taken after those low fi streams that you see on YouTube, where as an artist song came on, you could tip it in 25 cent increments, and 100% of the tip would go directly to the artists. 

So, it’s kind of our first experiment with music and web three, we on boarded over 50 artists, got them set up with Meta mask wallets, paid out at the time, you know, in like late 2020, what was worth, you know, like $1,500 or something like that and tips are nothing substantial but got a lot of interest from people on the crypto side. We got a meta cartel grant, shout out Peter Pan, really cool experience talking to a lot of those folks. But when it came time to scale it up, we had this vision for creating, you know, multiple stations, not just one. Stations for labels, for artists, for listeners, it’s kind of network that was tied in. And this infrastructure that we were built on wouldn’t support that very well. So, we took a step back, recognizing that while you know peer to peer payments are cool, it’s certainly not the most interesting thing that you can do with Ethereum. Talk to a lot of artists in our circles, just about their experience with sites like Bandcamp, what worked, what didn’t, what they wanted to see, what they didn’t have. And a lot of those ideas led to an early version of catalog that we built for the seed club and Eth Online hackathons in October of 2020. And that was a very different version of catalog, it was based around artist tokens, kind of like staking those tokens on the artist to receive a share of their income pivoted away from that from a number of reasons but the November of that year in a rework the idea but and then December onwards, just been building what is now catalog today. launched on March 9 2021. The rest is history.

What Is Catalog?

So, what is catalog? For those who don’t know. It’s a cat liner?

Jeremy Stern: Sure, catalog is a digital record job and music community for artists to press one on one digital records and for fans to discover, listen to and collect their favorite music.

Why do people want to collect their favorite music?

Jeremy Stern: So, a large part of our own identities and forms of self-expression, comes in things like the clothes we have in our closet, the books you carry on your bookshelf, the vinyl records that you have in your collection, or for some just the songs in your Spotify library. But these are all like integral parts of our identity, it’s the kind of thing where you could walk into someone’s home, take a look around, and without ever having met them, get a kind of an idea of who they are. And a large part of our digital identities is now moving in the direction of what you carry in your wallet. So, collecting music has always been a part of self-expression. This is just the latest iteration of that.

How Does a Music Artist Get On Catalog?

So, when you guys basically, you guys have a selection of artists publishing one of one’s, their fans and most beloved listeners collecting those. What does the curation process actually look like to get on catalogue? And what kind of artists are you guys actually looking for?

Mike Mckain: That’s a good question. I think early on, like curation is, is really, really important in this space, specifically right now, because music NFT is a market is still relatively young. Our role looks more like a marketplace today. And what that takes is balancing supply and demand. While the collector interest for music NFT is still growing, we don’t want to, you know, overdo the supply of artists that are coming onto the platform. I think the, you know, the curatorial vision from the beginning was really at the end of the day just comes down to the music. How good is this music and we work specifically with independent artists who aren’t tied up in complex contracts that we can’t necessarily work within, within the bounds and tools that we have available. So, it’s, it’s really like the music, we don’t look at streaming numbers, we don’t look at social media following. We want to put on new artists and undiscovered artists, as well as you know, maybe more well-established independent artists. And I think we value diversity of genre, diversity of geography, diversity of identity, all this is really important, especially, you know, we’re building what we hope to one day be a shared ownership. Catalog into a shared platform. Sorry, shared

Co ownership. Yeah,

Mike Mckain: Co-owned platform, right, co-owned by the community. And I think it’s really important that we build up a diverse base of artists so that we’re not accumulating all that ownership into a non-diverse group of people.

You know, I’m thinking about it, because back in the day, when vinyls came out, it feels very reminiscent to collecting a physical vinyl, right? Beyond being able to play it, you can show it, you can show it off, like I own this, I’ve collected this right, and I’m just looking up a stat right now. And it’s like I searched up our vinyl sales growing in the US. And it says vinyl sales in the US increased from 21.5 million units in 2020 To 41.7 million units last year, according to 2021 report from MRC data billboard, media consumption company, whatever. And I’ve never collected a vinyl, right, so it makes you think like, it’s a new medium for a new generation to appreciate music and the collection process behind kind of owning a song that you feel so, so connected to, despite actually needing to collect the vinyl to listen to the song. Right? It seems like people still enjoy collecting these physical assets that kind of represent a song, right? Do you ever imagine with time music NF T’s kind of dying down in terms of collection? Just like vinyl did. And I guess like that question is also like pegged to Okay, technology happen, new forms of streaming kind of got introduced. But I guess like, how do you imagine the future of like collection kind of looking like?

Mike Mckain: Yeah, I think it largely depends on like, the culture and experiences we create around music NF T’s and you know, whether the ecosystem can create value and create this new economy around collecting. I think there’s a long way to go on one level just on like the social value of collecting new music NFT. And I think it’s really important. If there’s not spaces to express yourself online, through the music that you collect, then we’re missing out on a pillar of value that should exist for music NFT. So, I think it’s really dependent on in a lot of ways how the ecosystem develops. But I do think, like, I’m more bullish, I guess, personally on web three, music versus music NFT’s particularly, I think there’s so many opportunities for, you know, especially when kind of NFT’s and defi have some sort of convergence down the road for artists to monetize their work in 1000s of new ways. One on One record is, again, like a small sliver of a value model. And the whole pie of, of new value models, whether that’s through NFT’s or streaming money, or any of the other kind of like, infrastructure that develops on Ethereum moving forward.

Jeremy Stern: Yeah, I think it’s worth noting that, you know, collecting music and just its Ross form. While is one really important mission that we’re on and a battle to be fought that there because of what through technology it enables so many different, like new, previously impossible types of models. And then you can look to a lot of interesting used cases around like jam bands and other artists who have like cult followings that have found really creative ways to, you know, kind of have a shared experience and support a fan base that they can connect closely with both digitally and in physical space. That are also just like very valid used cases. The music NFT’s, like kind of a fuzzy word people throw Yeah, people throw it around. And it can mean a whole slew of different things. It could be music videos, it could mean you know, more like other collectibles that surround music. But the mission we’re on is very focused around bringing value back to music itself.

Music Industry On Chain; What Happens When One Uploads Someone Else’s Song On Chain?

I want to talk more about macro discussions. Okay, so what happens when somebody actually uploads the same song on chain? Like how are handles dispute? How are disputes handled? Excuse me, Of course, we can look back and see which one was uploaded first, right? Given, but it’s on chain now like it’s forever there? It could accumulate money, right? It could accumulate revenue, then is not associated with the initial person that uploaded the song. So how do you guys’ kind of think about that at catalog and then music industry on chain at large?

Jeremy Stern: So, what you’re talking about is largely an identity problem, which is not specific to music, NFT’s but the space at large. And it’s also one of the main reasons why we’ve been curated. That’s one of the many reasons we were curated at this time is that it’s a very unsolved problem, even in web to music to prove that, hey, I am the original rights holder for this and that person is wrongfully making money off of my music. Sampling is as a whole gray area with that, but purely just, hey, I uploaded a Kanye song. There, it can be really difficult to, there’s things you can do too, you know, look at like content fingerprinting, and try to prevent that at a UI level. But ultimately, if, you know, there’s nothing stopping someone from using permission-less tools to upload a Kanye West song and sell it. So, with that in mind, it’s, I think there’s a lot of things that can be done in general to improve identity on chain.

It’s a different problem space to tackle.

Jeremy Stern: Right. But with regards to music specifically, you know, we take sort of your running standard, like run of the mill steps with regards to like Terms of Service and identity verification on our end, internally. But I think that’s going to need to be improved as we as we hit scale.

Yeah. Anything to add to that, Jeremy? I mean, Mike? Excuse me.

Mike Mckain: that’s all good. No, I think that about heads it, I mean, it’s a very difficult problem to solve. And like Jeremy mentioned, it’s a problem. That’s pretty much just an extension problem that exist today. Blockchain does not solve this. And yet, until we have, I guess, more rigid, decentralized identity systems, it’s going to continue to be, you know, a manual process, at least for us, I think there is an opportunity to decentralize this process and kind of give the opportunity or the responsibility of arbitration to the community to handle these things in a decentralized way rather than a core team. But, again, that’s an entirely complex and system and complex problem to solve. 

Yeah, for those less familiar with music NFTs and our artists kind of entering web three right now. They’re overwhelmed with all the buzzwords, all the processes from Meta mask, to uploading, to minting, etc. A lot of them just understand streaming platforms, right. And when they come to catalog, they try to understand okay, what is catalog and how do I kind of think about it from a bigger picture? I guess, Mike, my question is like, do you guys I see ourselves kind of like competing with streaming platforms to an extent, like, let’s say, Spotify were to embed and create a feature where you can support the artist through micro tipping, for example, or collecting their song file itself, right? Do you see yourselves competing in that matter? Or how do you guys kind of think about that? From a big picture point of view?

Mike Mckain: I think on a long enough time scale, we probably see ourselves competing with, you know, major DSPs. I don’t think that’s, you know, a scenario that we would hope for tomorrow. I think that’s actually a potentially nightmare scenario of streaming went away tomorrow. But I do think we need more robust systems, we need better developed infrastructure, we need education, and we just need more people participating in the space. Before, we’re kind of ready for that kind of scale. Yeah.

Jeremy Stern: it’s an interesting balance strike, because most of the time, when you’re abstracting, at least at this stage in the game, when you’re abstracting too much away from the user, it oftentimes means that you’re taking some amount of sacrifices in terms of centralization, or custodial wallets. If you’re abstracting away gas fees, then you’re on a layer to which some may be more trustworthy, your will have more longevity than others. So yeah, we’re gonna tricky, the stage is still it’s in infancy, or the industry is still very much in its infancy. And it’s always important, I think, to step back and remember that, it’s still kind of the first inning, or in the sort of dial up era phase of things.

Which is crazy to think about. 

Jeremy Stern: It’s exciting. Very much like a blank canvas, we all get a chance to sort of collectively paint. And yeah, it’s an endlessly grateful to be building and in this space for that reason. 

Does the Music Industry Need Its Own Protocol?

Yeah. On that topic of infrastructure, do you think the music industry needs its own protocol?

Jeremy Stern: Hmm. Interesting question. I mean, there are some amount of like protocols that exist today in terms of how money is facilite, like, how money is moved around from the pockets of, you know, everyday people who are using Spotify to, you know, when a song is played on the radio, or licensed via sync, it’s all, you know, has somewhat, has some amount of standards moved around. But admittedly, they’re pretty garbage. It’s not very clear, or rather, like there’s, there’s a lot of black boxes where money gets lost, and people are always having to chase things down. Putting a lot of that those movements on chain is undeniably, I think, a net positive for musicians getting paid instantly, and transparently, would be a huge, huge, huge step forward. And there’s a lot of cool companies working on stuff like that today. But to sort of broad strokes generalize, it’s, I think, difficult to say that there’s any one, you know, sort of proven way to monetize music. We’ve, you know, we’re doing things one way in a catalog. And I think there’s no shortage of possibilities there. So, in terms of a protocol for music, and web three, it feels like there’s going to be many, rather than just sort of one overarching standard.

What do you think Jeremy? Mike, excuse me.

Mike Mckain: Leave it there.

Leave it there. So, do you think the end goal of all this is to kind of build a trustless music industry, because there’s a lot of human error throughout the day to day from assigning rights to contracts to the DSPs and adding associating royalties to people the list goes on and on, of just like different human error and touch points that kind of get many people screwed over? Would you agree the end goal is to create a trustless music industry? And when you even hear trustless music industry? Like what does that really mean? It’s like two questions kind of thing.

Jeremy Stern: Yeah, trustless feels, obviously very important. It’s like a ethos. It’s a big part of the ethos of web three, generally. Like philosophically, it’s something that we should all strive for in the tech that we’re building. I think a big part of that is owning the tools that you use in your day to day so that, you know, we don’t have to trust that SoundCloud has our best interests at hand. But that, you know, we can actually, if they do something that we don’t like, as users that we can have a say in that, and are incentivized to act in everyone’s best interest. I would say that, like, the term gets thrown around a lot, even in the context of like, permissionless. And in permissionless systems, you know, like I was saying earlier, I can go and upload a Kanye West song and sell that. And if there aren’t checks and balances in place, I’m going to make money off of that. And probably someone high up is going to, like the music industry has a long history of suing or buying out disruptive technologies, and I think this is absolutely no different. So, to do things trustlessly can enable, doing things too trustless I guess, or too permissionless can open up a lot more risk for platforms like us. And I think taking an approach that’s more harkened to like to like the Pirate Bay or like RDS or something like that, something that is truly, you know, unable to be stopped. And that is immutable is a step in the right direction, but I don’t know it. It’s a nuanced topic. The more permissionless tools that you have, the more powerful things you can do. And some people might use that as a tool. And some people might use that as a weapon. So, there’s also a huge responsibility when building the space to, you know, make sure that people are, you know, doing things, moving ethically, like putting the right stopgaps in place to try and prevent the wrong people from, you know, making money off the backs of others. Yeah. But I feel like we can have a whole episode on that.

Yeah, Mike.

Mike Mckain: Yeah, I think you’re always going to have the, you have in your human input in these systems, as opposed to, you know, a defi protocol, the code is deployed, and you’re just interact with it, you don’t have people uploading content to a system, all over the world, all different kinds of people. And I think inevitably, in a system like that, you’re going to have bad actors, and dealing with bad actors. You know, as far as the infrastructure provides right now, depends on trust in a lot of ways. So, until we have, you know, better developed infrastructure or more tooling around dealing with these sorts of human problems, I think we’re, there’s gonna be a degree of trust in these systems for the foreseeable future.

Jeremy Stren: An interesting example, that’s more concrete is splits.

I was just about to say that yeah.

Jeremy Stern: Yeah, like a lot of record deals are, you know, say on like, a five-year contract. Yeah. And if that expires, and it’s not renewed, then the record labels not entitled to split from that anymore. So, in the context of music NFTs, if the live labels while address is permanently hard coded into that split, then the deal expires, then they shouldn’t be getting their share anymore. So now you need someone to oversee the split to make sure that it is being actively maintained. And these things change all the time. So, who should have the authority to update the split? Is it just,

Or input the split to begin with.

Jeremy Stern: Right. Now what if you have a bad actor who suddenly goes rogue and says, hey, actually, I, I’m not going to vote myself out of this split, even though they technically should be? Who should have the authority there? How do we make sure that, there’s honest cases where things can happen to like, oh, I lost access to my wallet like this happens a lot in these early days when people are still learning? Well, how can we be sure that they actually did lose access? How can we be sure that a bad actor who gained access is unable to do anything malicious? Again, not these are not problems that are specific to music, but.

Nor web three, because web two as well, you go and distro kid, and you could easily delete someone from his rights and his royalties, right? So, web three doesn’t necessarily solve it like, sure if there was like a contract where you can set a time limit, right? And you can put all these details to the actual written contract on chain. And sure, but we’re not there yet.

Jeremy Stern: Right. Dan Fowler has some great writing on that, on this topic, in particular, but yeah, a lot of these problems are human problems and coordination problems that are not easy to solve.

What Does Streaming Look Like Through Collecting and Owning Music NFTs?

Yeah. One thing I want to talk to you guys about what’s the canonical format of a song? Like, is this model of collecting a song and having everyone streaming for free the future? How do you guys kind of think about that? It’s something that we talked about yesterday, during the good karma showcase, the panel that we had at Eth Denver? So, I’m just curious, like, what is streaming look like, through collecting and owning? Right? How does that play a part in it, I know right now, it’s just treated as a way to kind of value music as an art the way you would buy a Picasso the way you would buy any, any form of art. And it should stand at that. But it’s composable. This technology is composable by nature, right? You can build on top of it. Sooner or later, all these top collectors, there might be a decentralized Spotify, where you can license the music that you own, and you can earn streaming royalties on it in the native governance token, right? Like, these are things that may eventually play out. But what does that look like from your point of view? And I know this is like very much like a macro like Oh, in the future, but I think it’s important to know.

Mike Mckain: Yeah, at a high level, I think that canonical, the idea of canonical is to serve as a source of truth. And what that source of truth contains, is pretty primitive right now, but it can grow into including permissions around licenses, or, you know, containing attribution and royalties. So, just to have that one of one source of truth of which not to say one of ones is the sole value model, but one of one serving as that canonical version that you can look to for any other value models or composition that you might do on top of that. So you build for example, we saw with BPM bot which was a discord bot built on top of catalog records originally, hosted club BPM and discord, invited a bunch of people sold tickets through their BPM token. And there was a question around, you know, these ticket sales to get into quote unquote club bpm. Where does that money go? Does it go to the Dao? Does it go to the people who own the records? Does it go to the artists? If it goes to the artists? Are they getting 100%? Are they getting 50%? Artists that a creator share on their one-on-one record on catalog? Do they collect that creator share on the ticket sales? So, there’s all these questions I don’t think they’re that are well defined on the one-on-one canonical version yet. But just to have that there and build out that tooling and permission systems on the original, I think can, again, serve as a source of truth for any other value model, or application that they might choose to build on top of it.

Jeremy Stern: Yeah, it’s worth calling out to that. You know, one of the things we recognize as problematic in the industry today is this paper play valuation model of music, it incentivizes music that is going to get the most number of plays, when that’s not necessarily how most people create art. And it creates sort of perverse incentives in that regard. What’s interesting, also about sort of streaming and the digital music era that we’re in today is that it allows content to be freely distributed as why it is the internet itself. And it’s not a bad thing, that means more people can hear this for free, right now, I can effectively hear any music I want for free and download that for free, with or without, you know, as a subscription to a DSP. The beautiful thing about NFT is that everyone loves to talk about it, you know, compare it to like the Mona Lisa, the more culturally relevant that piece of art becomes, the more it is experienced and shared, the more valuable the original. And so, with that logic, the more valuable the one of one or the catalog record. I think for a lot of artists, that is the case that someone would value that original more than that artist would ever get from streams from that single song. But that might not always be the case. It’d be some songs, you know, well correlated in value for the one of one to their streaming, to the streaming numbers might not have that same, that same balance. But ultimately, it’s, there’s no shortage of possibilities for ways artists to monetize it in web three native ways. And those are the things that I think we’re most interested at catalogue. And so having one of one’s that’s sort of the source of that, like Mike was talking about, makes for an interesting proposition.

Mike Mckain: Yeah, and shout out Holly, Herndon and Matt Dryhurst on the powerplay valuation model idea, I think they really helped kind of, like see that idea into the culture and, and popularize the idea that this value model is singular. And it may work for some artists, but it is not the way that we should be universally valuing music. Go follow them.

But on the consumer side, it’s just the easiest way to enjoy it. Like from a listener’s point of view, right?

Mike Mckain: Well, you can point to that number, say, look how many views that YouTube video has right plays the song has, you can say, look, how many sales that vinyl sold, you know, that they sold of that record? How many digital downloads that are get, now we can start to look at other interesting, you know, lenses of this slices of views of this, which is like, well, how much did the NFT sell for? Obviously, there’s a lot of other factors that play into that. But yeah, these are all sort of viewing the perceived value of a song in a very narrow lens. I think that’s something that can be very difficult to actually quantify, you know, how do you quantify how much a song means to you? If you think back to like, the albums that you listened to when you were 13? Like, how much do some of those, when you know, broke up with your first partner or something like that, like, trying to actually under understand how much that means to an individual or to a collective of individuals? It’s actually very hard to measure.

Outro

Yeah. I think that’s a good place to nearly wrap up really quick before I let you guys go. There’s obviously a lot of people that want to be on catalogue that know of you guys and the cool things that you guys are building. What are some tips you have for musicians for creators coming into web three, coming across all these buzzwords and wanting to dive right in? How would you help him navigate it?

Jeremy Stern: I think it’s a lot of just like hanging around the space and learning and diving into these communities. I think there’s so many web three music communities at this stage and they’re all incredibly welcoming. And there’s a lot to learn and all of them. You know, whether that’s hanging out in discord communities, listening in on Twitter spaces, following the right people on Twitter. This space moves super, super rapidly. And I think just to envelop yourself in it is the best way to get your footing. And if you want to, you know you feel comfortable to start releasing music. There are platforms today that are open for anybody to use. And then there are also curated platforms and I would just encourage everyone to explore the bounds of the space and if you want to release on a sound or a catalog, submit your music. We would love to hear it. And you know, in the meantime, there’s tools like manifold, there’s tools like mint songs that are available for everybody. But really, the only answer is just to get involved and dive in.

Amazing, guys, I think that’s a great place to end off. Where can we find you? Where can we find catalog, show the details?

Jeremy Stern: We are at catalog works on both Twitter and Instagram. My Twitter is @Jayzstern.

Mike Mckain: I’m on Twitter @Mckain_

Jeremy Stern: And also, yeah if you go to catalog.community, that’ll take you to our Discord, some basic questions can be found at catalog, can be answered @catalog.wtf, but yeah, jump in and say what’s up. And we’d love to hear what you’re listening to, even you know, web three aside, just throw some music Rex in the music Rex channel, always keep to listen to that stuff.

Amazing guys, thank you so much. Hope to have you on again soon. Thank you.

Jeremy Stern: Thanks, I appreciate it.

Mike Mckain: Of course.

Categories
Podcast Transcript

Why Beats, Loops, and Sample Packs Need Crypto and Web3


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 23 welcomes two-time Grammy award-winning producer !llmind who shares his motivation for launching Squad of Knights and argues why beats, loops, and sample packs need to be on-chain.

In this episode, we discuss: 

  • 00:40 – Intro
  • 09:24 – Understanding IP On Chain
  • 12:23 – How to Eliminate People Sending Files to One Another; Sending the NFT and Integration
  • 15:56 – !llmind’s Point of View on Web Three and Web Two
  • 19:08 – Why do Beats, Loops, and Sample Packs Need to be On Chain?
  • 25:00 – How to Track Payments On Chain?
  • 27:09 – Who Does Web Three Work Against in the Music Industry?
  • 29:13 – Why !llmind is Starting Squad of Knights
  • 45:23 – How do People Gain Access to !llmind as a Producer and Mentor?
  • 48:03 – Community Building in Crypto Around NFTs
  • 52:16 – Roadmap Project Launch
  • 01:02:39 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


!llmind Welcome to mint my friend. How are you doing? Thank you for being on

!llmind: My G. Adam. Appreciate you dawg. It’s honor to be here, man you already know.

Intro

Dude, I’m excited to have you on. You’ve been like, you’ve been pretty loud in the NFT space for quite some time talking on the music side of things on the general NFT side of things. So, genuinely a pleasure to have you on let’s dive right in. Okay, for those who don’t know, you, okay, which I find hard to believe. But for those who don’t know you, how do you introduce yourself, but more specifically, tell me about your journey into crypto.

!llmind: Cool. Yeah. Well, first of all, it’s honor to be here always. Um, man, how do I describe myself? I’m just a kid from New Jersey, who’s curious about a lot of things. First thing I was curious about was music and took matters into my own hands. And like dove right into the art of music production, was inspired by guys like J Dilla. And Pete Rock and Dr. Dre and timberland and Neptunes, and went from took that curiosity and started in mom’s basement. And you know, almost 20 years later, I’m thankfully still around and doing what I love and, you know, it’s a new adventure every day, and I got into crypto. You know, you what? I want to say my entry point into this whole thing was probably October of 2020. So, a good friend of mine, Jan Silva, who is an amazing artist, amazing photographer. He actually told me about NFT’s back in October of 2020. And, and at around that time, I was kind of like, looking for a way to, just something different to do in terms of like, the little side businesses that I was running, so like selling drum kits, you know, I have a very long-standing history of, of interacting with like, digital media and selling digital goods, sound, sound packs, stuff like that. And so, when I heard about blockchain technology, and a way to authenticate digital files, I was like, immediately blown away and intrigued. So that was kind of like my first introduction, NFT’s. But I didn’t really start getting fully into it, until around January of 2021. And that was when, you know, shit really got real for me. And I think for the rest of the world, I kind of you know, it changed everything, right? And when you combine that with the pandemic, and everything that was going on, it was an eye opener. So that was my kind of entry point. And since then, I’ve been doing a lot of homework and studying and getting into discords, and interacting with different people in the community and learning a bunch. And I’m still learning right to this day, I’m still, I still consider myself very fresh and very new to the space. But we’re here now. 

We’re here. Now, can you walk me through your first few drops that you actually issued? And like what you learned from doing them? Because I remember in the beginning, I was doing some research on you, you focused a lot, like you said, On the Beat side of things and the music side of things for the first few drops. Walk me through that, how they how did those come to life? What were some takeaways, lessons learned? and whatnot?

!llmind: Sure. So, I’ll take you to the beginning of like, what it is, and then what we did. So back in 2011, I don’t know a lot. I don’t know if you guys know.

Damn. 2011.

