The Future of Entertainment is Interactive

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The Future of Entertainment is Interactive.

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The future of entertainment is interactive.

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Transcript

...

Good evening. And welcome to

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and have talk that live

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this is a show about the creative process as well as

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artists making a living from that work and also

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about new kinds of opportunities to build direct relationships

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with individual fans

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audience members and patrons

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we are certainly living through

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What

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his historians in the future will define as a formative

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moment in the history of art and technology. It seems

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This space is wide open for people who

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understand both worlds.

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and I don't pretend to understand and have to use fully

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I don't think there are too many people on earth who do just at this stage.

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which is

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precisely,

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precisely why there needs to be

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ongoing conversation about

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what enough?

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and line technologies are four what they're not for

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and what they mean for the world of art

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most importantly,

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for individual artists.

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And if first Steve Stewart, has anything to do with it,

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the kinds of the direct relationships between artists

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and supporters will be happening

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at scale and very, very soon.

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It's it's my great pleasure to welcome to the

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and i've talked that live lab this veteran of the music business.

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because now

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changing the way musicians get paid.

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Steve stewart has a number of framed, shiny bright,

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records on his war wall metal records,

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and I don't mean it's a sort of metal you listen to I mean, metal like

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platinum. And now he's directing his attention to

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So

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running the world's first platform that enables artists

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to fractional

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the loyalty revenue

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And this is a concept that takes some some effort to get your head around, but

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The general idea is

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it's rewarding supporters for

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supporting the artists with cash,

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So they in turn many produce those works that earn

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There was royalties. Steve Welcome to

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I've talked that live

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Hey Ralph.

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Thank you so much for Having me. I'm not sure if you can hear me because this is my first time.

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It's it's it's fantastic.

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on Fireside,

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you're coming through five by nine as we used to say in the old days of ham.

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five by five, baby.

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those are those are vinyl those those are vinyl sprayed with some kind of silver page.

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there are actually metal records, but I appreciate the introduction and it

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talk about this. I think this is a really

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important point of inflection.

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not just for musicians and artists, but also for fans and listeners

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and people that enjoy the music that these artists create because

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before this point in time, it was very hard for anybody to participate.

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in this game, it was literally a closed loop where

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the artist would create something in a studio, and it would be

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you know, manufacture distributed by a record label and put out

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as a physical product, and then it became a digital product with streaming and downloading

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but the fans were held at arms length. They still were fans

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having to consume it

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in a one way streak.

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But I think now for the first time we're starting to see some participation models and

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ways for listeners and and Avid fans to participate

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right alongside the artist, which is an exciting time because it it

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to me provides an exponential opportunity

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to expand your listeners your fanbase base, and also to

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take the financial model that the music industry followed for probably the last hundred years.

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and turn it upside down. So the artists and creators finally

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have a chance to get paid with their do because I think

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I think everybody will agree that today, most artists are receiving about twelve cents on every dollar that

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comes in and their work and their craftsmanship and ship and they're

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playing ability and and

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and marketing ability actually, that brings in the revenue for the rest of the business.

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so we're the music labels and retailers and publishers of been making

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the why ensure of that for many, many years, it's time to actually

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compensate the artists in a much more fair incredible manner.

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And you worked exclusively on the artists

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side of the business. I have you cross the barricade to the label side on occasion.

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it's interesting. I've never worked for the labels.

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and I've started my career as as a I was a musician myself.

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and I started representing artists very early. I was ice teas managers assistant.

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for about three years, he's an original rapper and

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was very early in the rap game, and he was assigned to fire records, which was

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a division warner brothers, so I made a network

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through a lot of those connections and a lot of agents and attorneys and in our people at different labels. And

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friends of mine that I had grown up with played bands with, gave me a cassette tape back in

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because nineteen ninety and said, can you help us find a record deal?

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I took that to cassette tape around and shop it for about a year and a half.

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to

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every single major label, many, many independent labels get every single door shut on my face.

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except one

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nineteen ninety two atlantic records was

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kind enough to put an off together, and I was able to take that offer and

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partly that to a record deal the Band was called mighty Joy young at that time.

