Author: Adam Levy

Listen on: Spotify | Apple Music | Google Podcast

Background

Mint bonus episode: I was invited to speak at NFT LA on all things about the creator economy and lead a discussion with Jesse Tevelow of Praise, Alexandra Hooven of Rally, and Noel Borges of Mintblack.

In this episode, we discuss: 

• 00:00 – Intro 
• 02:12 – The current state of the web3 creator economy
• 06:28 – Should creators strive to build virality or a niche group of true fans?
• 14:22 – How to transition your web2 audience into web3?
• 22:02 – What data can creators unlock via NFTs and other crypto assets?
• 35:47 – Outro

…and so much more. 

I hope you enjoy our conversation. 

---

Yeah, I guess moderators here, what a good-looking crowd? Yeah. Check, check, check, check. I want the mic working. Yeah. Check, check. Hello. All right. How are we doing? Can make some noise? Yeah. Give it up for edge of NF T for a killer conference bringing the LA community together and all of us together. How are you guys doing?

Jesse Tevelow: I’m good. I got a lollipop.

What flavors is that?

Jesse Tevelow: It’s a bubble gum. Bubble gum, I think.

All right. All right.

Jesse Tevelow: I’m feeling it.

Intro

Guys. Before we get started really quick. This is all about how the creator economy NFT is intersect? How many people in the audience are actually creators, by show of hands? All right, three fourths? Is it like video creators, tick tock creators, by show of hands. Video creators. Bloggers, Twitter, shit posters. All right, not too many. Well, I’m excited to be here, guys. Pleasure to be on stage with you. Just dive right in. Let’s start with a quick bio. Who are you guys? What does the world need to know about you? Keep it short. 30 seconds. We’ll go one by one.

Jesse Tevelow: Hi, guys. I’m Jesse Tevelow. I am the creator of a community called praise and praise piles. And I’m going to talk more later, so I’ll leave it at that.

Alex Hooven: It’s awesome. I wasn’t familiar with praise. So, I’m excited to hear about it. But I am Alex Hooven Hooven. I am director of strategic partnerships and growth at rally. And on the other side of the coin, I’m also oversee governance and operations for a Dao called Friends with Benefits here in LA.

Noel Borges: Hello, everyone. I’m Noel Borges Burgess, one of the cofounders of mint black, I have the pleasure of working with an incredible team of folks to work with creators like Jim Jones, who was the first hip hop artist launching NFT, as well as a social token and Nicole Buffett, excited to be here.

The current state of the web3 creator economy

And then I’m Adam Levy, I host a podcast meant basically document the pulse of where crypto meets creators, teaching creators how they can use these crypto primitives to build, monetize and own their audience. So, without further ado, we’re here to hear you guys talk. Okay. I think a good place to start. We’re talking about all thing’s creator economy here. What’s the current state of the creator economy as it pertains to web three? How do you guys see that?

Jesse Tevelow: Are we going down the line?

Yes, down the line.

Jesse Tevelow: Down the line? All right let’s do it. Creator economy? Let’s see. Where do I start? Web three is all about community. So, it’s pretty much the core for me, you know, it’s kind of synonymous community verse creator, I think producers are the leaders of the future. So, creator economy is about being creative, being you, being authentic, being genuine, finding your true value. And, you know, in this web three world if it’s like, people are like, oh, what why is this art valuable? Because I think it is, because I said it is because someone else thinks it is. So, it’s a much more just open environment, and creators are going to be the leaders of the future. You know, our currency is going to flow to creators, I think a lot of currencies are going to flow to creators. And it’s just exciting times, because I think we all feel this vibe happening here. Certainly, if you’re here, you can feel it. And it’s, I think it’s the age of the Creator. So, let’s go.

Alex Hooven: Age of the Creator love it. The question was?

The current state of the creator economy in web three, as we stand today.

Jesse Tevelow: Oh, I think the state of it is awesome. Sorry.

Alex Hooven: The state is awesome. I think what’s so incredible about the Creator economy and how its intersection with web three is that all the tooling and primitives that are being designed right now in web three are really just allowing sort of that relation, that precious relationship between a creator and the fan, to be able to have this symbiotic relationship where both the fan and the artists can be capturing equal value that they are both providing, without having any middleman in between to sort of disrupt that. So that’s what I think is great.

Noel Borges: Amazing, I love it. First of all, before I want to shout out Adam and mint, every Sunday at 3pm, I’m looking forward to your email, if you’re not subscribed, you definitely should as he captures everything from Dallas to NFT social tokens. It’s really the best podcast.

Thank you, sir.

Noel Borges: So definitely check it out, within the sole creator economy. So, I think there’s economy 2.0 or creator economy 2.0 And there’s a creator economy 3.0, which I’ll consider web three. So, in the social token space, we talk often about moving from web two to web three, and we liken it to going from hashtags to cache tags. And we see the future in which is now we’re embodying our future self now. So, what does that look like? It looks like creators, having, as mentioned before a symbiotic relationship with their fans. And more specifically, we’re capturing value of the personal brand. So, they are creators. Up until now, the relationship is such that a tick talker or an Instagram influencer will perhaps sell a product or service or an experience, the fan will purchase it. Creator receives money, fan receives product or experience. And that’s usually where the relationship ends. Within web three, the fan receives experience and as well as the product. And more importantly, they now have the potential to share in the financial gains by reselling that NFT. And by the way, when that happens, the creator also generates additional revenue. So now their interests are aligned. And that’s where we’re moving from web two to web three. And regarding hashtags to cache tags, it’s this idea that within Instagram and TikTok, it’s about popularity, right? It’s about gaining as many followers and attractions. Within web three, it’s about community. It’s not just about followers, it’s about building community, and monetizing that community in a way that’s not just beneficial to the Creator, but also beneficial to the token holders, whether it’s an NFT, or a social token.

Should creators strive to build virality or a niche group of true fans?

So, should creators strive to build virality or to build their like 1000 true fans via NFTs? What’s better?

Jesse Tevelow: Yeah, I mean, I, I wrote a book about this. It’s called the connection algorithm. And so, I just, I think that everything is about humanity. And if sometimes we get lost in the technology, sometimes it’s hard for so, you know, for us to socially and culturally keep up with the technology. But you know, I just think that, you know, I just think it’s really important for people to understand that, again, it comes back to the community, that community is the most important thing, and that people are going to gravitate toward that. And so, it comes back to like culture. And so, I look at one on one connections. I try to figure out who I am. And then I try to figure out who’s gravitating toward me. And I try to have real relationships with those people. And I go one by one. And I asked that person who do you admire? And then they tell me, oh, I admire this person. And then I, and that’s literally like how I’ve grown my entire platform. And it’s funny, because like, three weeks ago, we didn’t have any community to speak of in web three. But I’ve been building community for so long, real community and real connections and real relationships, that, you know, we had no Twitter, no discord, no email lists, less than a month ago, now we have 30,000 plus, in that environment, and we didn’t spend a penny on advertising. We did that. Because, like, you were just saying, man, like beautifully said, eloquently said, you know, it’s a circle, like the community is getting value from itself. There is no product, there is no leader, there’s just a community. Right. And then there’s currency that is attached to that community in the form of a token or NFTs, or art, or whatever, something in IRL something in the metaverse, it doesn’t matter. It’s just a community of people. Okay, like, the community that you were born into was, was controlled by a government, you just popped up, you spawned onto the land. And then they were like, these are the rules because you’re in this box of the land. Right. So, make real connections with real people. Don’t worry about the boundaries that you think are around, you just find people that you love. That means something to you, that are doing something that you like to do, or want to do or are doing, find out who you are, and then that value will start to literally manifest. And the cool thing is that you don’t have to worry about the fucking lines on the map anymore. You can just share your value.

Noel Borges: Just see if I can say I think the real secret is your swag. You have a pink lollipop with the glasses. I mean, you’re, I think that’s what attracts everyone to you.

Jesse Tevelow: Well, that’s deliberate because i don’t really give a fuck anymore. So, I’m like, this is me. So, you want to hang out or not? Let’s make some money.

Let’s go. Alright. So, the question was, again, build for virality or built for an intimate base of people. Right, that may or may not end up being your collectors. Like how do you guys think about that?

Alex Hooven: Yeah, I think, I think it’s interesting. Like, if you look at sort of the entire crypto landscape, whether it’s a platform or an exchange like uniswap or a big successful NFT project, like board eight Yacht Club or any things similar like that. I think What makes them successful is the community around it, not the morality. And so, I think especially when you’re talking about, you know, a creator, or some sort of any kind of artists, that’s going to introduce a token, whether it’s a fungible token, like a social token or an NFT, you know, the success is going to be sort of a parent by the community that supports it, not the virality, the community is what drives the virality. So, I think, you know, when we think about a pop star, or any or a sport, the athlete or whatever, who wants to introduce a token, I don’t necessarily think an athlete with millions of fans necessarily translates to a community of people. And so therefore, if there’s not any sort of unifying ethos, or philosophy or mentality around why we’re introducing this token, what the goals of this community to build together and share an ownership of this community, there’s not going to be a tremendous amount of at least an instant success. And so I think, a community that’s been established, so you know, that could be a media company that has a passionate group of existing subscribers or a community like praise, where they’ve already sort of fostered this idea of like, why they’re in this together, they’re way more set up for success than just your average athlete or musician that just wants to introduce a token for the sake of introducing a token. So yeah, I think it’s more about creating that community first and less about the virality and I think the virality will come and success of the community.

Noel Borges: Absolutely. I think virality is more. So, web two, and creator economy 2.0. As we see it today, I think community building is at the heart of web three. And, as mentioned, the goal isn’t to just get more followers, but to create raving fans, and how do you create raving fans? I would prefer to call them token holders, right, and build this community where everyone is aligned and sharing in the upside. And the follower doesn’t just see their contribution to the fan by just liking or posting or commenting or liking or commenting or sharing. But now they get to purchase a product or an experience when the account when they collect, let’s say an NFT of a creator. Or if they purchase the social token of a creator, that gives utility. And I think utility is at the heart of community building, where there’s more than just collecting it, collecting it is Cool. And I think we’ve seen a lot of that over the past year, I think we’re seeing the shift where creators whether it’s folks on Tik Tok, Instagram, or celebrities, right, Jim Jones, for example, the goal isn’t necessarily to just create more fans and have this one two-way relationship, this one-way relationship where the Creator generates revenue from the fan. But rather, everyone is aligned, everyone is communicating, the fans now get to communicate with one another, rather. So, the community gets to interact with each other in let’s say, a discord by holding an NFT of that in that particular creator. And so, the goal is less virality. I think virality is a byproduct of community building, not the other way around.

Jesse Tevelow: Yeah, I was asking if I could add on that, you literally just hit it right at the end there. So, it’s like, I don’t want people to misinterpret like, virality is awesome, right? Like you want virality. So, I’m not saying virality is bad. I’m saying that it doesn’t start there. You’re not it’s like, you don’t just like have an idea. And then it’s so good that it’s viral. You build something slowly, like we’re talking about to the point that it’s solid, and then you turn on, you know, you put the foot, your foot down on the gas, and that’s what we did. And it’s like, it’s a hype cycle. So, like, you want to leverage that still, you know, you’re still trying to it’s a competitive market. It’s a hype cycle. You know, you got to look at all these elements. But the problem is that people don’t see the forest for the trees, and they just try to go all the way before they build it up. You know, I’ve been working on something for a year. And then, whenever you see an overnight success, it’s never an overnight success. Never, ever like It’s lightning in a bottle if that happens, so.

Alex Hooven: If it isn’t a scam.

Jesse Tevelow: Yeah, and it’s yeah, it’s 99.9% also a scam. So, there you go, whatever that equals out to so yeah, that’s just use virality is good. Just stick with humanity first.

How to transition your web2 audience into web3?

So, because the panel is only 30 minutes long, there’s different types of creators, right? There’s music creators, art creators, video creators, bloggers, all sorts of creators. And I guess in the context of which creator pertains to like if you’re a musician, because the hottest thing right now are music NFTs, like everybody’s trying to buy music NFTs a lot of people are talking about music, NFTs. If you look at a music artist, is like number one source is kind of like getting virality on Spotify, on Apple Music, right? And then trying to use NFTs and social tokens as that primitive to kind of bring his fans together to monetize his fans separately from Facebook, separately from Spotify, in all that, so I think it’s very relative, right? Another thing I want to ask you guys is because I host a podcast like, thankfully people listen to it I get hit up by agencies who manage craters, okay? That have existing audiences that have existing followings that want to integrate these primitives into their day to day, right? Have their fans by their NFTs, build a fan base, a token gated fan club, whatever, whatever the buzzword is, how can an existing creator who already has virality tap into web three, what is the funnel look like? How do they get started? Okay, do they issue a social token? Do they issue NFT? And once they have that asset, how do they actually funnel in their audience from Facebook, Twitter, Instagram, Tik Tok into telegram or discord to create token gated communities, right? A lot of people, a lot of creators in the Creator economy have already quote unquote, made it in web two. There’s, there’s a lot, I’m not saying everybody that want to use these primitives to kind of transition I think rally, by the way, is a good example of that, right? Using these primitives as a way to create some type of token asset to reward incentivize their audience. So maybe Alex Hooven, you can start with this one. How do existing creators web audiences transition their fans from web two into web three?

Alex Hooven: Yeah, so I actually think there’s like a giant misconception and like, sort of what that barrier is, in terms of bringing your audience along into web three. And I think the way that people need to think about it is less about okay, there’s, I have all these new tools at my disposal, how do I plug them into my community, and it’s more about actually just taking a look at your community and knowing what they, what they want, and how to engage them in ways that you are already doing that. And just thinking about how you can use tokens, whether they’re NFTs to just add more value in those spaces that you are already engaging in and adding value to your fan bases. So, rally specifically, just for everyone, if you’re not familiar is a social token platform, it is a sidechain of Ethereum. That does allow any artists or community organization to mint a social token as a means of starting a micro economy with that fanbase. What is a micro digital economy mean to us? It means sort of pairing this idea of fungible currencies, so social tokens with non-fungible tokens. So, NFT and what we really focus on is figuring out how you can integrate NFTs and add value to your communities in a way that provides utility and not scarcity. So, we’re not really focused on, you know, one of one drop where you can, you know, have high volume, high value auction items, and it’s more about how can you use NFTs as tickets? How can you use NFTs as badges, keys, access to things, and really just figuring out what that utility is? And so I think getting started is more looking at your community, looking at your roadmap of like what you have going on over the, you know, next six months to a year and saying, How can I actually just sort of take this technology, this from, you know, fungible tokens, non-fungible tokens, and actually integrate it into what I’m already doing, and ultimately be providing your fans more value, right? So instead of saying, okay, I’m doing this live stream, and I’m going to sell tickets, maybe those tickets are NFTs. And, you know, instead of just paying a sunk cost of $50, for that ticket, you’re not providing them with an asset, which they can, you know, carries that intrinsic value of the content that they want. Or they can just, you know, sell it on the secondary market, if that’s what they choose to do. And you’re both participating in the value of that transaction. So yeah, I think it’s, it’s less about saying, Do I need to do an NFT? Do I need to launch a social token, and it’s more thinking about what the community wants, what you’re already doing, and what you can plug into with those two options?

Noel Borges: Amazing. I love it, I think, as creators who currently have virality, let’s say, for example, this is in conversation with Kimmo who has 2 million followers, she’s here, shout out to Kimmo and Samir who has 4 million followers on TikTok. So, as we are speaking about, how do we not just monetize your fans, because that’s a one-way relationship? How do we give more value to the fans than you receive? Right? And I think so long as the creator is thinking about giving more than we take, that will be a sustainable con, there will be a sustainable growing community. And whether it’s a social token or an NFT, it’s likely to thrive, I think, where we see the Creator, whether it’s an Instagram or TikTok influencer, or as a celebrity, only thinking of it as a one-way relationship, how much money can I make? I think regardless, whatever they do next, it’s already a lost cause. And it’s, it’s going to end up being a whirlpool, and no one’s going to win. In fact, they’re going to burn their following, right. So how do we, from the beginning of the conversation, think about how do I give more value to my community and some of the examples we’re speaking about with Kim and Samir, how do we allow fans give access that they may not have gotten before for example, being able to meet in person have in person IRL events where upon so now that wasn’t something that unless you’re a close friend of the Creator who you celebrate chemo as a fitness influencer, if you happen to be at the gym, you might be able to meet with her. Otherwise, how is it possible to have a zoom one on one meeting, or setup? If you DM her, you’re one of 1 million people in her DMs, she’s probably not going to respond. But if you purchase one of her NFTs, you might you’ll have the opportunity to have a video chat with her. Same with Samir, you know, folks are admiring his cars, and he’s a car enthusiast on tick tock. How do you imagine the ability to ride and ride shotgun literally and figuratively with Samir for a day? Well, now you can buy purchasing one of his NFTs and now you get to see a community that is more engaged than ever before. And so, this creates that medium to create a more intimate experience, whether it’s in real life virtual, and the relationship doesn’t stop there. Because the person who collected the NFT of Samir, Samir is incentivized to continue to provide value to the token holders by potentially air dropping his Samir coin. So, he now has the social token, he creates an airdrop it to folks who are in possession of any of his NFTs. And so, we don’t see it as an either or whether it’s NFTs or social tokens, we see both ends, we think they work in harmony with one another. The way we see the current landscape at mint black, which is a social token platform as well. We don’t just focus on social tokens, we see the trajectory of where crypto was, where it is and where it’s headed. Where it was, was NFTs then Metaverse, now Dao’s we see the next frontier being social tokens. And social tokens will tie it all together will bring all of those four pillars within the crypto economy in a way that works in harmony with one another.

What data can creators unlock via NFTs and other crypto assets?

You know, you brought up ticketing, it’s one of my favorite use cases for NFTs. I’ll share a quick story and the next kind of like conversational I want to talk about his data, what kind of data can creators tap into that they otherwise would have had through social media platforms? So, if you issued tickets, let’s say you do like a meet and greet. Okay, a lot of creators do meet and greets. They try to meet their fans, they issue tickets as NFTs, teach them how to open a meta mask. One of the coolest things or one of the most successful creators, they actually create videos on how to open up a meta mask, how to buy your first Ethereum that comes from them personally, that creates more of a level of comfort, right on how to actually do these things. So, there’s this creator, her name is Queen George. Okay, she basically did a NFT concert at Eth Denver, I think a couple months ago, excuse me a couple of months ago, and she issued free tickets for people to collect to then watch her perform. Now the cool thing about that is that she got about 200 collectors off the bat. Okay, they all minted one of her things for free. So, she gave before she took. And then on top of that they came in, met her in person, watched her perform live and then had the option one to join her discord and to mint, one of one music NFT on the spot. But the cool thing about that, why it’s so unique is now she has about 200 collectors who collected her stuff and also came to watch performed. There should be a way basically for her to understand who her collectors are, it extends beyond anonymous addresses. She now can see okay, are any of them in FWB? What percentage of them? What things do those people vote on? Right? How much money do they have in their wallet, she starts tapping into data points that she otherwise would have never had, thanks to these collectors. So, she might realize, wait a minute, 75% of the people that showed up to my concert aren’t FWB, it may be worth to do a collection or some type of collaboration with FWB. And now she’s growing her audience in web three. How do you guys think about data on chain? And how can creators tap into data when they issue their NFTs and kind of build more meaningful communities around their collectors?