!llmind: Ten years ago, right, I released my first sound pack, right. And if you don’t know what a sound pack is, a sound pack is basically a zip file containing different types of audio sounds that are original, you know, snare drum sounds, kick drums, high hats, drum loops, melodies, original melody loops, stuff like that. And they’re basically tools for music creators, music producers. And back in 2011, this wasn’t a thing at all, like if you wanted to purchase sounds, you had to go to Guitar Center, or very, very few online retailers sold actual, you know, sounds. And it wasn’t really, there wasn’t really a market for it yet. So, 2011 I told myself, I’m like, I wonder if there is a market for me to sell my own original drum sounds and Melody loops that I created from scratch. And I’m wondering if there’s other music producers out there that would want to use them. And so, I did that in 2011 You know, on my blog site, and ended up blowing up and then from there, I migrated to a Shopify account and created a Shopify, and it turned into a whole thing, you know, and, you know, 10 years later, it’s become a multi-million dollar a year business. It’s grown to about a $10 billion a year market cap globally, which is huge for my industry. And so, in 2019, no, early 2020, okay, it was January 2020. I decided to release a sound pack on eBay. Right? So, I told myself, I’m like, instead of selling the sound packs individually for like, $20 $30 each, and sell, you know, an unlimited amount of them. What if I sold a one of one, right? And so, I was like, I’m going to create a one-on-one sound pack and sell it on eBay. And this was the beginning of January, or the beginning of 2020. So, I did it, and ended up selling for like $12,000 for one sound pack, right? So exclusive one of one, you know, kind of similar to like the Wu Tang album, The one of one type thing, but it was a sound pack. And so that was unheard of at the time. So, I did that. And then October hits, like I said, 2020, October hits, I hear about NFTs. Jan Silva puts the puts a battery in my back. And I’m like, Dude, this is crazy. We might be able to do an NFT sound pack. So, I think it was February of 2021. If I’m not mistaken. February 2021. I release a one of one NFT sound pack, which is the first of its kind. No one’s ever done that before. I did that in January of 2021. On mintable. Right. And I did it and it sold for 4.5 Ethereum. And, and back then it was 4.5 I think was like $8,000.

And that and that was for one buyer. Right? Because it was one

!llmind: That was for one and mind you these are going for $20 $30. 

Right.

!llmind: In the market. So, I sold a one on one for I mean, I don’t know what that is. 8,000x.

Yeah, yeah, crazy.

!llmind: Right. So that kind of created like a bit of a shockwave. And it definitely woke me up to how powerful NFT’s could truly be. If you associate them with like the right utility. And here’s a little fun fact. So, the person, I want to put them on the spot, the person who purchased the sound Pack NFT for $8,000 for pro five Ethereum. They actually recently used one of the sounds in that sound pack and got a placement on Migos his album, and they’ve since 20x their investment.

Wow. And were you able to recoup any of that? 

!llmind: No.

Was it an exclusive outright buy, the one of one?

!llmind: It was exclusive 100% ownership. And so, from there, I told myself I’m like, that’s, that’s, at least to me, that’s what makes the most sense with NFT’s is, you know, and this is not taking anything away from other types of utilities and use cases. Sometimes, an NFT is meant to be a work of art. But for the NFT’s that aren’t meant to be a work of art, you got to ask yourself, what kind of value am I giving to the person? Like, is this something that they’re going to make money off of later or hang up in their living room or, or actually use for something and maybe make money from it in another way. And so, I love the idea of giving intellectual property to the person that invests or purchases the NFT. And that’s exactly what I did with the with the sound pack. And I’m super happy that you know, the person that bought it has since like gone on and done some cool things with it. So that’s the part of the NF T’s that I really love.

Understanding IP On Chain

Got it. Can you walk me through like your journey of understanding like IP on chain? Because when you sell something outright, something that’s traditionally done through paperwork and a ton of middlemen, right to kind of make a sale online, you actually just did that one transaction. Right. So, was there something in like the unlockable content that was able to provide like a legal contract to sign to make it official off chain? Or how did you kind of walk through those problems?

!llmind: Yes, so I I think that we’re kind of still in real time figuring that out. I don’t know if there’s like a foolproof method on deploying that. But from the one of one pack that I released a year ago, what we did was I had my attorney write up, you know, an exclusive contract that pretty much grants full usage forever to the person to use all of that IP that they purchased in the pack. So that’s one way of doing it is a natural just like web two you know, contract that comes with it. But in terms of having that actual you know, information in the smart contract, I think that would be probably the next step is if I were to do this again, it would be the contract, but in the smart contract so that whoever owns that piece has those rights. But again, you know, it’s very still very new.

 Yeah. Yeah.

!llmind: You know, that’s what my instinct tells me, but I think it’s something that we need to figure out collectively.

You know, it’s really cool. Like the evolution of the marketplace, you started selling that one on one on eBay, which is something like when you look back and you try to use eBay today, you basically use it for like physical items, right? And it makes you think, like how early the concept of NFT’s were without the buzzword of NFT’s, right? And now come to today, now you’re releasing your own sample packs on chain that, like have exponential more value than if they were off chain. Right. And you’re doing in a very curated one of one way to keep it super legit super scarce, which outright has its own value within itself, right, setting up that dynamic. So.

!llmind: Exactly. Yeah.

Yeah, keep going, keep going, you’re gonna say something?

!llmind: I’m gonna say, you know, it’s, it’s a little bit different from like, you know, an artist selling an mp3, right, which is also I think, you know, something that we want to talk about today. But, you know, if I’m a rapper, and I have a song, and there’s a million things I can do to turn that into an NFT. But essentially, my NFT’s, my sound pack NFTs are like, I’m selling the shovels, I’m selling the shovels to the people, right? For them to use, I’m selling tools to create music. So, it’s a little bit of like a, there’s like an additional like, layer underneath that, which is what I think makes some of my stuff a little more unique, because it’s very much more of a person. But all of it excites me, man, anything that has to do with like music and chains and NF T’s like, I’m super fascinated. You know.

How to Eliminate People Sending Files to One Another; Sending the NFT and Integration 

It’s interesting. For the last few days, I was learning more about like how the producer industry works from like a grain of salt point of view. And you see, like, up and coming producers, uploading loops, sample packs, beats whatever, on Dropbox, right? And sending like files to people in their inbox, and basically defining the terms of the usage of the file in the text file itself within the email. And it makes you think, actually, how outdated and how old a 2022 music industry actually works with the advance of technology that we have today. And it makes me think like, could NFT’s actually be the new standard for ownership for beats, loop samples, etc? And what does that look like unlike when you scale that process? Right? How do you actually eliminate people sending copies of files to one another, more so sending the NFT as the actual example of what they want to integrate into a song or sell to a producer or whatnot? Do you have any thoughts around that?

!llmind: Yeah, I think I mean, the whole thing is so interesting, man like, I feel like on one hand, it’s a golden opportunity for us to potentially, you know, create a brand-new way of doing things, which I think is at this point much needed. With that on the other hand, you have to be realistic about the idea that there’s a system in place in music business, that’s obviously skewed to benefit one party and one type of person. And that needs to either be completely changed, or it needs to be completely obliterated and replaced. And that’s a really, that’s a really a tough battle. That’s a very, very bold adventure to go on. But I’m all for it, like I’m with the smoke, right? Like, I’m with the smoke, but you know, that in my opinion, that’s what needs to happen. Because when you think about performing rights organizations, right, PROs ASCAP, BMI CSAC. That’s just America alone. You’re not Europe, Asia. So, you’re talking about all the PROs have to be on board with this. All the major labels have to be on board with this. All you know, Harry Fox agency, and all the royalty collection agencies have to be on board with basically saying, Alright, cool. We’ve been making billions and billions of dollars every year. But, you know, let’s just switch everything up and go with the web three route because the artists are fighting for it, and it’ll help them and it’s just the right thing to do. Like, no, that’s not gonna happen. Yeah, that’s not gonna happen, like you have streaming services like Spotify. Like they’re not gonna bow. They’re not gonna just say, Well, okay, cool. Well, I guess we’re web two and the web three community. They got us we’re done. That’s not gonna happen. That’s not gonna happen guys like and trust me as much as I want that to happen. I do as a producer, as a songwriter, like, of course, I want that to happen. But we have to be realistic. Like, there’s so many innovative forward-thinking people that are creating amazing technology in web three. But we have to really be mindful of exactly what we’re up against. It’s either we have to work with them, or we have to completely obliterate them. And so, it’s your choice, right? Like, it’s gonna be interesting to see what happens.

!llmind’s Point of View on Web Three and Web Two

You know, you know what is interesting? You see startups actually saying, the new payment rails, the new system needs to be completely on chain. And there’s some that believe the thesis that there needs to be like a collaboration and build rails between web two and web three, right? There needs to be a way to work with Spotify, bring streaming data on Chain, make royalty payments via USDC or whatever, then get Airdrop to all the contributors and their wallets associated through splits. And it’s very hard to tell which one would actually win and which one will actually work, from your point of view is the way to completely go web three and build an entirely new streaming platform, distributor, publishing platform, royalty, everything, like the entire operation is it is it better to just redo that, or work with web two and build rails from what to two, web three?

!llmind: I think that the better way, like if it was, if it was like, our choice, like if we were, if we had the Infinity Stones, we can snap our finger and make it happen. I would program my Infinity stones to completely get rid of all the streaming services and create a brand-new web three thing. Like, the entire industry needs to be replaced, I’ll be honest, like, you know, this is me, like trying to be, you know, because I know a lot of really good people that work for, obviously, for labels, and these are good people. But we’re all doing a job that we were assigned to do, right? Like, you can’t blame the good people that work at Spotify for what’s happening. You can’t blame all of them. So, this is no direction to any one of them. But at the end of the day, if we’re keeping it really transparent, we need a brand-new system guy, like we need a complete overhaul. Like we need to, we need to replace the idea that like music producers, typically get four points per song per album on royalty. You know, a four-point royalty is, I mean, for every 100 million streams, I’m making $4,000, that makes no sense. Like, we need to redo the numbers, we need to redo the process of how songwriters, producers, artists get paid. We need to redo how publishing works. I mean, there’s a lot of amazing people that work in publishing, that are creating new systems like MDRC deals are no longer really a thing, you have term deals. Now, you have co pub deals, you have admin deals, those are all really great. And they’re working for a lot of people. But to be honest, we need it, we need some new energy, we need to overhaul and if we want web three to be the thing. Like you said, I think having a railroad like a railway to kind of bridge the two together and maybe segue into some different partnerships that might make everything work and have it all kind of coexist, that’s probably the most realistic way to go. And it could work that way. But again, I think only time will tell. And again, that’s gonna take time. You know.

Why do Beats, Loops, and Sample Packs Need to be On Chain?

Yeah. You know, it’s interesting. All these streaming platforms were very much intended to benefit the record label in their large catalog of work, right. And I think we can all agree like the revenue models and the royalty models behind Apple Music, Pandora, Spotify, etc. Don’t really value music, the way it’s supposed to be properly valued. And hence why we’re seeing like this entire new wave of music NF T’s where you have platforms like catalog, sound dot XYZ, Mint songs, etc. Treating music as a collectible, as if you were to collect the fine piece of art, right? And it’s interesting, because like, back in the day, you would collect vinyl, right? Sure, they had utility of playing them. But these were physical objects that people enjoyed collecting. We’re seeing that same mindset being applied in the digital realm as well. But one thing that I find super interesting behind beats loop sample packs is that these assets, these on chain assets actually have genuine utility. They’re the molecule, the atomic unit of a song, right? And being able to actually purchase these things and create utility and make a song from them, actually introduces a whole new layer and like building blocks, and now I start thinking about defi and how this entire kind of ecosystem kind of bridges in to one another. So, seeing what you’ve done so far in producing and creating genuine value from a producer’s point of view on what you want to sell sample pack for, not necessarily plugging into let’s say splice or beat stars etc. Letting them define whatever it is that art is worth on their platform, is just interesting to see. And I guess from like your point of view, okay. Why do beats, loops, sample packs actually need to be on chain? Like, what is the problem that’s solving? I know you touched upon it a little bit earlier, but just to give more clarity to the audience that doesn’t really have true familiarity behind it. Yeah, what was like the aha moment for you? Was it the provenance? Was it the ownership layer? Was it the royalties on chain, like, walk me through more of your mental model behind that?

!llmind: So, the number one issue it solves is ownership. Right? And so, think of it this way, think of it like you said Legos, right. So, let’s say these sound packs are Legos. And let’s say for instance, I have a Lego set. And I want to sell it, right. And so, let’s say I placed this Lego set in Toys are us, there’s, you know, 50,000 units that are shipped that are expected to sell in all these platforms. And after a couple months, all 50,000 of those Lego sets are sold, right. And it’s the same Lego set. So, you have 50,000 different people that have this Lego set. Now, let’s say they put the Lego together, and they create what was intended to create right from this Lego set. And now they want to resell that Lego set to other people, well, it’s going to be difficult to do that, because you have, you know, 49,999 other people that have the same exact Lego set. And if you sell your Lego set, you’re not selling, you don’t, you don’t have that ownership to sell that Lego set, because there’s you know, tens of thousands of other people that have the same one. And you, you really have no way of proving that you own it, right, you just have a receipt that you purchased it. So that’s sort of how I look at these sound packs, is, it’s a way to transfer true one on one ownership to use this one Lego set for this one purpose for this one person, right. And so, it just kind of solves all those issues of like usage, what you’re able to use, and create with that sound pack. And it gives that person that freedom to be able to take advantage of using that sound pack the way it was meant to be used. So that’s number one problem it solves. And this is guys, by the way, this is a huge problem in our industry, you know you have, I mean, even me personally, I’ve run into cases where you know, one producer will use one of my sound packs. And then there’s another music producer that uses the same sound pack. And now Drake has a song with one piano, but then Travis Scott, just recorded to the same piano. And now, you know, who gets to release what, who owns it? Now I’m in the middle. And I’m like, who do I give this piano pack to? Do I give it to Drake? Or do I give Travis because they want to release it as a song. And they can’t both release it? Because it’s basically the same thing. So, you know, it’s a big problem. It happens all the time. And I felt as though the sample pack NFT was one way of potentially solving that problem. Yeah.

So, do you imagine Drake or these other artists that are kind of like, fighting, quote and unquote over the same sample pack? Do you imagine them going onto a platform and buying that? And then underneath the hood, there’s like some verifiable standard, like an NFT. That would prove outright because x person bought it and it’s in their wallet, and they outright fully own it. Is that how you imagine the process kind of coming into play?

!llmind: I do. I do. Okay, I’ll give you an example. Yeah, and this has happened. Okay, my one of my good friends, music producer, Boy Wonder, one of the best to do it. I don’t know if you guys are familiar, boy wonder as produce all of Drake’s hits. Let’s say he, he calls me and he goes, Hey, !llmind, I’m in the studio with Drake. Send me some sound packs, right. What I can do is AirDrop him sound packs, with the smart contract already on the thing. Be like, Alright, use those. You’re the only one that has them, because I just AirDrop them to you. Simple. And then the usage, you know, the smart contract, the contract is in the smart contract in the airdrop so 

How to Track Payments On Chain?

Right. Yeah. No, but then. So then once they get it though, okay, let’s, let’s say once they get in their wallet, and they actually use it. How do you actually track payment? How do you actually like integrate the licensing and the splits in the points everything else that you kind of talked about that make up your contribution on the song? That stuff still happens off chain? Right? Yes. How can we bring that process on chain?

!llmind. Well, I think.

It doesn’t need to be on chain.

!llmind: I think it does. I think it speeds the process. I think it, it’s a very different way of doing things as opposed to traditional contracts. I mean, you have to keep in mind, like, every every transaction in the music industry is still lawyer, lawye,r redlining, you know, contracts, going, going to, you know, the printer to like, print out the contract for 50 pages and physically redlining stuff with a highlighter, like, that’s still happening, right. And so, I think you still have the challenge of lawyers having to negotiate and I think there’s no real, at least to my knowledge, there’s no like web three solution to solve that issue. So, it’s still gonna take a while, like, it’s not gonna just be this like, quick. All right, like, we’re in the smart contract, like, one push of a button, and we’re all good. Like, you know, we still have to figure out like, how many royalties do I get? How many royalties does boy wonder gets? If we hire an additional musician, which that person also gets, you know, royalties on this or publishing? What kind of publishing agency Am I signed to? What are you signed to? So, it’s still, like I said, and it proves the idea of having to redo the whole system, right? Like, we still have to, we still have to figure out the publishing, the writing, the royalty. So, if we redo, we need to redo the, it’s almost like, do we renovate the house? Or because it has like good bones? Or do we fucking destroy the house and start from scratch, and we have to destroy the house and start from scratch?

Who Does Web Three Work Against in the Music Industry?

I agree with you with that, because there’s too many incentives in the house that already exists, right? And, like, let’s be real, like people feed their families with a model that exists, currently exists, right? There’s no need to generally fix something that isn’t broken for the people who are running it, right. But what’s interesting about web three is like, artists, creators, creative entrepreneurs are really realizing the potential behind these web three primitives, these crypto primitives to actually be able to build, to monetize and own their audience without needing to basically rely on these big middlemen that kind of run the day to day of how things work today. So, you know, part of recording season four and making all about the music industry’s kind of dive into what does the current process look like? And how does crypto change them? And one thing we haven’t really touched upon yet, which I’d love to hear your point of view is, who doesn’t want web three to work in the music industry? Like who does it work against?

!llmind: I think it works against people that are making a shitload of money. People that are making a lot of money from the system that’s in place right now. And those people not wanting things to change too much. Right? I think if you, if a web three opportunity presents itself to an executive that’s making $1.5 billion a year, and you tell that executive. Hey, check out this web three system where you can make $3 million a year, I think that person will be open minded to hearing that person out. But until that day happens, I think there’s too many people that are in too much control, that control many things. They’re not bad people. They’re just in control and their money and they’re comfortable. And it’s just what it is. And until there’s a solution where everyone is happy. It’s either, you know, we create something where we can coexist, or we try to revolutionize something. And that’s just the rock and the hard place that we’re all in.

Why !llmind is Starting Squad of Knights

Yeah, makes a lot of sense. So, part of revolutionizing things. Okay, here comes squad of knights. Okay, I want to talk more about that. A revolution within itself led by a revolutionary Okay. Walk me through more of like, your thought process behind starting squad of knights. What do you actually try to do with squad knights right now all I see is a landing page. I see records on the back. I see horses like it’s sick. But walk me through like what can we expect? What are you trying to do? Give me the whole thing.

!llmind: Cool. So, this is an exclusive, so by the time this goes live all the info will be out there. So, like this literally, first time.

Okay, let’s go. 

!llmind: Excuse me. So, back in April of last year. I immediately that was when I got into board apes. And I started collecting PFPs and did pretty well honestly, I sold my ape a while ago, took profits but we can, yeah. Paper ill mine. So back in April, I was like super fascinated with like, the PFP idea. And I never wanted to jump into it. Just to do it. And I’m very, very humbled and blessed that I’m able to like, have continued to make a living off of what I do. So, it was never a money play for me. All of this stuff is strictly excitement. And wow, new technology, what can I do to contribute? So, I was thinking to myself, I’m like, what kind of project can I create that actually contributes to the community? But also, again, just like the NFT, the sound pack, NFT did something that solves an issue that I have experienced myself, along with other people that are sort of in my similar situation, right, as a creator. And so, after many, many, many iterations, and changes and evolutions, back in October, we landed on an actual use case, for a really good project that I want to release. And so here we are, it’s called squat of knights. And it’s 8888. Programming. How do you say that word programming?

Programmable.

!llmind: Programmable generated. NFTs, that are basically pixel style, and their chess nights, right. So, the reason behind the chess knights is because I’m a huge chess fan, I’m not going to sit here and say, Oh, I’m the best. I’m pretty good, right? But I love the game of chess. And the knight is one of my favorite pieces. And so, I wanted to go with the knight, I’ve always wanted to do something with the chess piece knight. And so, it just like felt good. And I’m a retro guy, like, you know, I love Sega Genesis, so like, pixel all day, like, I’m like a pixel head. So, they’re randomly generated. And so, the whole idea behind this NFT project is, and I really want to apologize ahead of time for saying this, because it’s like such a buzzword right now. But it like really is about community. Right? And so, I’ll tell you why. So, back in 2011, when I released my drum kit, that was the beginning of what, what I didn’t anticipate to be a series of just like, different things that I would do in my career that would just like, bring people together, right? So, like, I sort of became really fascinated with utilizing my influence in my voice to bring creative people together. So, it started with like my podcast 2012, which was a music producer podcast, it was the first music production podcast to ever exist, to my knowledge. That was before people even knew what a podcast was right? 2012. So, we did, we released that it was called blab on the radio. And then I used to do these like a live producer event where I would, you know, rent out like a club or like a studio space. And then a bunch of producers would come plug in their laptop and play beats basically. So instead of a DJ, you would have a set of like five to 10 producers that would just play original beats all night. And then you had people networking, like, at the bar again. Yeah, so it was like this really cool community event. I did these at this venue called contra in New York City. And we used to do those once a month. So, we started doing that in like 2011, 2012. And then in 2015, I started doing these events every month, called pass the ox, where I would go to a different city every month, and I would rent a very like intimate recording studio space. And I would sell tickets and I would invite 20 music creators to come through network, each person would be able to play their music, like plug the oxygen, hence why it’s called pass the ox. Yeah, each person will plug their oxygen, they will play their music. I would give them constructive criticism, you know, rappers, singers, music producers. And we would all just get to know each other. And I did those once a month. And I did those from 2015 all the way up until 2020 Right before pandemic. yeah. 

Wow. Wow.

!llmind: So once pandemic hit, we started doing them virtually. I ended up building a Metaverse partnering with a platform called spatial.io. I built a Metaverse studio, where we can do some networking and get to know you know, get to know each other and to do networking. And so, I hosted a few of those events in my Metaverse last year and sold NFT tickets for those. And we did two of those and those were really amazing. And so, I say all that to say that a lot of what I’ve been doing for the past 10 years has been all about bringing people together. And that’s exactly what the squad of knights NFT project is. So, if you’re a squad of knight older it’s basically this idea of being able to meet your peers and being able to collaborate with your peers, and getting rewarded for doing that, right. And so, the whole idea is this, you purchase a squad of knight NFT. And then from there, you get into the discord. And you get to meet other musicians and other, you know, people, creative people, basically. So, you get in, and you basically, the first thing that happens is you choose a role, right? So, we have six different roles, right? So, if you’re a rapper, you choose your role as squad of voice, right? Or, sorry, Knights of voice. And then we have a knights of rhythm role, where, knights of rhythm role is basically drum programmers, right beat makers. And then you have knights of melody role, where you’re either a musician, you play guitar, or you like to make sample loops, sound packs, your knights of rhythm, or knights of melody. 

But then you have knights of audio, which are audio engineers, right. And so those are the people that are mixing the actual songs, engineering, the actual songs, stuff like that. And then you have knights of vision, which is basically graphic designers, audio, you know, our visual artists, wants to make album covers stuff like that. Those are the knights of vision. And then you have Ambassador knights, which are aspiring, and ours, aspiring executives, aspiring music industry executives, people that are just like forward thinking in the industry, those are Ambassador knights. And so, you take all these different categories. And what happens when you put them together? Well, you have beatmakers that are, you know, creating music with rappers you have rappers that can now find producers to work with, you have singers that can collaborate with producers and musicians. And when you put all these different people together, you can create some really amazing, fresh energy, new music and create some new IP. And so, what squad of knight does is it solves the problem of finding people to collaborate with and you know, you know, very much as much as I do, how difficult it is to find people to collaborate with. I mean, social media is cool, but like, you can’t just go on Instagram, and be like, okay, cool. I need a rapper or if you’re a rapper and say, okay, I need music. Like, you can’t, it’s still so hard. And you can go beats stars, you can go to YouTube, you can get beats that way. But I’m talking about real connection, Adam, right, like, talking about, how about, like, we really get to know each other. And maybe you can be my producer, just like timberland and Missy. Just like, you know, Forelle and the Neptunes and just like Dr. Dre, and Eminem, like, so that requires access and requires like real human to human interaction. So being part of the squad of knights, not only are we going to do a lot of Metaverse related squad building, but we’re also going to host you know, a lot of different things like live events where we’re doing networking parties, we’re hosting parties, you know, across the globe, we’re gonna offer free studio time for squad knights, squad members, where they can book studio time. And you know, get in studio with people they’ve never worked with, that are other squad members as they can get to know. 

And then we have a knight token that we’re going to distribute for people and reward our members for collaborating, right. So, imagine, the more you collaborate, the more music you make, the more knight tokens you earn, which you can use for studio time for, you know, a budget thing up. So, I’m super excited. That’s like a super like, sloppy, quick explanation of what it is. But that’s the idea behind it. And I didn’t want to create an NFT that was about me. Nothing about squad of knights is about your mind. It’s all about the people. It’s all about me and my team, utilizing our resources and our knowledge to curate events and to bring people together. And that’s literally what it’s all about, like we want to like, my idea is to just like spoil every single squad of knight member for the next 10, 15, 20, 30 years as long as I do this, because that’s just what I’ve always wanted to do. And the fact that I can now do this with web three, and do it as an NFT project is like a match made in heaven for me. So, I’m like super excited about it.