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And we started working with a producer named Brendan that Brian, who became a very big

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record producer throughout the nineties and even through today,

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he one of Rick rubin, Pro back then, and

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made a record and a signed the contract in April, start making the record in May,

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had it ready for release came out September of nineteen ninety

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too we had to change the name of the band from my Joy young to stone double pilots.

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Because others are there's a blues man.

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code Mighty Joy.

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but that's exactly right. There was a a a blues player I think it was

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wisconsin. And our lawyers, the very last minute said you can't use that name. There's an existing

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musician who's alive. And it it created this

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crazy scramble. We went... I think the band night for about three weeks. We're just pulling our hair out trying to figure out

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how to change the name of a band right before the records supposed to come out. So

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we have to listen with the names every day, and I think it started out as, like,

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stereo Temple pirates. And i said, guys, let's clean that others are

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stereo Mc and stereo lab and a lot of bands of stereo. And

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pirates, you know, does kind of folks an image of a a guy of a patch over as Eye

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we cleaned it up and it became stone temple pilots, and that record came out in September of ninety two.

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and was go by brown. I'm gonna say

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January of ninety three was platinum by March

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and when Arm sell close to ten million units, and I made another

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four or five records with them and probably did another twenty three artist

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sign to major labels and publishers during that period. So I've I've

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always been on the artist side. I I

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appreciate the pain points that artists creators have to go through

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and the hoops they have to jump through and a lot of the inefficiencies in the music industry

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especially on the royalty collection side, and the way the artists are paid

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true and how much time it takes to create

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that royalty stream of earnings, which

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you know, for example, they had a record that was number one in June of ninety four. I think it

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out and we didn't see royalties on that record for another eighteen months.

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So there's a big lag between the time that a music, a piece of music comes out and is

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consumed by the public distributed and the artist actually getting a payment for that could take

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up to a year and a half.

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that awareness of those others those pain points, I guess, that is why

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you've now picked the the particular problem to

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so. I mean, the music business in large parts is still stuck in

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ancient ways of of working, but somehow you decided to

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concentrate on direct support for artists, I guess that's

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It it was, and it's

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been a natural choice

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again, it's it's direct support coming from their fans.

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Right? And I think that was the part of the equation. My founder robert and in as and I started just

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in

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late twenty sixteen and incorporated in twenty seventeen to large the fly

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born live in two thousand late two thousand eighteen. But

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we looked at the model that was existing... There's

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a music rights model that was basically administered by most

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large media companies, sony many universal order Chapel,

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E back then bm, companies that that have a global media region or

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have their hands and many pockets with Tv film music

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both on the label side and the publishing side. And

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realize what was missing from that equation

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were the fans. They had a bunch of B2b business

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between themselves of Sony had a record that they that

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universal wanted to put in a movie that was coming out. They would just call selling and saying license that song.

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it's a million dollars. They kinda a check through boom, but there was

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the lack of involvement of the consumer side. And so I call that a wholesale business.

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where you're trading B2b to b business to business inside a

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closed ecosystem, so to speak.

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but the people that were willing to pay three hundred fifty dollars for a concert ticket or sixty dollars for a t shirt

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that's where the passion was. That's where the fans came in.

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I said, what if you involve them?

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in this music rights business.

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Now you're gonna take it from a wholesale level to a retail level.

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And as everybody knows, there's there's a bump valuation between buying something at wholesale and

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i at retail. And I think that when you include those fans,

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as a factor, the value of those rights can only go up

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how far are

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near future horizon call that you need to look

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in order to see this choice to to go down the path of of building a

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system of direct support direct involvement for our and and friends,

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have how do you need to look to

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to see that the choice

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we'll start to

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have wider ripples in

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in and across the industry,

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well it's starting to happen now. I think, with the advent of In particular, now let's

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you know, that one of the titles of the of this chat is

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that for all the problems with them. Right?

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still think they're very nascent. I think there were very early days

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with this structure

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what it has done is it's open up an awareness. It's open up the ability for artists to say, hey,

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I can go directly to my consumers with

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artwork, a digital token or a piece of my song.

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and also from labels and publishers, which is interesting because they've

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hidden behind a retail network.

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for many forever. I mean, most record labels never had a direct to consumer

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exposure ever.

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Right? So back in the Cd days, they would rely on retailers, like

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power records or h or best buy. And they would just basically print these cds up and put them in a truck

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virgin mega stores, we're about the only the only one

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and somebody also seldom them.