Jesse Tevelow: Who is it going to me first?

Whoever wants to take it?

Noel Borges: Awesome. I’ll go so I think what was mentioned with brands earlier, how I think it goes this is, the data point is not just important to creators, but also to brands. where for example, let’s say Kim has a relationship with a brand, a fitness brand who wants to do a collab, if there are let’s say 1000 collectors of her NFT and she can see that these creatures we can Airdrop now let’s say that brand wants to create enemies, you can Airdrop it to her current collectors. And over time, we’ll be able to look in the wallet and see which fans are the ones who are likely to buy product A versus product B. And as mentioned a moment ago if they’re 50% of them are holders of let’s say a since 3000 generative art collection, therefore which is an upcoming collection with the Danielle Lesley, she’s launching shortly. If similar to like a world of women, for example, if they’re in possession of that NFT, we know that that’s someone who’s passionate about women’s empowerment, right? And so those NFTs that are in the wallets of a token holder, says something about the person, Danielle is very intentional with the NFT she collects, right? Because it’s a representation of her brand. So, when you look at her collection, now, she has a world woman, she has a board, he has some blue chips, but more importantly, she has NFTs of collections. And with that causes that matter to her. So, we can see what matters to the individual that perhaps in web two, you wouldn’t be able to see that because this is all public.

Really quick. That’s the ownership economy, right? When you talk about creators owning the platforms that they participate on, this is data that they might have not otherwise been able to tap into. Right? And to learn more about who’s their audience who’s doing what with them? Who’s engaging with them? When you have these addresses, and everything is transparent, and you can tap into this data, you’re able to unlock insight that you otherwise wouldn’t been able to kind of explore.

Alex Hooven: Right? Yeah, I was just going to add, like, I think that’s just the huge part about web three is this idea of ownership. And like, the question I posed to a lot of creators is like, okay, if you were to wake up tomorrow, hypothetically, and YouTube or Spotify or Instagram or wherever you’re, you know, you know, interacting with your audiences, the most magically disappeared? Would you feel like you still had meaningful ability to connect with your audience? And I think most people would say no, right? Because you don’t have ownership over that data. So, I think the most exciting thing, just to I mean, everything that you said is correct, is that you truly have the, through decentralization, you truly have ownership over your data, and you can do anything you want with that data, no matter how, however way you choose to synthesize it.

Jesse Tevelow: Yeah, I agree with both of you, I feel like we’re also aligned on this panel. And you know, I guess I don’t know. For me, I feel like it’s, it’s definitely a situation where you’re trying to look for what is the culture and to me, it’s the model is completely flipped, like the power has shifted from the corporation to the individual, right. So, when I think about that, in the context of data, it’s like a whole different thing. It’s like, when you think about data, you think of corporations, but now it’s flipped, the data is yours, it’s the individual. So, it starts the core, everything is center is you. So, the future is all about you. And I’m kind of on a mission to change the connotation of the word selfish, because I think it’s a really positive word, I think we all need to be more selfish. And I think we’re all starting to realize that we’ve not been selfish enough, the corporations are selfish, the institutions are selfish, like, we’re just literally like living miracles. So, like, let’s just own our data. And I agree with everyone on here, you know, it’s what they’re showing, we’re all showing the world is that this is where we want to spend our money on self-expression, on art, you know, the data is showing us now because it is decentralized data, it’s real data, the data is coming from you. And you and you and you and, it’s coming from us now. It’s not coming from the corporation. So that’s why the web two folks are like, I don’t get this, you know, here’s all my data, here’s all my numbers. Okay, here’s how NFTs work. Okay, I’m gonna plug this in, and then I’m going to raise my bottom line by this. It’s like, guys, that’s not what this is about. So, if you have a long-term view, then you got to really like literally to turn the concept of data on its head upside down and start thinking about it that way.

And again, why I’d suggest doing stuff for free, giving things out for free, just get something to collect something, right? Get someone to just commit that action. And I think you’ve already like enter the funnel, like a top-level funnel to kind of building like a minimum viable community in web three.

Jesse Tevelow: Yeah, they’ll come to you like, you’re literally, your people will come to you, and then you monetize.

The coolest part about web three is that in web two, where the products of the platform right, like we rent, everything, you know, many people on my Tik Tok feed, they disappear because Tik Tok decided to like shadow ban them or like remove their account for whatever reason. And they have to build their millions of followers from the gecko. They rented their audience, right? In crypto, you now own your audience, right? You co own now, the platforms that you belong to, that you participate on. And you share the upside as they grow. Right? You want to add something.

Noel Borges: I want to add on to that. We see. Web two, Instagram, Tik Tok, YouTube as one layer and we see social tokens, the NFTS as a layer that sits on top of the various platforms. So, if you are in possession of a Samir NFT, you can now gain access and benefits to his brand, whether it’s on Instagram or TikTok, or YouTube, wherever you find him. You can all have this shared common interest that goes beyond just the relationship on that respective social media, as mentioned, if you’re Tik Tok shut down or if you were shadow ban, how do you communicate and interact in a way that’s separate from these platforms. And we see social tokens and NFTs as the medium to do just that. And it sits above all of the various social media, all the all the various social platforms.

Go ahead, Alex Hooven.

Alex Hooven: Yeah, I was just gonna say and by the way, like, it’s so possible for these platforms to just shut down, I remember when Facebook was down for like a day like that actually had tremendous impact on small businesses that operate on Instagram. But I just wanted to add to something that you said about just I think that web three has kind of flipped this idea of like, the traditional web two tech notion that, you know, you build the platform of the product first, and then the community will come. But in web three, it’s actually built the community and incubate the products from there through the ownership of your data. So, like, an example of that is FWB where, you know, there is now I think, about 2000, about 6000, token holders, but 2000 active members. And you know, we were throwing events at different conferences and trying to find a way to get our members in through like a token gated mechanism, and we couldn’t find a solution that works for us. So, we then, you know, voted internally, to allocate some of our treasury budget to just build our own product. And now we license that out to other Dao’s and other platforms. So, it really is that notion of like looking at your data that you own and seeing sort of the white spaces, and then building things for the community because of your community needs it. There’s obviously others that needed to.

Jesse Tevelow: it’s like your community is your team and your team is your community. It’s all the same thing.

Noel Borges: Well, we’re in the same hat. And by the way, I love that line. And we got to repeat it again, for the people in the back, the token, you build a community, and the product will come versus the other way around.

Alex Hooven: Yeah, exactly.

So, it’s like the model in like web two is like build a minimum viable product, right? find product market fit, and then scale. The web three, it’s built a minimum viable community, find people that align under a common theme under a subject, bring them together, issue an asset of some sort, whether it’s a membership pass, right be an NFT, some type of ERC 20. That’s a speculative asset, whatever it may be. Give them upside that as the community gets stronger, grows builds, they share that leverage with them. By the way, I was a victim of the first event that happened that then led to building the event platform.

Alex Hooven: Oh, in Paris.

Yeah. Paris. Yeah. Throwback. Yeah. I want to leave an open the room for questions. If anybody does have any questions. Does anybody have questions? Show of hands. Do we have time for questions? Yeah. All right. I’ll come to you. Let’s do it.

Speaker 1: Hey, how you doing?  Hello. I had a question about as far as doing free NFTs. How do you how do you set that up? Because from what I know, I have very limited knowledge of a lot of things in the NFT space thus far. It’s a lot of cost that goes into everything. How do you set up something to give for free? Do you have to like to choose a certain blockchain like might not be able to use Ethereum? You might have to use something different in order to get that out there because I want to give something away for free, but I’m not sure as to how to go about doing it.

Noel Borges: I’d recommend the marketplace drawstrings on one of my partners. Kenny was one of the co-founders of drawstring is built on near it made it easy for folks to give away. And as pretty much gasless where you can create NFTs, you can Airdrop it, send it via an email or a text and folks can redeem it. We’re doing, we’re using drawstrings for a drop we’re doing with Julianne Moore, where if you’re in possession, if you bought purchase one of her NFTs, a collab we did with Nicole Buffett, it’s as simple as sending an email, someone clicks the link, create an account and the NFT appears in their wallet. So therefore, there isn’t necessarily a payment that’s required.

Alex Hooven: I’m also just going to quickly show rally because rally is very much just an out of the box economy and that you can just create an account, sign up and all of the tooling, the smart contract language is all done for you on the rally side chain. So, it’s as easy as just making an account and you know, uploading your art asset and then being able to drop it that way. There is no gas on the side chain. And I think you know, that’s actually a key thing to touch on is that rally was built with sort of the fan relationship in mind and in thinking that, you know, these people that are creating social tokens or NFTs on the on rally, probably have a community and probably have some sort of reputation on the line and you know, you want that first expand experience in crypto to feel safe and secure. And, you know, for us, that means no gas fees so that people don’t feel like they’re getting sort of Taking advantage of when they’re making a transaction. And so that’s a big thing for rally.

Jesse Tevelow: Yeah, I’ll just quickly say plus one for rally. I mean, that’s like for what you describe probably one of the best, if not the best options. And then the second piece to go along with that is do your research, right? Because there’s not one answer ever. It’s like, what is your specific goal, and then, you know, in touching on gas, like, totally agree like rallies, good for what you just described, because of that fact that whereas, you know, on Ethereum, you’re gonna pay for gas, if you don’t know is almost like a tax for bandwidth or throughput through the system. So, but then you’ve got Ethereum has a big community, right? And they’ve got a lot of, you know, eyes on them in this. And so, you just got to, like, really think about how you want to, those are just two examples that you could use out of, you know, 1000s. So, but you know, so, use rally.

Outro

So, I’ll add one thing, and we’ve got to wrap up. So, I can’t do any more questions, but obvious pull ups, which are basically like free NFTs, I’ve growth hack my newsletter to 1000s of subscribers, because of pull ups. It’s like a hidden secret in crypto. The best way, in my opinion, I haven’t tried rally stuff, I’d love to try it. But from my personal experience, a lot of people that throw events, they use pull ups to kind of just give something for free just for attending, right? And then from the, so pull ups is, it’s a proof of attendance protocol. So, it’s basically its own like mechanism to reward people for showing up at an event or doing an action. So, at the end of every season, I basically give out listener badges, speaker badges, and I give sponsors NFTs as well, via pull ups, right? And it’s just a fun thing people love, and people go crazy for them. So, it shows you if you can give something then you’ll get something in return. But I think that’s where we got to end off. You guys want to plug yourselves really quick. And then yeah, thank you.

Jesse Tevelow: I’ll just plug you man good job. Amazing moderation, dang sure is amazing conversation. Everybody can find me so thanks for being here. Love web three of all you guys keep doing what you’re doing.

Alex Hooven: Yeah, I mean, if you’re interested in, you know, figuring out what a social token economy could look like for you feel free to come see me after this. And follow rally on all our social channels for more.

Noel Borges: amazing. Check us out at the exhibit booth, mint black and as well as on our socials. We have a number of exciting drops. As you mentioned, we’re doing Jim Jones performance where he’s also dropping an NFT live right after Steve Aoki. So, if you’re still in the building, make sure to check that out. It’s at 6pm and Steve Aoki speaks at 5:30 as well as we have an exciting NFT drop that Julianne Moore did, where she created a, she created NFTs of her wearable of her dresses where if you auction when you receive a gown, and we ran the world first NFT commercial during the Oscars, which would have made the headlines if it wasn’t for Will Smith. That said, you will not even know that it happened. And shout out to Jessie, I need a black lollipop. Thank you.

You guys can find me at @Levychain everywhere on the Mint podcast, if you search mint Adam Levy. You’ll find it everywhere. Thank you, guys.

Listen on: Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 34 welcomes Matthew Chaim, who’s the founder of SONGCAMP and ideator of CHAOS, a 77-person collective building towards a headless music artist.

In this episode, we discuss: 

• 02:08 – Intro
• 07:58 – Why Music Needs Web3
• 09:47 – How Has Crypto Influenced Your Creativity?
• 12:39 – What is SONGCAMP and CHAOS?
• 26:50 – Patronage-based NFTs vs Ownership-based NFTs
• 34:28 – What to Expect From Matthew Chaim in the Future
• 40:38 – 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!

---

How are you doing?

Mathew Chaim: I’m good. I’m good.

It’s good to have you on.

Mathew Chaim: Yeah. Thanks for having me.

You got it. How’s your state of mind? How are you feeling?

Mathew Chaim: I feel busy. I feel overwhelmed. I feel excited. Today, it’s been a good day. I kind of didn’t like work as hard as I do every day. I had. I’m getting married in the summer. So, I did some wedding prep stuff this morning

Wow, Nice.

Matthew Chaim: We’re out of, you know, Discord, Twitter land for a few hours there in the morning. But yeah, most days are full throttle.

Intro

All right. So, I always like to start these conversations, kind of understanding who the guest is. Okay. So, for starters, who are you, Matthew, what does the world need to know about you? But more specifically, how did you get your start in crypto?

Matthew Chaim: Yeah, so I’m a musician, first and foremost, from Montreal, Canada. And yeah, very, was focused on my music career, just like putting music out under my own name, Matthew Chaim for about five, six years and ended up moving to LA and doing kind of the songwriting thing there put out an album at the end of 2019. Yeah, just focus on my music was very creatively satisfied, out there. But I also went to business school back in the day, I thought I was going to be like, in the entrepreneurial world, but then music kind of swallowed me whole. But there was this kind of other part of my, I guess, mind that felt a little atrophied out there, wasn’t super challenged, if you will, kind of was just full deep in sort of like the art which was, which is also incredible, like, no shortage is there. But when I got back to Montreal, I came back when the pandemic hit, thinking I was staying for like three months, but then like, the world changed, and so did my life. And I’ve been in Montreal ever since. But when I got back here, I was quarantining in like this hotel, there’s nothing else to do but go for walks. And I was a block away from an old friend of mine, who I knew had been working in this thing called the Ethereum since like, 2016, but I didn’t really understand what that meant. But we started just taking walks, we would walk our dogs together, because there’s nothing else you could do at that time.

Which, by the way, is my favorite form of exchanging ideas and having these conversations is on a walk. But I.

Matthew Chaim: I would agree.

Yes, I digress continue.

Matthew Chaim: Would totally agree with that. And these were very fruitful kind of exchanges of ideas. He started educating me on what he was doing. And at the time, he was working at Loop Ring, which is like a layer two, exchange and protocol. And so, it was a very interesting sort of, vantage point, like an interesting angle to sort of tear the fabric into this new world via like, layer two technology, Merkel proofs, all this ZK roll ups, like, very kind of down in the piping stuff, which was super interesting. And I could feel the sort of passion and excitement he had for this new world. But I was sort of interested as a musician, as an artist, like how does this stuff kind of come to the surface? How does it meet culture and the things that I care about? And then one day he told me about this, like art online that people are buying and selling and I, you know, my mind went on tilt. I was like, what are you talking about? And of course, he was talking about NFT’s. And when I fully kind of was just immersed in curiosity as to like what this space is, and that’s what really like, pushed me down the rabbit hole.

What year was that again?

Matthew Chaim: So, this was in 2020. This was summer 2020. When we first started talking about this stuff, and I first started getting interested and then like it was kind of like waves of like deep interest versus, still You know, I was like kind of really focused on my music thing and trying to, you know, my shows were just starting to really happen when the pandemic hits. So that kind of got crushed. And I was like focusing on a new record and all this stuff, but I kept being pulled in and I was looking, I was remembering I was looking for like, I was like, hearing about Dao’s and NFTS, I was like, where the music Dao’s I found, you know, Dao records and stuff like this, I was just like getting a taste. And then it was really in like October, November of 2020, that like full plunge sort of thing.

So, you and I have a very similar intro to crypto, at least on the intro side. So, I’m a drummer, I typically have a drum set behind me, but I’m In Miami right now with some family. But I got my start into crypto one kind of seeing bitcoins price at 20k. And that catching my attention back in 2017. But what kept me in the door was seeing what companies like media chain were doing, which is Jesse Walton, some very, very, and his project got acquired by Spotify, around 2017. I was like, wow, he’s actually helping musicians. I’m a musician using this technology to better their life. Right? That was interesting to me. I’m not really interested by money. And I really like a financial person, I get numbers, but that’s kind of like what kept me in the door, kind of similar to you. So, once you got Eth built by your friend, told you about the projects he was working on, from I’m 2020. What was the next step? Like, how would you get involved from there?

Matthew Chaim: Yeah, so I guess like, yeah, just through that, like really just following my curiosity, and it was at the time, yeah, kind of both, like hearing a little bit about Dao, but it wasn’t like kind of where it is today, of course, and it was, you know, and, and also, on the NFT side, the visual side was really blowing up. This was in the time when like Bebo was starting to have like, this $2 million moment, then the, you know, $69 million, early next year, but so I was seeing all this visual art NFT but there was like, not this much things happening in music NFT space. And I remember he had sent me a podcast, much like this one, an episode of into the, I think it’s called into the ether with RAC, and this is when he spoke about his launch with Zora at the time, which was still kind of the old marketplace that it was before the protocol of today. And he did his dollar sign tape project. And that was my first Oh, like musicians are really experimenting and playing the space. So, I started following RAC and people who are like really experimenting at the edges. But I was like, there’s not so much music stuff happening. This was also right around the time that Zora was like starting to tease this big kind of change. And it felt like this like cultural gravitational pull of like, it felt punk, it felt like new, it was exciting. And then that sort of, to me, me, like Zora, and like Zora on Twitter was that sort of nucleus. And then around it came mirror and catalog and forefront and see club, these things started popping up into my world. And I was like, oh, this is a really interesting corner of the internet. I want to play here and especially catalog caught my eye. So, I was spending a lot of time in the catalog discord being like, what are you guys? When are you launching? Because I wanted music NFTs stuffs to happen.