Exciting. But let’s talk about the value for a minute. Okay. There’s value in curation. There’s a lot of value in curation, right? There’s musicians, there’s producers, rappers, beat makers that exist all over the world. But there’s only so many that understand the value of web three, let alone building and creating in the environment of web three. within itself, like finding a group of people that understand that is difficult. It’s very difficult, right? I’m personally, I love social clubs, like I love buying into projects that give me access to a network of people of other like-minded people. Because at the end of the day, if you strip everything away in life, it’s just people, right? It always comes down to people. So, what better way than to congregate, everybody and like-minded people under a unified theme of music, where you can bring a lot of these talent heads under one roof. So, I love that. Yes, that’s really cool.

!llmind: Exactly. And, you know, in our industry, like, if you’re a musician, or you’re a beatmaker, or a rapper, singer, like, you’re a very creative person, and creative people are different types of people. Like, we’re not just like, super outgoing to where, like, we know, like, exactly what to do to, like, meet other people, like, you know, it’s still hard man. And like, I’ve spoken to, I would say, like, more than 10,000 at this point in my life, like, upcoming music producers, beat makers, rappers. And dude, they tell me the same thing. They’re like, I’m not really, like, I make music. But like, I don’t know where to find people to, you know, work with and like, I don’t want to force people to fuck with me, because like, I know I’m good. Like, I want to just work with like producers that are willing to help me, right. And so that’s where the issue is. And we’re still facing that issue today. And I feel as though the squad of knights project is, to me a really, really great starting point, because it means stepping in ill mind, stepping in and creating curated experiences, legitimizes and gives a lot of them the confidence to say, you know, what, I am going to go into that studio session, or, you know, what I’m gonna, I’m gonna go deep into this NFC project, because I know that !llmind and his team has the ability to bring people together, and see what happens, because that’s what music is, right? That’s my job as a music producer, I step into the studio, right? If my job is to make a smash record for Adele, let’s say, my job as a producer is to not only create the beat, but to also bring people together that makes sense, where we can maximize our chances of creating the best song possible. So, I’m going to go and call a horn player, I’m going to call a jazz pianist so we can access different chord progressions that I don’t know how to play, I’m going to call my best engineer to come in and track the vocals. So, when Adele is there, she knows she’s in good hands. Right? So that’s my job as a music producer. So, knights of, the squad of knight’s project is really that times 8888, right? Yeah. So.

Yeah, you know, what’s interesting, it’s a social experiment at this point, because I wonder what can happen when you put all those like-minded people under one roof, what can come out of that? Right, through from the creative process, the production process, the public, like the recording the beat making everything. So, it makes me think like, actually, you’re really cultivating an environment here, that will be like a hot spot and a hotbed for, like a lot of interesting stuff to come out in the music scene, the future.

!llmind: And by the way, all the music that’s being that’s going to be created within the squad of knights is all going to be 100% owned by them. Imagine the different types of opportunities that we can explore in web three, and also web two. But in web three, all the all the music being created, we can partner with, you know, different companies, mint songs, audience, and now we’re creating momentum that way in web three, using all this music, right? Or imagine a scenario where you have a particular squad that’s been making amazing music. Now, we’re pipelining that up and creating label meetings, right? With executive for distribution. Now, all of a sudden, they’re getting, you know, opportunities and like, maybe getting a record deal if they want an old school web two record deal, right? Like there’s, believe it or not, there’s still people that want those. So, any type of opportunities that my team and myself can bring to the table for the squad of knights is, that’s the utility. That’s the roadmap. The roadmap is, this is a problem it solves, hey, you love making music, join, you know, a community of thousands of other people that are just like you, who love making music, that fill in those sorts of, you know, puzzle pieces that you’re looking for, while also being part of this really cool community, and also get rewarded for collaborating with people and creating music. And from there, it’s kind of like, sky’s the limit, right? Like, it’s really going to be an exciting time. So, I’m really looking forward to it.

How Do People Gain Access to !llmind as a Producer and Mentor?

That’s exciting. I’m curious. A lot of the value out of joining a group like this is obviously, it’s spearheaded by you and you’re curating a group of like-minded people, bringing them together. What level of access will people have to you as a producer? As for mentorship, from tracks from samples, etc? Like, how do you how do you manage? Imagine, excuse me, cultivating that type of experience around you?

!llmind: Yeah, I mean, it’s pretty crazy. Like, I kind of see myself partaking a lot. Um, I mean, I kind of already do like, on my Twitch, if any of you watching, watch my Twitch stream, so I typically stream on Twitch every Monday, Tuesday, Wednesday, from 10am to 4pm. Eastern, so it’s like, it’s almost like a, you know, a full-time job making beats. And so, I’m there literally making beats. And when I’m on there, I’m literally collaborating with different producers that gets us submit their, their melody loops, their sound packs to me. So, on Twitch alone, I’d say I’d probably collaborated with probably three to 400 different producers on twitch in the past two years. And I’ve created definitely well over 1000 beats, that are all collaborations with other, you know, musicians and producers. So, um, that being said, that’s just one example of like, how involved I like to be. But in terms of my own involvement, yeah, absolutely. Like, you know, we have, we’re gonna, and this is, I don’t want to speak too early, but I am, but I don’t give a shit. Because I’m excited. We’re imagining a scenario where, you know, I’m booking a three-day studio lockout, !llmind inviting, you know, guest producers, I don’t want to name names. Because you know, I don’t want to speak too soon. I’m inviting my you know, famous, platinum, selling whatever producers that are, like genuine people that genuinely want to be there. And you throw us in with our top, you know, squad of knight performers, or just how, whatever the system ends up being, for entering that opportunity. Or we’re going to extend those opportunities for our squad of knight holders to come in, create music with us get constructive criticism. So, it’s almost like the events that I used to do but like times 10. Right. So yeah, to answer your question, I know it’s a long answer. But to answer your question, I’m 100%, looking forward to being super super involved with all of this shit, because it’s what I do, I’m a produce like, I wouldn’t, I don’t want to I didn’t grind for 20 years, to create a project that I don’t want to do. Like, this is something that I’m looking forward to doing for like the rest of my life. 

Community building in Crypto Around NFTs

You know, what’s interesting about your, your background, !llmind is like you, you are a community builder, like from doing all the meetups that you’ve done, the podcast that you’ve done, you’ve you understand the value of bringing people together, and NFT’s are just the way to kind of solidify value around that. Right. And for everyone to kind of a collective share and what that can look like in the future. When you’re trying to build an online community, it’s different than building a physical community, right? It’s different than traveling and moving from place to place promoting a venue to come together. How do you think about community building in crypto around NFT’s? And also, maybe tackle like, what are some of the challenges that you’ve faced starting off trying to build a community online? And what does that look like?

!llmind: I think, you know, I think the two things are very important, they coexist. I think we’re still kind of in the trenches figuring it out. But when I think about community building online, which is basically omitting real, anything that has to do with real life, you know, I think discord, I think social media, I think Twitch, I think, you know, any type of video communication, zoom, and the metaverse, obviously, right? So, one really cool thing we’re going to have is our Metaverse, right, so the virtual reality studio that I built last year is sort of going to be our meeting place for all the squad of kights, so and based on spatial technology, we can fit 50 people at once, right, so that’s going to be sort of like a 24/7 revolving door open access to everyone who is a member of the squad of knights. And so, everyone and anyone can just be in there at any given moment, you know, playing each other music, sharing, talking to each other, building relationship with each other, getting to know each other. Um, that’s what I love about spatial. And so that’s going to sort of be like a virtual reality pass the ox session that never ends, which is pretty cool. So that’s going to be an interesting experiment. And !llmind is going to be popping in there every once in a while. You know what I mean to surprise people. I might pop in there with some other friends too. So that’s on the metaverse side of things. That’s what we’re doing. And then discord. You know, we have two amazing moderators in there. I’m in there every day, and we’re keeping it pretty simple tight knit in the discord like, you know, we’re gonna have catered rooms for all of our squad members on that’s going to make it really easy for them to be able to network with each other. So, everyone’s gonna choose their roles in discord. And so, let’s say I’m a rapper, and I’m looking for beats, all I have to do is click on, you know, knights of rhythm, knights of melody, and I can access all of different knights that are, that produce music. And from there, I can just start talking, start networking, right? If I’m a graphic designer, and I want to create or if, if I have a song, and I need some visual design, I need a album cover. I can go to the Knights of visual and or knight vision and you know, collaborate with someone on some artwork, right? So again, all the components are going to be there, it’s all gonna be on Discord. So that’s kind of how I see the community stuff happening. So, discord, Twitter, which is obvious, and then Metaverse.

And I can attest to that too by the way, I know you’re in the discord yourself, because I reached out through discord and in less than 20 minutes like you hit me up and DM me. And I was honestly impressed. I was like, wow, someone like !llmind who’s probably has a million things to do as a family. He also has time for a lot of these like strangers online that he genuinely feels like in love with, you know, in a connection. So, I can attest to that.

!llmind: Yeah, dude, I’m super excited and there’s some good people in there already. Like, like, these are the discord community right now. Like, is super healthy and like I want to, we’re gonna try my best to, like maintain that, that energy in the discord because I don’t want it to turn into, you know, I mean, I don’t want to talk down on any of the discord communities. But like, I don’t want it to turn into like a shill community, you know what I mean? So, we’ll see what happens.

Roadmap Project Launch

Sure. So, give me some context. When does the project go live? Okay, so I guess we might end up actually publishing this after the project lives. We’ll decide behind the scenes. But when does the project go live? What are the first few things that you have on the roadmap, if any? Walk me more through that?

!llmind: Yeah. So, minting, the whitelist minting happens March 28. Public mint March 29 and then the reveal March 30. Right. So, we have about 30 days from the time of this conversation. And the first thing on the roadmap honestly, Q1, or I’m sorry, the stage one of the roadmap is all community building. Right? So, it’s, I know that sounds cliche, but it’s our label. Lay motherfucking rug for us now. But first order of business is squad members getting to know each other, getting to know each other in the discord. We’re gonna host our first in real life, kind of kick off networking event. I’m probably in Los Angeles. There’s some exclusive news right there. In Los Angeles, probably in either April or May. So yeah, so about 30 days after mint. We’re gonna have our first in real life on really big in real life event happening. And you know, from there, we’re gonna open up the metaverse is, everyone’s gonna get, to all our white listeners are going to get AirDrop to VIP pass to be able to access our Metaverse 24/7 Metaverse I was talking about and from there, it’s really the phase one is everyone getting to know each other. Collab starting to collaborate with each other and then starting to form groups, right? So, one of the first tasks in the beginning of the roadmap is to find squad members that you can collaborate with, and create a group, right? So, in one group, you want to have you know, a producer, musician, you want to have a rapper, or a singer, you want to have an audio engineer, you want to have a visual designer, and you want to have an ambassador. Right? So, I’m gonna, I’m gonna reward our knights’ members. For creating squads, we’re gonna call these groups squads, right. So, first order of business, create your squad sent to know each other. And then from there, the real fun begins, right? We’re going to do a series of, of gamified experiences, to allow for knight members to earn knight tokens. And then we’re going to start opening up studio sessions where members could redeem their night tokens to book studio time, or going to give studio time, it’s all going to be for free. So, we’re never going to ask knight members to pay any money to do any of this shit. I mean, the only money you’re gonna have to spend is like travel and lodging, depending on that. But in terms of studio time and events, it’s all gonna be free. We’re gonna have you know, we’re gonna launch our merch, and yeah, it’s just gonna be fun times, man. It’s gonna be a lot of cool things we’re gonna do.

I’m excited for you. I’m curious, like, I feel like I’m gonna end up buying one of these things just because I’m a drummer, and I want to be in that environment. Oh, my gosh. So, let’s go. My question is like, do you imagine a world where you actually have a disproportionate amount of producers to visual designers, to beat makers? Like on the community? Like, if that happens, Is that a problem? Does that, like, interfere with the vision? Or how do you think about that?

!llmind: I think it’s kind of like the fish tank behind me. Right? We know the fish are there, we’re not really in control of how many of one type of fish, I think you kind of have to let the people sort of decide that, right? I know, we’re going to attract a lot of music producers, we’re gonna attract a lot of rappers, a lot of singers. And I think naturally, you know, we kind of let it happen organically. So, I think that’s just one thing that we kind of crossed that bridge when we get there, right? Like, if we end up with, you know, 1000 rappers and 1000 producers, but we have you know, 100, graphic designers, then, you know, we utilize those 100, to do what we have to do you know what I mean? So, it’s, it’s very much and I want that I don’t want it to be like, robotic like, okay, 100 of this type of person, 100 because then it doesn’t feel human, right. Like, the whole idea of this is to feel energizing, and human, and exciting and weird. And I don’t know, who I’m going to collaborate with. And I don’t know, if they’re going to like my, my beats, but I don’t give a shit. Right. This is how I have; this is how it is. And this is, this is what it’s like to be a musician, right? I mean, you know, out of your drummers like you, you can’t predict everything. Like, it’s not.

Music is very feel thing. It’s a very in the moment, when you’re when you’re trading force is in a jazz band, it’s like you’re training force is based on feel like that’s all it is. You’re echoing what the guitarist plays to what the bass player plays like. It’s all in the moment, I feel you.

!llmind: Yeah, that’s the perfect analogy, dude. Like, you know, I might be a great producer, but like, I might not be the best producer for a specific person, right? Like, I might go in there. And I got my squad of knight pass, and I’m good to go. And I’m starting to network with people, I get into studio, and I ended up not really hitting it off with them. And that’s okay, that happens to all of us. But that’s something that you’ve never experienced before. Yeah. Right. Have you not, you know, so again, like, those are the types of things that you want to experience and, and I’m excited to see this community grow. And I’m, you know, I’m betting that there will be, you know, a cool little handful of success stories that come out of this over time, and I’m just happy to be, you know, the guy in the background to help these people make it happen. Like, I tell people all the time when I do my events, I’m like, this is not about me. Like you didn’t come here to meet me like you did. But that’s not what you, you’re gonna walk away. Understanding that it’s not about meeting your mind. Right? The fire I tell people, the fire is inside of you. And it’s been inside of you. My job is to just fanned the flame. My job was to add more fuel. Yeah, my job is to bark whatever is already inside of you. Like yeah, I’m your guide, but you’re the hero, right? You guys are the hero, like so, that what I’m really excited.

I love it. You know, it’s cool tying back our beginning of the conversation to what you’re doing now with, with squad of knights is you start off dropping sample packs. Now I’m thinking you put all these hats in the same room, producing, creating stuff together, there could also be a scenario where they create their own sample pack. And then you use like a splits protocol, where they sell the NFT they all collectively earn from that. And it’s all because it was a curated environment, right? And like the optionality is endless. As long as you get the right people in the right room in the right creative energy synergizing with one another. That’s it. You’re taking off. I love it.

!llmind: Adam, you’re taking the words out of my mouth, right? And I don’t want to speak too soon, but I’m giving Adam all the exclusives right now.

 let’s go.

!llmind: A percentage, it’s inevitable that we’re gonna have a percentage of people that are going to buy and flip right, we can avoid that and people are free to do what they want. Like, you know, I’m not expecting every single person to like purchase a squad of knight NFT and like Huddle forever and like you know, collaborate with everyone, we’re gonna, we welcome everyone to purchase squad of knight NFT but here’s the cool thing, Adam, a percentage of the initial sale and the secondary sale is going to go right back to the knights to basically fund the entire operation. So, you know, all the studio time that we’re going to spend money on, all the you know, curated events and all the get together and whatever else, you know, we implement for the empowerment of the community of the squad of knights, we’re all going to be funded, right? And we’re also going to leave it up to them too, so I don’t want to say like, I don’t want to, I don’t want to put it out there and say we were going to make it into a Dao necessarily, but it is going to feel very Dao like in terms of, hey, guys, what can we do? What do you guys want? You know, in addition to what we’re doing, what do you guys want to see happen? And how can we see that happen? So, all the flippers on the secondary are essentially funding, you know, our operation, of the people that really want to be there. Right. So hey, we welcome you if you want to, if you want to buy into.

Slip away way

!llmind: Slip away. Flipping means you get what you want. And, and the people that are here that want to partake. We get to help them by doing that. So, thank you for your contribution.

Yeah. I love it. Dude, look, I’m excited for you. I’m excited for the project. I’ll be definitely tuning in. Before I let you go and we wrap this up. Where can we find you? Where can we find more of the project? Give us the takeaway.

Outro

!llmind: So, you can find me on every social media it’s @!llmindproducer, one word that’s I L L M I N D producer. And that’s, you know, Twitter, Instagram, all the social media, and then squat of knights. So, it’s knights with a K. So, squadofknightscom . That’s our main website, Twitter @squadofknights. And I’m sure over time if you Google squad of knight, you’ll find our Twitter, our website and all that good stuff. So yeah, follow me on my producer, follow squad of knights if you want to get into discord all the links are on the website. The website should be live at the time of you watching this. So go to squad knights right now. It’s going down, get on that whitelist, get on the discord. If you’re a musician, if you’re a beatmaker, rapper, singer, a visual designer, an aspiring, you know forward thinker in music and web three, and just want to be part of a community where you can actually build something cool and creative. I think the squad of knights is a great place to start. So, look into it and we’ll be here man, we’ll be here crushing it. So.

Amazing, bro. Amazing. Thank you for being on. We’ll have to do this again soon.

!llmind: No, Adam, my boy let me know anytime.

You got it. And I’ll put it there. Good shit. That was awesome.

Categories
Podcast Transcript

Why Cooper Turley Spent 100 ETH on Music NFTs


Listen on:
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Background

Mint Season 4 episode 22 welcomes music NFT collector and crypto OG Cooper Turley (aka Coopahtroopa) who rationalizes his conviction for spending 100 ETH on music NFTs to date. He came by my hotel during Eth Denver for our first in-person conversation, making this session the longest episode in Season 4. There’s just too much alpha in one sitting, I hope you can handle it.

In this episode, we discuss: 

  • 00:36 – Intro
  • 03:56 – Music Projects Dominating The Space
  • 07:08 – How to Price a Music NFT
  • 11:17 – Why Treat Music NFTs as Collectibles
  • 14:18 – How to Get Started as a Music Creator
  • 15:34 – Understanding the Music NFT Movement
  • 21:26 – Web3 Protocols in the Music Industry
  • 24:58 – Getting Started at Audius
  • 28:18 – Building Funnels to Grow Your Collector Base
  • 35:04 – What is LA’s Crypto Culture Like?
  • 37:46 – Web3 Music Platforms and Opportunities
  • 48:26 – How to Create Digital Emotional Experiences Around Collectors
  • 50:29 – End Goal with Collecting 100 Eth Worth of Music NFTs
  • 58:30 – Open Sourcing The Entire Music Industry
  • 01:03:22 – Music Streaming in Web3
  • 01:04:46 – The Consumption Layer of Music NFTs
  • 01:08:31 – Tokenomics: Risks Associated with Overwhelming Artists and Fans
  • 01:21:19 – Daniel Allan and Designing Overstim’s Tokenomics
  • 01:24:13 – Building Bridges Between Web2 and Web3
  • 01:28:18 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Cooper, welcome to mint. How are you doing my friend?

Cooper Turley: I’m doing wonderful. Thank you very much for having me.

What a pleasure. Eth Denver.

Cooper Turley: Yes, sir. 

What is this your fourth Eth Denver?

Cooper Turley: Yeah, fourth one?

How has it been different? 

Cooper Turley: It’s a lot bigger now. 2017 was like peak of the last bull market. That was my very first crypto conference ever. And so now we kind of saw this law 2018, 2019. 2019 was epic, but it just wasn’t really talked about much because it was kind of during the bear market. 2020 It was virtual hackathon. 2021 was virtual now we’re back. So it’s been a long time coming.

Intro

We’re back. The virtual was pretty sick, though. I prefer to be in person. But TBT to the virtual one. Alright, man, welcome to the podcast. This is your second time being on mint, I think is our fourth conversation having, is our first in person conversation, right? You are a part of season one, iconic season, the Genesis season, for season four on all things music, what a better person to have. Alright, dude, dive right in. For those who don’t know you. What does the world need to know about you? How’d you get into crypto? We can start there.

Cooper Turley: Cool. Hey, guys, my name is Cooper. I’ve been in crypto for about five years now music for closer to 10. I’d like to say I’m a curator. You know, I’ve been spending my whole career trying to find trends early on help people contextualize that. So what that takes the form of is an operator and investor, I help creators learn how to use technology, specifically web three, I invest in the platforms that allow them to do so. And so the last couple years of my life, been working with crypto projects, launching tokens, you know, helping to start companies helping to start Daos and really just making sense of what’s happening. And these days, I’m really excited about music and NFTs. It’s a passion of mine I had long before crypto graduated with a music business degree. And so now taking all that same culture and community ethos that we had in web three, and applying that specifically to music as a canvas.

Nice. So you’re really big on music, like really, really big. If there’s one thing that you should know about Cooper, if you’ve seen him publicly online is he shows music a lot, we are in a group chat with a bunch of other DJs. All we do is share playlists and songs with each other. That’s more internally but externally also collect a lot of music NFTs. At one point you were the biggest collector on sound.XYZ. And prior to sound, you’ve just been super supportive to new creators and new artists coming into the space. So I want to take this conversation from different angles, but primarily focus on music X crypto, okay. And I think a good place to start is really understanding what’s the current state of music X crypto, you got started on audience. Yeah, right. And you also move to LA from what I remember, with this vision of getting really involved in the Creator economy getting infused in the music scene over here, you had a big, big, big vision and audience was a big part of that. Yeah. So talk to me more through your early days at audience and how that kind of played into you understanding the current state of music NFTs.

Cooper Turley: I started to see that music offered a very new lens into web three, you know, most people that are interacting with it do not have experience with crypto, you know, most of them don’t have a wallet, most of them have never used open scene, most people don’t know a uniswap is. And so it forces you to think about crypto in a very different way. I think that opportunity for me to come to LA and have conversations with creators who had large followings, but have not been active in web three, really challenged me to think differently about my own experience, I started to realize that Meta mask is a really difficult while to get set up with, joining a Discord server is very difficult to most people. And so when you start having these conversations around onboarding, you focus a lot more on the fundamental layer of buying your first NFT joining your first community, I think through that a project like audience was really exciting to me, because they really were focused on mainstream adoption. You know, today audience has 6 million monthly active users, I was fascinated by the idea of being able to use a crypto app with an email and password and never knowing that there’s crypto under the hood. And so, I guess just to round that out, I would say that was the very first, you know, music crypto project that had a fundamental impact on my career. And since then, we’ve seen sort of a blossoming explosion of 50 plus projects, all focused on music times, crypto, you know, a big influx of this sort of NFT wave. And I think that’s kind of the current state of music. NFT landscape is a lot more tokenization of audio files.

Yeah, makes a lot of sense. I’m gonna quickly pause to step a little bit back just so I’m seeing the wave files are there like hitting yellow. So speak again, really quick.

Cooper Turley: Check, check, check.

Music Projects Dominating The Space

Solid. Cool. So on that topic, okay, understanding the macro landscape. What are the current projects kind of dominating the space right now that are empowering musicians, empowering, empowering artists? What are you seeing?

Cooper Turley: I’m really excited about catalog and sound as kind of the to premiere on chain collecting projects. So this is a ability for you to basically collect a tokenized audio file. I think that in and of itself is very innovative. For those who don’t know, catalog is a one of one NFT marketplace. You take a song, you upload it and you tokenize as one of one, sound is more of a release platform for new music. So instead of one of ones you have one of 25 typically but just music additions, you know it’s a little bit more social in nature, you can leave a comment, and then more broadly, Royal has started to ramp up they’ve had two drops so far, but I’m really excited about their platform because it allows you to collect music at scale, you know, their entry price on a music NFT is somewhere closer to 50 or $100. And it comes with ownership rights to. So, then NFT not only is a collectible version of audio, it also has some of the master rights from that song tied to it too.

Do you prefer ownership or pure collecting?

Cooper Turley: I don’t think it’s and or question. Okay, I think that ownership is a premium, but I don’t think it’s required for something to have value

When do you prioritize ownership? When do you prioritize collecting?

Cooper Turley: I prioritize ownership, if it’s someone that’s not very tapped into web three, you know, if they’ve had a legacy brand that’s performed? Well, you know, there’s going to be consistent cash flows. I think that’s a strong signal. But I actually prefer collecting new artists who are going to make a career on the back of web three, because I think that is fundamentally more important than ownership rights to legacy streaming applications.

Yeah, you know, one thing that’s like, very, very vague, and we talked about this yesterday, when good karma put together showcasing Eth, Denver, this topic of ownership, right, and you’re obviously very vocal on the whole thesis of the ownership, economy, in everything that kind of funnels underneath that. And a lot of what we were talking about, a lot of what Jeremy CC Grady, Daniel, yourself, a lot of you guys were talking about the sake of collecting music NFTs, for the sake of appreciating that art as art the same way you collect a piece of art, a Picasso, whatever it may be, right? And do you think society has like a weird understanding around? Okay, why do I need to collect an audio file? Like I understand the concept of collecting physical piece of art, I may be more in tune with understanding of what it means to collect a digital piece of art, but an audio file? How do you make sense of that?