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that I could I could think of

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Yeah. Virgin. There you go. But virgin

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is the one that had the relationship with the consumer because the consumer coming of

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Yeah.

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store browse to the records

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put down their credit card and buy one. They knew who that customer was.

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they had their payment information

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whereas Atlantic records had no idea. Right? They would literally put those cities in a box

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put in a truck and they get shipped to virgin.

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they wouldn't know who the end user was. But with the ad been a digital distribution were there's,

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you the physical limitations of inventory and breakage and shipping are all gone.

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there's no real reason there's a barrier between that consumer

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and the actual source of the music, which it could be a label, but generally,

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is actually creator the artist themselves. So I think as we start to see technology

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you build in that direction, There's gonna be a much more direct connection between the

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creator of that music and the user of that music, and there's no reason that the

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compensation you can't flow more quickly and more freely and more directly.

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to the creator. So I think that's

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kind of where we are right. Now. You're starting to see it. There's there's small ecosystems where

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I've seen platforms or an artist can put their music on the

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platform a user comes on of the platform, and then there's a collective payment made

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back and forth.

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doing that in the real world is gonna take

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a couple of more steps and and more time, obviously, because most

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labels don't accept

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a unified currency. They don't accept even the same rights structures across different territory

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So I think that it's possible

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when technology is certainly there today to do this.

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but the impediments are some of the older companies and older business structures

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have done this. Like I said for, you know, decades, if not a hundred years.

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and it's very difficult to get them to move away from something they're used to and accustomed to and built for

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and it's something that might be, you know,

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a game changer for them, and it definitely will affect

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each party differently financially.

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I I think the bigger media companies probably gonna take

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some type of a revenue hit when a lot of artists are gonna go directly other their fans.

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artists may have more opportunities to see a better piece than twelve cents of every dollar.

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coming in so their income may increase and users or consumers or fans

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now can also participate. And I think the strongest part of the equations when

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is is gonna be when those fans can leverage there

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ears in this case. So I was gonna say eyeballs, but their ears

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Mhmm.

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and allow their social networks to jump in

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and support an artist that they enjoy.

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and we're starting to see it. Although, we haven't seen it.

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worked exactly like that yet, But if you've got, like, a popular

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guy named Logan Paul He's got i think, twenty million subscribers on Youtube.

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if you came in and said, hey,

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why don't all you guys jump into this new

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Adele record, maybe he's an adulthood.

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and maybe Logan has made a deal with a dell, and he gets

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I'm allowed five percent of the proceeds from that record.

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Right? But if he brings twenty million fans,

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to that artist

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that might be worth five percent or more.

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Right? And each one of those fans has their own social network. So

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even say, ten percent of of two million of them came in that became

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subscribers of this artist or listen to the record, who whichever artist it is.

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and then they brought in their social networks because no one is just a social network of one. And everybody's got

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me on their Facebook or Twitter or Account. If they bring in a hundred people

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were thousand people with ten thousand people

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that exponentially grows at artist fanbase almost immediately.

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So I think when that starts to happen, you're gonna see things happen on a grand scale

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The revenues the revenue chain is gonna change

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some parties are gonna be cut out, and some parties are gonna benefit greatly

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So it's it's exciting times.

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Yeah. We seem to be on the

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on the progress bar of sorts the music business is being

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has been undergoing digitized like, like, every other creator a business,

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I I just wonder how long

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how long before, you know, we hit one hundred percent

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but I dare say it'll will be sooner rather than rather than later.

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But

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musicians musicians about making music, and now it turns up

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what you've been saying. In order to continue to make a living making music.

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kind of does rather help if you're handy with, you know, web design and social media and know that's

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stuff.

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in addition, you know, to being able to play well. Right? The pressure is opal.

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is

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it's a whole skill set, and I started seeing this... Even, you know, back in the nineties,

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it it it was... You had a management team. You had a social media person if that was even that

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and the it wasn't the early in the early midnight such thing.

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But as technology has grown and become much more

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prevalent. It is important to to run that in it's part of your business,

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and it's

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it's still... You know, I I know guys a play guitar or or or vocal

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they just wanna sing. They just wanna play. And

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I will tell you as a manager

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our goal was always to say, look, you right

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and perform, and I'll do all the rest. Right? The idea was to to give that artist

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the freedom to to not be burdened.