Why Music Needs Web3

Oh, so why does music need web three? Let’s start with that. Why are you, why were you so excited around that? Like, what was the aha moment for you?

Matthew Chaim: Yeah, the way I boil it down. And this is maybe a bit more of like a personal reason over global as a musician who also just loves to play across the gamut. Like I like to wear all the hats I like to like to hold all the paint brushes. For the most part, like I’ve always been like kind of self-managed, mostly independence on one, on one album deal when I was out in LA to basically pay for my life to live out there. But for the most part, like and signed it mainly because I was with like kind of friends that I’ve met there and could just like be in control of everything. And it was a short sort of situation, I love to just be in the kind of driver’s seat across the gamut and really play in sort of the release mode of this thing. But you’re sort of playing in this world, you’re playing in this box of like, this is how you release things, release things to these platforms. And this is what you get for it and then here I saw like, oh, suddenly, this sort of like Canvas is extending past the making of my music and the making of the artwork and the teasers and the whatever, and the Instagram Stories, blah, blah, it’s extending all the way to how I distribute this music, through what means, to what mechanisms and how I monetize it. And I could actually play like, within the value realization of it, I could play within the story around its actual file scarcity or history, there was just like the Canvas was extending all the way down into the piping of the thing. And that really excited me, I was like, oh, I want to, I want to like grab some paint brushes and play there too. And I couldn’t do that in kind of the web two or the current system, because it’s sort of like this is the way it is you know, and there was less mobility there. And so, it’s been a lot of fun kind of being able to play in that part of it. 

How Has Crypto Influenced Your Creativity?

So, as a creative what has your mind been open to an unlocked because of these NFT primitives, because of these social token primitives, because of token incentives, mechanism designs? Like, how has your creativity shifted from music creation process, from a people organization process, from a curation process? Because I feel like those keywords very much like resonate with you, just seeing your work, seeing what you do online. So how has crypto kind of influenced and inspired more creativity that you otherwise would have had before?

Matthew Chaim: Yeah, I think like my mind goes in two different directions. One is like my relationship with my art. And the second is more, I would maybe boil it down to my relationship with other artists, primarily. And the first one being sort of like, I’ll give you an example when during the pandemic, even kind of in 2020, early 2020, really one of the starting before I even fell down this rabbit hole, I was making a lot of music. And for the first time, really a lot more music on my own completely, I always worked with producers. That was why LA really resonated with me because there’s so many creative producers to work with there. But I was never really like creating the music that I was writing vocals and melodies and lyrics to. But then suddenly, I was like, forced indoors, I was picking up the guitar a lot more, I was creating a lot more stuff on Ableton myself. And it really felt like intimate work, it felt like my own work, because I was creating the whole thing, I was creating the seed of it and letting it grow. But from a production quality standpoint, it was definitely lower than the stuff that I’ve released. Right, it’s like, it’s much more rough draft D. But I kind of liked that, like, I kind of liked the demo quality of it, it felt very intimate. But I would never consider releasing it on Spotify, it’s not like branded enough, it’s not going to get the playlist, it’s not going to do well. And suddenly, here, I could actually carve out that intimacy and actually express that, rather than just like be able to experience it on my own, I could express it by saying this is important to me. So, an example that is I put out songs on catalogue as one of ones. And really, you know, I could set the value of that, whatever I want. And sometimes people really resonate with that, it could just be one person who actually feels the same way I feel about that song. And they can express that by collecting that for a higher, higher price than actually sacrificing more than a like or whatever. So that was like a really powerful thing. For instance, right now I have a song on there that I would probably never put on Spotify. But it really matters a lot to me, it has a lot of like meaning in myself. And so, I put it up there for 100 Eth. Because that’s what it’s worth, for me. And it could sit there forever. And maybe someday someone will click it. And it’s like, yeah, that’s like a life changing song for me. So, the expression of someone else’s, you know, resonance with it should be as life changing. For me sort of thing.

What is SONGCAMP and CHAOS?

Got it. So, one thing that stood out right now your relationship with your music and other artists kind of changed and evolved with the introduction of crypto and NFTS, etc, which kind of brings us to the project that you’re working on right now. SONGCAMP, and the songwriting camps that you put together through SONGCAMP, and now this new collective called CHAOS, which super sick, first thing off the bat, I gotta mention two things, okay. First thing is a branding. Beautiful, like, ah, chef’s kiss, beautiful. Second thing is now you guys have started releasing these Twitter spaces, or these radio collectives or high-quality production, that kind of reminds me of, like, how I built this, which I told you privately, it sounds amazing. So, you guys are already making a really good splash online. I’m curious to hear, what is SONGCAMP? Okay, what is CHAOS? And tying it back to you saying how crypto has helped you better appreciate in a better relationship with your work and other people’s work? And then kind of falls into that. So, kind of show your point of view on that.

Matthew Chaim: Yeah, yeah, that definitely goes those other points that have like, have like my relationship changing with other artists? Yeah, it was around that time, like at the beginning of 2021, when I was first playing in the space and catalog was coming and dah, dah, dah. where I was like, I really craved this connection of like, let’s bring together sort of these web three curious musicians just have a place to do things. So, I threw up a discord in March of 2021. It’s hard to remember, March of 2021, called SONGCAMP that was like, here’s a place for music, and the new internet to crash into each other. And really, it was just like a place to bring together musicians that I was starting to meet. And like, let’s go do stuff together. The reason I called it SONGCAMP was because I experienced incredible growth, both creatively and just as a human being through songwriting camps over the years as a musician, as a songwriter, especially at songwriting camp I went on in 2017, really opened the doors for me both on a networking standpoint, and just creatively because I was really working with only a few people here in Montreal, didn’t have as much like exposure to more artists. And suddenly, I was thrown into a sort of structure of like, you have to make five songs in five days with all these people, and I’m like, whoa, that’s not even possible. That’s not human fossils too fast. But we did it and it was incredible and so many bonds were formed. And so, I started to feel that like communal aspect, with other artists that I didn’t really feel before, like, you know, I had close friends here in Montreal, but I didn’t really feel that intensely. Even in LA, it’s sort of more just like spread out, and everyone’s doing their own thing and, and you have your sort of team and whatever. But like that sort of campy feel really was resonant for me. So, it’s like, wanting to create that sort of in some way here, but just in a way where we can like, yeah, not only just focus on the songwriting part, because those songwriting camps, just focus on that. And then none of the music ever comes out, let’s just extend all the way down to the canvas and actually put that music out, too. So that’s where the real impetus came from. And, and the result of that have been that sort of community feeling, again, incredibly strong way. Like, I’m sort of everyday sort of blown away with like, the sense of like belonging that people are experiencing, coming together and running these camps, these projects that we’re doing in sort of collective creation, and like really experimenting at the edges of music and web three together as artists, and camp CHAOS being our third and most recent project that we’re smack in the middle of right now.

So, curation is a superpower I believe in, I will die on that hill, if you can curate the right minds together in a room and give them something to do. That’s like productive in that positive. Really good things can come from that. Right. Hence, that kind of boils down to what you’re doing at SONGCAMP. So, walk me through more of your curation process. So, can anybody join a camp? What is a camp? What does that look like? How often do they happen? How long do they last? What’s the goal of the camp at the end of the session? Like walk me through that a little bit more to.

So related to how do camps come together. So, camps being sort of, you know, SONGCAMP is more than camps. Now, especially we have like this growing community and all these different little projects happening here and there. But really, camps are sort of like the flagship experiments, call them. And they’re pretty big in scope, and ambitious in what they want to achieve. Each one looks different, but it really takes some sort of hypothesis and wants to experiment at the edges of music and web three, do something different both in the way that that music is created, and then how it’s released in these, these new formats that these nascent technologies and web three are allowing us to, to experiment with. So, we’re running them at a cadence of two a year, we ran two last year. The first one was camp Genesis, which was like a very small project compared to these with 12 or 13 people total, and looked a lot like a songwriting camp, like the one I had in Nicaragua thrown online, globally, you know, coming together and a discord creating music over two weeks, and then releasing those as one on one and NFTs. You know, music NFTs, which at the time in like May of last year was our, was still playing at the edges, right, it was so new, releasing kind of music NFTs. Then we ran our second one in the summer of last year called Camp Elektra, which was a bigger project songwriting camp again, but this one, also creating a sort of pop up production house around it, and bringing sound designers, visual artists, voiceover actors, all storytellers together and creating this world, this planet called Elektra, where music is energy and it is dying, and we’ve been sent there to save it with our music. So, creating this sort of story, this world building, this lore, through which the songs created in the songwriting camps could sort of spread out and the audience would have had this immersive experience and interactive experience with that project. So that was sort of like the big game there was kind of creating this game. And then this one, a much bigger one, that that one, so it went from 13 people. Second one was 42 people. This was 80 people. And this is camp CHAOS.

Wow. That is chaotic.

Matthew Chaim: Yeah.

It’s crazy.

Matthew Chaim: Okay. So yeah, so camp CHAOS. 80 people now we’re 77 few had to fallout here and there. But we’re 77 artists. And when we say artists, we call everyone who’s working on a camp and artists, even if you’re on the operation side, there’s 45 musicians. And then there’s visual artists operatives, a dev team, and then also this Lore team, which inside the Lore team exists CHAOS radio. The other thing we’ve experienced, especially with our last camp Electra was we realized, like, the actual process of creating this art is art, right? For a lot of artists who here like what’s the most exciting part of like being an artist, it’s sort of like the process of creating whatever art you’re making. And now because we’re creating it online together, and like communicating online, co-creating, like, we’re actually capturing that process that so often happens more in the room, we’re capturing it. So, we’re actually able to create art with the process of making art. So, we’re calling that immersive digital theater. And CHAOS radio is sort of an experiment in immersive digital theater, and it’s like, how I built this which is it’s documenting what’s happening in camp in real-time through our calls, our you know, our chats, our interviews, our voice memos. As we’re making stuff. We do weekly murmurations, where we as a group on our camp-wide calls, create some sort of thing together, we all answer a question on our voice memo together, we all take a video of the same thing together. So, like creating this art of the process of camp that’s coming through this, this like podcast-like format called CHAOS radio. So yeah, there’s a lot happening in camp CHAOS. I haven’t even mentioned I guess what camp CHAOS is, which it is. The intention is to create this headless artist, this headless band cult.

That’s, that’s the coolest part, right? Like the headless artist, I think that’s super cool and very relevant to what’s happening in crypto as a whole with all the pseudo-anonymity, and a lot of these narratives and ethos that come around producing something or being someone online without really knowing who you are online. But the fact that there’s 77 people behind this project genuinely baffles me, yeah. How do you organize how do you orchestrate 77 people? How do you, I guess, like, pay everyone and align incentives? Like, how do you do that? Yeah, does that work?

Matthew Chaim: So, we learned a lot from Camp two, from Camp Electra, that we were able to integrate into this camp that helped us answer those questions. Because 42 people’s a lot too. And if you can, if you can believe it, like, now we’re double that. And this camp actually feels like less people than camp two, because it’s more organized. And there’s just like, less, there’s almost ironically, less CHAOS so far in this camp than the previous one. And that’s because like, Yeah, we really got to see what happens when you crash so many people into a project together and like, the sort of blind spots. Yeah, so a few things. One is like, I like to call them containers, we have containers of time, containers of space, to give this sort of entire project orientation and give the people in it a sense of orientation. So, containers of time is really like the time we’re doing this in and we’re doing this camp in eight weeks. And in camp, we’ve given that time lore. So, every two weeks is called an act. So, we’ve act 1, 2, 3, and 4. So, there’s sort of this breakdown these chunks of time, that people can sort of orient themselves in that this is like the project CHAOS, which is sort of needed in this sort of digital ethereal space, you need to give people the sense of containership to say, okay, this is the thing I’m in. And then the other thing is like, you know, containers of space is like we’re doing this on Discord, we’re doing this on Zoom, we’re doing this on these channels. And you have a team, this is your team. This is the thing that you’re a part of, this is the role you’re playing in this network of, of rules.

So, in camp, we have six main teams, we’ve got CHAOS music, CHAOS visual, CHAOS operations, CHAOS lore, CHAOS economics, and CHAOS. Because to get to your second question, and CHAOS, what did I miss? I missed one. Dev build, how can I forget, a big one. And so yeah, to dive into the economics part, that was a huge lesson in the last camp, not that this one’s perfect at all. There’s definitely imperfections and blind spots and this one, but it’s working better than the last one. Because here’s what we’re doing, we’re leaning into the fact that this is a network that this is, we’re creating these headless artists called CHAOS, we’re becoming one. And because of that, we’re treating the economics the same instead of every artist, or creator, or Dev, or what have you being connected to the value of the exact thing that they made, we are all exposed to the value of the aggregate. So instead of like I wrote a song with you and one other person. And that’s a part of this project. And we’re splitting a third, a third, a third of that song. 

Yeah, well, the one I forgot was CHAOS Dev. But yeah, to jump into like the CHAOS economic side of things and how we’re sort of incentivizing this network. The thing we learned from last camp was you know, we’d created a big project with a lot of people in the previous camp, but the difference was artists were exposed to the very art that they had created. And we created these pies of value. You know, these revenue pies. that were split amongst artists who were part of each disparate piece. So, in essence, we had to create all these different pies with all these different artists, some artists working in different like teams, right, we’ve visual, and maybe music, putting together an audio-visual piece. And now suddenly, teams that aren’t even really collaborating, now have to figure out a split together. And there could be 12 people who’ve contributed to that thing, it got intense, it got chaotic. People, you know, teams have different cultures. And now you’re trying to blend these cultures to figure out something, as you know, fragile and vulnerable is a conversation around value and art and money, like, so it got messy. And through that, we took the learnings and integrated a new path where we are all creating one split, this entire NFT project will be one split. And we’re dynamically splitting that over time via these different mechanics to create this thing that we’re calling CHAOS value flow. So, we have this whole CHAOS value flow system that runs the length of camp, that’s broken up into four cycles that map to the acts I told you about. So, two-week cycles, in which we are self-selecting certain amounts of value saying this is what I did, this is how much we deserve. And we’re also giving via coordinate. And this all kind of gets aggregated together for people to get a share in that eventual one big split.

Got it. Got it. I’m so excited for this to come together. Personally, I’m going to be minting this or at least trying to mint it. Because there hasn’t been a project like this in crypto just yet. You’ve never seen like so many people come together at least under this medium of music, right and actually put their heads together and push something out. At least I haven’t seen anything. Have you seen anything like that?

Matthew Chaim:  No. I don’t think so.

Patronage-based NFTs vs Ownership-based NFTs

Yeah. So that’s why part of the reason why I also wanted to have you on is because it is a unique project within itself. But also, to that you bring a lot of information in like opinions, I guess on the current state of where music meets web three. Right, and I’ve had, I think I’ve done, this is gonna be the third episode 34, the last episode of season four. And we’ve had everyone from Blau on the mint songs guys on, the catalogue guys, we’ve had Verta, Cooper. We’ve had Daniel, Allen Grady, the list goes on and on and on people. Yeah, different people innovating in the space. And one thing that I want to get your take on Matthew is your thought around the two, I guess types of music, NFTs, patronage based NFTs, and ownership based NFTs and correct me if I’m if I’m missing another type. But that seems to be the two major types that are kind of prevailing, the ecosystem right now that you’ve seen a lot of artists kind of like experiment with? What are your thoughts between patronage based NFTs and ownership based NFTs, I remember you also tweeting if ownership based NFT’s are like a meme to an extent, right? So, I want to get your take on that for a minute.

Matthew Chaim: So, patronage NFT’s versus ownership NFTs, I guess to just like define those, I guess you mean ownership and NFTs being attached to some nominal owner?

Exactly. So, like what like, I guess like streaming royalties coming back to the NFT. So, you sell like actual IP rights, or at least fractionalized IP and patronage based NFT’s is merely collecting to collect a collectible, right, like an audio NFT, music NFT for that matter, right. am I defining those correctly? You think? Do you think there’s a better definition?

Matthew Chaim: Well, I guess my initial thought, is, like my initial reaction when you say that, is like, I would say, I don’t see a difference. In let’s say, maybe the way you define patronage NFTs, I would call those NFT’s ownership NFTs too, I don’t necessarily see those as separate, like so on the ownership NFT side or like the, you know, exposed to some level of IP or what have you. It’s, you know, we’re starting to face this like, from a real standpoint now with CHAOS, because we are exploring, like, what would it look like to actually bridge some if not all this music over to web two with like, headless artists that was born in web three, it could be pretty interesting. We’re calling it operation Trojan horse, because we’re gonna, like, create these artists, that’s all web two and Trojan shit. But really, if you look underneath, it’s like these headless artists of certain people. So, we’re exploring that and like, yeah, how do you split IP in this world that we’re really kind of playing in a very untraditional way. A lot of interesting questions. But I guess fundamentally, where I go is, I think at a base level, like, the exposure to intellectual property or royalties, from like, a web two side gets a lot less interesting to me. As an artist who’s sort of, like been exposed to those with my own music, like, you know, I know if a song blows up, like you can make a lot of money off that stuff. But like, you know, I think there’s a lot more value to be created here for a lot of a longer tail of artists and a lot more interesting way. But even when you get to the fan side of things, like as a fan, like I don’t really even need or want to own my, like favorite artists like a piece of their pie, I think like, I can own something that’s actually soaked in more lore, if you will, like it’s, you know, actually, the actual art or it has something to do with, you know, it’s like this product of what they created, be it, there’s like, what you might call what you refer to as a patronage NFT.

To me, I’m still like, exposing myself to the investment side, where it’s like, I’m still, if I’m early, and there, they blow up like this, the value should carry over of this thing. I think like this goes to a grander conversation to me around what ownership means. I think the idea of, you know, this 100% pie for Master rights, for intellectual property, for a company’s value, for all these things, and that we’re splitting that up in this ownership NFT, token, share, whatever, that’s a story. It’s the, you know, fundamental story that our current capitalism kind of world lives on. But it’s a story no less, it is lore, right? We’re saying, okay, these 100 things represent 100% of that value. So, if I have one of them, I own 1% of that value, even though I can’t exchange, I can say, here’s 1%, and like, give it to me, or whatever. And a lot of those cases, to me, there’s better lore with what we’re getting with web three. So, to me, I’m more interested in owning something that is sort of has that creative, sort of, like resonance baked into it. And that’s the sort of fun, like, primary lore of it, versus it being the sort of economic lore, I think fans are more want to be exposed to the cultural side of things rather than the economic side of things. And that like, paradoxically makes the cultural thing the economic thing. I kind of jumped around all there, but oh.