Cooper Turley: It’s really no, you know, I think we’ve all had experience collecting trading cards, we’ve all had experience playing video games and collecting digital assets, we’ve never really had the opportunity to collect audio, I’d say the closest analog to that is vinyl. And even that’s a very small segment of the consumer population. Most people when they listen to music, they just go on Spotify and stream it, they actually don’t even know what artists they’re listening to. But for someone that has a very strong affinity with music, they’re going out there buying records, they’re buying vinyl, they’re having people over to have listening parties. And I think that demographic is what’s best suited for music and NFT. And as we start to make that price point more accessible and show more of the social experience that can come from collecting audio together, I think that’s when that demographic will make a lot more sense to a lot more people.

How to Price a Music NFT

What’s an acceptable price point? Like, how do you determine how to price a song from a creator, an artist point of view?

Cooper Turley: I don’t think there’s a broad stroke way to do it. I tell creators, you should always list something at the lowest price that you feel comfortable selling something at.

Because there’s platforms like mint songs, for example, where you see, like prices for beats, loops, single editions, one of one, whatever,  going anywhere, anywhere between like 99 cents to $7 to $100 to $2,000. And you’re kind of just trying to understand, like, What the hell is going on. Me as a collector, and I feel like many other collectors that maybe want to start accumulating more on chain wav files, right? They find themselves maybe in a position where I don’t know, what’s an appropriate price for what I want to kind of collect. Right? So you see like sound kind of standardized, either you do a point one drop with 25, editions 30, editions, 100 editions, catalog does very much the super rare model where you have one on ones and like the canonical format of a song starts as a one of one. But I don’t know I’m trying to make sense more from like an artist point of view. Like if someone wants to jump into the space right now, how do they think about price psychology? How do they think about what they should price their work at? Should they do additions? Should they do one of one’s? should you know what I mean? Like it’s like, it’s a very gray area and part of it like surely people are experimenting as we go. But give me more context on that on that train of thought.

Cooper Turley: Yeah, it’s a great point. To start off, I would say there is no standard around releasing music and web three right now, you know, there’s no tried and true model. And there’s no sort of expectation on how to price your work, I think we’re starting to see a little bit more standards emerge around one of ones and additions. So on catalog, you’re seeing one Eth is a pretty standard list price is just like a starting point. And on sound, as you mentioned, point one is sort of a base spark, entry price is important. I think something that’s really interesting to highlight there is we both called that out in terms of Eth and not dollars. And so pricing these assets in the native chains that you’re releasing on, I think is going to be more of a standard. So if you’re releasing on catalog, you’re thinking what Eth price, am I releasing this at, if you’re starting to release music on slot, I think we’ll see people doing music NFTs in terms of one soul. And so when you start to not think about dollars, and instead think of Eth, I think it becomes a little bit different. But I would say for any artists that’s getting started today, you know, don’t be afraid to start lower and build up your floor over time. You know, I think it’s actually much better for you to start with a lower price point get a couple collectors under your belt and slowly start raising that over time rather than come out of the gate swing in with a five Eth sale and probably not have any bids for a long time, which is more difficult for you to kind of conceptualize why this is valuable and you know build a relationship with collectors that I think is so important.

you know it’s really cool. Verta was on a Verta was on Season Four as well. Okay, we talked about basically how do you price a song and she put out this like macro point of view blog post of her journey in crypto and how she kind of got around the challenge of okay, what is my art, what is my wav file? What is my song worth? The best answer that I’ve heard today is let the market decide. Let the people who enjoy music who enjoy collecting let them decide on what to buy and collect your art for. The way you kind of start with that is just leaving an open bid and putting a timeframe on that right and seeing what the market will kind of like take it for, right? Is that like a model that you’ve seen kind of prevail? I know Verta is like she  introduced that model to my head. Who else? Have you seen kind of experiment with that? What is the success been around that? Taught me more through that.

Copper Turley: Yeah. So I think reserve auctions are important, because you have a minimum price that something starts at, I think that’s just fundamentally important from an Artist to fan relationship. Because if you have an open order book, you know, when I just go in and put a one Eth bid on something, there’s a world in which that artist is really offended by that bid. You know, if I say I think this is worth one eth, like, oh, wow, Yeah, like, Fuck you like this should be at least like a five Eth record, you know, and I’ve had experiences like that collecting crypto art, you know, where I put out a bid for something like, Oh, hey, my floor is actually five. But that’s not stated, because it’s not in an auction mechanic. And so using that auction mechanic, I think allows them to be a lot more realistic price discovery. And to take that a step further, the best way to have that happen. In the case scenario, we’re talking about, you know, Malik, Mader. This was his last two records, he started them at point one, and just let the market do its thing. You know, and he’s had some sales at some pretty high price points. But starting from a point of saying, go figure it out yourselves. Like, I’m not trying to ascertain what this is worth. I think it introduces some interesting game theory where, you know, the market will self affiliate. And to your point, I think that’s actually a really beautiful thing.

Why Treat Music NFTs as Collectibles

Yeah, you know, I try to still like wrap my head around the value between collecting to collect and collecting to own and really make money off an asset, which one has a lot of regulatory uncertainty, and the other one is just like, really fun. Like you’re collecting a baseball card? Yes. I’m personally in favor on the side of like, being able to co own something right? In Sure. Maybe I need to upfront a lot of money to actually see some valuable return from it that you cannot for the economics to make sense. But I’m curious to hear your point of view. Like, did you participate in the both blow drops? 

Cooper Turley: Yeah, I did.

Okay. And you participated in sound.XYZ, catalog, mid songs, etc. What was more like impactful experience?

Cooper Turley: Definitely the one of ones I purchase on catalog.

That are purely collectibles?

Cooper Turley: Yeah, those are the ones where I’ve had the most direct relationship with the artists, you know, they’ve gone out of their way and reached out to me and expressed how much that meant to them. I think a large part of that was because of the price points at which I was collecting. But I think that that felt the most real to me, you know, and I think what we’re starting to see now is music. And NFTshave not had a secondary market, really, because we haven’t really seen the form factor for that to happen. But now with the emergence of sound of royal and sort of these platforms that allow you to collect additions at scale, we’re starting to see more of that come to fruition. And so just as a blanket canvas, I don’t collect any music NFT right now to make money. You know, I think most of them are illiquid, and I couldn’t sell them if I tried. But I have such a sentimental relationship with them that I think it was worth every penny that I’ve spent.

You know, it’s really cool buying a music NFT. And then being able to see that person perform the song that you own or CO own.

Cooper Turley: It hits so much different.

Complete different, there’s an entirely new emotional connection to that, specifically at like, the catalog event, okay. And seeing like, my friends, collecting different pieces of art on there and seeing how they are kind of just vibing and experiencing that live performance, for example, from like, dot. Yeah, and the list goes on and on and on. And I know you and Brad are also like very vocal about that stuff as well, like you collect to support an artist and then watching them perform live. , and it’s, it’s a completely different experience. How would you explain that experience?

Cooper Turley: So it’s funny, my first experience with that was actually way sooner than people would think. So I remember Mike Shinoda dropped a song with EMDR. And he put out 10 NFTs on Zuora, just like open auctions. And I won one of them, and you got a signed poster. And it was two days before the song came out. So I won this auction, and then the song came out, and it was number one on my release radar. And when that song played, I had such like an emotional relationship with it, I was like, this is going to be such a thing. You know, just like collecting a song early in advance, and then hearing your premiere, you have so much incentive to promote it and be a part of it. And I think live shows are just the next level of that, you know, like when I hear songs in my release radar, I’m sure all of us can attest when we have a friend drop some new music and you hear it for the first time and you’re like sharing it on your story or something like that. It’s that experience times 100, you know, to where you feel like you have a real financial investment in this, you have a social affiliation with it. And I think that opportunity for more fans to feel directly attached to the music that they’re consuming. Is the exact market that I’m really excited about tokenizing and unlocking.

How to Get Started as a Music Creator

Yeah, when  a creator comes to you or a musician comes to you and they ask you, how do I get started? What do you tell them?

Cooper Turley: I tell them spend some time in the community, like get to know the people around them. You know, don’t worry about tokenizing, your first record today, go into the chats go into these community calls, figure out who the people are that are involved in the space because right now there’s probably less than 500 artists in the world doing music NFT seriously. And if you take 10 hours out of your week to go and invest in this, you’re going to become much more active part of that conversation than you think. That’s your leverage. You know, once you have a couple of people in your corner who are going to bat for you, they recognize that you’re in these conversations, when you tokenize you have the support of those people. And that’s what these platforms are looking for. You know, I think the sad reality is right now the platforms we talked about, catalog, sound, royal, they’re extremely curated. You know, there’s 10,000 Plus artists on the backlog, but only a select few that are getting in through the door. And if you look at the commonality amongst them, it’s the people who are going out of their way to build relationships in web three, you know, we’re not looking for what their stream count is on Spotify, how many followers they have on Instagram, it’s how closely connected are you to this source of like this music NFT movement. And so if you’re looking to get started today, don’t worry about trying to make a splash or trying to get any sales or anything like that. Just put in the time and meet the people that you see really building this movement from the ground up. And I think very quickly, you’re going to become a part of that conversation.

Understanding the Music NFT Movement

Yeah. Cooper, where are we right now in the in the music NFT movement?

Cooper Turley: I’d say like second inning. You know.

What does that mean? Exactly? Second inning.

Cooper Turley: We have the ability to collect tokenize audio, you know, that is a primitive where you can go out and collect a piece of music from an artist you’ve heard of, you know, no one too crazy. But an artist you’ve probably heard of if you’re tapped into music, that’s kind of the fundamental piece of it that I think is important. I feel like if you start to make an analogy to like early SoundCloud era, you know, we haven’t had that viral moment. Yeah, we’re everyone’s on SoundCloud. You know, sharing everything reposting everything. We’re in like the very early formation of that. And so I think if we take a step back, we still need another year or two to enable collecting at scale, where I can go and buy music NFT for $5. And feel like that’s a sentimental thing. But right now we’re seeing the early adopters, really taking advantage of that. And it’s something truly beautiful. You know, if you’re in web three, you definitely need to pay attention to.

How do you think about price psychology as a collector between buying something for $5 versus buying something for $4,000? Is there a different connection like sentimental connection you have to it? Like, how do you think about that?

Cooper Turley: I am fortunate enough to be in a position where I can buy music NFT for $4,000. And I have to think a lot about that. That’s extremely rare. And I think that’s not something that’s the same across the board. But right now, I feel confident that if I buy your record for one ether catalog or more, there’s a more than 90% chance that I can have a personal relationship with that artist. And so having just a ticket to a direct relationship is like unlike anything I’ve ever experienced in music, my job been in this music for 10 years, you know, I’ve done curation, I’ve done touring, journalism, artists management, and every other way you could think about it, getting the artists to see you as a fan is so difficult, that you can see them 10 times at a show, you can write about them 50 times, but you’re just sort of someone that’s kind of like in their orbit, it’s not until you have like a way of seeing them eye to eye in a very direct way that they actually realize who you are as a person. And so when I’m collecting something for eth Plus, I’m going in and saying, like, Hey, I see you using this technology. But my hope is that you’re going to see me back to, like, when I collect your work, you’re gonna want to build a relationship. Talk to me about this. And that’s what I’m doing. And to your point about the difference between that and a $5 collectible, I think the $5 collector was more for the social experience, it’s less about you thinking you’re going to have a direct relationship with the artist, it’s you think that you’re gonna have a direct relationship with the other fans of that artist. And I think that piece is really important because we’ve never had great social channels for music. We had Facebook groups back in the day, which was really active, we’re starting to see discord servers, but music discord servers aren’t that active across the board. And so we need a new pocket to allow fans who are deeply affiliated and connected with these artists to be able to meet one another and see that they’re going out of their way to use new technology to show how much they love this act.

You know, we haven’t seen yet. Bits, loops, samples, stems kind of like hit the mainstream for the most part. I know Apergy labs is doing a variation of this. But you can imagine that maybe a bits, a loop would actually go for more around the dollar, the $5, the $10, maybe the $20, $100 price range, it would actually have different utility. Yeah, most part then a fully complete song, right? When you think about like music composition, okay, and you think about like, creating a song and actually extracting audio files that are on chain, whether it be a drum track, since etc, and forming a song and then minting that song. How do you think about the price psychology around that around beats, loops, samples stems, because again, those have a completely different utility around them versus just collecting something on catalogue sound, for example.

Cooper Turley: it’s interesting, I used to price catalog quite a lot back in the day when I was messing around with producing. And so their model is basically just buy credits. And then every song is just like, or every STEM is yours to consume, essentially, we’ve seen a lot of beat packs, where you basically have a fixed price for a pack of beats or something like that. And so I don’t think there’s one try and shoot model, I think the important thing to recognize is in the future, all stems, and all aspects of every song will be tokenized down to their finest unit, you know, like a kick drum, a snare, you know, a Mini Vocal, all of that will be tokenized in some way, shape, or form. And so it’s impossible to say what one kick is worth versus a vocal stem. But the important thing to take away there is that all of that is going to live on chain. And there’s going to be pricing mechanisms where it’s not about paying a subscription fee and getting unlimited access to all of it. It’s about all of those source files being connected to one another. So as there are usage and cash flows of them, they all flow back to the original owner.

Yeah, I’m kind of curious to see how that that part of the music landscape kind of plays out and what that really looks like from a price standpoint, from a composition standpoint, from an IP standpoint, and the list goes on and on and on the topic of IP Okay, how do you think about the legality around like, music NFTs, bringing song wav files on chain, and the purchasing the collecting of that, and how that pertains to people who helped create the song help pertains to people who helped publish the song. And that entire lifecycle? How do you kind of think about that?

Cooper Turley: So the reality is music as an industry is one of the most convoluted from an IP standpoint, there’s so many different people involved with it. But what you’re seeing right now is independent artists are largely thriving the most, because they have the least red tape around them. You know, they typically have a very few collaborators with them, maybe it’s just themselves producing all audio themselves singing on it, whatnot. And this is going to be the biggest roadblock, you know, and the biggest hurdle to try and get around for music, is if you are a major songwriter who has 10 writers on it, three producers a label associated with it, making sure all those people are properly accounted for is a really scary ordeal. But what I get excited about is the fact that this technology we’re using has never been better suited to, you know, affiliate and help with those scenarios. If I have 10 songwriters on something, being able to ascribe them to a smart contract with automated splits is the exact reason why this technology exists. And so right now, the process is basically trust the artist to distribute the earnings to the people who deserve it, that’s just the v1, you know, we’re going to get to a state where all this is automated, everyone’s gonna have a wallet, everyone’s gonna know where to plug themselves in. When we get to that point in mind, it’s going to be less about trusting the artist to make distributions, and more about it all just going exactly to who owns the rights at any given time.

Web3 Protocols in the Music Industry

Does the music industry need its own protocol?

Cooper Turley: I mean, I think that everything needs a sound protocol. I don’t think music is any different, I think that we need a different way to be able to see who own what different parts of a music asset, you know, and I think we use the word NFT to describe tokenized audio, but like, you know, music will just become an evolution of NFTs like when you think about a song, all that data is going to be ascribed naturally into a token, who owns what percentages, who has what affiliations with it, and we’re going to read directly from that asset. You know, right now, if I’m on different PRO’s, or I’m trying to get collection, I need to put that information into many different sites. But in the future, it makes perfect sense to me that you have one source file that has all that information ascribed into it, and everyone’s just reading directly from it. And so protocol, yeah, I think metadata standards are the first practical usage of that, you know, shout out to catalog and mint sounds are thinking a lot more about this. But beyond the protocol standard, to try and address all music, which is a fucking huge vision. Let’s just talk about how to actually read data on chain. Let’s talk about how to have better standards around playing back a music NFT and having a good experience with it. You know, I think those basic questions get us along the line. And I think we’re going to wake up in five years and see that there’s an entirely new way that music being consumed under the hood, and being routed to all these different parties. And that’s when we’ve actually won as an industry.

So is the end goal to build like a trustless music industry? Is that even possible?

Cooper Turley: I don’t think any industry can be entirely trustless. Always, I think that the  end goal is to always have market opportunities for someone to be able to release music trust Lessly and for there to be better standards around the way that it’s consumed at scale. And so if you’re going through a label system, you being able to have more transparency around the way payments are working, you know, when someone streams your track, you being able to get paid directly. You know, the one of the caveat, and I think the funny parts about web three is people are really big on decentralization. But the reason why centralization wins, because it makes things easier and cheaper. And so we kind of have this balancing act between like maintaining the core tenants of trustless permission less technology and making a successful someone for $5, who has no clue what’s happening under the hood. And so I think, you know, maybe just to kind of round that out, we’re going to see really big companies that are not fully decentralized. You know, some of the biggest players in music, NFTs will be a little bit more centralized than we would like and web three, but I think that’s okay. And actually important, because it’s going to allow this technology in the hands of 1000s and millions of people.

So when you say it’s, it’s cheaper, right? Take that with a grain of salt, right. For those who don’t understand they think of making a transaction minting something on chain, there’s an associated gas fee that is depending on what they’re minting very unaffordable, right, so elaborate more on what you mean by cheaper as you kind of approach decentralization.

Cooper Turley: I mean, the cheapest way of doing it is there is no gas fee, you know, the protocol or the platform is covering it for you. You’re using a custodial wallet where you don’t have to worry about cussing your assets or losing your private key. It’s a fixed price point. It says $5 you press one button you buy for $5 Yeah, that’s a centralized solution. You know, decentralized, you’re paying the network fee, all this kind of stuff. But you know, that’s why I’m excited about other ecosystems outside of Ethereum for music NFTs because while I think all of the most valuable music NFT will live natively on Ethereum, I think there’s going to be a vibrant economy of assets live outside of Ethereum. And those are going to be the solutions that allow you to collect $5, $10, $20 music NFT at scale.

For example, Solano polygon, what else comes to mind?

I think those are two great ones to start with. You know, I don’t think that, if our demon say those are like the final ones. Yeah. Like I challenged myself all the time to think like Ethereum and like, the end all be all. Like, I don’t think that people thought Apple would be what it is before we started. You know, I believe that we’re still very much in like the Myspace era of crypto as a whole and I still think there’s an opportunity for those new ones to emerge.

Getting Started at Audius

Talk to me more about your time and audience Okay, I think Cooper you have like unique insight into music x crypto Getting Started at audience and audience being one of the leading platforms for music in the space. Quite frankly, a lot of people, a lot of artists, they get started in music and crypto start an audience. Yeah. So your target audience, what were some of like the aha moments you kind of realized prior to joining that kind of allowed you to see the space from a different.

Cooper Turley: Yeah, it was that build and that architecture that I talked about. So really abstracting away the need for a noncustodial wallet to get started was really, really important to me. Audience built a standard called hedgehog, which was an email and password login solution. You have an ERC 20 capable wall under the hood, but you never need to use it to be able to do anything. You don’t pay gas to play a song to do anything like that. And that approach of saying, like, Hey, we’re built on crypto, all this content is stored in a centralized system. But it’s not necessary for us to use the product, I thought was really beneficial. A lot of my work was around sort of the token side of things. So launching the audio token, doing a lot of stuff around staking and delegation and governance, I saw that there is a very big distinction between artists who are using the platform every day, and node providers that are making it work under the hood. And that relationship between sort of the creative side and the technical side is a really difficult bridge to walk. And so I think for all of these platforms that we mentioned today, there’s going to be a really big challenge around maintenance, you know, and around decentralization and recognizing that not all artists are going to know how to participate in governance, or want to do anything around decentralized file storage. And it’s really important for us as leaders to be able to build systems such that people conceptually understand what’s happening, but they don’t need to be core participants to make it work. And so I guess really, just to finish out that thought, audience to me was the first opportunity for me to see what artists were interested in web three. And what I think is really beautiful about that is many of the top selling music NFT artists today are the ones who are really early on Audience. They got that Airdrop, they’ve been in the trenches for a long time they’re charting on the playlist, and that growth of going from uploading a song having streams to then tokenizing that song and having a sale of it as a music NFT, is a really beautiful journey to watch.

You know, one project that comes to mind specifically is Wilkie and Wahlberg, yep. Right. And he started on audience. He’s also doing really, really well on tick tock. He also has the wobble bug project where he like created like this Metaverse DJ and sold NFTs associated to that to that character. And I think there was some like IP Association as well, terms of the music streaming, royalties and whatnot. Who else comes to mind?

Cooper Turley: Well, also just cosine wiki real quick. He has a social token on rally called walks that was really early on, that’s doing a lot of stuff with pixel ban, you know, super active under the collecting lot. And I think the caliber of what you’re seeing was successful web three artists is, it’s not just about their artists project, you know, like they’re doing stuff in different communities. They’re helping to write music, they’re helping in community management and talking about them at shows. You know, Steve Aoki, I think, is doing a great job with this. He’s building out the Aoki verse now and has this really wide ecosystem to get involved with. Camouflage is one that comes to mind from the early audience days. So it was doing extremely well on audience, now as a bunch of sales on catalog and sound. Oshie is another great example of this. You know, Daniel Allen is kind of more of like the music NFT native caliber acts, but you know, I could list dozens and dozens of acts that I’ve been impressed by. And the commonality amongst all of them is they didn’t have a huge following prior to web three, you know, they’re making some noise and local communities, but they’ve been able to use web three to really leverage themselves into a new position. And I think that’s the model that you want to follow. If you’re listening to us today.

Building Funnels to Grow Your Collector Base

Yeah. Let’s talk about funnels. Okay. And building a community of collectors for a second. Okay. I think a lot of newcomers that enter the music NFT space, always have the question, like shit, how the fuck do I find my first collector? How do I find someone to take that first bet on me, and something that we talked about yesterday at the good karma showcase during the panel was actually don’t really focus on finding in like, trying to get someone to buy something. Rather try to give? Right. Talk to me more about that funnel of giving, and how can you really build a community collectors around giving?

Cooper Turley: Yeah, you need to find opportunities to be value added within different communities. So being able to go and, you know, show up to a call consistently, week after week, just answering questions and being active in the conversation. Asking questions is actually productive, you know, showing that you’re here to learn, you don’t have all the answers. I think for me, I don’t love it when people just like cold DMing and be like, place a bid on this. Like it actually is kind of a turn off. 

You don’t like that?

Cooper Turley: I don’t like it. I respect that they’re out there. And they’re tokenizing. And they’re telling me about it. But I think it’s better to just sort of like show someone that you’re on cataloger sound, but then show that you’re like active in the community. And so before we started recording, we were talking about how she played this catalog show. And after I saw her set, I went home and I collected my NFTs, you know, and so I think putting yourself out there where you’re just immersed in the web three culture, you’re playing like an F3P part of your plane, you’re playing a catalog party, you’re doing something eth Denver, and just getting yourself out there with no expectation of making a sale. People see that you know, and like people are looking for like who’s really tapped in and gets this out the source. And so if you see crypto comments as around, go hang out there, if you see local meetups about web three, go hang out there. Don’t say to people come and buy my NFT and just be like, Hey, how can I help you? You know build a mutual relationship I think for people like myself, I can really see when someone’s putting in the time and effort. And if I see that you’re consistent over a month, two month time horizon, there’s a very high likelihood you’re gonna see a bids sooner versus later.

You know, it’s really cool. The artists Queen George, I think you met her, right? Yeah, we did something really cool. Were April 2021, we tried to do an NFT concert, online during COVID When you couldn’t do performances in person. And we actually created like an entire drop page, we had like, different tickets that we had a one of one, an additional 25,5100. Each at different price points, each with different utilities. And we’re like, Okay, let’s try to throw like a live performance for this new artist who does have some credibility and is up and coming is solely independent, and try to use like web three primitives as a foundation to kind of bring that thing to life. And it flopped. It completely flopped. And we ended up reverting to Eventbrite because a lot of our audience wasn’t like crypto native, they didn’t have Meta mask. They didn’t have Ethereum. They actually couldn’t even like, understand and comprehend why the fuck do I need to pay $40 on top of the $200, I need to pay to just come see you perform. Yeah. And the takeaway was like, Okay, we need to like restrategize. So eth Denver came around, we’re like, okay, how can we actually build an interesting funnel where we give, right, and we use this platform called impish to basically set up like a concert in person. But the cool thing was, is we basically we did in the way, we’re one all the tickets for free to mint, it’s on Polygon, the platform impish kind of ate all the transaction fees associated with minting and two off the bat, she was able to garner anywhere between 150 to 200 collectors in the Ethereum community, right, that not only already collected something from her that had the Queen George logo on it that was sitting in their wallet, but then they were able to come to the show and watch her perform in person. Right. And at the show, we had QR codes everywhere. Like you couldn’t miss it both for joining her discord, and for bidding on her one of one. Yeah, so the cool thing was, she makes like the  URL with like the IRL. Right. And she did in a way where she wasn’t really asking for anything. But providing a good time. Yeah. And based off that we got like, I think like 50 people to convert back into our Discord out of the initial people that came and collected her NFT off the bat. Right. And then on top of that, during the performance, you like, play two songs, introduce herself. And then she’s like, Okay, this next song, I actually just meant it prior to launching, if you feel compelled, I invite you, if not join the discord. Right. And off of that anonymous addresses that she would have otherwise not have had with emails, she started to build her database. And I’m curious, like, one thing that artists don’t have in web two is all the data that Spotify collects Apple Music, etc. But now she has 150 addresses where she can see what are the tokens are they holding? What other communities? Are they a part of? What other governance forums are they voting on? What other PFP projects are they collecting? And they she’s able to actually build a data profile? You can be like, okay, 75% of my collectors that attend the show are also an FWB. Yeah, maybe I should do a collab with FWB because a lot of FWB people collected by stuff. Yep. Right. How do you think about that funnel? Like, sure there’s the ability of like starting a minting something on chain, but like, how can you create more experiences beyond just like trying to sell something to collectors?