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by the business side of the business where oh, how do I do the market?

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how do I do the financials? How do I get this team together? How do I move a career path on the line? It's

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those are difficult and and kind of burdens some thoughts sometimes

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you wake up in the morning, you're worried about how to meet your budget or

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how to market something to the to the most effective point.

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that's a different skill set in mindset than someone who's going to put a song together

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that's gonna appeal to millions of people. So

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I I I think there may be a division labor there, and I know there is. And and all six

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successful artists have some type of representation team around them because

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at some point, it's very difficult to handle all of that.

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in one felt swoop. So I think that

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Yeah. There will be specialists that did focus on this. They're already you are, obviously,

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but the serum an artist can get scaled and there's

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there's a many many examples have artists starting out and

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building a great following on social media all by themselves.

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You're if they're in college or if they're in high school if they're in middle of

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some type of a debt or they're getting a lot of attention to a lot of attraction.

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and they bring in some music, all of the sudden those people become fans with music.

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then they can par that into more fans.

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it's amazing. But at some point, you're right. You have to have a dedicated

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team that's gonna handle

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that traffic and those comments and those responses that are necessary to build that network.

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to its fullest extent. So it is easier gonna to start

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as a grassroots reach project today, I think, because the tools for distribution and production are

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free and the the scale of distribution is

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almost unlimited if you put something in Youtubers Spotify,

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you're gonna be accessible to millions of millions of listeners immediately.

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Now can you discern yourself from the noise?

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and someone find you is someone gonna locate your music specifically and focus on you.

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amidst the millions of millions of pieces of content that are going up every day. That's the problem.

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but the the idea that you can make music for almost free.

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that you could distribute music

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for free for sure and have access to anybody on the globe.

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to listen to your songs. That's that's there right now.

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Now how do we get paid? How you develop a career path? So

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like you said, the artist can sustain themselves because it's one thing for someone to do this as a

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hobby and, you know, maybe they have four other jobs or three other jobs.

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But if they're gonna focus on making music, you've gotta be able to put food on the table and

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That's right.

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it's increasingly difficult to do that and it's, you know, the millions of other competitors that are out there day.

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i've been talking to morning,

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friends

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and and others in in the music biz and

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there's one word

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they consistently used to describe their general

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state of understanding

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of any kind of way forward as a professional, you know, making it in the twenty

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twenties. It's it's confusion.

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people you know, people are trying out

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the have approaches to see what my stick

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more out of

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you know, more than than out of kind of any kind of conviction that it will. But out of just

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you know,

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wanting to see and kind of terrifying out there and and it doesn't really matter if you're

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you're a brilliant kid straight out of conservative or a working prayer,

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any pointers

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Well,

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I always say the music comes first. You have to have great content.

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Right. There's there's never

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like I was just saying about discerning yourself from the noise it

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today, it's more important than ever to have songs and music

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of high quality. Right? That that's gonna catch someone's attention

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that's gonna reflect something that's going on physically or country and culturally

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it's important to think about

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the content itself. And I think a lot of

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people get caught up in the social media aspects and the marketing aspects of something and

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they ignore the fact that the music may not be there. So

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you know, musical tastes change and musical case.

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or I think, far more broad today, and they were

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ten or fifteen or, twenty years ago. But if you can find a niche or you've got an appeal,

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and you're one of the, you know, go to artists and that niche.

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and people start to follow you and you respond to them. And I think that's the other thing is

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is responding. It's it's one thing to, you know, just push or material in your

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content your songs and music out.

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But in today's world, you've got a response. People want to

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anticipate. They wanna say, hey, I really enjoyed that song. You know, where do the idea come from?

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if you just let that sit out there and never respond of that comment. I think you're hurting yourself because

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there's probably others that have the same question that just haven't asked it.

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if they see respond that, they're gonna read that response that response become something that can

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actually garner more attention to more fans. And, you know, one of the easier

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social media tricks is to go in and look at people's comments and comment back.

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right? Join that comment stream, join others that are discussing the same things that

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you're aligned with.

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and all of a sudden you become part of that community.

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so it's it people have been doing that for many many years, but it's it's a way to jump

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the stuff the stuff we used to do in in in in high school,

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traveled handled over of, you know, cassette players.