So, do you think the cultural investor is different than the economic investor? Just based off your explanation and using the words like the keywords that you’re kind of bringing up?

Matthew Chaim: Yeah, I think they’re really crashing into each other in a way that I haven’t seen before. The example I would bring up is like, I participate a little bit in noise Dao

Okay.

Matthew Chaim: I’m also like, like not, I’ve never really been an investor or anything like that before this world. And now.

Which is, which is important to know, as well, right? Because I guess that would make you so much different than I guess the economic investor for the most part.

Matthew Chaim: right. And in so many ways, I’ve like converged with investors, call them collectors now. You know, who are coming in from for maybe economic incentives, cultural incentives, maybe both but converging in this space in a way that we didn’t converge before at all. Right. So, I think, I think they are emerging in a lot of ways. And I think like the artifacts of value, like, we’ll be merging too, and I think like, like skeuomorphism, because is a very powerful tool, right? Like, it allows us to understand things in a new world, and this is very much a new world. I personally am like more interested in that, like the skeuomorphic nature of sort of owning something that is more akin to a CD, then to own something that is more akin to a contract that says, I own point, whatever of this thing. That’s like, in our world, right now, no artists are trying to own the ladder thing really, right. But like in a previous world, a lot of people were interested in owning CDs. And they did hold this like cultural wait to have your CD package like that, or your Pokémon card package or whatever, these things. And now we’re actually in a world where those things exist. And there’s so much more liquid. So, like that, yeah, that cultural lore and the economic lore are really merging. And I think the things to adopt on the front facing UI of it, if you will, is the cultural stuff. So, to me that’s like, CD rams is like fun and interesting and kind of like, nostalgic. Yeah.

What to Expect From Matthew Chaim in the Future

It’s very, it comes down to Preferences. In my opinion, I’ve had so many different takes on this season as to how people think about the different types, whether one type is defined one way or the other way. I think it really comes down to the individual, of course. And I think it’s important to know, like you said, you weren’t like the investor type prior, you’re more of like the cultural type prior, but now you’re seeing both worlds converge, and you can’t be one without the other from what it seems right? So, I appreciate the hot take, you know, and it’s interesting to kind of, when I put out the Blau episode. That was the first time I got like Criticism Online, which is good. Yeah. But like, but like I’ve gotten criticism before, but to that extent, right, people kind of understanding and thinking about what is like an IP royalty-based music NFT versus just a collectible NFT that sits in your wallet, right? And what that means what the difference is, what is ownership really, as a, what is ownership in general and crypto? What does that mean? That’s a gray area within itself, right? Yeah. Because the real world doesn’t really translate yet to the digital world. To an extent or I guess, the crypto world. For the most part, there’s a lot of gray areas. So, I know we’re wrapping up on time over here, you know, I want to ask you like, what can we look forward to in the next couple months? Like what should we expect from you individually as an artist? Because I own, you’re golden. Your golden from sound dot XYZ. And also, from sound as a whole, excuse me from SONGCAMP and CHAOS?

Matthew Chaim: Yeah. Totally. So well, yeah. As an artist, my girlfriend’s decided to make a coffee right now. As an artist, yeah, I mean, like CHAOS. The project has sort of eaten my life whole, SONGCAMP generally eaten my life whole, but I sort of am trying to stay tethered to my own, like personal creative endeavors. And, yeah, I don’t know my plan kind of sprinkled throughout maybe the year. But I do have this sort of like, vision to release a body of work in December, I’m sort of giving myself like the whole year to like, reach that goal and kind of give small bandwidth to it on a consistent basis as we go and embark on all these crazy stuffs, we’re doing in SONGCAMP. So yeah, hoping to have something interesting. On the music side, and on the mechanic side for a personal project in December. But yeah, kind of all the way from now. Until then, it’s kind of all SONGCAMP. And right now, is CHAOS. For CHAOS. We’re planning. Yeah, we’re actually in our third act right now. So, we’re on week six of eight of this of this project, we’re creating, there’s maybe going to be a few hidden songs, but there’s really 45 songs being created through this, the first six weeks. And yeah, after those first four weeks, 30 of the songs have been delivered in their mastered form. Incredible music, like you’re like you spoke about curation as a superpower. It is. And we have the results to show it, we’re, we just heard the demos for this last kind of batch. And then in a week from now, there’ll be delivered in their final mix form. So, we’ll have 45 songs at the end of next week, which is crazy. And we’re going to be releasing a really interesting NFT project in May. And kind of going to your last question in an interesting way. One of the ways we’re playing with NFTs, for that drop, is we’re doing a few interesting mechanics. One is that we’re selling packs. So, you’re actually going to be able to collect a pack of four music NFTs, and you can choose to open that pack or not kind of go into that collectible card.

Really cool. Okay.

Matthew Chaim: I’m hoping some packs closed for years, I’m definitely gonna mint to pack and never open it. The songs are randomly, so of the songs, you’ll have, like sort of PFP generative style, a visual art in the sense that every single visual piece will be unique throughout the collection, but the music will be, you know, edition pieces of these 45, 50 songs. But yeah, and they’re randomly chosen the visual layers and what audio you’re getting, at the time of opening the pack, not at the time of minting. So that’s kind of cool. Like some things just never get opened if these packs stand in condition. So that’s one way we’re playing with things, the other way and this kind of goes to your question earlier about sort of IP stuff or whatever. I mean, it’s not really IP, but how we’re actually dealing with the value flow, what it was. For the campers, we’re actually creating 1000 what we’re calling supercharged NFTs. So, in this project of music, NFT’s that are coming out that people will be able to collect, there are 1000 being held back that are only distributed to campers based on the amount of this project that they are going to own at the end of the eight weeks. And those actually are supercharged with liquid split technology. This is a new thing that we’re doing in camp, the O X split team and what it actually does, it gets big brain for like final minute here, but what it actually does is the value of this project will flow to a split, an O X Split. Protocols.

Contract. Right?

Matthew Chaim: Right. Yeah. And that contract will be determined by those 1000 NFT’s and what wallets they sit on. So essentially what we’re doing is we’re creating kind of like liquid master rates on a web three level, if you will. Let’s say I own 2% of this project, I’ll therefore own each NFT, there’s 1000 Each one’s worth point 1%. So, I’ll essentially have 20 NFT’s which equal to 2% of the split, I can then transfer you 10 of these NFT’s and now your address will get 1% of the split. So, my master rights are liquid. So that’s kind of like a really exciting part of the product.

Really cool. Yeah.

Matthew Chaim: So that’s what to look forward to in May. And after that, we’ll see man.

We’ll see.

Matthew Chaim: we’ll need a little break.

Outro

It’s good. It’s good. It’s good to have you on, thank you for making the time. We’re gonna have to do another one of these sometime soon when the project is out. We got to do a recap at some point so before I let you go, Matthew, where can we find you? Where can we find SONGCAMP? CHAOS, yourself your music, just shelled it away. The TLDR go for it.

Matthew Chaim: So, CHAOS.build is the website to go to for CHAOS. And then I guess I’d point, yeah, people that on Twitter, Matthewchaim on Twitter, songcamp_ on Twitter. And then we’re up in the discord every Monday, SONGCAMP happy calls, that’s our bread and butter.

Amazing. Thank you so much. I will have you again soon, man.

Matthew Chaim: Thanks for having me. This was fun.

Listen on: Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 33 welcomes Benny Conn, who’s a developer at Gallery.so and co-founder of Beat Foundry, an NFT platform for entirely on-chain generative and curated music. Benny is back for a second episode on season four of Mint mainly because I love what the team is building at Beat Foundry, his energy and passion for music beams every time he talks about what he does. It’s genuinely contagious.

In this episode, we discuss: 

• 00:00 – Intro
• 09:56 – What Rights Do You Get When You Buy a Beat Foundry NFT?
• 17:19 – Benny’s Thesis Around the Consumption Layer As it Pertains to NFT Editions?
• 19:25 – What Traits go into Valuing Music NFTs?
• 20:44 – Should Artists Prioritize Social Media Virality or Web3 Collectors?
• 22:44 – Benny’s Favorite Music Artist in the Space
• 23:21 – From a Collector’s Point of View, What Makes One Music Artist More Valuable Than the Other in Web3?
• 26:50 – How Did the Collaboration With Oshi Come Together?
• 31:33 – Why Does the Music File Itself Need to Be On-Chain?
• 37:27 – Benny’s Biggest Challenges With Bringing This Project to Life
• 41:08 – 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

Benny, welcome to man. Thank you for being on. Welcome. This is your second time now first time was Twitter spaces. And now we’re doing an actual, intimate session. Thank you for being on that. How are you?

Benny Conn: I’m doing really well. It’s great to see your face and my face this time. I’m looking forward to this.

Yes, before we had the barrier of Twitter spaces, but no more. Here we are. I want to dive right in. Okay. For those who didn’t maybe check out the first episode, which I highly recommend you do. We basically cover the first drop that beat foundry initiated, which was super dope, I collected a few myself. Can you tell the world who are you, Benny? What is what is the crypto community to know about you? But more specifically, how did you get your start in crypto?

Benny Conn: Yeah, so I’m Benny. I’m a software engineer and founder of beat foundry. And I’m also a jazz musician. So originally, I actually started playing jazz in high school and playing jazz trombone. And I wanted to take that into a career path, it kind of seemed like the right path for me at the time, I’d been traveling a lot playing trombone, and I ended up going to Manhattan School of Music, where I studied jazz for one semester, before I realized that the lifestyle of jazz musician just really wasn’t for me. I wanted to pivot somehow, but I wanted to stay near music some way or another. And, you know, I’ve been interested in tech for my whole life. And I had picked up some software engineering skills a little bit before I dropped out and decided, you know, what I can probably couldn’t find some way to, to get involved in tech somewhere in the music scene. And so, I dropped out and happened to meet somebody who was working on what at the time was a side project. Gallery, which is like a music, or sorry, it’s just an NFT display platform. And next thing, you know, I’m working there, full time, it seemed like the right thing to do, I just dropped college entirely. And, you know, thinking about ways to get involved in the NFT space, you know, kind of because gallery was not necessarily tangential, but not making NFT’s directly gallery is not an NFT project, I wanted to figure out, you know, kind of understand the context behind what we were doing. So, I tried to put myself or try to find a way to get involved in the space directly. And being a 19-year-old college dropout, I did not have nearly enough beat to start collecting NF T’s. So, I decided that I would make my own and being a musician, I thought that would be the perfect path is to find my own music NFT space. And from there, I found my way to beat foundry. So.

So, dropping out is no joke. Okay, that’s a that takes a lot of balls. Honestly. What, what, what kind of led to that? Like, what led to like, talk to me about the final weeks in college, where you’re just like, fuck this, like, I’m out? How did that kind come about?

Benny Conn: Totally. Yeah, it might have had something to do with COVID. Because, you know, we were we were at music school. And thankfully, I was allowed to be on campus, a lot of my friends, you know, had to stay home for at this point, this is, you know, pretty early on. And I was able to play with people. But, you know, I was just realizing, as I, you know, met all these musicians that I knew a lot of them before, but it was as if, you know, in college, you do have to think about like, hey, where’s this going to take me? In four years? I’m gonna be out of here, and what am I gonna be doing? And I can kind of see their perspectives on what they wanted to do. And every time you know, they would say, like, yeah, you know, I’m going to be gigging right out, I’m going to be, you know, at jam sessions at 4am, trying to get heard, and when somebody hears me, hopefully, I’ll get picked up and I’ll be playing those things. I’m just imagining, you know, that lifestyle doesn’t sound like something that I want to be doing, I want to have a little more stability and know, you know, where it’s gonna be the next, you know, what’s the next thing that I’m doing? Right? I’m not just gonna be like, okay, hopefully, I can schedule some gigs for next week. And, you know, there was a couple other paths in the music industry that I saw myself doing, but you know, at the end of the day, and I wasn’t like, for sure I need them. So yeah, dropping out, I was just, it was constant calling with my mom, you know, calling or talking to her friends and figuring out like, is this a path I can do, even talking to the teachers and faculty at the Manhattan School of Music that I went to, and a lot of them, you know, could see me going in those other directions and saw that as being a valid path. So, I just, I follow my instincts and decided that you know, dropping out, and also, being a jazz musician, too, you have to be very self-motivated and self-driven. And I thought, you know, what, I’ve motivated myself to get here I can, like, self-drive myself, to get somewhere else. I didn’t think it would be too much of a job, it was a fun challenge, honestly.

So yeah. So, what I understand you’re working full time at gallery and doing part time beat foundry. Right? 

Benny Conn: Yeah. 

How do you how do you divvy up your time between the two, full time job and a part time side hustle that has basically captured the hearts of like the, the music collector space and web three? How do you how do you balance the two?

Benny Conn: For sure, yeah. So, you know, I, my work would be Foundry is mostly, you know, one, talking to people, getting people on board, you know, getting the project out there and planning and scheduling all those things. And that kind of stuff can happen you know, all day long anytime during the day, thankfully, with my work at gallery, you know, it’s not like a nine to five, I don’t have to like be on a certain time so I can mix it up with the things I’m doing there. It’s all remote work. And the then the engineering side of the stuff that I do for Beat foundry, which is like smart contracts. And for a while I was doing the website as well. You know that stuff I can I consider myself I guess a pretty quick engineer, so I’ll just like pop it out in a couple hours later at night, I’ll get the things done that I told myself, I would get done for gallery later that night, I’ll pop some stuff out. But you know, doing that does require a little bit of sacrifice on the other aspects of life, you know, hanging out with people, sometimes it’s harder to find time to do this other thing when I’m, you know, working at smart contracts at 10pm at night, so yeah, and my weekend the same thing. So.

We love to hear man we love we love the side hustle, side hustle lifestyle. So, when beat foundry came about, what was like the Genesis idea or problem that you tried to solve or experiment, experiment that you wanted to basically go after? Like, how did that come about?

Benny Conn: Yeah, yeah. So, I had been looking at some other projects at the time. This was like September of 2021. And I had seen, you know, some projects, really nailing one thing, which was, you know, NF T’s give these artists a platform to release something that they find interesting that the collectors find interesting, and then support themselves by, you know, selling that thing, right, and then continue making art, right. And I thought that was super cool. And I think that’s just kind of a byproduct of NF T’s. And then seeing that work in the music NFT space, with the products that were around at that point was really cool. Because, you know, the music industry is something that even people not involved in the music industry know a lot about being, you know, little skinny, you know, they try to take a lot of value from the artists and it’s hard for artists to make a lot of money, really hard to hard for artists to get in. And seeing artists that are able to connect with even their niche crowds, right, the people that they’re small, even if it’s only like 2000 fans at the time, they can connect and build something, release something and make enough money to continue doing it right, continue growing, it just it’s much better cycle. So, I wanted to for sure capture that. But I also wanted to give a reason for, you know, the music to be an NFT right. And I’d seen a lot of people releasing music that they had either previously released on Spotify previously released on Sound Cloud, you know, releasing this song, again, as an NFT. Maybe later, they already wrote it, or they just released it both at the same time, one on Sound Cloud, one, one as an NFT. And maybe there’s even like 1000 copies of the same song. And I saw that, and I was just thinking, like, from my perspective, what I was, what I was getting, you know, I also couldn’t really describe what I was getting, you know, it’s like, I’m getting to own this one has something that a bunch of other people own the exact same thing, but also everybody has on Spotify, right. And it’s something that they really, they’ve already released. So, like, you know, it’s interesting to have, and I want to support the artists, I’m going to do it. But you know, it’d be really cool to have something even more interesting, something that’s like personal and something that actually connects me to the artist that makes me feel like, I’m part of this artists journey, right. And for me, that was coming up with some way to allow an artist release something that is unique per person. And the best way to do that, for me, or the way that I thought about it was generative music. Because, you know, in generative music, there’s going to be all these different iterations, each person’s going to get one that is completely unique. They only have it right. And that feels pretty special. 

So, but the issue with that is, you know, like with art blocks, you know, there’s these artists who know how to paint, but they can’t just go and make an art block straw, you know, you have to know how to code you have to know how to make generative art, right. And I was thinking, you know, I don’t even know how to make generative music, right. And I don’t want to learn how to do that. I’m a jazz musician, that just doesn’t seem like something interesting to me for the type of music that I enjoy. And other artists, I’m sure relate to me. So I want to figure out is there a way that we can make generative music in a way that any artist can get on board with it, they don’t need to learn anything, they can just make the regular music and we can make it generative. And the way that I discovered doing that was splitting up the song into various stems, maybe it’s the drum part, it’s the solo, it’s the lyrics, it’s a, you know, a little background part that’s going on splitting that up. And having the artist write a bunch of versions of each of those. And what’s cool is a lot of artists actually do that in their composition process. Anyway, a lot of artists will write three drum parts and me kind of picking out like, you know, which one do I actually want on the record, right, so we’re actually gonna have the write all of that up front, right, so all three drum parts, all of these, all the melody parts, all the lyrics. And on chain, we’re gonna mix and match them. So that you know, there’s a certain amount of total combinations, a certain amount of iterations that you can make, and each person is going to get one combination, right? So, when you get one, you’re getting this unique thing that the artist fully composed, right, every part of the song, the, from the drums to the lyrics, that was composed by the artist, so you know, it’s guaranteed to sound good, so long as the artist makes good music. And you’re going to own this one of one that is super unique, they compose it, you get to feel that connection with the artists being like, you know, you have this thing that they compose that nobody else has. And you’re you know, you’re that you’re then involved with the greater community of like super fans that also enjoy that artists who all want to have the same thing as you. So, it creates this really cool sort of community around the artist and you know, gets the artists community involved with them more directly than I think I’ve seen with other music entities. I think that’s kind of the idea behind having the generative miss.

What Rights Do You Get When You Buy a Beat Foundry NFT?

Got it. So, you brought up a couple points that extremely fascinating, okay, which is a, it’s like a topic of debate for a season four, we talked about patronage, ownership what it means to buy music NFT, what do you actually get when you get it? What does it mean when it gets diluted by via multiple edition one of one? What does it really mean? And you share a lot of the same sentiment that Justin Blau shares when he came on mint a couple episodes back, basically stating that I don’t know what I get for collecting music for the sake of collecting music, if it’s, if it’s not a one of one, for example, right. And I’m not gonna, I’m not gonna like quote him word for word, because it’s very much like a high-level paraphrase. But it’s very much the same energy that your kind of communicating right now. So, you’re telling me when someone basically collects something on Beat foundry, it’s unique within itself, it’s a one of one off the bat, right? Because the way the music is composed, the way that the stems are stacked on one another, the way vocals are basically integrated with the drum track in the sense, etc, etc, etc. So, what kind of rights you get what you get, when you buy a, beat foundry NFT, like, any IP ownership, is it fully ours to fuck around with? Do whatever we want? Like, how do you how do you think about that?