Cooper Turley: Yeah, I think the important takeaway there. And I really want to underscore this as most people hate NFTs right now. If you’re a musician who’s doing music, NFTs you need to recognize that 99% of your audience does not care. Yeah, I don’t want to be told about it. You know, and so you’re almost speaking to a very small segment of your population. And the thing I really love about that example, is when you started to give away things for free, people become curious about it. You know, when there’s not a financial price point or financial barrier to join, people start asking questions. And so I thinking find more opportunities to give away po ops just for coming to a show. You know, giving people some little trick get a reward for joining your discord. I’ll give a quick shout out to a platform called medallion that’s launching soon to tokenize fan club platform where you can come and sign up with an email address, get a free NFT and then be able to buy tickets early on have discounts on merch, I think what a lot of fans need is just a way to see that NFTs are not only about like collecting high profile assets, you know, we spent the first half of this podcast talking about one of ones and additions, but most fans would never spend more than $100 on any anything from the artists that they love, you know and so we need to have better opportunities for them to join. And I think, you know, the two things I really loved about what you said is one giving away those NFTs for free, spamming the QR codes everywhere that were free. There was nothing that was like you had to buy something to get involved and then doing that locally here at eth. Denver, which is going a level beyond, you know, a normal concert you would do to being in a spot where people are receptive to this technology. You can put stuff out there, but like the one thing I don’t like is when artists come into web three, they’re like, here’s what an NFT is, you know, I’m gonna educate like, you know, here’s how to make a wall and all this stuff. It’s like most people are just turned off by that, you know, I think what’s actually better is just to do your thing and assume that people who know about web three will pick up on it. And don’t worry about like overly converting the rest of your fans. We’re gonna have better standards for that and as you start to find different ways where people don’t need to be super knowledgeable on web three to be able to join. I think there’ll be more receptive to it.

What is LA’s Crypto Culture Like?

Yeah, that makes a lot of sense. I want to talk to you more about like you moving to LA embedding yourself in the LA culture and what that kind of means for where your head’s at in crypto. Yeah. LA is obviously a very vibrant scene from Arts Culture, the list goes on and on and on. What is the current state of LA when it comes to crypto, because you’re in every pocket, like, I was born and raised in LA, and I still feel like I’m stuck in my inner circle with my friends and my family. But you came over here, and you’ve managed to kind of like plug yourself into all these different communities, become friends with everyone provide value to a lot of people. I feel like you have your finger on the pulse. Okay. So what is the current state of LA culture? When it comes to crypto when it comes to music NF T’s and related topics?

Cooper Turley: I absolutely love LA right now, you know, I think if anyone is listening to us, and is remotely in the crater sphere, I highly encourage you to spend time out there. This doesn’t mean go out there for one weekend and expect to gain the world. But the conversations happening are really, really productive. And they’re really inspiring. You know, I think most people are misguided. They don’t really know what to do or they don’t really know what’s going on. But it’s in their you know, field of interest. They’re asking their friends about it. They’re buying a couple NFTs on open sea, they’re going out to crater houses and just asking questions. And so I think it’s a very much like a sign of the times right now, where this, you know, mainstream mania around NFTs is sort of the topic of conversation. But while it is that topic of conversation, being able to be a guide and educator for crypto is extremely, extremely important. You know, the role I’ve been playing is, if you want to get into web three, let’s go get an AAS a wall, let’s run through everything you’re working on, let’s find one fundamental way for you to join the space in a meaningful way. Now, it’s everything from fashion, to art, to music, to photography, whatever it might be, you know, the creative lens of web three is becoming so clear now, but that’s exactly why I think LA is becoming such an epicenter for these conversations.

Dude, you love our site?

Cooper Turley: I fucking love it.

Like, what’s up with that? 

Cooper Turley: It’s a great food, man. I mean, all it is all saying sushi. I’ll be honest with it’s only two things I eat. But um, if I didn’t, if I didn’t have to eat, I would not eat but I like the social experience around it. I don’t drink coffee. It’s I’d say Aussie bulls are my closest equivalent to grabbing coffee. And the benefit of that is I can leave that conversation recharged. It’s a fun little brand thing. And yeah, I actually I highly cosign for anyone else that’s listening.

If you don’t get a say with Cooper, have you ever even met Cooper? Like is that even a thing? Like, I don’t know. I see like on your store, like three to four to five sessions aside.

Cooper Turley: Eat dude, it’s so hard. It’s gotten bad to the point where I just have like.

Like sugar rushes I’m like, how the hell does this happen.

Cooper Turley: Bad rating if you get too much sugar rush. But I have like 100 Plus, like request glass ables, just like, we need to grab a bowl. We need to grab a bowl. And I’m like shit, like, what have I done? 

Web3 Music Platforms and Opportunities

 I love it. All right. Back to music NFTs, okay. What’s on your radar right now in terms of platforms, in terms of opportunities in terms of mistakes? Walk me through, like, where’s your head at right now?

Cooper Turley: I’m kind of in this middle ground of advancing the platforms that exist today. So being a leading collector on catalog and sound, you know, working closely with teams like Royal and helping them to figure out how they’re growing and scaling their operations. And something that I’m really excited about is bespoke projects for high profile creators. So people that have done NFT jobs in the past, but when actually make those more meaningful now, you know, they’re asking questions about how to tap their fan base into tokenized communities with free to earn NFTs. And then the fundamental question I keep asking, What does it look like to release music and web three? There’s this project I’m working on called Roki that I’m really excited about, you know, we’re toying around with this season pass model. And we were released this EP, we’re going to release every single as music NFT So we’re gonna have editions probably somewhere around 500, you know, experiment with rarity games to encourage secondary market activity, a lot of people that have that season pass to get the right to mint early on, I think challenging the notion of like, dropping on catalog and sound or royal can not be the only way to release music NFTs, you know, and we need sort of more experimentation around secondary markets. And so outside of just utility, you know, allowing bigger artists to allow their fans to use their NFT to come to a show and building a product around that. It’s like, what does it mean to be a web do native artist project where you have, you know, the sale of all your singles going into a community treasury, you know, have a system where all of your tracks are being prioritized in web three. And even if they exist on Spotify, people know you because of the fact that you have a high floor price or a lot of secondary market activity on open say.

So this project that you’re working on, you launch that on mirror, right from what I remember, okay, so, talk to me more about that. Like what is the music who’s behind it? What’s the end goal? Are you just experimenting and throwing shit at the fan? Is there some type of an excuse me objective behind it, like, walk me more through that?

Cooper Turley: So I had some Grammy Award winning producers come to me and say we’re really sick and tired of the way that music works today, we’re being encouraged to make hits for tick tock, pop bangers to throw up the chain. We don’t feel like Ross anymore. We’ve been collecting NFTs we’re really active in a lot of these deeper communities. So what does it look like for us through a web three native artist project, as we started to ask common question we started going to like, Okay, let’s do a project release on cataloger sound, let’s do something we’re on glass protocol. But we quickly realized that like, taking that ownership into your own hands becomes really, really exciting. You know, building a team around making season passes, you know, having this incredible creative design around like your key into the community, you know, building a website that allows you to have a custom smart contract where you’re doing different rarity games around minting, you know, there’s a lot of exciting things there. And what I’d say just to help people contextualize this, no, Roki is a web three Native artists project in every sense of the word, the music is not going to be on Spotify. 100% of all sales are going to community treasury. I think the reason why I’m so fascinated by that is a lot of artists are really scared about giving full ownership to their community. You know, they’re tokenizing, their back catalogue, they’re keeping 50%. They’re putting 50% into the treasury. But I believe the most valuable web, the projects are the ones that fully embrace that. And every sense of the word, be able to have a canvas to explore that with producers that as are as talented as the guys behind Roki is an absolutely phenomenal thought experiment.

So one thing that I wrote down that I wanted to ask you is like, how do we get to a place as an industry where artists can one fractionalize, their back catalog and future catalog? And to do it in a legally compliant way? Because the way we’re doing right now is not scalable. Not everyone’s a daredevil, not everyone wants to say, Fuck you, suc, not everyone wants to do that, right? Because they have kids, they have this, they have all these different reasons. Me for one, like, I’m also interested in doing that for mint, right. But I want to do in a way where I can find a model where other creators can kind of replicate, right, and use mint as the foundation in the example to kind of do that. But I keep getting a crossroads. Right. And there isn’t one lawyer that I haven’t talked to and trying to figure this out. Okay. How do you get to a point where you can actually do this in a scalable fashion? And do it? So, you don’t have necessarily that fuck you Daredevil mentality that a lot of people in crypto have?

Cooper Turley:  So the short answer is, I don’t know, I’m trying to figure this out every day, what I’d underscore there is it’s not about saying fuck you, the systems that existed before, we need to be highly collaborative with those systems that this is going to work. And so when you think about fractionalized assets, I think challenge yourself to think more about additions instead of fractions, you know, like an addition is basically a fraction, it’s just kind of pivoted in a different way, when it comes to actually giving ownership rights to those assets. My belief is putting all of your income into a treasury and giving NFT owners the ability to govern that Treasury is fundamentally different from giving those NFT owners dividends directly. It’s a very small nuance, but it’s something that cannot be understated. And so if you are thinking about tokenizing back catalogue, and giving people ownership, put it into a shared community pot, you know, get people to really start thinking about governance and making that system be effective, because you’re going to create so much more value out of onboarding people into your community and getting them in paid roles, than you are just going to be giving passive income to collect your NFTs once and never come back or do anything in the community again.

Well, what you’re explaining right now is like such an arbitrary model, it’s such a new model for starting a community, right? In the sense, the buzzword that we like to use is a creator doubt, right. But again, like that’s still super scary, let alone trying to open up a Meta mask, let alone buying your first cryptocurrency, let alone trying to find your first collector and put a lot of your content on chain, whatever that content may be. Now you’re talking about a whole new community format to actually build, participate, monetize, eventually scale in own what’s yours? How do we get to a state from overcoming opening up a meta mask to actually establishing a creator doubt?

Cooper Turley: We build better products that allow that process to be much easier. And so I’ve been investing in a lot of doubt tooling. To that I’ll call out here, coupe Kayop and Castle, as Castle would be spelled there making it easier to start collaborative doubts, you know, like, you don’t need to be able to know how to use a Gnosis safe, or how to be able to, you know, make a contract call or anything to get off the ground. I think products will make it a lot easier for us to do things with our friends on chain. And that’s the way that we get there. I really, really, you know, resonate with your feeling that this is incredibly difficult to understand. I think that’s why when people ask me. How do I get like a Post Malone or Justin Bieber and a web three? I say we’re not ready for that. 

It’s not there yet. 

Cooper Turley: We’re years away from it. And the things that are gonna work are the extremely niche communities that are willing to go through those hoops. And so that’s why when I have conversations with larger artists, I’m like, yo, just tap into something smaller, like your time will come but like, you’re not gonna onboard your whole fan base to web three. And in fact, if you chatty you’re gonna get crucified so like, figure out how to build legitimacy in the space so people trust you when that time does come and just be active and make a footprints that you can be a meaningful voice when that time does come for you to actually start tapping in.

So but let’s say Justin Bieber or Post Malone, or one of these big names actually wants to jump in, they’re ready now like, fuck what the industry thinks, like I’m ready to go. Is the best way to approach it by creating like, an alter ego, like synonymous type of character and releasing music through there, or do you do like, what was that one artist that sold like a million copies and went platinum? Toy lands, right or do you do like the Toyland’s approach? Right? What do you like? How do you how do you strategize that?

Cooper Turley: I think you approach it with everything but the financial incentive in mind you ask yourself. How can I do something in this space that I make $0 off of? And when you start from that principle, I think you start to strategize differently. You know, tactically what that looks like, I think doing a drop with royal feels really awesome to me. Yeah, as if you are an artist with a really successful back catalogue, your tokenizing your masters. And if you’re in a label deal, there’s a high likelihood that they could be receptive that conversation, but I would say more broadly, don’t worry about trying to make a million dollars off of selling like 10,000 PFPs of your fan base. Instead, just go ahead and be like, How can I release one PO OP for one of my headline shows, because that in and of itself, getting people to claim a free NFT is such a bitch that you’re going to learn so much from it. And starting from that principle sets you up for so much more success than it does dropping something in raising millions of dollars and having no clue what to do with it after.

See within that that’s like forced to kind of like change the mindset of like, oh, wait, if I’m Justin Bieber, and I’m releasing something, I can’t publicly only sell like $9,000 of it, or else I’ll be like, Justin Bieber failed at it. Yeah. Right. And then the media will shit on them. And the list goes on and on.

Cooper Turley: So the question becomes, Why sell anything at all right? And I think that’s a good question to ask. And I think one easy answer to that is give it away for free. And the important thing here is I believe that the primary market is extremely oversaturated right now, you know, people are getting upside in terms of selling $20 million worth of NFTs right out of the gate. I think it’s a terrible model. I think you should price your assets as low as possible and see all of your upside off of the secondary market, because that’s gonna determine whether or not people actually fuck with what you’re doing.

Yeah. Makes a lot of sense. I’m trying to think like, you know, a lot of a lot of what’s happening in music  NFTS right now is, again, people are just trying to figure it out. People are trying to understand, again, how do I find my collector? How do I actually get on catalog? How do I get on sound? Do I just go on mint songs and just like, like, throw shit at the wall and mint on Zora because there’s also a niche collector base over there. Part of me feels like we’re just like scratching the surface. Right? And like you said, we’re in our Myspace moment. A lot of people may think, Okay, I’m obviously like, we’re so early. But I want to paint a picture of like, what’s next? Like now that there’s 1000s of NFTs being collected sitting in wallets that each respectively have their own value? Is there going to be a decentralized Spotify that comes into the picture that allows us to basically license the collectibles that we bought to start earning royalties off of it through a governance token of some sort? Again, I’m thinking out loud here. Yeah, but okay, you collected a bunch of vinyl, like digital vinyl, what’s next? What happens after that?

Cooper Turley: Yeah. Tactically, I think it’s better social communities around collectible assets. So if you are someone who’s collected an NFT, from an artist, we have better social spaces to make friends. I think focusing on the social layer first is most important because that’s the integral glue that holds us all together. But if we step back a little bit, I think there will be creator markets where if you find any artists at any song of theirs, you have a direct opportunity to invest in them financially with economic upside. And the world that I want to see is where NFTs are sort of the primary engine for larger crater dolls. Or if I’m selling an NFT on chain, it’s going into a Dao and that Dao is backing a crater token that lets me invest in that artists brand. So if I find Jack Harlow, three years ago, I would invest in his upside, I don’t have to go and buy one of one of his own catalogue. He has a jack Harlow token. And I can just buy $10 of that. And so I think the first order of magnitude is, let’s figure out how to tokenize music and sell that because that’s the underlying glue that allows us to have on chain cash flow. Let’s put that all into a Dao and then let’s tokenize all those assets and open up this huge market for  collecting and curation at scale.

How to Create Digital Emotional Experiences Around Collectors

You know, you mentioned Jack Harlow, there’s one video that comes to mind. I think he performed recently at the first venue he ever performed at and there was this guy in the in the audience who collected that initial t shirt that he sold at that first event.

Cooper Turley: Incredible. 

And he came back, that listener, that fan came back and was like holding it up in the air and Jack notice he’s like, wow, you know, like he got super emotional. And it makes me think like, how can you actually create more of those emotional experiences, but digitally? Yeah, because there’s something physical behind a t-shirt has sentimental value to it. Ensure values abstract one man’s trash is another man’s treasure and everything has meaning to everyone else, right? It’s like it’s arbitrary. But to see that, like emotional connection of the guy holding the shirt in the stands and Jack Harlow is like wow, like that was the t-shirt. Yeah, that’s like an emotional connection that’s like unmatched. Yep. And you try to think, Okay, that should be the foundation, the goal of every community on chain, in my opinion, right, developing an interconnected emotional relationship between the talent and the fan supporting the talent, right? How can you get more of that emotional experience on chain digitally? What does that look like to you?

Cooper Turley: I think it’s tokenizing every aspect of the creative stack. So we talked a lot about collecting audio right now. I think digital merchandise is really important. I think digital tickets are really important. You know, I collected wristbands and show and stubs of tickets for many years, you know, emotional experience around music varies. And I remember having such a profound realization at this new year’s festival like a year or two ago where I was like, there are 10,000 people here all like the same music and I have no clue who any of these people are. I was like how cool it be to be able to flash my phone at someone and see like their XP score or see that the fact they’ve seen Skrillex 10 times that they have like a ticket from the show like a long time ago. And I think in the same way that Ready Player One kind of depicts this, you know, world where you can see everyone’s public inventory and assets and what they’re wearing, like the same things gonna happen from music, you’re gonna rock up to a venue, you’re gonna see that person who’s at the front row level 99 Plus artists, with all their most badass merch. And when you think about all the economic opportunity underneath that, it’s so impossible for me to think about working on anything else for the rest of my life.

End Goal with Collecting 100 Eth Worth of Music NFTs

Yeah, Cooper you obviously collect a lot of NFTs but you don’t just throw your money like that shit. Like, I know you, I’ve known you for a long time, we’re very strategic with your investments, you’re very strategic with who you spend your time with. And you’re very analytical person. And with that makes you sharp, right? And not to like hype you up, but more. So take it from the point of view of like, you’re not just buying to buy, you’re not just buying to collect right. Now funds, labels, etc, have been listening to the season, thankfully, right? They’ve been hitting me up. They’re like, I want to open a music NFT fund that sweeps entire floor, and I want to be the beast collector behind that. And they’re like, they continuously come back to the same question. It’s like, okay, now that I collected everything, despite the ownership being very fuzzy and gray, what do I do with this next, right? You as someone who like you buy multiple ones every single day, from point one eth, to 0.5;to 1 eth to 2.5? Like, you’re all over the place, like it doesn’t matter to you. But there must be some end goal, some end state for you, you’re not just throwing your money out for the sake of collecting, right? Sure. There’s value in collecting. But how do you justify spending so much money on these collectibles? Okay, you can impact the artists life you give him his independent him her their independent creative freedom. Okay, there’s a lot of purpose behind that. But you think about incentives, you think about you as an investor, right? You as a contributor, you as an active web three member of voice in the space? What is like your end goal behind collecting all these things?

Cooper Turley: It’s a great question. I’ll start by saying I’m fighting for my life out here every day.

 I know, I know.

Cooper Turley: I’m putting a lot of my eth into this stuff, because I’m so passionate about it. And I think what I’m buying is social capital, you know, I think I’m buying the ability to have highly influential conversations with highly influential people, you know, and that in and of itself is worth all of the money I’m spending, you know, to really underscore again, I don’t think any of my music NFTs are liquid today. But I believe if we see the same growth and music NFTS that we saw with crypto art, there is going to be exponential returns for these early assets. Now, I have a lot of my friends, you know, Brad being a great example of this huge collector on Super in 2018, now very vividly describes collecting these works, and no one having any idea what he was doing, you know, buying works from the likes of X copy and coding, people being like, Who is this random crypto artists, and now the same works are selling for millions of dollars? You know, I think there’s going to be a chapter of generation of artists who are made entirely on the back of web three. And my goal with my collecting is the plant enough seeds to have that come to orbit and have ownership stakes in those creative projects when they start to blow up.

So ownership stakes in those creative projects when they start to blow up. Okay. That’s a lot of incentive for I feel like a lot of like, outsiders looking at this from an investment point of view. Okay. But again, ownership is very gray. Right? The  fine lines, the  onion, the layers of the onion, it’s not defined as it, as it is, in more traditional music industry, for example, right? Again, it comes back to that question of like, understanding how do we get past the securities laws? How do we get past through the boundaries that web two in traditional world imposes on the internet? Right? How do we get to that state where the ownership stake actually ends up prevailing itself and you see outsized returns in the things you actually make an investment in? Because for a lot of people, they like to be frank, like, dude, a lot of people don’t care about helping the artists, they see things as a financial investment, right? They don’t care about okay, sure, the outcome is helping and liberating the creative artists, right, and giving them independent freedom. But a lot of people they’re gonna put their dollar and trying to get 10 back, because that’s the stigma in crypto, right? So in any new attractive asset, that’s going to be the mentality for a lot of people. And you talk about music and NFT is having its viral moment, a lot of white defi tokens have their viral moment is because they’re outsized returns, right, without a doubt, infuse a lot of institutional capital, a lot of private money, how do we have that same moment for music NFTs with all the legality issues and all the gray area ownership issues around that?

Cooper Turley: We create more rarity games? You know, I think as a core standard, I think right now we’re having struggle finding out what makes music rare. You know, music doesn’t sound rare to me, like when you hear a different kick drum, I don’t think you’re like, oh, that’s extremely rare. You know, the visual wave that we saw with NF T’s now, I think is going to play a big tie in to this music NFT movement as well. At its core, you’re always going to be tokenizing an audio file and collecting an audio file. But I think the rarity in the secondary market will come from the visual association with those assets, which is gonna be really exciting. I think one thing I’d like to highlight on the ownership question, as we’ve been really zooming in on the individual assets and artists that I’m collecting, but we’re not talking a lot about the ownership stakes and the platforms that are enabling this, imagine if you could own a stake in Spotify. If you could own a stake in SoundCloud early on, you know, these things have gone on to be multi billion dollar companies and there was never an opportunity to invest. No large reason why I’m investing so heavily in something like how long in sound right now is they will be tokenized in the future. That’s the fundamental reason why I’m investing in them and why I’m so active. And when that becomes a reality, I hope to be a major player in the governance conversation around that.

Yeah. No, I hear you, it makes a lot of sense. A lot of the models that kind of prevailed in defi or have kind of like proven a grain of salt of credibility, definitely makes sense for I feel like any any platform that’s consumer based, right, any any infrastructure, any protocol, for the most part, and make sense to be co owners of everything that you participate in, will your time with your money. In all the above.

Cooper Turley: I want to add a quick point in there. Yeah, no, for anyone that’s listening to this and is in web three, ask yourself all the questions that you’ve been, or all the platforms you’ve invested in prior to having a token. And what that netted out is when they initially dropped their token and had an airdrop, you know, if you’ve been active as a collector, as a user of the protocol or whatnot, you are seeing outsized returns from ownership stakes through an airdrop. And I feel like that model is no different for music, NFTs there’s going to be a day when all these platforms tokenize. And so if you’re looking for somewhere to allocate your eth into a new ecosystem, there is literally no place better to do it than music NFTs right now, because none of them have tokens, and all of them well, and I think that’s a huge reason why you should spend your time and energy on that.

Yeah. You know, another thing I want to talk about is kind of like the timeline of music and streaming music. Okay. Yeah. And we talked about this yesterday during the good karma panel, but it wasn’t recorded. Unfortunately, I should have brought my mics but I digress. So, you use LimeWire?

Cooper Turley: Yeah. 

You use Napster, right, you also used the next kind of evolution of that, which is the iTunes store and buying songs for 99 cents $1.20 $1.30. You also use Spotify, right? Each have their own value model. And now we’re getting into the wave of tokenizing, wav files, right, and being able to provably own, or fractionalize that process right? It feels very reminiscent to the period of buying songs on iTunes except different price points, of course, right? And you’re not letting iTunes diffs decipher what the value what the artistry is actually worth. Right. How do you explain that we went from like pirating songs to like sharing songs for free through Napster, to then moving to like an iTunes model where you’re gonna have to buy a song to earn it to now a streaming model where, you pay a flat fee and get abundance of songs. And now you’re collecting music? Yeah. How do you explain that evolution?

Cooper Turley: all music will be free. At some point in time, you know, at its core, if I want to listen to a song, I should never have to pay money to do that. I think we’ve been constantly challenging what that model looks like. Now we started out with, we want to listen a song, you buy a CD for $20, that if you wanted to listen to a song, you bought it for 99 cents, then if you want to listen to a song, you paid 999 a month, eventually, if you want to listen to a song, you don’t pay anything, you’re just going to stream it for free. But I think what’s going to happen is we’re going to create better economic incentives on top of collecting that music. So if you really resonate with it, and after you play it, you want to have an economic upside in it. That’s where NFTs come into play, the artist is able to say hey, here are the economic ways that you can get involved, go and can see what all you want, share with your friends, you know, posted on these different sites, here’s a Creative Commons license. But if you want to actually get involved in this ecosystem, come and put your money behind it. And let’s go ahead and you know, grow this thing collectively. I think that’s the next chapter that NFTs are really unlocking.