Benny Conn: Yeah, so I guess at this point, we have decided that it is fully yours, you can do absolutely anything you want with it, the artist, you know, that they’re gonna release their music in the other ways that they want to, but like in this format, in the beat foundry way, right, which to add kind of to what you were saying, which I think is even more special is that, you know, they were, these artists write music for the average, this is you can’t really, you know, use a song you wrote a bunch of years ago to, you know, release that on beat foundry because you haven’t read all the extra parts. So, you’re getting this thing that is nowhere else. And in our format, the artist agree that you know, yeah, it’s whoever owns it, or not even whoever owns it, literally, anybody who can listen to it, you know, anybody can take any information, whether or not you own it or not, and all the rights are there. It’s Yep. 

Okay, so I’m going to the beat foundry site right now, as we speak, I know, Oshii is doing a drop on the 16th. Right on the 12th.

Benny Conn: On the 12th. 

And there’s gonna be 808, if I’m not mistaken, right edition. So, 808 editions of randomly generated on chain music by Oshii was a legendary artist, tons and tons and credibility both in web two, and web three. So, you’re telling me when I collect one of Oshii things, I can then go listen on Spotify, if it just so happens that I get randomly selected with the best sounding auto generated part or a song, I can actually do whatever the hell I want with it, monetize it, use it in my podcast, have a Super bowl ad around it performing at the Grammys do all these things. And it’s mine. 

Benny Conn: Yeah.

808 versions of that song on Spotify, worth streaming and worth listening to? Is that kind of like, is that what I’m understanding?

Benny Conn: Yes, you’re definitely right. Although, you know, it’s, it’s a question of why, you know, like, at a certain point, I mean, obviously, you are bringing back, you know, things to the artists, I don’t imagine anybody releasing all 808 versions on Spotify, if they did, I would add all of them to my playlist, because I’m trying to listen to that, because they are all connected to Oshi, one way or another, people are gonna try to figure out who this is, if the person releasing it doesn’t say that already, you know, so. Yeah, I think given that it’s an NFT to like, enough of what Oshii needs to get from this, which is, you know, having his music tied to him, right, all the on-chain credits are there and all the lyrics are there. They’re his, and then, you know, whenever somebody trades this, there’s gonna be royalties and all that. And that’s what he’s getting from this, right. If somebody uses his music, that’s only good for him. Right? That’s, that’s good for us as well. Right. So.

You know, Benny, what’s your end goal with doing something like this? Is it just to like, play on the edge of what’s possible and creative for musicians? Is it to actually produce legit music compositions that could end up in top 40? Like, what’s the goal here for you? And also, what’s essentially the goal for the artists that you guys are partnering with currently, and will essentially partner with in the future?

Benny Conn:  Yeah, so we are talking, you know, we talked with a bunch of artists, and a lot of them are from different perspective, some of them have never even done anything related NFT’s, but they made it pretty large in the non NFT space, you know, millions of listeners on Spotify. And I’ve been just kind of gauging, like, where they see the value and beat foundry the most and for most of them, it’s creating something unique and interesting, that is going to connect with a, you know, the crowd that is most close to their center, right? They’re their strongest community, their strongest fans. And I think our goal is to just facilitate that for all these various artists, right? Because, you know, there’s gonna be the artists that only have, you know, have only released music NF T’s they’ve never released anything on Sound Cloud, never released anything on Spotify. You know, they’ve, they don’t have too many listeners, their music is, but their music is amazing. And they’ve got people who love it. And they want to connect with those people. Like we want to facilitate that for them, as well as the people who have, you know, millions and millions of streams on Spotify, who just want to release something to connect with the 1000 or so people who are in that top 1% of listeners right and truly love them. So, the first thing is yes, we really want to just release Something interesting and unique that’ll allow these artists to connect with those people. And then I guess on the other hand, I had something but I’m totally losing my train of thought. But.

So, it’s for the for the edge of experimentation, essentially, it’s like breaking the boundaries of what’s possible, experimenting, thinking outside the box, I still think back to my like, part of my questions like, could these songs end up in top 40? Could they end up being nominated for a Grammy. And I know, it’s only the second drop, and it’s the first drop with an artist, but I’m already thinking like, 10 steps ahead, because I’ve never seen like music being composed, in this way, this format, let alone on chain, let alone using software. You’re basically like really testing the boundaries for what’s possible and what’s not possible. And, yeah, I’m really curious to see how the how the songs will come out. And if they actually are enjoyable, if your thesis of stacking stems like that, and automatic, like, auto generating them actually produces a list able song and you’re smiling, I take it as if it is, right. It is it is to that extent.

Benny Conn: Yes. I mean, already, just from the samples, we posted on Twitter, you know, the just the short samples, you know, those are auto generated from all the various stems. And when I listen to it, like, first of all, you would never think it’s generative, you would never think, okay, there’s another version of this somewhere out there, if you just heard that, right. And, you know, I’m already trying to make sure that when I’m, I’m going to be there at the minute and getting like one of each song. Because when I when we originally got the samples from Oshii, when he just wrote the original four bass songs, because basically, the way that this works is theirs, you know, four bass songs. And then of those songs, there’s a certain amount of combinations that reaches 808. And right now, it’s actually even its 202, 202, 202, 202. And I’m trying to make sure that I get one of each. So, it’s like a little album of mine, right? Because these songs are seriously insane. Like, I wish, I’m going to try to find some way to be listening to this, like add it to my Spotify playlist or something just like will be in the mix. Because I need to be listening to these songs all the time. They’re, they’re really insane. And well, and you know, we’ve already, we haven’t announced any artists, we’re getting music from a couple other artists. They’re in the pipeline right now. And everything I’ve been hearing is unbelievable evolved different genres. You know, we haven’t, we don’t have any artists working in the same genre right now. So, it’s just it’s truly great music and the general thing doesn’t even get in the way.

Benny’s Thesis Around the Consumption Layer As it Pertains to NFT Editions?

I gotta tell you, dude, your energy is so contagious. I feel like I feel like beaming off of you. Your excitement is unmatched and unreal. Unreal. I love to see it. You know, part of minting all these collectibles and part of buying music NF t’s a lot of the conversation currently, as we go through the music, music cycle music NFT cycles, like okay, how do you actually enjoy these collectibles? Now, all these collectibles are sitting in your wallet, and they’re each worth X amount of money, whatever the community is willing to buy, buy it for. There’s multiple variations of them. How does the consumption layer tie into this? What is your thesis around the consumption layer as it pertains one to multiple editions? And I guess to music as a whole and web three?

Benny Conn: Yeah. So, I always say when people ask us about, like, you know, how do we think about royalties? How do we think about all these kinds of external problems that, you know, it’s not going to be up to us to find that solution. And this is kind of one of those cases where I would also say that, you know, the consumption layer isn’t necessarily like, our responsibility. But you know, thankfully, I work at a, I worked full time at a company that is kind of this consumption layer, right gallery, is that consumption layer, and there may or may not be like a little partnership in the works, or beat foundry Gallery, and all the holders so, but I’ll say, you know, like, the, these consumption layers, having this perspective of being working out this consumption layer, I know that this is a big thing that they’re thinking about, the music, NF T’s you know, music, in, you know, free web three, music is just the greatest or like the largest art form, or at least I think it is, you know, it’s a most people listen to music. So, I foresee that this music NFT thing will grow quite quickly, when, when, when interesting things are happening. And I hope beat Foundry is one of those interesting things, I think it is. But these platforms are thinking about this and I think, you know, with good enough curation, being able to create playlists and play through them and have a good user interface and the sound to sound good. And then I think, you know, I’m going to be wanting to have like a, you know, a gallery app with my playlist and be listening to that in my when I’m walking, so.

What Traits Go Into Valuing Music NFTs?

Interesting. Okay, got it. Got it. How do you think about like the types of traits that go into valuing music valuing, excuse me music NFTs? What is your thought process around that? Like, what do you look for? Because I know you collect yourself and beyond building you support artists, whether it be through beat foundry or independently. So, when it comes to actually valuing music NFT whether it be in addition, whether it be a one on one, whether there’s IP attached to it, how do you think about like, what’s your mental model around that?

Benny Conn: So, I am it I’m pretty simple person in that I just, it’s good music. And honestly a little bit of value for me in the art that goes with it. I think album covers are very cool. I think that’s been around for a while, I think that that adds to the experience having some sort of visual aspect. And it could even be a video, I think that’s interesting as well. But if the quality of music is really, really high level, then that, that creates all the value for me, I honestly don’t really think too much about the rights. I don’t think too much about, you know, what any special technological capabilities is has or whether or not this NFT is gonna be useful for something else in the future. I just want to collect great music, and I want to support the artists that make that great music. So yeah, pretty simple for me, and I’m sure a lot of people share my opinions as well.

Should Artists Prioritize Social Media Virality or Web3 Collectors?

Yeah, Benny, how do you think about like, how artists should be prioritizing their time should be should they be prioritizing their time to build virility on web two or building like an intimate collector base on web three, in which one’s more important, you think?

Benny Conn: I guess it would depend on the artist with for, which one’s more important, I think they’re both, I think they’re both very important, I think, you know, like some artists might need just to support themselves to have kind of a majority and one or the other, or, you know, if you have virility, you’re probably going to have also like a tight collector base, unless you’re kind of pulling the sort of industry plant kind of thing where you’re just making music that is a mass appeal, but doesn’t have anything truly interesting about it and isn’t going to be remembered in a year, then you might not have that that close collector group. So, I think, you know, at the core, you should always try to have that that core group of people that is going to support you, because that’ll allow you to just keep going. And they’re also going to be your best gauge for how well you’re doing and what you’re what you’re making and who your audiences right, because those are the people who listen to you the most. So, if you’re going to get to that viral stage, you know, I think you should definitely have the grounds to for the small tight knit community first otherwise, you’re what I said before, which is just like you’re making music that is maybe mass appealing, but not truly interesting not gonna be remembered a year because it’s just the hype of today, right?

Benny’s Favorite Music Artist in the Space

Yeah. Yeah. Yeah, makes a lot of sense. You know, we’re seeing we’re seeing with every new platform comes its creators. So, tick tock has its tick tock creators, Instagram has its creators, Facebook, Twitter, Snapchat, etc. And now web three is starting to birth its creators, right? We’re seeing very strong instances of that. People really creating web three full like immersive experiences, and bringing value back to the collectors and how that’s really benefiting them financially and on an ownership level with basically being able to own the crater economy, monetize their fans the way they want to without having some form of middlemen in between and platforms like yourself, actually empowering artists to further engage with their independence and further engage with their creativity and give them that level of financial freedom that a lot of music artists and web two don’t necessarily experience. Off the bat. So, who are some of your favorite artists in the space right now music artists, particularly that are on your radar?

Benny Conn: Yeah. So, two favorites got to be oshi and Daniel Allen.

Okay. 

Benny Conn: Love, love them both. I think I’ve heard music from sober Rob as well, that’s really fantastic. Lac honey, he showed me some stuff recently, that’s absolutely amazing. Latasha always thinks she’s doing some interesting things. And those are, those are probably, I guess, my top five. I would say that’s my top five.

From a Collector’s Point of View, What Makes One Music Artists More Valuable Than the Other in Web3?

So, from a collector’s point of view, what makes one music artists more valuable than the other and web three.

Benny Conn: In, in web three, like I’ll say, there’s kind of two perspectives, there’s the in web three, and then there’s just the alone, like, what makes us more valuable. For that second one, I’ll say it’s kind of what I mentioned before, which is just the quality of, music and the quality of the effort that went into this. And then, like, if I actually enjoy the music myself, the second part of the web three is, you know, I see like, artists like Oshii, who are truly you know, he’s pioneering in every, every space right now. He’s done, you know, sound, he’s done catalogue, he’s done, you know, he’s working on his own thing heads Dao, which is super cool. Then he now, he’s doing beat foundry and he’s kind of pushing the space forward as well. So, like, I think that is really interesting to see because I, I can almost predict for somebody like Oshii that if I’m following him and you know, if I have his NF T’s that they’re going to, you know, be high value and that it’s worth owning, because he’s going to continue to be pushing the space, he’s going to do things that are interesting. And I think for all those five artists that I just mentioned, they’re you know, they’re all doing that, they’re all participating in the new things that are coming up, the new projects that are coming up, all the new technological ways to get these music entities out there. I definitely see that as kind of be like the web three appeal, I guess, who’s pushing the space because I can predict that it’s gonna happen more, they’re gonna continue to be at the forefront.

Are the models that music artists are engaging with today from building a creator Dao and bringing value back to their collectors via social token or issuing collectibles is one of the ones on gated curated platforms, and other activities that like music artists are engaging with from creativity from creating to, to making money, etc? Is this niche culture, or could this actually be mainstream you think?

Benny Conn: I think they’re a lot of what you mentioned is probably niche. And I don’t foresee it becoming mainstream.

Why?

Benny Conn: Because I think, you know, one, there’s a lot of, you know, the average person just wants to listen to the music. And that’s why I say like, the main mainstream thing being like, sure owning a music NFT might become mainstream, right. And people might not even think about it as an NFT, like, in a far future, it’s like, okay, I’m just buying music online, it’s just back to like, iTunes days, like, I’m buying this song online. And yes, it has a lot more advantages than when I was buying things in iTunes, like, it just follows me everywhere. And, you know, I support the artist, with it with a little more, and this is something really interesting that I find really cool, I think that is something that will for sure, become mainstream. But the things that are more like, you know, get involved, do something specific and bring, you know, like, with some Daos that I’ve seen, that allow people to vote on what the artists are going to make, you know, I don’t foresee anybody except for the small crowd that likes those artists, that the niche collectors, you know, getting involved in those kinds of things. Unless there was, it would have to be a very large-scale Dao where it’s like any artist, because if you’re just limited to like the five artists, you can choose to, you know, vote on right, then it’s only going to be those five artists, you know, they’re their big collector base, they are their strongest collector base, right? The super fans of theirs, right. So, in that way, like those things are going to be siloed, which is why I don’t really see it being you know, necessarily mainstream. And then like I said before, like there’s just there’s the added layer of, I’ve got to do something to make this happen. You know, there’s a lot of action there. And that’ll always be there. I don’t I don’t foresee it going away. But I think there’s too much action for the average person who’s just interested in music. If we’re talking about music NFTs, specifically, music, blockchain technology.

How Did the Collaboration With Oshi Come Together?

Yeah, makes a lot of sense. I want to talk about more of this upcoming drop, okay. The reason why I’m here today, which I’m so, I’m so excited about. I gotta tell you, I think it’s so sick. I heard the sample on Twitter, I’m like, Shit, this was randomly generated. Like, how and it sounds good. Like I could, I could actually, I could see myself listening to that, you know, what is the what is the inspiration behind the straw? What what tell me the story like, how did this drop come about? How did the collaboration with Oshi come together? Why oh, she has the first artist that you’re collaborating with? Kind of give me give me the entire narrative here.

Benny Conn: Totally. So yeah, with our, I guess I’ll start back with our last drop, which is the FreeNAS. And, you know, our, when we were thinking about that one, you know, we had all these ideas about how we could get the music on chain in the form of MIDI, to represent how the compositional content of a song be on chain. And then just like the actual technological feat of getting it all to be put together and making sure that the Midwest well, and all those kind of things. And, you know, we, it went as well as it could, and we’re super happy with how everything went with that one. But you know, the, the actual music itself was interesting. And it was it was, you know, it sounded good, but it wasn’t like the kind of thing I’m trying to listen to on Spotify, right? Like, I do enjoy when I hear them. They’re very, they’re very interesting. It proves the concept of okay, yes, this can sound good. But it wasn’t fully there yet. And when we were introduced to Oshii, and we heard his music, you know, I was thinking like, how is this guy, you know, and it’s because he just hasn’t released his, you know, too much music and these other platforms, and he’s kind of focused a lot of his energy into the web three space. At least that’s my perspective. How is this guy not like, you know, top, you know, top charts, artists like this music sounds unbelievable. I have never heard anything like it, I can’t even tell you what genre it is. I don’t know how to describe genre it is. His voice is so beautiful. I was just listening to music. And I’m thinking like, Okay, I need this, all my playlists, right now, I need to be listening to this. And when I was, when we were just, you know, thinking how can we get this with the lyrics, you know, because now there’s this new element, you know, the first drop with the green is we didn’t have any vocal element, it was all produced in logic, by just like, writing the notes out in MIDI. And, you know, now there’s, like, these audio things, you know, he’s going to be sending us a recording of his voice, and we have to be able to get that on chain somehow. And for us, we were, we were just trying to figure out, like, how we could do that. And next thing, you know, many actually includes lyrics in the format. So when you’re getting, like, let’s say, you download the MIDI for when you whenever you buy a bridge for the for this upcoming drop, you could put the MIDI into like GarageBand, and it’ll show above the notes that are show the lyrics that she was singing. And we, you know, it was just trying to figure that out.

And then and obviously, you know, figure out like, you know, now we’re working with a new artist, it’s not in house, you know, we’re truly going to be accomplishing what our goal is, which is to allow this artist to connect with a large amount of people and then you know, reaping the benefits of that and connect with their super fans. And then also bring in people just who are in beat foundry, not everybody was going to be buying one of these is an Oshii fan, maybe they just like beat foundry. Right? And they’re trying to stay and volunteer, but, you know, they like the music. They heard the music, right. So it’s just trying we, we’ve just been trying to think a lot about you know, how can we truly accomplish this with somebody out of house and that is, you know, You know, that kind of stuff made us put a lot of thought into, like total supply, you know, 800 nits, we’ve got this allow us that we’re doing before, right? There’s gonna be 404 people who can mint the day before. And all of Oshii’ s current collectors are in that allowed list as well as a bunch of offering holders. And that was something we really wanted to do to get back to the people that are his super collectors already the 100 or so people who collected NF T’s. So, and then, yeah, the songs themselves the fact that there’s only four songs, right, and for the arena’s, there are seven songs, kind of curating a sort of album vibe, and then all the art that goes with that, this time, there’s going to be more than just one piece of art per song. When you look at the screen, as you see, like, there’s various colors, there’s the black and white one, there’s the you know, blue and pink one. And every, within those various colors, there’s a bunch of combinations, but the art stays the same for the kind of global sound those give off. Whereas for this one, you know, each song is gonna have various different art, you might get one that has the same chord progression as another, but hasn’t, you know, really cool, like steel looking case, looks like a CD case that looks like it’s made out of steel, or one of them might be like more plastic looking, or shiny and kind of translucent, a little bit. So yeah, there’s a lot of stuff that, a lot of thought that went into this one, we’re just super excited to be really seeing the quality of music that comes with this one, I think that’s just the most important part is that this is music that anybody can enjoy and listen to. And the generative thing truly does not get in the way that’s just a, that’s a feature that allows more people to connect and more people to  feel connected to Oshii. So.