Open Sourcing The Entire Music Industry

Do you believe in transparency in crypto? 

Cooper Turley: Yeah, to a degree.

 Okay. Do you believe in like, open sourcing everything? 

Cooper Turley: No.  

No? Okay. How come?

Cooper Turley: I think it’s just impossible. Okay.

But when you think about like platforms that are actually providing Pivotal, I guess potential for artistry, let’s talk about, let’s say something like royal, okay, who seems to unlock the securities issue around actually tokenizing ownership, and providing a more direct fan relationship experience that was has never been able to be done before, I guess in a legally compliant way. How can artists kind of tap into that avenue and that that financial freedom that Justin Blau is doing for other gated artists, right, and curated artists? How can they tap into that without actually being on Royal?

Cooper Turley: Yeah, I think eventually those token standards will be generalized. Yeah, like Royals model will become an open source contract that you can use into yourself. So if I want to tokenize my master rights, I don’t need to go through royal to do that. Royal would just be a distribution platform to get more eyes on it, you know, in the same way anyone can release on Spotify. But if you get added to a Spotify playlist, it’s gonna perform better. We’ll see those systems exist. The reason why I answered that question and said no to everything being open source, I fundamentally believe that everything should be open source and all open source all my work, but I just know for a fact it’s not everyone thinks and I think it’s never gonna happen. And so I think we need to take what we can get, you know, we need to look to leaders like Blau and like the founders of catalog and sound and push them to be as you know, generous with their IP and with their You know, kind of findings as possible, because the reality is we’re gonna get to a saying crypto or not everything’s gonna be open source, you know, early internet was open source. And then we saw competition among social media platforms. And so we’re living in this golden age where I think, you know, trustless technology and open source primitives are kind of the standard. I think as the space gets bigger and more competitive, people are going to bunker down, and you’re going to need to be selective about who you’re spending your time with, because that’s going to tell you who’s gonna win.

So that gets me thinking, are we just going back to web two, but we’d like co-ownership?

Cooper Turley: Yes. I mean, I don’t think we’re going back to web two. I think that we’re just democratizing.

I guess, like my gated platforms, right. Yeah. But with CO ownership. I guess that’s I got to rephrase that a bit.

Cooper Turley: Yeah, I think that the curation layer is what’s going to be the most difficult part to decentralize. I think that there will always be opportunities for curators to make money through their services, which is what I’m really excited about. But I think the most premier platforms for curation will always be a little bit gay kept. I think that there’s value in exclusivity for that exact reason. But I think the difference there is we can’t only have gay cat platforms, that’s where we exist today’s everything is only gate caped, if you want to be successful on Spotify, you need to know the dude at the playlisting site, you know, want to be successful on YouTube need to have editorial support or something like that, you know, right now, with web day, we’re noticing that there are new channels where you don’t need to be, you know, gate caped to be successful. And we need to unlock better systems like Zara, where you can go and tokenize something and people actually see it. So, we’re not only looking to sort of like the whitelist, that artists for the ones who are actually going to be successful.

Yeah. Yeah, you know, I just see like, where we are right now with music NF T’s and I’m trying to think like 10 steps ahead of like, what are some, like obvious plays? What are some obvious roads that we can kind of go down, that bring more value back to the musician beyond just a collector? Yeah, right. Any other value models that come to mind? So, let’s say you collected an NF T, like what happens next? Okay, so you started cratered Dao? Now you issue a governance token around that, right? And you can tokenize that on paper on paper will be worth much more. Okay. But actual money coming back to the artist that stems from their initial one of one, their addition, whatever may be trying to think of like work, can it go from here?

Cooper Turley: I think streaming being on chain is really, really important. You know, right now, instead of paying 999 a month to listen to Spotify, being able to allow artists to say, hey, please pay me 50 cents every time you play the song and it going directly into my account is a huge step forward. Even the notion of having.

 But could that happen? Do you think that’s actually plausible? 

Cooper Turley: Yeah, I think that will be live on audience within the next year. That exactly situation.

Like from a consumer’s point of view. Okay, from everyone listening to Spotify, they’re so used to paying a flat fee and getting access to everything. Honestly, like, will people psychology around consuming music actually change? 

Cooper Turley: Like, yes, I think if there is exclusive music that can only be listened to, if you pay an extremely small price, people go out of their way to listen to it.

So, it comes from the exclusivity element back to what you said earlier.

And it’s not everything, I don’t think every song will have that standard with it. I think they’ll probably be a bass streaming, right, that’s applied under the hood where you don’t need to think about it, you know, like, you’ll have a balance in your audience account of $100 that’s just sitting there. And every time you play a track, you’re paying like, literally a penny. A penny is three times more than you get paid to listen to a track on Spotify. But think about how much music I listened to every month. And how much value I’d get if I was spending a penny on every song, I’d probably save money. Spending 99 a month, you know, we just need to rethink that.

Music Streaming in Web3

Yeah, yeah. You know, when you and Justin Blau were on Blockchain & Booze. Yeah, a year and a half ago.

Cooper Turley: Fire episode. 

Fire episode, shout out to Blockchain & Booze. But that was like, way before Justin Blau had his iconic drop the $11, $12 million drop in clubhouse with origin protocol, that kind of set the precedent for a lot of other conversations around NFTs music etc. You know, one thing we talked about in that conversation is what we just brought up is like, what if the artist can dictate the price per stream? Right? How would that look like? Is that an appropriate model? And from what you’re saying it’s slowly gravitating towards that. But what you’re saying is like, audience, a platform might control the price per stream. Is that counterintuitive to what web three is about? We’re giving creative freedom, financial freedom to the musician, should the should the musician and the artist dictate the price per stream? Is that even plausible? What do you think about that?

Cooper Turley: I don’t think they’re mutually exclusive. Okay, I think there’ll be a suggested model where it’s like, hey, every track should be one cent here. I think there’s a protocol wide, you know, global streaming rate that can be decided by token holders. I think that every artist should have the ability to say I want this tract cost $1 to stream I want this tract cost $20 a stream. I want this tract to be free. But I don’t think it’s applied across the board. I think it’s kind of a freemium model, where it’s like, you can allow anyone to listen for free, but if you want people to upgrade and listen to more exclusive content, then you have more, you know, economic rails around that.

The Consumption Layer of Music NFTs

Yeah. You know, another interesting conversation around music NFTs is actually the consumption layer, the enjoyment Yeah, like it’s not just buying to collect and to flip or to hold. It’s also to listen and enjoy right, as more things exclusively Come only on chain and don’t get distributed through web to audio platforms. There isn’t really a consumption layer now. Yet, like the first thing that comes to mind is an application on the iOS store, we can connect your wallet and all your music NFT kind of populate, you can listen to them. And not only that, listen to other people’s music, NFTs as well. Yep. And it makes me think like, what’s the current state of consumption? Everyone’s just buying, buying, buying, buying? Everyone this like there may be like 2000? Collectors, Like it’s so small. Yeah, but what like, how do you actually start enjoying beyond buying?

Cooper Turley: So, I usually listen to my music, NFTs on catalogue or sound directly, you know, I go to the sites that I’m playing music on and just go back and listen to them. I’ve been building out an on cyber-Gallery, which is like a 3d NFT gallery. That’s only for music NFTs. So, you walk around this, like big 3d space, and you see the giant cover image, you walk up to it, and you have like a cylinder around you that you can hear the audio in. Gallery is also a fantastic platform. They’re currently thinking through how do you have a playlist view for your music, NFTs instead of just a fixed static cover art. And, you know, even here at Denver, I ran into someone that’s building music NFT Player. Oh, just underscore. We don’t know what that looks like yet. I think it’s extremely important. And I think that music, NFTs are vastly different from NFTs you have on your open sea. And so, we need different ways to enjoy them.

Yeah, I try to think like, if I’m about to take a flight, how do I actually enjoy? Yeah, the songs that I collected? You know, sometimes I’m on a flight and a song doesn’t download fast enough. Yeah. And I get so fucking angry. Yeah, all I want to do is listen to that song. And I’m thinking, wow, it probably gets even worse now that you collect music, and you can’t really enjoy music on the go. Again, with time.

Cooper Turley: Two things there. One, I also want to give a shout out to club BPM, I think they’re doing a fantastic job around, you know, playing music and NFTs. And back to my point about all music being free. I think if something’s released exclusively in web three, that doesn’t mean that it can’t be heard elsewhere. You know, if I’m releasing a song that’s being tokenized, as a music NFT, and it’s released with creative comments, people will put that on Spotify, they’ll put that on YouTube, they’ll put that on these other platforms, there’ll be ways to hear it if you don’t own that music NFT. But I think the difference there is that it starts from the source of the first way Listen to this, is you have to buy the NFT or you have to be coming to the place to buy the NFT to listen to it. And from there. I think as it gets more successful, the more proliferates elsewhere into the, you know, consumption experiences that we’re used to.

Yeah. So, there’s the collectible layer. There’s a consumption layer, there’s infrastructure layer. What other components Haven’t we really, like tapped into yet? Again, consumption was one, we are talking about infrastructure, we see platform plays, we see what’s happening underneath the hood, we haven’t really seen too much consumption again, what else are we kind of lacking? You think.

Cooper Turley: Just community, you know, like some of the governance standards, we’ve seen around bigger defi protocols around like social Daos, I think cratered as a really early on. And so, I think for artists that are brand new to the space, finding out ways to pay your fans to work on your project full time is extremely important. You know, I challenge artists that started thinking from the view of a CEO and not just as an artist, where there are many different roles that you need to fill. I think the reason why those cater stock markets will come to exist and why Jack Harlow token will have value. Like it’s not only just like an asymmetric fan bat where it’s like, oh, cool, here’s this jack token that he cares nothing about. It’s like no, that token is Jack Harlow equity, you know, and like, he’s gonna have to start operating from a standpoint of being a CEO, just as we see with like all major companies, the artist is not always going to play that CEO position, they might just sit on the board, they might have like a very creative position where someone else is operating it. But I think challenging the way that artists products are structured, and thinking outside of the box in terms of ways to be able to capture that ownership is gonna be a huge unlock for the way that we start to invest in these assets.

Tokenomics: Risks Associated with Overwhelming Artists and Fans

So, you know, that tells me, it shows me like currently Jack Harlow, again, on the subject of him, he I don’t know what his like current like situation is in terms of like, record label, whatever. But I’m guessing he has a team a record label behind him, right, that has helped him get to where he’s at today. Right now, he’s under the precedence of basically pleasing them, right? And kind of like making sure that they get a financial return on their investment, right? Probably indirectly, it’s probably not as direct as them saying it. But now it makes you think, when you tokenize, your work, and you tokenize yourself, and you play more of the CEO role on chain through different assets that you kind of sell and distribute to your fans. Doesn’t that bring in a lot more pressure on the artist, because now not only does he have to like fulfill the needs and wants, and the expectations of a single entity, but now he has to do it with 1000s of people that have a financial stake in him. And if his ticker goes down, then everybody’s angry. If his ticker goes up, everybody’s happy. Yeah, and you’re introducing an entirely new psychological element to kind of like an artist fan relation. Now. I’ll get I want to hear your point of view on this, but like we also see craters like Dave, Dave Young with Dave Coin. And he was a part of season one like you were and we talked about when the market took a dip. All of his fan’s kind of like felt more aligned. Like they all lost money together, you know, and they were all in the shithole together. And when it went back up, like everybody was happy and like they went through that emotional financial cycle together. But again, that’s a very like small like minimum viable community type of like approach, right? What does that look like? On a macro point of view? We don’t know yet. It hasn’t gotten to that point. But I’m thinking like, Will that get too overwhelming for the artists where now they’ll be focused more on community management and policing their audience financially and less on creating? Will it actually have the opposite effect? How are you thinking about it?

Cooper Turley: I mean, I think as teams get bigger, so does the delegation of responsibility. You know, as these artists start to scale, it’s not just going to be them at the helm, they’re going to have people around them that have equal exposure and responsibility in that system. So, in the same way we invest in Ethereum versus Elana, it’s the same way invest in Drake versus Jack Harlow. You know, I think it’s gonna take a while to get there. The one thing that I’d underscore too, is like for these artists that are in breakout positions, you know, being on a label is very different for very different artists, you know, if you’re a priority artist on a label, they’re gonna do whatever the hell you want, like you’re in the driver’s seat, you’re controlling all those conversations, it’s a great relationship. If you’re on a label, and you’re not a priority artist, you’re fighting to even get a voice in that conversation. So, what I think we’re seeing now is that independent artists are thriving in the web three space, because they have that creative freedom that party artists do on labels with the financial backing that a label typically provides. But what this is going to evolve as is the label is going to be another corner in this conversation in the same way all of your fans are, we need something done, you’re not only going to go to your rep at a major label, you’re going to go and you’re discording, gonna put out a bounty. I think that democratization of artists opportunity is exactly what makes these exciting opportunities possible. And how you get to a point where we can start to ask the question of what is the market cap of Jack Harlow? And the people who can ask an answer that question are not only labels and catalog buyers, it’s the people who listen to that music every single day.

You know, it’s an interesting factor of like, pre tokenization, pre financial incentives and just seeing like what fan clubs look like today, look at Facebook groups, look at Instagram pages, look at these everyday artists that just love keeping up with the with the character with a fan, whatever may be in posting and creating content on their behalf and some pages have millions of followers. Yeah. And you think like, okay, now it’s time to issue a token, align incentives, bring wav files on chain, sell my artwork as one of ones or additions and sell tickets on chain like you start building all this like financial capital, right and social financial capital around you. And you think okay, who can I empower off the bat to kind of manage and delegate? First thing that comes to mind? Is those people Yeah, the people who manage the Facebook groups for free, the people who manage the Instagram pages for free, the fan pages, etc. Give them some social capital now give them the incentive, empower them, and bring them even tight knit even closer into the community. But I haven’t seen that kind of like prevail yet.

Cooper Turley: No. 

And what are we missing? Like? Why? Why? Why isn’t it happening?

Cooper Turley: It’s not one concrete thing. You know, I think it’s a mix of things like people understanding that ownership exists, understanding that they can have higher social capital, you know, my earliest entry into music was through those exact same Facebook groups. The reason why I became so bullish on Daos because I spent time in grid family, pretty lights family, or does a family like all these like electronic communities, STS nine lotus, like, I would go to these shows, and I would see people that were so passionate about these artists projects with zero financial incentive, we’re giving the artists money, but spending all our free time talking about them. So, when you build that into a two-way street, I think people are gonna be so empowered, where you can just work for your favorite artists. Now, if I want to work for my favorite artists right now, I need to be like, their agent, their manager, their label rap, or just like nothing, you know, like there’s not ever been a way for me to be like a low-level contributor to an artist brand that I love. And I think that ability for us to offer those opportunities is what’s going to make not only music NFTs valuable, but also the creation of these larger crater dolls at scale.

But look what you just said right now, you did it because you love doing it. You love giving them money and getting access to these experiences. Yeah, without the expectation of getting anything in return. That’s how people have been doing it now or years. When you introduce money into the picture, it starts getting a little bit weird, right? And if you start building a big enough community where everybody has money, everybody’s financially incentivized. It gets even weirder, right? And again, we haven’t seen these models like prevail in theory just yet in practice, but you know what I mean, you know, what I’m getting at?

Cooper Turley: Web threes opt in; I think that’s the important part. Like there are people who will choose not to opt into these systems and just enjoy it possibly, I think that’s fine. That’s not to say you need to be like joining the discord to be able to like be a part of an artist community. But when you reach a certain level you like see that as like the next step up, I think we just need to make that door a lot more accessible. Because right now, if I go on, like, find an artist that I love, or something like that, you know, I said earlier an episode, most people when they listen to music, they don’t even know what artist they’re listening to. Yeah, but I when I’m listening to an artist, I love I could tell you where they’re from, what label they’re signed to, you know what their rollout process looks like, how many catalog records they have, that’s a drastically different artist profile. And so, we need to recognize that these systems are not being built for every single person that ever listens to your song. It’s being built for the people that really want to tap in and actually have an impact in the future of it.

You know, what’s interesting about you, Cooper, it’s like you’re one of the 1000 true fans. You’re like one of the 100 true fans like you classify underneath that funnel. Me personally, like I’m a drummer, I’ve been playing music my entire life. I can’t tell you where Steve Gadd is from, I can’t tell you how many like, records he’s played on. I can’t tell you his most iconic drum solo like I can’t, you know, because I consume it, I enjoy it in a different way. But does that make me different? Like, could I still qualify within that funnel? Will I still be, you know, while I still participate? I don’t know. I’m like, I’m like processing like you as an individual. You as a user, me as a user. We both listen to music. We both like get the emotional extraction, the most emotional uplift from it. But we do it differently. Right. And I try to think like, does crypto change that? Is crypto just the medium to lock all that in together? And I don’t know I I’m asking very much from like a generalized point of view. Is it the medium? Like, is it is it the medium to bring in the 1000 true fans? Is it the medium to bring in the 100 true fans? The 39-true fans? whatever the hell the key word is? Okay. I don’t know. We’re too early. What do you think?

Cooper Turley: I think there’s two underlying principles. One, people just want to belong, they don’t really care about making money, they just want to have friends, you know, and I think this is a great way to make better friends online, which is exciting. And two artists just want to be heard, you know, at scale. They want their creative work to be heard. When I talk to managers of big X, they always asked me like, like, listen, people always say the artists want to make money, but they don’t want to make money they want to be heard, I think most artists would prefer to have more people listening to their music than they would to actually make money. And so, what I think the process is here is the role that someone like us plays in this process is allowing more of this music to be heard, you’re not going to be like a top Contributor that’s in the discord every single day. But if you hear about this artist, and you own their music NFTs, there’s an extremely high likelihood that you’re going to tell one of your friends about that, and that network effect for you to be able to just be a collector of it, and then tell your friends about that over another artist to listen to because of the fact you want one of their assets. I think that’s the role you play in the process.

Another interesting question that I like to think about, and I tend to ask other people in the music season is every collector is a listener, but not every listener is a Collector. And earlier, you talked about like, you don’t need all your fans to be collectors. But how do you actually get part of them to, like, how do you become an in transition to people who listen to you, right? And if only you could actually capitalize on that, that Spotify data when they give you your Spotify on raft, you can find your 1000 true fans actually based off how many hours like the top 1% listener? You know what I mean? Data points. So how do you turn more listeners into collectors?

Cooper Turley: I have a weird opinion. Like, I actually think that if we gave artists, all the data on their fans, most of them wouldn’t use it, like are so genuinely like, lazy when it comes to data analytics, you know? And so like, I think a big premise of web three is like transparency on chain, but most people just don’t care, you know, or like when they see people posting on their stories, like, oh, like you’re my top artists, like, most artists, don’t think to, like, do anything about that, like a lot of these people will share it on their story and tag the artist, but they don’t really quantify that. And to your question about how to get more fans to become collectors. I think it’s like having a specific desire to actually convert those fans in a very meaningful way. At a concrete level. You know, starting a Discord server is where we’re at today. I don’t think Discord is the end all be all for fan communities actually don’t think we found the product for that yet. You know, finding more opportunities for fans to be able to build relationships amongst one another, you know, offering them a free pop and giving yourselves a private collector community to have a deeper relationship, doing things like hosting town halls, where it’s not about you. It’s just a social happy hour in the same way that we went and had a music NFT happy hour knows, as artists I think you need to start thinking about it’s not me trying to like sell myself to my fans, it just giving my fans different opportunities to connect with one another. The more that people resonate around their social experience because of you, the higher likelihood they’re going to transcend and move up the ranks. And I think that’s how you find more collectors.

You know, just you’re absolutely right, like when overstimulated came out. And I want to talk about that too. And talk about the tokenomics and how you kind of helped bring that to life. But I was a new Daniel Allen fan, I had never heard of him prior to actually collecting the overseeing token and seeing the blog post and funding that myself and yeah, being a part of that experience. And I remember Daniel Allen had every right to be like above right and to feel above and to feel that ego that a lot of artists that have made it quote unquote into the space now there’s different ways to define what made it means and it’s each, it’s very, again, it’s a different definition of what value means. I remember going to a show and him coming up to me and be like, hey, I’m Daniel, nice to meet you. Yeah, and it plays like a level, it provides a level playing field right and allows you actually to feel more genuine curiosity so not only that I collect his sound one on one not only do I have like a cool amount of like over some tokens, not only my in the discord and like voting on stuff, but he recognizes me. Yeah, right. And he doesn’t need to write and you think about like at scale, when you have Jack Harlow doing that. I see videos of him interacting with his fans hugging them, talking to them remembering their first names like I’ve seen that. But when you think about like, how can you take this model and apply it to many others? I don’t think it’s gonna work. Yeah, I don’t think it’s going to work and I don’t think it’s gonna work simply because the levelheadedness Yeah, I don’t like feeling like he’s better than me or she’s better than me. But a lot of artists think they have that clout, right, that social clout and with their own respect, they deserve it, whatever.

Cooper Turley: Well, that’s the X Factor that I always have you know, when I go back to like, what makes an artist web three native, it’s giving, it’s caring about your fans, it’s caring about building those social relationships and giving back to it. You know, there are artists that do that outside of web three. And I think that’s why they’ve been successful. You know, Grizz, I think is a great example of this, Helenium is a great example of this, where they are so tapped in with their community, and really giving back on a meaningful level. I think the funniest thing that I’ve learned in the past year, is that no artist tries to be bigger than their fans. It’s just impossible. You know, we’re at a stage now where like, there are millions of people who’ve never met in your life who know your life story. You’ve never talked to them ever. They come up to you, and they’re shaking, they can’t even hold a conversation. It’s like, bro, I’m just like a normal guy. Like, we laugh like me and my friend, we laugh or like, imagine being Post Malone, and somebody who’s 13 has three children comes up to you, and you can’t have a regular conversation. That’s freaking out, you know. And so like, I think, when every artist starts out, they have this opportunity to cultivate a community. I think as you scale, it’s impossible to maintain those personal relationships at scale, what we can do is find better technological ways for fans to stay better connected amongst one another. Because that’s how you maintain that social relationship in the absence of you being able to do it yourself.

Daniel Allan and Designing Overstim’s Tokenomics

Yeah, let’s talk about overstim for a second. Okay, you were a big part of that. You held Daniel’s hand a lot through that process in that served as a model and inspiration vehicle for many, many other musicians’ kind of coming into the space. I want to talk more about the tokenomics, I had Daniel on a couple weeks after he had the campaign, I had him after he released the EP, we did an entire, like, timeline breakdown and everything that kind of in between, but we never really got too technical with it. Okay, you jumped on board, you helped with a bunch of different things. But your special specialization through Fire Eyes for example, is helping with tokenomics of different projects, Ens, rare, bank lists, etc, etc, etc. And now for this micro creator. Yeah, walk me through your mental model behind designing a token system and incentive system around artist shares in selling a percentage of one’s artist share. How did your kind of like decide okay, this is the right model. This these are the tokenomics This is how many tokens should be in circulation, we should do the drop mechanics like this, like walk me through like from A to Z, how you kind of think about the tokenomics specifically around that drop?

Cooper Turley: Well, I’ll start by saying if I could do it again. Today, I would just sell NFTs instead of doing a you know ERC 20 token with it. I would sell one NFT membership pass for overstim as an EP. Yeah, and yet one vote and all of the holdings would flow back into the Dao. That’s today. But when I was building at the time I came from a standpoint of, okay, I have a vague understanding of how token distributions work for generalized protocols, I think that this is a much smaller scale. So, we need to retain more ownership. The most standard model for record deal is a 50/50, split 50% of artists 50% of the label, the label is being replaced by the community. So, 50% of this is getting sold to the community, the theory was that 100% of those royalties would flow back into the community treasury, because we split it 50/50, the community would be entitled to 50% of it, and Daniel would be entitled to 50% of it. Now, it’s important to recognize that does not mean that if you hold overstim tokens, you’re getting USD directly to your address, we’re just putting those royalties into a treasury that’s governed by those token holders. And so, you have a claim over 50% of the artists rights that’s going into the treasury, it’s not going to you as a holder, I think that’s a really important distinction to make that allowed me to be comfortable with this from a legal standpoint, and one that I think kind of, you know, sets better precedent for the entire model here. Because honestly, what I’ve learned through the process is, who cares about the Spotify streams, like he’s outperformed so dramatically with music NFT sales relative to Spotify streams, that the value of those is similar to tokens is a claim on music NFT sales, and the secondary sales of those on chain assets. And so, I think the thought process now is, how do we continue to drive revenue back to treasury through selling on chain assets, less about worrying about how do we bridge in, you know, Spotify, royalties, or licensing or stuff like that. And we’re just focused on like, all the web three things on the table.