Why Does the Music File Itself Need to Be On-Chain?

So sick, you know, one thing you keep bringing up, is it’s genuinely on chain. There’s also like commentary around music NFTs not being entirely on chain, or the media files actually on either on our weave or IPFS. Right, and it kind of just referencing back to the collectible itself. But why  is it important? Like why does the music file itself need to be on chain? Like what  do you get? What can you do when it’s on chain versus if it’s on IPFS or our weave even? Why was that so important to this drop?

Benny Conn: Yeah. So I do spend a lot of time thinking about these kinds of questions. The on chain option one has been probably the most thought that I’ve put into any web three philosophy question. And I kind of narrowed it down to three things that I think give anything a reason to be on chain. And the first one is going to be interoperability, so that you know, whatever is on chain can be interacted with through other smart contracts and other  things right other places on the blockchain, there’s permanence, which, you know, on chain, the blockchain is a pretty solid database. It doesn’t go away, you know, it’ll be here forever. So permanence is a very important one. And then the final one is like, responsibilities slash verifiability. Right? It’s like, can we, is there a reason why we need to verify something and prove it in some way, in a public way? Right? Because the blockchain is totally you can see what’s going on, right? There are reasons to prove like for defi, defi is the best example of that, right? You want all the rules on chain, so that, you know you’re going to make your money back when you pull out? Right? That’s like the best example for verifiability. Right? For beat foundry, I think mostly those other two apply. And the verifiability is something that could apply in the future when you know, if there was, if we were making promises, like, which is something we plan on doing, like, okay, when you put in this input, you’re going to get this song output, right. And that is something that we want to be verifiable. Because when you buy something, and you’ve been told, okay, I, you know, I’m going to put in my birthday, and it’s going to change the song, it’s going to change the output of the song. If that doesn’t always happen, it’s like, what did I just buy, you know, that that rule would be good to have on chain, that’s kind of the verifiable thing that might apply. One permanence, you know, having the composition of the song entirely on chain, right, this means that no matter what the best foundry is, no matter what Oshii is, Oshii can die, beat foundry can die, that is still there, what you got is, is there you have the full composition, and that is yours, right?

And you can do, you can even later on if you don’t like the recording, or if, if you outlive the recording of Oshii and even wanted to redo it later on in 200 years, and you have the composition to remake this song, right? That’s the core of the NFT. Right? You can put that into an Able ton or whatever Dao where people are using in 200 years, and turn it into something and you still have that. So that’s the provenance. And then the interoperability is also really important. Because like I said, this is free rights, right? Anybody can use this. You know, we’ve already been talking to platforms like our Apache, who are interested in possibly connecting to our stems, and allowing people to compose using the stems and by just grabbing the stems directly from the blockchain. And pulling in the compositional content allows them to truly, to make something right off the bat. They don’t have to, you know, find out, you know, for other music NFTs that are based on just audio, right? You can’t really manipulate audio too well. So like, you’re gonna have to download the audio, find some way to turn it into something manipulatable like, you know, MIDI right, turn it into MIDI somehow. And if you’re going to get that into like an Apergy, you know, you can right off the bat with  audio, you can use it as sort of like a sample, you can maybe just grab the drum part or just little portion and have it loop or something like that, that’s interesting. But you know, right off the bat with  Blockchain or with beat foundry, you know Apergy you can plug in, grab the MIDI, and you can be working with that immediately and there’s you know, a lot more you can do with that, because that’s, that’s the full composition, you know, that’s not an audio file, nobody knows how to work with audio files and change the  frequencies and all that kind of stuff to manipulate it. So that’s the interoperability aspect of it. So right now, you know, we’re accomplishing those first two, and then the verifiability is the  third one that will, depending on the drop, will apply.

So what’s the benefit then of having it on our Weave, IPFS? Like, why  use that model? Like, what’s the downside of having it on chain that you would otherwise use our weave or IPFS to basically host?

Benny Conn: Yeah, so the costs are the main thing, you know, the right now the blockchain is not cheap, and getting things on chain is just too expensive. And sometimes, you’re just not feasible, there’s a limit to the amount of bytes you can, you been put on chain at once. And just the size of a transaction, the size of a block is limiting. Right. So, you know, that’s the first thing that I would think about, you know, if you’re putting a huge video, you know, realistically, you can’t get it on chain. Because one, it doesn’t fit in one transaction. And even if you did split it up into a bunch of different transactions, that’s going to cost you literally, can cost millions of dollars worth, right. So that’s what I’d say that the biggest thing for IPFS our weave and also, given the cost is a big thing. I’m a very big proponent of like, what doesn’t need to go on chain, what doesn’t apply to those shouldn’t be on chain, there’s no reason to, like try to get something on chain that doesn’t necessarily need to be it doesn’t apply to those reasons, right? Like, the example I always give is, if somebody is making a website, they want their whole user graph to be stored on chain. Right. And that’s data for their website. Well, I’m thinking, you know, if the website goes down, does this on chain data mean anything anymore? You know, does it? You know, the website went down now, like I can’t this on chain doesn’t mean anything beyond the website, did it need to be on chain first place, right? In my opinion, the website should just have a database on their end, where they store all the data they need for all the users so that they go down, the database goes down to right. And it’s better user experience, because nobody needs to pay gas every time we do anything, right? So what needs to be on chain should be on chain and what doesn’t and IPFS and our weave are really great way at accomplishing the permanence aspect of something without, you know, getting something on chain and having to pay that cost, right. Because on IPFS and our weave, it’s going to live beyond whatever API you set up. Right. So I think that is a valid solution for a lot of people.

Benny’s Biggest Challenges With Bringing This Project to Life?

Benny, what were the biggest challenges with bringing this project to life? And what were some of the things you learned from basically producing the first drop to now producing the second drop?

Benny Conn: Totally. So there’s, I would say, there’s two main like categories of challenges that I’ve dealt with. And that’s like, technical challenges. And then just like, you know, beat foundry challenges, like the  idea of beat foundry and how to move it forward. And the technical challenges can be summed up by solving the problem that nobody else has really solved before, which is getting the video on chain, figuring out how to put that together on chain and make something that’s readable, right off the bat, then having all the other data we like the composer, you know, everything that’s involved in, in the metadata, and having the system work, right, you know, a big thing that I’ve had to deal with is, you know, there’s all these generative projects out there, like art blocks, where you can have pretty much an infinite amount of results, right, depending on the input, you know, let’s say the random factor of an NFT is just the transaction hash, you know, whenever somebody meets at our blocks NFT, there could be so many different results, right? But for beat foundry, when you make NFT,  there’s only a finite amount of results, because the artists wrote a certain amount of stamps, and there’s only so many combinations of those right. And normally, there’s more combinations than there are, than we can mint. Right, then then we open up for minting. But if let’s say we minted all of them, right, like, how do we ensure that no, two people mint the same one? You know.

Right.

Benny Conn: That’s, that’s a big challenge that we faced, just technically. Thankfully, we found a solution to that. But that would took us a long time. And then there’s the beat foundry side of it, which is, how quickly do we move? How do we work with a bunch of artists concurrently? You know, are we going to do you know, are we going to just keep it curated and only work with artists one on one? Are we gonna start releasing, you know, five artists at a time and kind of split it up? Or are we gonna allow anybody to release you know, on the platform and just, like, open it up, so that, you know, any average artist can do it, we don’t even need to get involved, right. And those kinds of decisions have been, you know, you know, problems, not necessarily problems for us. It’s just like, the, the, the energy it takes to figure that kind of stuff out. And, you know, those  are, are very important things, you know, a lot of products are going different ways, you know, catalog opened it up, and most people can, you know, anybody can release something on catalog sound is you know, doing more editions, now, they’re releasing a different total supplies. Snoop Dogg just did one which I believe was like, 1000, which is really cool. 

Yeah.

Benny Conn: And, you know, we’re still, we’re also still experimenting with  the supply thing, and then, yeah, just figure out like, how to schedule you know, we’ve talked with probably around, you know, 20 artists at this point, and, you know, managing that and trying to figure out okay, what’s the ordering of this and you know, who we’re gonna have next and we want to make sure that we diversify genres, and get people involved who have never done NFT’s before. You know, there’s a couple, like I said before, there’s a couple artists who just released on Spotify, Apple Music, and they’re trying to get in the space and like, how do we, how do we work with them in the most efficient way? How do we, you know, make the process super easy for an artist? Because we don’t want like I said before, also, we don’t want the artist even think about anything different to make this kind of music, you know, there’s the generative things should be back of mind for them, right, they should be writing music, the way that they want to write their music. And we can handle everything related to generate, generative, you know, MIDI, and making that process, you know, streamlined for the artists is something we’ve also spent a lot of time thinking about, and we’re getting but you know, we’ve only worked with, at this point three artists and we’re just getting better as we, as we go through. And but it’s fun working with the artists and hearing how, how they think about it, how the experience compares to other experiences they’ve had composing for people that are, you know, composing or writing or producing for people that are not just, you know, for their own record. So, yeah, I’d say those are the two main areas that we’ve been focusing on the most.

Outro

Amazing so April 12, the drop 808 NFTs, 404 of which are basically available for pre Mint for Oshii’s first early supporters, including some of the you call them, I keep pushing Archana, right?

Benny Conn: Akarena.

Akarena. So I’m super stoked, Benny, before I let you go, and before we wrap this up, where can we find you? Were can you will learn more about the drop? And what should we expect basically leading up to it? Today’s April 5? So this will be coming out on Thursday. Okay, so what? What should we expect kind of leading up to this?

Benny Conn: Yeah. So I would say, you know, definitely follow the Twitter, which is at beatfoundryNFTs and just keep an eye out, we’re probably posting every day at this point. Tomorrow, we’re doing me a pretty big post, I think we’re the website, there’ll be a big change on the website that’s going to prepare for this mint. And that is where the mint is going to be happening on April 12. And for those of you who are on the allow list, make sure to you know, you have the whole day on April 11, which is next Monday, to mint, you can mint one, at any time starting from 12am. East to you know, 11: 59. Eastern. And yeah, make sure to be there at 1pm on  the 12.

Amazing, Benny, thank you so much. We’re gonna have to do something like this again for the next drop. I love what you’re doing. I love your energy. And I love how you’re helping musicians and tapping into what’s possible with creativity, software and crypto. So thank you so much.

Benny Conn: Thank you so much.

Listen on: Spotify | Apple Music | Google Podcast

Background

Mint Season 4 episode 32 welcomes Lee Parsons, CEO of Opulous, who’s changing how artists access the funding they need to pursue their music. He’s on a mission to wake up the outdated industry and he explains why the legacy music system is about to encounter a rude awakening. 

In this episode, we discuss: 

• 00:00 – Intro
• 08:18 – How Web3 Will Fix The Music Industry
• 14:27 – How Do Artists Get Started on Opulous?
• 15:43 – What is an S-NFT?
• 19:22 – The Future of Music NFTs at Opulous
• 24:22 – What Will the Decentralized Layer of Web3 Music Look Like?
• 27:33 – Does Web3 Favor Established or Up n Coming Artists More?
• 30:38 – How Do You Turn Listeners into Investors?
• 34:44 – Copyrights on-chain
• 40:14 – Future Plans for Opulous?
• 43:30 – Beyond the Collectible; Staking Your Music NFTs

…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

Lee Welcome to Mint, my friend. Thank you for being on. How are you doing?

Lee Parsons: I’m good, mate. I’m good. A pleasure to be here Adam. On the channel. So, look forward to the conversation.

Thank you. Thank you, sir. excited to have you. This is the first conversation we’re having, I guess explicitly on music meets defi, we kind of treaded around the topic across like 20. Other plus seasons, give or take, but I’m glad you’re on because I know jack shit of where defi meets using. I have ideas. I have thoughts. But you’re the real expert here. And we’re here today. So, let’s jump right in. Who are you? What does the world need to know about you? But more specifically, how did you get your start into crypto.

Lee Parsons: So originally, I was working the music industry, I run a company called ditto music. And I started that with my brother back in maybe like 2008. And the story behind that was just really quickly, we were in a band, we were trying to get our music out, we were on a record label that dropped us the day the songs first came out, we just didn’t know. We didn’t know how to release our music. And at the time, everyone was still doing CDs, it was like the end of the CD era. And we were the first people to get a contract with Spotify. I think there was like, four major labels and us at the time. And we just started a company that helped artists get onto Spotify and iTunes and Apple digitally. And then they keep all the rights to their music. And it’s a tiny little idea. But at the time, you just couldn’t get onto Spotify or anything like that without having an intermediary. So, I grew that company, it’s about having half a million users. No VC backing, just me my brother working away. That’s, you know, probably about 300 staff in in most countries now we’ve worked with some of the biggest sites in the world. And then around 2017, I was in the Philippines, because we have an office out there. And a producer friend of mine, he’s a friend now. But I just met him. Crazy guy, which he just sat me down and told me about Bitcoin. And I didn’t, I’d heard about it. But I didn’t. I didn’t obviously, I just hadn’t really looked into it probably because no one explained it to me. We spent like a day just drinking beer and he was telling about all these kinds of different things he’d been doing and he built he bought a house from his what you can what you only talk, he was talking about a Ethereum and then loads of really bad points that I ended up buying.

What year was this?

Lee Parsons: This was like early 2017. Right? I think Bitcoin was about $3,000, something like that.

Okay, so like the low period 

Lee Parsons: So, wait, so I was like, man, well, this is obviously gonna take off. I went, I thought, right, I’m booking my flight home. The next day, I’m going home, I’m gonna take everything out the bank, and I’m buying everything I can. So, I literally went home the next day, I’m quiet, let go kind of guy. They’d worry about it. Afterwards, I went home, I’ve got this book. What was it? I think was it. It was just about I can’t remember what the books called. It wasn’t banking on Bitcoin was it or something like that? It might have been, it talks about Ethereum and how you could use it in the future in, you know, in a Tesla and all this stuff. And it was just like, Man, this is this is obviously the future, there’s no way you know, the current banking system versus what this is offering that’s going to survive. I’m 100% Confident in this, let’s go, went to the bank where I lived. I said right when all went out the bank, you guys are finished. And this is, you know, oh, so hyped up about it, like you guys are finished, you’ll give me all my money and they’re like, you can’t have and they were like, you can’t have all your money back today. And that’s what you’re talking about, give me my money out of the bank. And I’d already, I already fallen out with this bank because I took my mom in there once. And my mom was actually the director of my company because she was, she just she had to have that kind of level of security to do something. And I took her in, I said like, you know, I want to do some work in my business account and they thought was they thought was trying to set an account with my mom. And they were just, they were really rude to me. They’re like, okay, well, you know, we can’t do that today. So sorry about this. And then my mom phoned them up and they ended up sending her a big bouquet of flowers and all this other stuff because they obviously looked at my business account thought well because, you know, we pay out 10s of millions a month that ditto, and they just literally shoot me out of the bank like I was, you know. So, we’re already fallen out with this bank. So went back because I want my money, they wouldn’t give me my money. This girl comes out with this pamphlet goes, look, you can earn 1% interest if.

Let’s go.

Lee Parsons: Like, Get out of my way. So, it took me about three days, I took all my money out the bank, and I moved most of it into, like Coinbase and Kraken, I bought all the Bitcoin I could buy, I can’t say how much money it was, I had a decent amount of savings. And then, they all got to like 20 grand, and I’m just like, Man, I’m a genius. I’m Oh, this is like three months later. So, I’m like, I’m a trading genius. This is brilliant. And then my mate from the Philippines, my friend from the Philippines gets back in touch. And he’s like, man, if you really want to make money, you need to get into these old coins and not really. So, you can imagine what happened next, I went all the way back down to less money than I started with. And then um, and then that took us it’s like January and my friend who just saw Fernando, me and him were just so far into it at that point. I was like, man, looking at all the problems we had in the music industry for reporting, and, you know, giving money to people and I started looking at what big, what blockchain could actually do. And you know, away from all the speculative nonsense about the price and everything. As that man, this is just still, you know, I was still pretty happy with it. And then so I started what a company called Blue Box, which was the original version of Oculus. And I was doing that for about two years, man. And like, it was so, it was such a mad experience. I was going to like China and I was meeting, I met all of the blockchains you know, some horror stories. And then with some of them, you know, these, I’m talking about really big top 20 blockchains, who had three staff, and you know, not even a proper office, and I talked to all of them. I started trying to build my product through a bear market. I couldn’t get any funding from anywhere. And this is having a company that’s worth hundreds of million dollars ditto, you know, which is one of the world’s biggest distribution companies that I own? No one was interested at all because it was a bear market, right? Absolutely. No one cared about crypto, it was going down every day. And then around, when was it? Must be 2019. When my founders miles, he was one of the original people who put together algorand. And he was one of the first lead investors, when I say put together, I’m talking about on the finance side, he put like that he helped using Cosmos capital he put like the seed round for, got investors in. So, he had contest algorithm. I spoke to him a few times before. And then we kind of knew a bit more of what we were going to do. But those two years were crazy man. And it was honestly I thought this is never gonna happen because the market was so bad. And then we got some funding off algorithm to kind of build a defi products. And that was around what September over a year ago, and then the market or just turned that it went crazy again. And since then, it’s been like, but anyway, that’s how I got into crypto. And since then, you know what? The best thing I did all the money that went back down to zero, I waited until that March when COVID hit, I think Ethereum is about $90 and put everything into Ethereum. And just left it and so the answer I want.

Everything is locked in Ethereum now.

Lee Parsons: Yeah, man, I’ve got other stuff. I’ve got a lot of algorithms; I’ve got a few things. But for the most part, I’ve got like stable tokens and stuff now, but I don’t have, I don’t have anything in the bank. Really, I don’t ever use banks, I just use my crypto.

How Web3 Will Fix The Music Industry

Lee, can you talk more about like the hype around where music meets crypto right now and what’s going on in the current state? And I want you to take it also from the point of view of because you have such a deep history and you have such deep roots in the music industry. What kind of problems are you kind of seeing web three solve as of now?

Lee Parsons: The biggest problem we’ve had in the music industry has always been lack of transparency, or lack of lack of reporting, right? When we were doing CDs, imagine this like we did, we’ve got, we have Spotify now. So, you can track exactly how many plays a song has. Because if you don’t, you know, if you give someone a report, it doesn’t match up with what they’re seeing on Spotify is completely different. Imagine what it’s like in CDs. When you label, a label would man, I have friends that labels and they were saying they would literally cross out columns and just make this up and put that there. And our artists never used to make any money. Because the record, even a record deal now, there’s artists I know, who have signed a record deal for like 100 grand, so they’re getting advanced, and I think it’s loads of money. The record label takes 90% of your copyright for the most part, if it’s not 100% You get so you get 10. No sorry, 90% of your profits, right? 90% of your profits come and go to the record label. And out of that 10% that you get they pay for everything. So, say 100 grand comes in, your video costs 50 grand that’s gone that way. We spent 20 grand on this that’s gone that way. There’s five grand left, the record label will take 90% of that which and then get what four and a half grand and then give you and so you end up with nothing with anything and then they own the copyrights forever. Just so the actual song you’ve made. The reason you see so many artists complaining at the moment because everyone from you know, pre-Spotify, pre independence era doesn’t own anything. So, 10 years later they got no income coming in, and then only thing and meanwhile, the record labels are making. I don’t know what it’s like $3 million, every hour at the moment, just in streaming. I mean, it’s cool, it’s crazy amount of money. But it doesn’t trickle down to the people actually making the music, that’s the biggest problem people would have.

When I started Ditto. It was, it was just crazy to me that unless I signed with the label, I can’t get a song on the radio, because if it’s not in a shop, you can’t get it in the radio, and one in every probably 10,000, 20,000 artists were signed to a label, and the competition is so fierce assigned to a label that you take the worst deal ever. And that was a problem right now, it’s all kind of shifted the other way in, in, in the direction of the independent artists, because, you know, they don’t need labels as much, they’re holding on to their copyrights. But the one thing they do need is funding still, you know, because if they want to raise 100 grand to go to a video or something, how do they get funding because a bank is not going to give them money, they don’t want to take them on record label. So where are they going to get the money from? So, I guess that’s kind of how, that’s how I just came in on the defi front, because what we do, our defi is backed by artist loans. So, say someone I mean, we work with a lot of big artists, I don’t want to name them on here, but say you had an artist that is earning $1 million a month, crazy amount of money, and you know, artists are, so they’re earning $12 million a year. And that’s backed by their copyrights, I know exactly what they’re gonna earn in the next three years, because I can see from their, from their analytics and Spotify and what playlists so on how much money is gonna come in. Now, they still can’t go to a bank and get a loan on that money because I don’t classify as proper earnings. Meanwhile, music copyrights are one of the fastest growing assets in the world, the fastest growing faster than anything are about 100% in the last few years. So, everyone’s trying to buy these music copyrights. So why can’t an artist who’s making this money get a loan, without Plus, they can take a loan out of the pool that’s in the middle. So, say, to take a loan out $5 million, then that is a staking pool that’s lending. And then people come into that pool and stake their money and earn interest on that money, do you not mean so it’s kind of, it’s like a normal pool, but it’s actually backed by an asset that’s earning money.

So, this is the revenue that’s being generated from their copyright contracts that they otherwise can’t go and get financing from, from a traditional bank, right? So, you guys are coming in as that new modern bank to provide them the financing that they need to kind of tap into the value that they’re generating that they couldn’t otherwise tap into. Right?

Lee Parsons: Yeah. And the independent market is 60% of the whole, when I started, it was like 10. But now it’s like 60% of the whole market and growing. So, most people have access to their own money and their own copyrights. And what happens is that they don’t pay the loan back. I mean, they have to pay it back anyway, most of it goes through ditto right now where it’s automatically taken out. If they don’t pay it back. We take the copyright until it’s paid back, and then they get the copyright back. You know, but they can only take a loan out, obviously, if they’re already earning money. So, it’s really 100% rate of them, you know, us getting the money back.

So that sounds incredible. That sounds like it’s a win, win, win situation. Right? What am I missing here? It sounds like I’m just having this aha moment. And I don’t know this. This is why I’m asking you right? Like, that sounds like such a big problem that needs to be solved.

Lee Parsons: Yeah. And I think that’s what we should be doing on web three. Like you said, the best thing is, is connecting someone who wants to stake money and support someone, and someone who wants to borrow money and you don’t need a bank. Like I said, who’s going to take four days to let you take your own money out and throw my mom out the bank? Which I’ll never forget. But the fact they said, that’s my mom, you don’t mess with my mom. She goes, like that just shows you right?

Is she involved in Opulous right now?

Lee Parsons: My mom. My mom is just, she. Or she still involved, right? Your mom?

Always. So, Opulous came into the picture again, what was it? What was the year?

Lee Parsons: We actually launched last January, which was January 2021. But we’ve been probably I’ve been working on Opulous with algorand for nine months. And I’ve been working on the previous product that was still linked, we had investment for like our three, if you know our three quarter blockchain and a few other people and that and we were running two projects, then we kind of merge them into one as Oculus, about 18 months ago, something like that.

So, Lee let’s scenario arise from it. Okay. Let’s say lil pump comes to you and you guys had to drop a lil pump and he’s actually not applicable. It’s a big artist comes to you right now. Okay. 

Lee Parsons: Not Little pump, a big artist.

No, no, I say because you already did a drop a little pump.

Lee Parsons: Yeah.

How Do Artists Get Started on Opulous?

No, no, no, no, he’s dope. Alright. A big artist comes to Opulous. Right? They say, okay, I’m earning X amount of money per month, here are my contracts, okay, then justify that? How do they tap into Opulous? What does the step by step process look like now?

Lee Parsons: Yes. So, at the moment when we launch right, eventually it will be open to any artist to do so if you’re earning $300 a year, you’ll still be able to, you know, apply for a loan and the moment we’re looking at the bigger artists with bigger loans so we can fill those pools very quickly. Yeah, I mean, so they’re all kind of worked out from, from what their earnings but we have, there’s so much data out there, it’s very easy to kind of see what they’re going to be earning, it will go to an algorithm that will tell you how much money they can borrow. And then it’s really simple man. It’s so obviously it’s an algorithm. That’s it’s obviously mathematical itself, but it’s its own blockchain man. So, transparency

What is the interest rate on a loan?

Lee Parsons: Well, obviously, there’ll be different interest rates, right. So, you’ll have some that will be shorter term loans or longer-term loans, but you know, we want to be able to be around the 10% You know, zone for people staking and then add other rewards in for people using the plus token. So, we’ve got a few cents, the same as you have on a Nexo or anywhere like that. So, you stake a certain amount, Nexo tokens, you know, you get you get a higher reward.

What is an S-NFT?

Got it. Got it. I want to talk to you more about this  S-NFT. That you guys’ kind of like coined at Opulous. It’s called the security non fungible token, it was the backbone for the little pump royalty drop that occurred if I’m not mistaken, on Republic, right, was taken on Republic. This security backed NFTs security approved NF T’s. They’re like one of the biggest question marks and excitements in music ex crypto, let alone crypto in general, right. And a lot of people are trying to figure out how do I overcome the securities issues that have been around since like, what 1946? That I’ve kind of like stumbled many, many people from quote, unquote, innovating, because of these laws that the SCC believes, protects the everyday investor or the accredited investor, right? Yeah, but you guys have found a way around it. Okay. In your own unique nature, for the most part, give or take, I want to learn more about that. What is an  S-NFT? How do you think about it? How did you come to picture with it?

Lee Parson: So yeah, so it’s not even that we found a way around it, we’re just doing it, we’re just registering it as a security with the SCC. And eventually, we’ll have an exchange where you can trade that as you would a normal NFT. But, you know, it takes time to do this stuff. It’s a 12-month period to register something with the SCC, but you know, you can take the chance and hope that no one comes knocking on your door in 12 months. So, it’s a very hard thing to do. But I know, for me, I’m looking at this very long term. And I even know from speaking to people that, you know, some of the biggest changes, they think the next wave of tokens coming through could be securities because, you know, once the SCC do start coming into this industry and working out what is scary, and what isn’t, there’s, there’s a lot of, there’s a lot of projects out there that are questionable, even just a you know, even just defi products, and even some of our defi products will be SCC registered on some parts of it, because it’s just once you’ve got that out of the way, it’s a lot easier. And as far as an  S-NFT, is say, with a little pump sale, we broke a song up, I think it’s sold into about 1200 pieces. They all get, they all get an artwork NFT, they all get royalties off the song, the songs already done, I think over 3 million on Spotify alone, it was one of his biggest songs. Because once you, once you put the song out, or the community of people have bought it or just streaming, it’s a death. So, it’s kind of a win win for both communities, really. But yeah, for me, building long term, looking at it from you know, two, three years down the line and where it’s going to be, then definitely having a security, you know, it makes no difference to the audience and the community. It just makes it a lot safer. And the other thing is you’re dealing with artists and their managers and their lawyers. And it’s very, very difficult to get something but even if I thought it’s not a security, which I’m 50/50 Anyway, once I come to, you know, one of the biggest sites in the world, are they going to want to take any risk as something being a security? No. And the lawyers, the lawyers won’t either.

Yeah, makes a lot of sense. I’m adjusting the screen here. So, for people who are watching on YouTube, I just want to get an idea of what like, what the, what the user flow kind of looks like. Okay, so when it comes to actually registering a song with the SCC, because that’s what essentially it is you’re registering security with a SCC, to do a drop, it took 12 months from what I understand?

Lee Parsons: To be honest, the we just announced another one today, actually, and we’ll have one out in about three weeks, which is Kora, which is amazing artist, and he’s gonna, hhe’s doing his full album. Isn’t that 12 months? It’s quite, it’s quite quick to do. The problem is you know, when you do the first one, it’s difficult because even though it’s SEC registered, there’s so many guidelines, which kind of spent probably the last three months just making sure all our contracts are good, and we can get them done really quickly. And now. Now they are, we’ve got them all lined up the next few months.

The Future of Music NFTs at Opulous

Got it. Got it. Got it. What do you, what does the future of music and NFTs look like at Opulous? What is your thesis around this entire space? Around this entire movement?

Lee Parsons: So, we’re launching a normal standard artwork NFT platform and our next drop has you know, we’ll do artwork NFTs drops. It’s really hard. It’s really strange, man because when you hear you know, I was listening to Gary Vee talk you can’t get away from, can you about music NFTs? And he’s like, the same thing as actually. What do you mean the future of music NFTs? It’s all very good saying it’s going to revolutionize the music industry. But what are they actually going to do? Does anyone know what they’re actually going to do? I think right now, no one does, we’re just kind of working on it as fast as we can to dictate where it’s going to go for me. And then it is the best way of storing an asset on the blockchain and proving ownership. So, the most natural use for it is saying, you know, I own this piece of copyright, I own these royalties are coming in. And they also have a, you know, I have a digital representation of that I have an artwork representation of that, for me, that’s the most useful one, because we’re also building an exchange where they can be traded. And if you want to go and trade copyrights, that they’re not liquid, you know, I can go and spend probably three months trying to buy, I don’t know, a Lewis Powell the song or piece of catalogue, but it would take me three months, it’s probably going to cost me $100,000. In legal fees, what I can’t do is go and buy, you know, $100 worth of a copyright, because no one would do that a lawyer wouldn’t do it. The way we’re using NFTs is to break all of that down, make them tradable, make them be able to buy as you know, a small portion. And that’s where I see that part of the market going, you know, and that’s, that’s what we’ve been building for a long time, ask everything else is the Wild West, we’ll see. Right? 

So, let’s talk about the Wild West, because there’s a difference between collecting something to collect. And there’s a difference between owning like collecting to own right and own an artist share of something. And it’s very much a gray area, like there is no distinct definition of what’s better than what because even the economics behind owning a song, don’t really play out the way people kind of imagined it to. For example, we have yet to see like an actual use case and actual scenario of somebody making legit money from part of a song share that they bought, partly because all this is new. How do you think about the difference between collecting to collect and collecting to own? How do you how do you decipher the two?

Lee Parsons: I’m trying to make them both collectibles, right. So, the one we launched today is the same you know, if you have you have an artwork drop which are very collectible alongside you had the song drop now, I can calculate how much you know, Karl’s NFT is going to earn over the next few years for someone and they are going to get you know, the even the the people who bought the little pump NFT, you’re gonna make a lot of money from it. Because, you know, at some point, over the next few weeks, we’re paying everyone out for the first three months and they’re gonna be like, you know, I’ve got money here. This is crazy. So, if you compare that to other NFTs that are just a piece of artwork that’s probably gone down over the last 12 months, you know, that’s huge. And then obviously, whoever your, who’s your favorite artist.

In a space in the music kind NFT space. There’s a bunch, there’s people from Valencia to Queen George to Daniel Allen, the list goes on and on and on. I collect a bunch of them.

Lee Parsons: Oh, amazing, man. I’m on the music side who’s like your favorite musician?

Musician. So, I’m a drummer. So now we’re getting. You can see like the like the little outline of the drum kit, I guess. The thing is, but my favorite drummer has to probably be either Tony Royster, Jr. Steve Gadd. There’s, it’s endless. It’s endless. But I guess I’m like, like an artist point of view, maybe from like a singer songwriter right now. I would maybe say, Amy Winehouse, I love him. I’d love to own something from Amy Winehouse, for example.

Lee Parsons: We nearly did an Amy Winehouse track, which was a bit worried about legalities on it in the end, because the ownership was a bit unclear. But I guess for you to own a piece of Amy Winehouse track, that’s going to be really collectible. Now, even if it’s not going to make you a millionaire. 

Correct. 

Lee Parsons: It’d be cool.

It’d be cool to see like, a little bit of that song when I hear a play. 

Lee Parsons: So that’s where we are really, it’s about, there’s a lot of different reasons why someone’s going to buy an  S-NFT. So, some of what a Kyle fan, they want to support him, right? That’s the first thing they want it, they’ve got, then you have investors who want to make money who think well, this Kyle albums gonna do really well. So, I’m going to buy it now. And in three years’ time, I think the value is going to go up from it. So, you have investors. You know, there’s this kind of all different types of people that are going to want to buy something from a musician, I think music is the one thing that everyone is, you know, he’s passionate about if I was selling, you know, there’s this, there’s, there’s a, love the AI and algorithm, which I think is awesome. And they do the same kind of thing for houses. And you can buy a little piece of a house, but it’s just, I just they’re not going to capture the same passion as buying a piece of an Amy Winehouse song, but I’m not dissing that project thing, that projects great. But I think the one thing everyone has is that love. Everyone has a famous, you know, Favorite musician, and everyone has someone that they think actually yeah, that’s, that’s something that I want.

What Will the Decentralized Layer of Web3 Music Look Like?

Yeah, you know, a lot of the music NFT that I collect today, they have no real value, for the most part, the market determines their value, right? When you introduce royalties into it, you introduce another metric that potentially values the collectable song in a completely different light. Because it’s revenue generating, right, you can show data to back its value, etc, etc, etc. And I’m also trying to debate like, which one do I prefer more, because the majority of the ones that I collect right now are just purely collectibles, right? And also, there’s no real way to listen to them just yet to enjoy the collections that I that I kind of bought into right, which is another problem that I want to talk to you about, like the consumption layer. How do you imagine that decentralized web three consumption layer for music, looking and feeling like it’s gonna be like a decentralized Spotify that builds on top of all these open networks that allows anybody to listen to anybody song, but people own different versions of them, whatever it may be. And then it’s like a governance token that pays people out as royalties. You know what I mean? Like, what, what is that? What does it look like, a few years from now? Because no one’s really doing that yet.

Lee Parsons: To me, that’s a question. I think, it probably looked like the last thing we expect it to look. Because don’t you think, though, because when we all come into this space, you know, pets.com example, all the internet businesses that, you know, we thought this will be, you know, everyone will go to pets.com to buy dog food, like no one wants to do that. They do want to go to Amazon, and buy everything. And all those different things that came along with what not what they thought it’d be, I don’t think we’ve seen the best use case, it’s going to beat Spotify at the moment or anyone near it. Because Spotify is everywhere. It’s on your television, it’s on your laptop, it’s on your, you know, everywhere you want to be Spotify is so how are you going to take something from web two, from web three, that’s going to beat that? It will happen because you know, the same way Napster happened. But right now, we don’t really need it to happen as a listener. I mean, we need it from a musician standpoint to things out, but you’ve got to change the whole community moves fast and technology, right? That’s how things move. It’s not technology, you can’t sit around and think, well, let’s find an answer for this from a tech wise, eventually the community will discover a way of doing it. And we will all just be like, yeah, there you go. That’s what we wanted to do.

I wonder where Apple and Spotify come into the picture? How do you imagine like the ecosystems, both ecosystems implementing NFT’s as part of streaming services, for example, do you think they’re gonna allow people to purchase songs, in addition to stream them and listen to them? Or, you know, like, where does it play now?

Lee Parsons: Spotify just announced that they were doing that.

They are doing NFT’s? Yeah, yes. I saw that.

Lee Parsons: Token showed. 100%. I hope they announced it again. Um, but even then, I know Spotify very well. I speak to them all the time. And they don’t have a clear path at the moment. They’re just kind of looking at it, looking at were, where it should be. But, you know, it’s like Facebook going to the metaverse, they’re gonna win. They’re gonna win because they are Facebook, they don’t have to do as much as someone else has to do to beat Facebook. So, I think as long as Spotify make the right moves, they’re gonna win. But that’s also not going to stop an 18-year-old, 19-year-old kid coming up with an answer and changing the whole thing, which I hope will happen. Yeah.

Does Web3 Favor Established or Up n Coming Artists More?

Yeah. I’m curious to also hear your point of view of like, does the web three market favor established artists or up and coming independent artists, maybe not even up and coming just like new, independent artists?

Lee Parsons: It depends what you mean about web three? You mean? How do you mean like.

So, let’s say, let’s talk about the Ethereum community, for example. Okay. Ethereum community they support innovators, right, a lot of the entire foundation of Ethereum is innovation. Right? We are still in the innovator’s adoption cycle, right? The really, really early stage of the adoption curve, right. And from what I’ve seen, you see, creators, let’s say, like Daniel Allen, who was absolutely nobody on Twitter raised $180,000, with 200 followers, on Twitter raise that amount of money in less than 48 hours, right? They saw the innovation within his model of sharing a percentage of his artist share right into his EP that has yet to be produced, that is not yet revenue generating, there’s nothing to prove its value. Maybe there’s some data on Spotify to show he has about a million monthly listeners, but still not a substantial amount. That project was absurd. And it also influenced the evolution of this new wave of web three native musicians who went to go ahead and then copycat, a similar model to his a basically, forming a crater Dao distributing his percentage of artists share into that crater Dao, issuing a governance token that then collectively, everybody kind of buys into and then raising money off that governance token to then crowdfund in EP right? That entire, it’s a very like web three native model, but it comes from an independent artist who otherwise wouldn’t have the traction as little pump. soldier boy, Kanye, etc. How do you think about that? Like, does the Ethereum community, the crypto community, web three community, whatever buzzword you want to tie to it? The current state of where we are today? Do they favor more? The up-and-coming independent artists aren’t tied to record label? Or the ones who are revenue generating or the ones who are established, that have a fan base, etc? What have you seen kind of, kind of layout us?