Building Bridges Between Web2 and Web3

Yeah, it’s something that you’re big on, like, forget web two. And let’s just take this one entirely, like straightforward web three point of view. And let’s just do everything from a web three ethos, from a web three mindset, from a decentralized point of view, from a co ownership point of view. And that actually goes back to the project that you’re just starting right now with those Grammy Award winning producers that are Metaverse DJs, Metaverse characters, whatever you want to call them. But then again, there’s also value in the web two system so much. There’s also value being generated from a royalty point of view from monetization point of view now, it doesn’t favor everyone. Yeah, and I think web three favors a lot of the independent innovators, right? That kind of pushed the boundaries forward, hence Daniel Allen success but to say that forget the web two royalties, don’t even bring those on chain. Like, let’s just focus on a new, a new structure of creating value, in my opinion is like, wait, but there may be an entirely different opportunity that we’re missing. Maybe there’s actually a way to coexist with one another. And why actually like blouses approach so well, because he’s mixing the old with the new to create a brand-new primitive, right. But I get your point of view, I get like experiment with the boundaries test what’s possible within a web three. But in my opinion, I think I think that’s completely ignoring what web two is generating? Sure. Yeah, it has its fucked-up systems, it takes advantage of the artists, royalties are not distributed fairly. There’s all these underlying issues. It’s, it’s meant to empower the record label and not the individual artists itself, like, but I feel like there’s a way to mix the worlds and leaning one end on the extreme side doesn’t work. And leaning on another one of the extreme sides doesn’t work. Were web three to be on one side, web three, being on the other side, nothing extreme has ever worked out. Yeah, right. How do you think about that?

Cooper Turley: They’re not mutually exclusive. You know, I think that the underlying principle here is, if you think about time, per dollar, you know, like, the amount of time you put into something, web three is going to outperform web two every single time. And that’s just gonna be a standard moving forward for the next 100 years, you know, and so if you’re gonna be putting your time into schmoozing a Spotify curator, or trying to find someone to collect your music NFT, you’re gonna make exponentially more off of that. And I don’t think the financial piece is like the only important thing here. But for many artists, it’s necessary for them to be creatively free. And so, I think what we need to do is find better ways to allow artists to spend their time in web two productively, where they don’t feel like they’re just running in circles, but they feel like they’re making direct imprints with their collectors. I think all those systems in web two will try and come into web three, it was a great book called The Innovators Dilemma, I highly recommend, it talks about tech companies that had a huge lead in any respective technology and just blew it completely, because they weren’t built on the same fundamental fabric, or they tried to adopt too late. I think the same thing is gonna happen with web three. You know, even this weekend at the conference, I met a lot of kids who are 25, and younger, who are all building web three companies, who will spend their entire career building a web three, they will never know anything else. And so, when I think when you frame it, from that point of view, it’s kind of like, why would I try and like be the best at an existing system that has millions of players in it, but I can go tap into this new world that has 1000 people in the world spending time on it, and become a leader with exponentially more economic opportunity.

Yeah, I think I think it’s well said, what am I missing? What questions am I not asking you think are important to tackle?

Cooper Turley: I think just like, generally, don’t overcomplicate it, you know, I think that’s my general rule of thumb for all of crypto right now is we get so big brain and meta, and like, we’re gonna change the world, and everything’s gonna be different, but it’s like, Yo, like, we have not figured out the simplest shit like in the slightest, you know. And so, I’m always a big believer of like, hone down your scope, and something like very, very small. And if you are thinking about tapping into web two as an artist, like, don’t worry about how you’re going to make your entire product decentralized. Don’t worry about how you’re gonna tokenize your whole catalog, just find one really small way to start poking around with it. Make a po-op for your next show, find a way to tokenize one of your assets, make a Discord server, very simple questions, you know, you’re going to learn a lot from that. And so, I just really underscore, you don’t need to be a wizard to dive into this world. You know, if you have time and energy and a capacity to learn, I think you’re going to be just fine. And we are so early on that if you spend your time on this right now. You’re going to wake up in three years and be the people that are coming on this podcast to talk about your learnings.

Outro

I think that’s a good place to end off one because I don’t have any more water. I’m honestly impressed that you haven’t taken a sip of your water and you’re in the driver’s seat. Cooper, awesome to have you on again. Any final words? Where can we find you? Any last thoughts?

Cooper Turley: Wrap it up? I would say this was a master episode. We covered so much incredible stuff about music and FTS and if you go listen to the Blockchain & Booze episode we had and did like a now to then you’re gonna see how much has happened in the last year. And anyone who knows me and sees how much I’m talking about this? This is exactly why and what I would say is we are going to come back on this episode in a year and be like holy shit, like think of all the stuff that has happened since then. So high level best places to have with me is on Twitter @Koopatroopa. I’d say keep up with my Instagram too. You know I’m putting a lot more time into that trying to percolate a little bit more into mainstream culture. On Discord you can find me but honestly, I don’t spend too much time on there anymore. So yeah, we’ll get in touch if we’re meant to get in touch, now keep doing the good fight. And if you really want to come and find me spend some time in LA, start hanging out at music web two events and there’s an extremely high likelihood, we’re gonna bump into one another.r

Just scope all the aside places.

 Cooper Turley: What are they gonna start?

Like literally start the aside down just with Cooper. Hello, dude. You’re amazing, till next time.

Cooper Turley: Thank you for having me on man. 

Categories
Podcast Transcript

NFT Ticket Case Study: Queen George on Growth Hacking Collectors


Listen on:
Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 21 welcomes Queen George, the modern jazz-pop artist who’s been publicly, yet thoughtfully experimenting with web3 primitives since April 2021 in an effort to find and build a collector base.

We explore a new funnel and interesting case study on how she growth hacked *120* collectors by minting tickets as NFTs for her live concert at Eth Denver.

In this episode, we discuss: 

  • 02:00 – Intro
  • 07:36 – Experimenting in Web3
  • 13:49 – NFT Ticketing, Metamask, and Eventbrite
  • 20:17 – Your New Single “If I Ever Go Down”
  • 30:30 – Crypto QR Codes: The Funnel
  • 33:52 – Why Doing Tickets as NFTs is Important
  • 37:09 – How Crypto Provides Better Fan Based Data To Artists
  • 45:57 – What are the Biggest Challenges Getting into the Space?
  • 49:25 – Building a Mainstream Audience
  • 50:47 – First Time at a Crypto Conference: Biggest Takeaways
  • 53:57 – Queen George’s Thoughts on Web3
  • 59:12 – Outro

…and so much more. 

I hope you enjoy our conversation. 


Support Season 4’s NFT sponsors!

1. Coinvise – https://coinvise.co

2. Polygon Studios – https://polygonstudios.com

Interested in becoming an NFT sponsor? Get in touch here!


Queen George, welcome to mint.

Queen George: Thank you. Thank you so minty fresh in here.

So minty fresh. 

Queen George: So minty.

 How are you doing?

Queen George: I’m doing so well. We are on our last day of Denver, of eth Denver, and I just feel like I have flown into a different country.

What country is that 

Queen George: A country that is brand new and I can’t tell anyone about yet. That’s how it feels. 

Wait, can you tell us a little bit about it? 

Queen George: Okay, so you know, we just started you already want to start this year with me? You don’t I mean? 

How are you doing? How are you feeling?

Queen George: I am feeling very well. I am feeling really good. I just drink my coffee. So, we’re doing well.

I feel the voice is warm. 

Queen Gorge: The voice is warm. Yeah. The voice is like is bubbly.

And you have such a raspy voice. So, you need the warm mint, the warm mint

 Queen George: The warm mint. Yeah, the warm Earth is really doing wonders for me. Yeah, I feel very, very good. Really happy to be here. Happy to be on mint.

Intro

Tell us about yourself. What does the world need to know about Queen George?

Queen George: What the world needs to know about Queen George is that she is my alter ego. Let’s start there. She’s very much me. I mean, I created her we created each other, we need each other. But she is the version of me that has no bounds, knows no bounds, knows no limitations. And is absolutely capable of anything new and completely detached from old ways of thinking or doubt. Anything that can hold you back. Queen George just looks at smiles at, empathizes with, moves on and is the fearless side of me. Obviously, it is it is me we’re not dealing with that double personality. But it is my artistic expression of a version of myself that knows no bounds, which is really has been very critical in my art ever since I discovered that side of myself. I want hopefully for people to get to know that part in themselves as well. Upon getting to know me and me getting to know them. Because we all have it. I’m also very, a very spiritual person and very into the things that, you’re into mindfulness and I believe that we are more control than we think. And Queen George symbolizes that artistically and spiritually for me, in many ways.

You know, for whatever reason, now that I’m hearing you talk, and we talk a lot like you should have your own podcast. I think you have such a soothing voice.

Queen George: Thank you.

And that gets exemplified in your singing but how’d you get into crypto? Well, I guess is a story of me red pilling you?

Queen George: There it is. Yeah, I mean, it’s a funny little twist you did there because you are the person that put your hand out. And when just trust me, which is something that you know, in good old fashioned music industry, someone puts out their hand and says trust me, you go. Hold up. Who are you? What are you What are your intentions? Where’s the loophole? And in this situation in my introduction to web three, you are not only someone so near and dear to me in my life, I mean music and web three aside, that’s all-beautiful bonus. But you are one of the only people that have been able to go okay, when you said trust me and for me to be completely blind, and understand that it’s okay not to understand. Just be there, just show up. And you’ve been so critical and that for me. And that’s transcended past web three. Let me tell you, because seeing how this has unfolded, although it is so early for me. It has given me a lot of faith that way. Maybe I should go to more uncharted territories, because there is so much there. And so yeah, to trace it back to your question. You did Red Pill me, but we started about April of last year, April 2021. We said, Let’s just try something, we made it really simple. We said, what am I good at? I am good at performing, right? I am good at making the people in front of me feel wanted warm, loved, present. I know that I can make them cry and make them laugh all in 20 minutes. And that is a gift that I do not take for granted. And I’m so happy to bring to this space. So, we just kept it really simple. We said what do we do with that? Let’s put on a concert. So, it was COVID people were down, people really down. And we said let’s just put on a virtual concert. So, I hired a full-blown production team, rented out a local rehearsal studio in the valley. We love repping the valley in the valley.

Shout out to the valley.

Queen George: Shout out to Northridge, shout out to Tarzana. So rented out a studio there called Pop studio, wonderful place. And we just put on a production we just created this opportunity to hopefully get in front of people and the way that this you know, went hand in hand with web three with just my first attempt in this space was that we tried to sell tickets as an NFT. I don’t know what took me and when you know, no one’s done this before. I said, perfect. I want that one. Yeah, I want that one. And I’m done to flop but I am down to just say we tried it. And it was so fun to try. I that was also a learning by doing experience. I don’t listen, I have one major problem. Things go in one ear out the other. I listened to your feelings all day. And I will empathize with you and, and try to hear as much as possible. But when it comes to life experiences, I don’t know what you’re talking about until I did it myself. So, I was like, Cool. Let’s just also all this one. We tried to sell these tickets as NFT’s. My fan base was like for the love of God, what do you want from me? What do you want from me? I just want to see you saying, I don’t know what this link is. I don’t know. What is an open scene?

What is a meta mask?

Queen George: What is a meta mask? I already have to wear a mask. You also want me to get on a meta mask, leave me alone. Right? So, there was a lot, there were a lot of hurdles, a lot of hurdles, which is fine. I mean, it was the first time we ever anyone ever tried anything like this. 

So, for context really quick. 

Queen George: Yes.

This was taking place during COVID?

Queen George: Taking place during. 

Where there were no live concerts in person?

Queen George: Yeah, no life concert.

And you had an itch to scratch where you want it to perform live. 

Queen George: That’s it.

Experimenting in Web3

And you had been writing a lot of music during the off time, right? From what I remember. And you’re like, how can I grow my audience? How can I tap into this world of crypto of experimentation and try something different? It flopped.

Queen George: It flopped. I mean, have you ever belly flopped into a pool I have but you were with friends. So, you didn’t want to show that your stomach was right or in pain.

I have

Queen George: So, you can’t get what you eat. you guys.

And I used to be 230 pounds. So, when I used to, when I belly flopped into things.

Queen George: they barely flopped back out, you know what they say you smile at life, it smiles right back at you. So that was exactly what didn’t happen for us. It didn’t smile back at us. But I kept smiling. And then we went back to the drawing board after that concert. You’re exactly right. By the way, I was just in the time in the COVID era, I was just writing. I was so used to performing. I’ve been on stages since I was seven years old. I mean theater, jazz bands. Like I was just super competitive. And I loved it. And that’s all I did when kids were like at the mall. I was at rehearsal till 10pm. And that was just my fuel. And it has never changed. I am 25. And it the same thing fuels me and gas prices have went up. They have especially in LA and I still need the same fuel. So yes, yeah, my taste is expensive. But my point in all of this is that after our concert, I went to France, I spent the summer in France worked on my first project, worked on my first album, it was a big point for me to find my sound. I also you know, it was in the back of my head after our little concert flop that I knew I needed to get back into this space, and bring my own ethnicity and authenticity to it. And going to France was a big part of that. Going to France and working with people who not all of them, you know, had great English and we just, that made the musical experience so much more bold. I mean, we just worked and we couldn’t necessarily justify our thoughts and ideas. So, if the music wasn’t it, it wasn’t it. You moved on to the next idea if it didn’t speak and could not transcend language and mentality, different cultural mentality. It didn’t work. And so, what that left us with was a beautiful, beautiful, like, package of songs that were so influenced by different cultures and backgrounds. And that’s what I have in my hand now and then when you know I can back to LA, I called you and I said, Adam, I need to play this music. I think this is how I want to enter web three. I think this is, I don’t think I know, I could play this in any room and go, I know that I left who I am there. And it’s more than just music because yeah, I’m a trained jazz singer. But I’m also Israeli and also French. And we speak so many languages at home. So, it was really, it is really important for me to bring that into crypto and to bring culture out of people and make this a very inclusive and diverse environment, just by bringing what I was raised. Like not thinking too hard. I think that’s the biggest thing. Not, that’s what I’m learning in web three as well. Not thinking too hard. Look in the mirror and just write down what you see.

Yeah. You know, this NFT concert that we attempted to do. You very much led. We built an entire site around it. Yeah. We had graphic art around it. By the digital artists. That’s nice. Yeah. It was all, it was all in theme around this new song that you were about to release. Was a song again?

Queen George: Champaigne problems.

Champaigne problems. And we did a drop, where we had different tiers of access and utility to the ticket that you would purchase. And they all range in different prices. I think at the end of the day, there was like four or five, six tiers. There was a one of one, and then there were limited versions of the rest was like a 25 out of 25, an addition of 50 and additional 100.

Queen George: We really went for this. I mean, we like you said we built the whole site around it. We built it as if 100,000 people were going to be watching, but I think that that should always be the precedent of how we work. Yeah, I mean, it flopped. But we did it. And because if it did, what if it didn’t?

What if didn’t flop? What if it actually worked? And what if we were actually able to sell tickets, right, and you’re able to actually get a higher percentage or to share around it, and you’re able to throw really cool live performance around it. But the problem was the biggest problem. And this is part of why I want to do this, like this case study around you is because we’re documenting your early steps into crypto as a brand-new comer, right. And we’ll get more into what that journey was like post April 2021. But the biggest problem that we had at the time is we were doing things very manually, we didn’t have a ticketing platform, that was an NFT. Had NFT as the infrastructure underneath the hood, right? So, we’d have to, we had to do everything in upload everything one by one on open sea. I remember we tried wearable; we tried all these other mints able.

Queen George: And it tried us.

And like, and we spent maybe like $1,000 on gas fees.

Queen George: I didn’t even know what a gas fee was. 

Yeah, I was just like, clicking away. I was like, fuck it. Like, let’s try to see if we can make this happen. And it flopped. I think the tickets are still on the market. 

Queen George: They’re still there.

They’re still there. And they’ll forever remain there.

Queen George: I’m never taking it down and they’re staying there. I love I just for whatever it’s worth, it was so cool that we could have put our mark on that. I just say we tried it. I think that’s all this comes down to. And for me a big deal was stripping the ego away, which is a very traditional music industry web two way of thinking of like, oh, you need a team, and you need to strategize and you will have one shot. That’s just not true in this space. And it’s so exciting. Because you could just experiment 100 of times.

it’s early enough where you can throw shit at the fan.

Queen George: Exactly. And I would even argue that that’s also true in traditional music industry, in the traditional music industry. We are so caught up in our ego that we don’t just try things. And I’ve gotten so much more confidence to just try. But yeah, it all is still up there. And that will be very cool to look back at.

Yeah, I feel you.

Queen George: it is very cool.

NFT Ticketing, Metamask, and Eventbrite

Beyond us trying to like manually do the entire process listening everything in open see building the site. Another big issue that we had was with the unlockable content. So, what does that mean? Every NFT or you know, all NFT’s can have like an unlockable content once collected purchases in and can reveal something secret specifically to them. Right. And we try to like, again, like bootstrap it in a way where they bought the NFT. And then they’d have to go to Eventbrite with the code in the NFT, or something of that nature, and then they could register for the event officially. And that was our way of trying to collect addresses and emails at the same time to build a database of anonymous people online. Right. But that flopped, also, right. I think that entire, like 10 step process of just getting a ticket was just so convoluted.

Queen George: it really was a convoluted process and, you know, in real time, would you go through a 10-step process for someone you don’t know?

No, no, no.

Queen George: I don’t think so. So, I would.

I maybe, I’m a little bit different, maybe because I have curiosity. And I feel like I enjoy going through those steps but I’m not the example. A lot of the people that you were promoting the event to online, they hit you up even in your comments are like what the hell is a Meta mask? Why don’t need to spend this much money on gas fees? All I want to do is just watch you perform.

Queen George: Right? Well, what I’m learning now actually, I’ve been learning this weekend in Denver, just there talking to a lot of people in absorbing that, you know, my goal till now was okay let me bring my normal supporters and fans into this space. And I’ve been spending so much brain fuel, trying to figure out how to cross those two worlds instead of just embracing what this current world has to offer. I feel like I was forgetting how early we still are and that it’s just so important to foster the community here and still give both communities what they want. If that original fan base of mine receives me in a way that they’re comfortable with, then I will give them what they are comfortable with. And if web three until something totally different, then I will learn what they need and give them what they need. One day with or without my efforts, they will meet in the middle because that’s where we are headed. So, I think it’s been such a big shift for me just in the last few days like to understand that I don’t need to try to save the world and connect my two worlds. Just give every individual world what that world wants and needs. And let them discover me in a way that is comfortable for them in the way that you go to a different country and speak their language. You don’t go in assuming that they are going to understand what you’re saying. So, I think that analogy has helped me a lot.

Yeah, yeah. So again, the campaign flopped. We ended up just pivoting to Eventbrite. We had the live show, you hosted the live show. It was a great live show. I was able to watching person, which was a lot of fun. 

Queen George: That was funny. I mean, we have just a few people in the room. Yeah, there were like, I think golf club.

Yeah, there was like 100 people online 120 People online watching it, which was more than we expected. We just wanted to create, like, you just want to create good content.

Queen Geroge: on stage.

And just get on stage and perform and just show your heart out to the world.

Queen George: I’ve had the same rule since I was 12. It’s two people or 2000 or 200,000.

Fast forward now. You started April 2021, got into crypto. What has happened since as an independent music artist coming into the space?

Queen George: Yeah. So fast forward from April, right? We covered this. I spent the summer in France, this album, came back with a body of work that I felt would really fit in the space, kind of back to the drawing board. Spent a lot of time baking, thinking, learning, reading, seeing what other people were doing, getting really inspired by other artists in the space. And then what was it like? Was it December, we minted my first song champion problem. The song that we wrote on for the live concert.

Which by the way, just to give more context, we did have audio snippets for each ticket, too. But it wasn’t the full song.

Queen George: No.

It wasn’t the full song. So, around December, you minted that song?

Yeah, I minted my first collection. 

Okay.

 remember? We did the.

Oh, that’s right. Didn’t you do the addition of 10 on open seat about champagne problems. Right.

Queen George: We did that. And, again, like still not much movement. But again, after everything that I had been learning, I realized that I just need to myself, step into this space, get to know people organically. I’m a very social person. I like people. I like strangers. And I’m okay with never seeing them again, because I’m romantic like that when it comes to people. So, so I realized, you know, I’m just going to start minting every release of mine, just so that I can learn by doing as I said, that is how I process that is how I understand and simultaneously, start getting on Discord, start spending more time on Twitter just a little bit more in my day, in the same way that they tell you. You’re not just gonna lose 30 pounds in a month. You can’t just change your diet overnight. I couldn’t change my diet overnight. That’s not who I am. I want this to be authentic. So, I started to spend more and more and more time every day by myself in the morning. And I made it a point to just.

Experiment to learn more.

Queen George: And see what other people were doing. The way that people speak in this community, all while also minting my last three releases. So, I said okay, the supporters, the friends, the community will come if I just actually engrained myself in a way that is natural for me, which is what I want. The same way that you don’t make a best friend overnight, you know, so have a lot of faith in that in that process now, so that’s kind of where I am at now. Fast forward to literally last week. Last Friday, February 11, I released a song called if I ever go down that I wrote in Tel Aviv with some awesome writers. I have the wonderful Omer Fetti who is like, we’ll always be like family. We love Omer. And he’s playing guitar on it. He graced that song with his gift And I released it just as a guitar vocal record. And it was right before Denver. And I came here to perform, you know your event which was so much fun. And right before I got on stage, we said you know what, let’s just mint this thing. And let’s just so

Your New Single “If I Ever Go Down”

Now we’re like taking three steps ahead. You’re right. You came out with if I ever go down, you also came out earlier with good mourning.

Queen George: I did right before if I ever go down was good mourning. And that’s m o u r n I n g, which is about the loss of someone in your life. Yeah, loss of love. 

So, I want to before we even get into eth Denver for a minute, right? Because if I ever go down is actually a really pivotal moment in your NFT career. or numerous reasons, but you started off doing the NFT concert. Try to sell like 150 Something tickets, right as NFTs flopped. Then you came out with champagne problems.

Queen George: The collection. 

The collection. You did 10 editions right for anyone like point one each, point one eth. I collected one. I don’t think we haven’t checked what the status.

Queen George: I have two, give it someone else. 

Okay, amazing. 

Queen George: Yeah. I was just so excited.

Awesome. And then and then that was an open scene. Okay, let’s re strategize.

Queen George: Correct.

 Let’s take good morning and put that on Zora. 

Queen George: Yeah. Try something else, we would see what else works

Okay. And that was, what. One of one?

 Queen George: That was one of one. 

Right. And I low key collected that one too.

Queen George: You’re such a real one.

I don’t know. I just love your music. Okay, so.

Queen George: I appreciate you so much.

That was on our Zora. And then, really, okay. He came up to me, we’re like, okay, we gotta do something bigger now. I was okay. Eth Denver was coming up. And for a long time. We’ve been talking about how you can ingrain yourself more into the crypto community, right? And just be a listener be a contributor. And then you got to have WBN. So, what was that like?

Queen George: It was exciting to know that I, it was like a kid in school, who finally has a lunch table to sit up. Who was a kid in school kind of sat alone for a little while. Who finally was like, Oh, cool. I have people to sit with. And even though none of them are talking to me yet. That’s cool to sit at this table

Where you get your Lunchables just like in the cafeteria with your milk.

Queen George: And you know, one day you’ll start sharing your food with someone and one day you’ll make a good friend out of it. I was just so happy to have a table to sit out in middle school, you know, as a funny full circle as a kid who not, not often did I have a table to sit at. I sat with my music teachers very often this FW felt like that. It was just cool to like, enter a community. And it was cool to go to their event yesterday. Like as I said, I love these people. So, it was cool to meet everyone in person. But yeah, I ended up WB. And then like you said, I said, I gotta do something interesting. I think now that I can hold my own a little bit more in this space. What can I do that is unique to me. And that’s when if I ever go down, came around, now with the release of that and then Eth Denver directly to follow.

 So, talk about, what is if I ever go down? About Yeah.

Queen George: If I ever go down? Well, the full sentence of that is asking someone, looking at someone and going if I ever go down, will you stay around? That is literally the chorus of the song. It is asking, Will you stick around when I’m not at my best when I’m performing for only two people, when I am not this? Shawn Tos onstage with these frilly gloves and a big personality and making you feel warm and welcome. What about when I need that? Can you give that to me? That you know as artists, we stand on a stage there’s an audience in front of us but there is an invisible wall, in acting they’re called the fourth wall. There’s this invisible wall between us and them all the time. And I felt that since I was a little kid because I’ve been on stages for so long. And you I always have this this wonder in my stomach when I’m on stage like why are these, look at these people they love me, look at these people that got in an Uber, they parked, they made arrangements, they got dressed that they’re all here for me. And that’s not a given right but we’ll the second that these lights, the house lights come on, I get off and I’m just one of them again. Are they going to love me that much? Are they going to be there for me that much, is any and you know romantically are any of these people? Or if this person, if there’s someone that I lowkey love in the crowd, and I want them to love me back romantically or is anyone going to be willing to pass that fourth wall in between us and say, you’ve given me that warmth? I have something to give you too, because as a performer you feel like you’re always providing that. Right. So that’s what that song is about. It was just a very honest question, you know, and it was important for me to put it out also for the music itself to be so raw, you know, almost playing it so raw, we barely touched it, my vocal was just like a one take. Like as if I was telling someone, I love them, it felt like a diary entry when I recorded it, it was just here it is, cool. So, if I’m asking you if you’re going to be your flaws and all, here’s to actually one take vocal. That’s what that song is about. And it was very important for me to make that a pivotal point in my web three journey, to make my entrance, my own kind of personal, unique entrance into web three, be very vulnerable, and one that is honest. And one that people can relate to. I mean, forget if you’re a musician, and you can understand the school, but I think all of us go through this. Like we all have this deep, silent fear of are you going to be here when I’m not doing well? And it’s a it’s just a question I like to ask. But then we got back to the fun music at your show. So.