Lee Parsons: Yeah. So, I’d say there’s a big difference. You know, most people, I mean, you know, most people on Ethereum, average pop music fan anyway, right? Because you’d have a hard time. The audience, you know, the audience of music fans, I guess, would definitely favor the independent musician of Ethereum. But I think if you look at what he’s done, as you said, it’s not going to keep replicated over and over again. If you look back when Myspace launched, you had a few artists who became superstars, because they got in there first and did something amazing which he, which he obviously did. And everyone was like really excited about it. So, he has done something for the first time. That was genius. And, you know, and that’s worked is that the model to keep it going forward? It could be actually mean similar to what we’re doing. But I guess everyone who works in Ethereum is a bit to the left anyway, of what they want to kind of so they’re going to support that, you know, it’s unlikely he’s going to go into a BTS forum and get the same response. Terrible, but I think, yeah, he’s obviously he’s obviously done something really, really good there. 

How Do You Turn Listeners into Investors?

Now, I’m curious, like, a lot of people are like, a lot of people in crypto are both listeners and collectors. But a lot of people outside of crypto are not collectors. How do you make in turn more listeners into collectors? Into investors?

Lee Parsons: Yeah. So, I guess the funny thing was, when we, the first one, the first sale we ever did was for a guy in England called big zoo, and Taylor Bennett, who’s trans rappers’ brother, and they were just friends. And I was like, man, let’s just, let’s just put a song out and split it and, and see what happens. And that was probably about 18 months ago, we did that. And I don’t think our audience had heard of either of them at the time. But what he saw was incredible. These people who bought like a tiny piece of a song for like 200 bucks, started playing their back catalogue. The one guy hosted the party at his house, where he was playing the song and all for all his neighbors. And it just created this crazy kind of superfan of people who didn’t know anything about the, I tell you one thing right after working in music for what, 15 years, when a song is making your money, it sounds a lot better. I have a playlist to do stuff. Some of it, some of it’s difficult hearing, man. I mean, let’s not sugarcoat it, little pump songs not gonna win. It wasn’t Bohemian Rhapsody at all that one but it sounds pretty sweet when you know you’re getting paid for it. So, these people, you know, a massive fan of these eyes now. And you know, and they actually do like the music because they feel so much more connected to it than someone who’s just playing it there. You imagine a fan who actually is, you know, someone who does know that artist is a superfan and has that song and they want the artist to win because you know, music fans are the most obsessive people community there is that and they do all that for free right now, you know, the BTS funds, you know, they just spend all their day on Twitter, having a go everybody that says anything bad. But imagine when that actually getting, you know, paid for doing that it’s creating. It’s creating a new ecosystem for music and funds.

Yeah, yeah, I hear you. I don’t know. I’m like, I’m so curious to see how this kind of plays out in the future, what legality, what infrastructure goes into play to standardize a lot of the experimentation that’s been happening behind the scenes that has yet to be caught up on by the SCC. And to really think and see, like, look at the data and see, does owning something, collecting an NFT of someone entice that person to kind of further support and further sell and further listen to that artist in their craft, the best example we have of this is boarded Yacht Club, and the absurd, like the complete insanity that comes from that community and how, how dedicated those people are to their craft to one another, to their brand, etc. And I wonder if that’s gonna hold true for musicians, music artists, if a fan goes ahead and collects, whether it be collectible for the sake of collecting or an investment, and you’re able to earn royalties, if that really does change the relationship between the artist and the fan, we’re still very much like the pre-early inning, to really see that thing come into play and to see it come to fruition, but we’re seeing small instance of, instances of how it does make a difference, right, but nothing fully to the extent where we’ve seen like, like a Charlie Amelio blow like she has on Tik Tok, for example, right? We haven’t seen like that happen in web three, like we haven’t seen a web three Native artists really take off in the in the mainstream. And I think intentionally because, again, we’re so early on.

Lee Parsons: Yeah. And you know, that’s the best thing about starting a company, right? Because if you’re investing in any company, I don’t know, I have a plan myself for what I want to be doing in five years, but it might completely change, right? It’s like you just have to be ahead of the curve, know what’s going on, and be ready to kind of, you know, someone else’s something amazing. You got it. You got to take, take the positive, take the positive out that keep working like we don’t know, do we really, and it’s probably, it’s definitely the most exciting thing I’ve ever worked in. Because of that.

Copyrights on-chain

Yeah, I hear you. I’m curious. Also, on the website you guys talk about, I have it right here on my right. Copy, music copyright backed NFTs. I want to talk to you about copyright. Okay. Copyright is very much still a gray area. I’d argue in unchain, excuse me. And it’s something that’s actually quite difficult. If you look back in like the LimeWire era, I remember people used to upload songs to LimeWire. And like pirate songs, and they changed like the frequency or the tune just a little bit and upload it to LimeWire. And it would kind of pass their content ID systems that would otherwise flag copyrighted material. And it makes you think we’re, we’re working in building on a network that’s so open, so transparent, and so borderless that a lot of these issues can kind of prevail again, on chain. Sure, there’s a level of ownership. Sure, there’s a level of transparency, you can trace back when something was uploaded, first, whose wallet address it came from. But it still doesn’t stop, for example, the pirating of music, let’s say, okay, when you think of, when you think of copyright, okay, on chain. And again, it’s such a big topic, it extends way beyond just music, but for copyright on chain for music, what is the perfect scenario look like? 

Lee Parsons: The perfect scenario, right would be that you create a piece of music, you put it on the blockchain, every time anyone interacts with that music, you get, you know, it’s recorded, right? Because that’s the problem in the music industry. It’s like, I live in Brazil. And I think something like 90% of the money that’s supposed to go out doesn’t go out. Because nothing is recorded, the way it works at the moment in music industry, right? Say, where everybody plays, everybody in the UK pays a license. So, if you own a bar, or a restaurant or anything like that, you have to pay license for PRS. And then someone from the PRS will come in to your bar once a year and say, oh, you know, what songs have you played, and then they count that for the whole year, the whole year. So, say you’ve got an independent song, and it’s played like, you know, 10 times in each and each little thing and you’ve had loads of plays, the chances are, I’ll never get picked up ever. So pretty much all the money just goes straight back to the major labels, because your ratio, and all these other guys are the ones that they will always record. So, all that money just is not going back to everybody else. So, the transparency and the recording of what your asset does is the most important thing. I think that’s definitely gonna happen. But, you know, we’re a long way off, because you need so many things that happen, but the blocks that we’re building now, all of us music companies will eventually, you know, allow that to happen.

Yeah, I hear you, you know, my whole thing is like, it’s still, it’s still, the whole idea behind these platforms of it being highly curated, right, and being very selective on who can publish new can come on, kinda like works towards solving the copyright issue, right and legitimizing people’s brands, legitimizing people’s platforms, like the element of curation, very much, very much helps with minimizing copyright problems for now. My question to you is like, can platforms solve the issues of copyright without risking decentralization?

Lee Parsons: platforms on web three?

Correct. correct. Because, again, it’s one thing to submit something to Zora, right? Music NFT and to publish something on Zora, it’s another thing to get it published on Opulous, sound or catalog, right? There’s a band of collectors that wait to buy things on those platforms that trust the curation process from those individuals, but they’re highly gated and highly centralized, the technology, right, is inherently decentralized. But I guess my question is a lot of their answers as to why they keep things gated is of course, one for exclusivity. But another point is to maintain, like the issues that would happen in would kind of like evolve with copyright issues. Right? When you have anybody publishing anything, right? And the issues that come with that? Can these platforms, continue to grow, continue to innovate, and also preserve the copyright issues without kind of like combating with decentralization and coming head-to-head with decentralization?

Lee Parsons: Right now? No, I think like I said before, I think the will, there’s just, there’s no way now, right? We can’t up. I’d love to go straight into the decentralization of everything, wouldn’t you? But you’re just not going to work in this system. We need people in the middle to kind of record stuff and do so because there’s nothing, you know, we’ve probably got about 1% of what we need on chain at the moment. But you know, I think 10 years down the line, we will, don’t you? You want a system were.

 I’d like to think so?

 Lee Parsons: That’s the whole point, right? Because so you don’t have a third party involved who can mess anything up or steal or act dishonestly. And that’s what we need.

Yeah, I don’t know. I think the primary winners right now are the ones who are making it easy to interact with these primitives, right? Making it easiest and most efficient and most approachable to interact with these primitives. Right? And I think with that comes monopolies. With that comes empires that will end up being built, despite our ethos and love for decentralization, which could be a good or bad thing. I don’t think I don’t think that’s up for discussion, because we’re not just there yet, but I don’t know. It’s something that I think about like can web three music platforms really address copyright infringement while staying decentralized? You know, I don’t know, I haven’t gotten a clear answer on that just yet.

Lee Parsons: Me neither. I see if I do. I’ll let you know. But you’re right. We don’t have an answer right now I’d say.

Future Plans for Opulous?

Talk to me more about like, what are the future plans right now for opulous? What can we look forward to? What’s in the pipeline? What upcoming drops? I know you mentioned, there’s another one coming out in three weeks that you talked about briefly, fill me and what can we expect in the next few months to year?

Lee Parsons: Yeah, man. So, we have our next NFC  S-NFT coming out in a few weeks with a guy called Adad who’s like one of my favorite UK rappers. He was like someone that Drake’s been, I think it’s like Drake’s favorite UK rapper, he’s just amazing, independent guy who’s done hundreds of millions of streams, then I’ve got Kyle, his album. And we’re just about to record a video with Tiger will not me personally. Normally, Tiger is about to record it. And he’s got an amazing single coming out. We have an artwork, website launching, so that we’ll be doing like artwork, or artwork drops alongside the  S-NFT sales. So, you can buy, you can like kind of pre-register for the main sale buy, you know, buying NFT’s, we just did a 3d artwork drop with Adads, we have a new like artwork team that we’re working with on that, our own platform launches next month with our own staking on it. And then we will have the copyright loans, which will be the next part where you can just stake USDC and Opulous. And, you know, people were taking loans out from that, we’re building an exchange, a copyright exchange, so after the do the sales, you know, you can go and trade it, you know, in fractions of the Sun, which is awesome. You know, something else I forgot was going to say that. And then I think in a couple of weeks, we’re going to start paying the first royalties for the little pump. So, for all those, all those massive little pumps fans out there, finally, all the way in, they’ve been doing probably never pumping alive, but you know what you don’t need, that’s probably the most thing I’m excited about. I work in digital distribution, right? So, if I’ve got a song out, I don’t get excited anymore, cuz I’ve got so many artists, but I remember like, you know, I’ve got, we have a label. So, we have like, 20% of a song for doing the distro. And it’s like, I get to see the stats from tick tock and Spotify and Apple and all the things like daily on what it’s done on, like, let’s sit in there. Now everyone is not any music, and she’s now gonna be able to do that log into Opulous and see that okay, well, this got use on Tik Tok yesterday. So, it’s just shot up on Spotify, and you’ve made some more money. And it’s so cool, man. And it’s so addictive. And, you know, eventually people have just a library of songs in their account that they’re probably just streaming themselves to death. And then, you know, checking the sales every day, we’ve already built that I’m just waiting for the sales to come in. So, I can get the data out.

You know, another thing that hasn’t really been tapped into yet is there’s already value locked in a lot of these collectibles, right, a lot of these music NFTs that people already have boughten, whether they are ownership based or whether they’re collectible based. 

Lee Parsons: You said boughten.

Boughten, excuse me. I don’t know, it’s a word, now making it a word. Boughten is my word, there you go.

Lee Parson: It literally is your word, congratulations

And it’s live. I want everyone to quote me on that boughten, is a but or boughten?

Lee Parsons: I never heard boughten and before but I love it.

What about button, button?

Lee Parsons: Getting off track there.

Beyond the Collectible; Staking Your Music NFTs

I love it. My point is there’s a lot of value locked in these music NFTs. Could there be a way for people to stake their NFT’s and these NFT lending and borrowing protocols for them to extract that value? That’s number one, to who would take a loan against these illiquid JPEGs, is in liquid?

Lee Parsons: Yeah, my that’s some crazy person. Like, I guess on the music side, that’s pretty much exactly what we’re doing. And we have a new CTO, who was one of the, wasn’t really original NASA people, but he worked on a lot of the web two products. And we’ve been looking at, you know, different ways that I get, it’s hard to explain them, because we don’t run out. But you know, an NFT can obviously represent, so let’s say you bought Opulous NFT and you’re saying right, this sounds effect. I know this is going to 1000 pound a year because of we’d look at, say you buy because we’ll have albums that are old albums, right? So, you might catalog on all Michael Jackson song, you bought 1% that earns you $1,000 a year, you will then be able to take the Anthopoulos system and get a loan from it. Because we know what money you’ve got coming in as regard as taking a loan from an NFT. I’ve thought about that as well. It’s like no, thanks. If I was a bank, there is no way. Right. Would you, I guess.

I don’t know. I don’t know. I’m asking you, is there a way to take loans against like illiquid wav files in all these music collectibles that people are basically purchasing on chain? Is there a way to kind of pull all these assets together and take loans against them as a whole?

Lee Parsons: Is there a way to quantify the value of it?

Guessed to an extent. I mean, the value is what it’s been bought for the floor of that.

Lee Parsons: Right? Okay, so I’m gonna go and buy an NFT for a million dollars is worth five pence and then take a loan out from it. Actually, I’ll be a moron to do that, anyone would know. But, you know, I think that that’s the problem, right? Because you’ve still got to sell it to someone, just because you put that as a value doesn’t mean that’s the value because you could no one would want to buy it what you’re gonna do, then.

I guess my point is, I have 1000s of dollars of NF T’s music, NF T’s that I’ve gotten, that are just sitting in my wallet. No only thing that they provide me is access to the community, even if the artist even has set up access and utility like that. I’m trying to think of how can I take it a step further as a collector and put my money to use that’s locked in these collectibles? Yeah.

Lee Parson: I mean, that’s the problem, then a teaser, right? That’s why we don’t run it in the same circle. Because where’s the value? You know, you bought it. We got all excited. We bought it, you try it, you know, is that going to go and trade on the open market for the same price? Do you know if you tried to sell it? You know what the value is?

Yeah, I mean, some of them have risen from like, point one to like, 8 Eth. Right?

Lee Parsons: Yeah, sick.

Which is amazing. You know, some of them are worth like, 10 Eth. And I bought them for point one.

Lee Parsons: Amazing. So, you’re so you’re really, are you? Are you collecting for collectibles? I mean, I guess we’re all, you’re all in it.

Here’s the thing there is like, I have two perspectives. I think at one point, it’s going to end up like we’re gonna see the same way that happened in March and February 2020. We saw that corporate artist, the Instagram artists transition into NF \T’s and end up being in Sotheby’s and Christie’s and doing exceptionally well through platforms like nifty gateway, I think the same thing is gonna happen with music artists. And if I could be a small part of that process and using my platform to help them once I collect something, I’m fucking happy. And if it just so happens that I can also read the value they generate for themselves and all the collectors like why not it’s a win, win.

Lee Parsons: But what classes music NFT then? Are you classing a piece of artwork, the wave what?

Let’s say, let’s say I buy something off Zora? It’s a WAV file, okay, a WAV file with a piece of art, that’s a gift. I can listen to that. There’s value, I have an offer, let’s say for example, like I want Eth offer and I bought it for point one.

Lee Parsons: right? Is that a gift that only you have? Or is that you, because you remember when.

Let’s talk about in two situations. Let’s say it’s a one on one, it’s only one that I have? Assuming it’s one, one, and then let’s take it from another point of view. It’s a collectible. It’s an addition of 25, edition of 100, edition of 1000.

Lee parsons: Yeah, so. But who would buy it? Who would buy it? And it’s a song that 1000 People have.

The 0X39, some random ass address wants it.

 Lee Parsons: Oh really?

 Let’s just say, yeah.

Lee Parsons: I mean, it just, like you said, it depends who wants to buy it? Right? I mean, yeah, that’s what you’ve just got to be making sure you’re, I mean, the artists have got to be really careful. And, you know, obviously, we speak to a lot of artists every day, some of them have just dove in and tried to make as much money as possible. But the majority of musicians have been quite skeptical about the space. And honestly, that’s why a lot of them like Opulous is because Okay, well, I can see you’re actually doing something, my fans will appreciate that I’m not ripping them off, because that’s what an artist does not want to do. Really, you know, if you’re, if you have a huge fan base, someone like you know, 50 cent you just massive and you kind of they’re not, it’s not gonna get you know, you can have independent artists, you’ve got a ridiculous engaged fan base. Now they can’t sell something because a bit flat, if you’re 50. And you know, you’ve kind of got that mid fanbase, you can but for the most part, fans, fans are very close to the artists and they can’t sell something. That’s rubbish. And I think this is the main problem that we have at the moment as you guys want it a music NFT is and what the value is, you know, I hope that’s something you know, we can we can change with Opulous.

Yeah, I think that’s a perfect place to wrap off. I was actually the last question I had for you. But Lee before I let you go. Where can we find you specifically? Where can we learn more about Opulous and everything that you guys have in the pipeline?

Lee Parsons: I am Ceoleeparsons on Twitter. That name was a joke when my brother and me started because we had no staff, but it’s grown into something that I hate now, but I can’t change it. Ceoleeparsons on Twitter. Opulous app on Twitter. You can ask me anything on Twitter again, man. I really appreciate you. I know you’ve had some really big names on the show man, you’re obviously, you’re obviously really ambitious and hardworking man, thank you for inviting me on man. And I’ll make sure our community support as much as we can as well.

Thank you, sir. We’ll have to do this again. Once more drops come in. And Opulous has 10x is where it’s at right now. I’m looking forward bro. Excited. Thank you.

Lee Parsons: down but we got to back up. I appreciate it, man. Thank you.

Thank you, bro.

Listen on: Spotify | Apple Music | Google Podcast

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. 

---

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

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.

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.

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.

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.

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.

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.