Yeah, so here comes the Eth Denver, if I ever go down.

Queen George: Here comes Eth Denver.

If I ever go down came out. This past Friday, but the Friday before that.

Queen George: Correct.

In preparation for Eth Denver.

Queen George: Kind of on the fly. It’s just an idea though.

Yeah, like, okay, Eth Denver was coming around. We talked about engraining yourself into the community, meeting more people, right, making more friends, helping other people learning about other projects. And we decided to try the NFT concert again. Right. But this time

Queen George: Is not going to give up on that NFT concept.

And I’ll tell you why. Because I think it’s such an interesting use case. It’s something that I’ve entertained in my head a lot. And a lot of what I talked about on the podcast is how can you make it as least threatening as possible for someone to join your community?

Queen George: I love that question. Yeah.

Right. It’s something that I continuously think about, and how can you give before you take? Right? And to that extent, we tried something new. We hosted an event Eth Denver on February 15. It was called the web three creator event. Very broad, very standard. 

Queen George: Oh, you create great? 

Great, come and create as a very broad word too, right. A creative entrepreneur can come in many different forms. And that was the intention to make it broad in general and see what comes. 

Queen George: It brough a very cool crowd.

Right? It did breed. It really did. And before we get into like the details of the event, remember last time, April 2021, we had a big issue that we couldn’t really do what we wanted to do online, we had a platform issue, right? Not only were gas fees really high on Ethereum to mint a ticket. But I even think we gave too many people too many options to a ticket.

Queen George: I think we’ve invited them a little just out of sheer excitement.

Yeah, think about it when you go to like the crypto.com arena. Okay. And you go and buy a ticket to watch a show. How many tickets do they have, if not different seats? Right? It’s very, like general admission or VIP? Or like.

Queen George: Pay depending on where you sit.

Right, right. And I think one of the issues, one of the mistakes that we made was we issue too many different types of tickets with too many different types of utilities. When we forget, the real utility is just coming to watch you perform.

Queen George: Exactly. And like that initial transaction of you know, the NFT being the ticket is already one that is complicated. So here we are with 10 Different options like Oh, but no pressure.

So, we put together this event, I guess, mint, the podcast, along with some friends of mint, from Polygon studios bonfire. Shout out to all of those people for helping make this this this event a reality. We use dystopia labs, this platform called impish, which is an NFT ticketing platform. Probably the most simple ticketing experience I’ve ever been a part of better than Eventbrite. Better than buying something at the crypto.com arena better than.

Queens George: Better than any live cons. 

Yeah. Yeah. It’s like four clicks through your wallet of signing signatures. And it’s yours.  And every single NFT had your logo on it. Okay, which was a Queen George NFT.

Queen George: And just to make this clear, every single NFT by that we mean every single ticket. 

Yes, every single ticket had your logo on it, right? Just like any other ticket in the physical world or digital world, non on chain would kind of look and feel like, through that we got between I think 150, 200 people, something like that sign up, share their email, and their wallet address, right. And it acted as like a top-level funnel. They kind of start spiraling in creating you a community, right? So, the cool thing about it was you’d come on impish, you’d connect your wallet, you sign a signature, you’d claim a ticket, right? From there. You’d wait to come see perform live in person. And the cool thing about this was and I’d love for you to take the stage but coming from my point of view like a practitioner’s point of view of like talking to a lot of people Seeing what type of strategies creators have in building an online community around their collectors. I thought this was very unique because it was effortless. It was risk free.

Queen George: And it was super inviting. 

It was very inviting. And it worked out because throughout the event we had between like 150 200 people circle in and out. Yeah, right. And not to say that, like another event hosted another event, or another company hosted another event after us. We invited even more people in afterwards. 

Queen George: This is a super welcoming experience from start to finish.

Crypto QR codes: The Funnel

And what do we do at the event with a QR code?

Queen George: Well, first of all, just to touch on everything that you just said, like I’ve been to a lot of shows I’ve done a lot of shows and nothing was as seamless or warm and welcoming as this experience. I mean, I’ve definitely found how I want to give out tickets from now. Yeah, I want people to go to know that they are wanted there, in the same way that I make them feel that when I’m on stage, this was the first time that that same warm that I feel you know is going on between us in while the music is happening. This is the first time that that translated into the transactional process. The part that’s not fun, was suddenly kind Yeah. So that was really important. And I think there’s a lot to take part in in that so amazing job but you’re what did we do with the QR codes? We printed I mean, hundreds of QR codes, big small. And there were two QR codes. There was a purple one. The purple one was for the one of one that I minted right before I got on stage. If I ever go down, which we could get a little more interesting. Sure. And then the black one was for my Discord is to join my community like what you hear cool. You don’t, I’m just so happy you showed up. So that was the vibe and with that, we put those little babies up all over the venue. I mean, a couple on every table I’ve taped him to the wall 

I feel that for the people that need is like to clean up the event afterwards. 

Queen George: I feel so bad.

Yeah, there were so many laminated QR codes,

Queen George: I put a huge one on the beer draft box. There was another poster and I asked if I could cover it. And he said no. So, we just took that poster off. So that’s all that and they were everywhere, just with the hopes of like I just wanted people to have fun and if they did, here is, everywhere around you is an opportunity to connect if you’d like to and being on stage knowing that that was possible. It was so it was so next level.

What’s up guys, Adam levy here. Sorry for the quick pause I wanted to give some love to our two NFT sponsors that are making this episode a reality. They are coin buys and polygon studios. On coin buys you can create a personal or community own social token on Ethereum or polygon. Coin buys also helps you create incentives through token rewards and bounties, NFT business models and bought integrations for discord. Discover more today by visiting coin buys.ko polygon Studios is the gaming and NFT arm of polygon who’s focused on growing the blockchain gaming and NFT industry while bridging the gap between web two and web three gaming. The polygon studios ecosystem comprises highly loved blockchain games like open sea Upshot, Aba Gottschee, Zed run, sky Weaver, decentral land and decentral games. If you’re a gamer builder or NFT creator looking to join the polygon studios ecosystem. Get started today by visiting polygon studios.com. Alright, back to the episode so there’s layers to why this is so important. I don’t know if you’ve had the aha moment yet as to why this is so cool. Yeah, well

Queen George: Maybe I will on my flight today. 

Why Doing Tickets as NFTs is Important 

Yeah. I think you’re about to have it right now and I’ll share with you like the big picture behind why doing tickets as NFT’s are so important. Okay. And again, back to the actual process of claiming a ticket. It was on polygon. So, platform actually ate up the transaction fees. They’re pennies on pennies, it’s like nothing. Okay. You got a ticket minted it would show up in your wallet, okay. You would then come to the event, and you’d watch you perform. A collector of yours would come watch you perform now. Okay, and they can decide whether they fall in love with you, they enjoy the music. Prior to you basically going on stage we minted the one of one on Zora.Ko and before you did like to intro songs, and then you talked about yourself and you announced this next song, I actually just meant it on chain, purple QR codes you can check it out if you feel, if you feel interested. Otherwise, join my Discord. I’d love to collaborate. I’d love to have fun and 

Queen George: Otherwise have a bagel and dance and I’ll never see you again and that’s okay too. 

Yes. Yes. Which was also fun. We had like what? Not through nine 9am to 11am was just like free brunch, coffee, doughnuts, fruit, vegetables, whatever.

Queen George: Yesterday was just music. It was just music.

It was just music and a lot of like-minded people listening to music and enjoying. So, people join your discord. It works people actually join your discord. I think what we had like 50 people or so join your discord from that room. So not a bad like conversion rate from acquiring a ticket to then coming to the event watching perform and then wanting to join your discord from there on out.

Queen George: And importantly, it’s very, very important for me to add that in a way that felt very authentic.

Very authentic.

Queen George: It felt seamless and really aligned with the way that I like my live shows to go with the feeling I like my people to have and that it was just the first time I think that’s the aha moment. Yeah, it was my first time in this space that I saw that the pride that I take in my performance, and I get to see the look on all your faces in the crowd. I wish you guys could see it was the first time that I saw those two things online that make sense and go hand in hand. Yeah. And it’s just, I’m talking about fuel. This is exactly, this all I want to be doing now.

Yeah. And the cool thing about that QG is because now you have or you built like a niche, minimum viable community. Okay, that’s what we talk a lot about on the podcast. How do you build an initial audience around an idea, a theme that you have right that you work with the people have. Now you’re the example okay, you built a very niche very small cute, yet powerful minimum viable community. Cute. Yeah, cute. Of all Ethereum collectors of all Ethereum benefit right. From there, the stage is yours. Like you nurture this audience. You build this audience? Try to grow this audience in an organic very natural non pressure way. Right. Well, why is this like so big and why I’m so actually obsessed by this use cases because we talked about again, giving before taking, right we talked about mixing the online experience with the physical experience and having a collector collect something of you and then watching you perform in person, right. But the last part is the aha moment here.

How Crypto Provides Better Fan Based Data To Artists

Okay. Talk about data for a second.

Queen George: The musicians favorite topic.

The musician’s favorite topic right now on Spotify, on Apple Music, on YouTube, you’re very limited with the amount of data that you have, right? One you’re not giving the emails of your listeners, right. It’s actually very, very difficult. I think.

Queen George: There’s not an open channel between no supporters.

No, it’s very gated. It’s very walled and a lot of the ethos behind web three blockchain crypto, whatever buzzword you want to associate with. Its transparency, right? It’s borderless, right? And so, it comes with the data too. Okay. So, you got about 150, 200 collectors, you have their addresses, you have emails. Now let’s zoom out for me okay. You can start building a profile around every single address that you have, why? That wallet that they use to buy and collect your NFT it’s probably associated with many other things that they did on chain, other tokens that they hold, other communities that they’re a part of, other PFPs and NFT’s that they collect other governance proposals that they contribute to unchained. With time, you’ll be able to build complex data profile around these collectors. And you’ll might realize that wait, out of the 150 200 people that collected mine of T, 75 of them are actually enough WB Yeah, it may make sense because I have such a big FWD crowd, it may make sense actually do a collaboration with WB because we have such aligned interest. They have their audience that overlaps with my audience, right? You might realize that some of your people are actually like defi degenerates, meaning they love spending money on open protocols, experimenting with, etc, etc. That could tell you something else about them, right? So, you start building this really interesting data profile in a very non-intrusive way.

Queen George: Well, it’s the nature of this beast that we’re all in. I mean, that’s the whole point. It’s a tree with endless branches, you know, that’s the point.

So, the cool thing about this is, again, we’re so early into this entire thing, but it shows you the power of messing around with NF T’s soon and I don’t know if this platform exists and whoever’s listening, go build this platform.

Queen George: The thing this all week. 

Like go build a platform we can we can build a profile around someone’s collectors. Right so you can see how many people are in FWD how many people are in for fun? How many people actually collect music NFT’s. What is their what is their net worth? Right? How long have they been in crypto for based off their wallet date? The list goes on and on and on and on. And you can actually understand who is your audience right beyond the audience that you’ve performed with in the valley. Right? And the people that love and support you since Day Zero? Yeah. That’s why it was super exciting for me to kind of go through this many used cases because that right there. That’s the future, the future of the music, the artists fan relationship.

Queen Geoge: Exactly. And you spoke earlier about how last year when we did this concert, everything was manual. And I still think we’re gonna have a couple more manual seasons. And I think that especially in this field of you know, getting to know my supporters and collectors. It’s all going to be hard work and it’s going to be tailored work to go in and get to know a person and then multiply that by 200. And that’s just the starting point, you know, until that platform exists. It will be so cool in retrospect to look back and go wow, I really, I really did the dig. You know.

Yeah. The next thing here is just consistency. Right? And trying to perform at every conference, tapping more into those communities doing live performances online, again, right? And being very thoughtful about how you do stuff yet not overthinking too much. And one thing that I like to talk about in the podcast is just try, just keep trying try. There are no rules. There is no expectations. Nobody really remembers your failures. Everybody just remembers the successes here.

Queen George: That’s been you know, I have to tell you, them that has been the biggest lesson in this space. For me. Like you grew up in LA, born and raised and in this system, where you think everyone cares, nobody gives a shit. In the and I mean that in the best way. Nobody gives a shit about you go flourish, conquer, fail. I mean, nobody wants to remember that. Nobody wants to say my friend failed, it sounds so horrible. But people want to say I know someone who did something great and we’ve seen that go off the deep end. You know, it’s getting get big headed, but it for the most part people want to see you shining. It’s just about do you believe that or not? And so, if any people that I know in web two music or listening to this, I think, you know, I really wanted to come on here today. You know, I know I’m a lot younger in this space than a lot of the people who might be listening or who I met this week and who I will connect with or any of my collectors are you even you know, it is very intimidating. It can be but I think when that aha moment happens, nobody gives a shit and people want to see you shine. I think the world is yours and I really want to encourage friends in web two to take control. I mean, there’s so many amazing resources in the traditional music industry. It’s obviously worked for this long. It’s brilliant. It really is. Is it. Is it a little gray? Is it a little too gray? Yeah, the waters a little muggy. Hard to swim. You know, so I encourage you to take control.

Yeah, you know why I also like this use case so much is because a lot of musicians coming into crypto, they see people selling stuff on catalog on sound on men songs on Zora those goes on and on. Making crazy money, right? People collecting songs for $4,000 for two and a half $700, it’s many musicians. That’s a lot of money and so many people, forget musicians but if we’re already focusing on musicians, many up-and-coming creative artists, struggling artists, that’s a lot of money. It’s a new, it’s a new avenue of independent freedom.

Queen George: Because you have people in traditional music ways that have 300 million streams in a song and work as waiters. Not that there’s anything wrong with that, but that shouldn’t be the case. There shouldn’t be such a huge disconnect.

43:46: NFTs. The first time in history where we can truly value piece of art in its most organic and appropriate fashion and done so in a way where it’s traceable, you can recollect in Prosper off the resale value in the data again, the data behind all these transactions, all these interactions, all these collectors. That’s your focus, right? Yeah

Queen George: That’s where my focus is absolutely right now

44:16: So, what I was getting at is a lot of musicians coming into the space they focus on how do I find that first collector right? How do I make that first one easy sale? Why don’t try to think about it the other way. Why not just try to give first, right? Put on a show. sell tickets as NF TS create a minimum viable community of collectors in the Ethereum community hyperfocus, don’t need 1000 People, just need 50, 100 People, 10 People just to get the ball rolling.

Yeah, if we would have had this conversation a week ago. I think even a week ago I was still in the headspace of how do I find collectors and I just think this whole experience in the last week has been so potent. I can’t wait to see how many has happened in this respect in the next week or two. And especially as I focus on this data, you know, gathering all the information about my new plugs or like a new family, you know, whether or not they know I’m coming and I guess you just got to say you know not how do I find collectors, how do I let them find me? What can I, how do I let them find me? What do I do to come to them? That’s also what I was getting at adapting to this space instead of spending so much, much brain time trying to bring the old fans over. How do I let people in the space who want to find something cool that they connect with? How do I let them find me? So that’s, it’s a brilliant really question that you’re asking.

What are the Biggest Challenges Getting into the Space?

Let me ask you. So, you’ve been very active since April 2021. You’re starting with the first attempt at an NFT concert. What have been some of your biggest challenges. One. getting into the space and navigating through it?

Queen George: First and foremost, language. I felt like I went to again, the country analogy is just one that makes sense to me. And could make sense to anyone listening is no matter how advanced or new you’re in this. It’s like going to a different country where nobody speaks English. And then you get there and you’re frustrated as to why no one can understand you and why you can’t understand them. And you go God but I i am i do think I have so much to give. Why can I get it across? The first hurdle is language and the way to hop over that not even hop over it. The way to massage it through is just to read to learn. You hear words you don’t understand pause the podcast and Google it. You know, you see that someone posted something, I remember this happened to me a lot when I was first in web three Twitter. People would post like I just minted did it. I’m like, minted which, okay, I stopped everything. And like, what does it mean for something to be minted? Yeah, and I know that this might sound silly, but that’s the only way that I started to be able to carry on conversations in this space. So first, understand what the hell the language is about. The keywords, just the keywords there. It’s not rocket science. We’re dealing with, you know, at the end of the day, the goal here is simple to connect, and it just in a different way than what we’re used to, open you open your mind and learn the goddamn language. And then more things will make sense by just simply just showing up and coming to these conferences. So those were I think the biggest hurdles I think with 

That’s the biggest hurdle is getting started.

Queen George: The biggest hurdle is getting started. Now I think I’m seeing the fruits of that homework. And I Eth Denver you know, this has been the first time at one of these in person events that I could carry a conversation that I’m passionate about and not passive about not like cool. Yeah, no, that’s a great Dao your work you know, as far as I’m concerned, it was the type of dumpling I mean, until I really understood and again, this might sound very funny and, and, and a hurdle. A big hurdle that I had to get over is feeling like a person that is good in conversation. And yes, I do think that I am an intellectual individual and at first, I did kind of feel stupid, but I’m zooming out and realizing that this is new territory for everyone and whoever tells you it’s not I mean, I’m just tripping is tripping or has been here for I don’t know how long you could possibly have been here, but that is the biggest hurdle at first. I think a lot of people listening to this who don’t know what the hell is going on. You know, I could understand that and are there. I’m still there. I think I think we all are, but that that would, I would say be the first hurdle that I experienced. I think an interesting perspective is not to fast forward it. Now that I’m just starting to understand a little bit of what’s going on. There are hurdles that I’m facing now, which I know with time are going to be smoothed out or how do I make this mainstream? I mean, I’m still a very.

Building a Mainstream Audience

What does mainstream mean to you?

Queen George: To me, mainstream means that anybody can understand this. But again, I think I touched on this earlier where I’m realizing now that I don’t need to worry about that. At this moment. So, this I’m talking to you. These are real time revelations for myself, that I really kind of sorted through this week where I came in here so focused and worried about how do I make the average person understand this right. I don’t come from it. I think it goes back to me also not coming from a family of musicians. I come from beautiful, awesome, hardworking parents who are just want to like see me shine. So, I think my life has always been very attuned to normalcy. Simple Life simplicity. I want everybody to be able to understand this. And what I’m realizing this week is that I can rid myself of that worry, because that will happen alone, and they’re not the same and they don’t need to be the same. And if my goal here is to connect, could do that in this space, and then with the people back home, still not there and that’s fine. So, I think that was a big personal concern. Like on a on a moral personal level, something that I kind of grappled with a lot, which now I have a little more clarity and so I’m interested to see when we circle back in a few months, if there’s been any.

First Time at a Crypto Conference: Biggest Takeaways

What have you been, what has been your biggest takeaways at Eth Denver so far? What did you, what did you expect coming to it? And I asked this because it’s your first true crypto conference. And honestly, also what a great crypto conference to kind of break into as your first time as well. Yeah. What were some of the expectations you had? What were some of your favorite moments? Talk to me through that.

Queen George: The expectations that I had were to feel like an outcast. And they tried to transcend past that. And I said, Thank God I’m singing because you put me on a stage anywhere and I’m automatically comfortable. So.

Oh my god, you know what comes to mind?

Queen George: What?

The catalog event that happened a few days after ours? It was like a live jazz band. And you walked in and you’re just like, a outer work space.

Queen George: The fish out of water start started swimming.

And you literally got on stage and give two fucks about anything and you like you guys know this. You guys know this tune? Alright 123.

Queen George: For about one song turned into five and

Then as you started singing all these people started like coming around you.

Queen George: Cuz it was really and natural and not. That is what I have been craving to see in this space. So, my expectation coming here was okay, I’m gonna feel like an outcast and I don’t know as much as they do. And then that fear started to manifest itself into hope and maybe you don’t need to adapt. Maybe you can just do what you’re good at, and people might fuck with it. And that could be cool. And so, I sing at your event, and that gave me so much more confidence. And suddenly that attracted people who also felt that way and felt creative in ways that they didn’t and I just started to meet people that also feel like other and feel like they have something to give that has not been done before. And then I’m like, Wait, that’s what this whole conference is for. So that fear that I had was essentially nothing to fear. It was just like everyone is coming here with another idea. And a new perspective. And that’s the whole Mo of the space. That’s what keeps the space alive. Yeah. Right. So, there was that and then just getting up at that event, like super spontaneously with the band. I got to see that in this, in this metaverse. I can just be myself and come as I am. And that there is someone for everyone and that there is someone who will connect to everyone and I don’t have to choose one. I don’t have to choose the authentic kind of live music style with an old band and you know, or the people poopoo people future you know, I don’t have to they there. Here lies a beautiful marriage of the two and that is something that I did not expect. I did not expect. I thought I would have to do 100 More backflips to adapt into this space and assembly. And it was just such a beautiful surprise to my surprise that that I didn’t have to and that there’s so much room for both.

Queen George’s Thoughts on Web3

Now that Eth Denver is like coming to an end. What are your overall thoughts? What would you do differently? Being a first-time steward in this community? Alright captain would you do differently?

Queen George: What would I do differently in terms of my recent choices or now moving forward? 

You know, we’re like we’re sitting down. We’re having this conversation. You went through like, what? Eight days, seven nights of this stuff, we got in on Sunday, Sunday now. So, it’s been a week actually.

Queen George: What would I do differently? Not a goddamn thing.

What would you like? What would you advise other people? Okay, new artists, new creators, new individuals coming in experimenting and seeing everything that’s happening externally. And being super curious. Despite the insecurity that web three kind of imposes on a newcomer right or may impose on newcomer we just went through it. Tips.

Queen George: That’s also by the way to touch on why I wouldn’t change a thing because I wouldn’t know what to change, I am learning by doing every single, every second that I’m here is a new path for me. This is, so I don’t even know to tell you. Maybe in a few months, I might have more, I will have more on my resume therefore a wider spectrum of choices to have made. But right now, I’m still learning as I go. But I think advice. I’m circling it right back to the language thing as questions and but you know what? No, that’s bullshit. And I’ll tell you why. That’s bullshit. I didn’t know what to ask. I didn’t even know what to ask. Don’t even worry about asking questions there. Everyone told me at the beginning, ask questions, ask questions. And I would say okay, because I know that there’s so much wisdom and asking questions, and I didn’t know what to ask. So just show up. Be present. Just be present.

I think 50% of the effort just come to show your face.

Queen George: Show up. If that’s to someone’s Discord server, or if that’s to an event happening in a city near you. Just go, just go because it’s no different than being at a party and making a friend. And, you know, I’ve had many jobs in my life that were aren’t music still do and I’ve always worked in sales. And then one thing is talk to people like, you’re like be excited to answer the phones if your best friend is about to answer. The same applies here. People are people across the board, no matter how invested this space is in tech, and no matter how robotic people would like to be. We are still people with a pulse at the end of the day show up, like it counts. You look someone in the eyes and have a real conversation that still transcends leaps and bounds past any computer. And any web. I don’t care what you’re using. So, show up, show up, absorb, trust that you are smart enough and wise enough to absorb and trust that your curiosity does mean a lot about you and say a lot about your commitment to your vision and your vision. My dream, whether it’s through web three or anything else.

Web 4, web 16.

Queen George: Spider spider web, spider man, I mean, Charlotte’s Web I don’t care at this point. You know, I’m happy to be here. So, my point is I know it sounds funny but the destination is the same. To reach as many people as I can in a collaborative meaningful way. And this is such a rich means of doing so. So, show up. Trust that just because you showed up something good will happen to you. I promise you just show up. That’s it.

I love it. 

Queen George: I really, I really can’t say that there’s more of a science to it

What can we expect from you next? What are you looking like what’s on your horizon, both for your web three community, for music.

Queen George: Well, so that album that I told you about any Made in France, that first project of mine is on the map to come out in a couple of months and simultaneously as all those songs are getting mixed and done, my inboxes are getting filled every day with new mixes, new drafts just for the final versions. We’re right there. We almost have them all. So simultaneously with that, also learning more about the space and I think my focus now is, you know now that I have no more people and I’m kind of building a community, although it is still small, small but mighty. How can I collaborate with the people who care about me? How can I make them heard, which I haven’t seen done too much. So, I have a couple ideas up my sleeve about how I want to let their daily experiences and stories. I’m big on stories. I want my, I want my supporter’s stories to be reflected in my art for us to bounce off of each other. So, I have a lot of a lot of ideas of how I want to do that. Maybe in the form of songwriting in the form of storytelling. I kind of know-how but I think I want to just do it first and then maybe talk about it in retrospect, but I know that it’s going to be in collaboration in the form of songwriting.

Outro

Amazing. Well George, thank you for being on.

Queen George: Thank you so much for having me. And till we meet again.

Till will meet again.