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Now now it's done somewhat differently. But the interesting thing is that it seems

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that there's also a shift away from

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the sort of hit centric

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industry.

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which has certainly conditioned many artists that

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the the choices between And and Pen

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But in in reality, not was actually wrong with aiming for a

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decent professional paycheck. Nothing. Right.

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Nothing's wrong with that. And and I've... You know, everybody starts at one

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There's... I don't know a single artist, but doesn't have a first listener.

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Somebody asked to hear it first.

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again, if you're good at what you do,

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they will come. I think that's what we're coming down to. Where you're seeing creators of all stripes now.

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you think, you know, there's the... I think one of the biggest Youtubers is a kid that opens up packages.

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I who would have thought that you can make

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tens, actually hundreds of millions of dollars

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over a few years, opening packages on a video camera.

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that's the most... You know, that... That's preposterous. But that's what's happening. So

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there is an audience probably for everything, but if you can address that audience,

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find it first, then address it and then engage with it.

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you can actually do well. I... One of the

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artists on our platform Got enjoying extra. He was a

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very independent artist. I think you had three thousand Facebook fans to start with

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which is a very modest amount of fans.

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he was able to get a hundred percent engagement from them, and they started

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supporting and by buying in and in his royalties.

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and all of a sudden, I think his first check was eight thousand seven hundred dollars or something and

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that was enough for him to quit driving lift and and take his music from a hobby to a

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career. He was making music at two or three in the morning.

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for a few hours when he could. And now he could actually make it at two or three in the afternoon where you could actually focus on it.

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so I see it happen. And if you just take a small

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fan bass

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but engage them. Right? Comment back to them ask them what they're doing. Where are they? What kind of music do they're like

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how do you relate to them?

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I build a rapport

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they will grow.

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and if you ask each one of those folks to put in a dollar, you've got three thousand dollars.

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Yeah.

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right? And you grow that to ten thousand fans mean he's put in a dollar now. You get ten thousand dollars it's

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it is a truly scalable opportunity.

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but most most a lot of people are afraid. They're like, well,

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I only have a thousand fans. Okay. You gotta start with that.

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Right? You're not gonna be Kim Tomorrow. And by the way, Kim Karashian stands

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are all real

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Right? You may have a huge number, but how many of those are

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true fans are were really gonna engage with her. I'm I'm gonna argue. It's it's

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a much lower number than her gross number of fans.

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So

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I dare say I just say they they

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well worn phrase, vanity,

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metric actually comes into this, but we we won't go down that path.

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The far more interesting part is Kevin Kelly

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idea of one thousand true friends. I'm sure you've you've come across this.

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Yes.

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Kevin Kelly, but the, you know,

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founder of a white magazine and a sort of an Internet stage.

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One of things he he talked about a long time ago was that an

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this doesn't need millions and millions of people. He age thousands and thousands.

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And all of a Sudden, now it turns out that

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from, you know, the conversations. We've we've had

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I've actually, you know, had

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confirmed to me what I had suspected for a while that

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and just because you play the big venues and you have

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you know, so many,

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zeros at the end of a new onion on your Facebook

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page doesn't necessarily

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translate into into being able to to make a proper living

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But if you do connect with a thousand or ten thousand

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people who actually love what you do, Then all of a sudden,

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this this this direct relationship

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idea comes into being, and and

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if I may steer the conversation saying as we've been,

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being been talking for a for a while now and it's coming up to the top of the.

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if I may steer the conversation towards the

...

primary topic of of the evening and that is

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that is

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and of and and and matters arising

...

it seems that

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Oh,

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this technological roller coaster, which which is going on right now

...

may actually skew

...

the scales in favor of the artist. Wouldn't that be fantastic?

...

What a surprise? Okay.

...

Yeah.

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I I think you're right. And and again, these are early days.

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it's the door is just opening. You've seen a lot of crazy things come out

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a lot of valuations kinda go all over the place.

...

one of the things that that's

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operative to me is the legal side. I'm very conscientious of that. And

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most of those platforms I see coming out on the End of side are

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are run by tech engineers and developers

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and they've got very, very little or skin

...

experience on the music side of things. And

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most musicians and even most people that work in the music industry

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have a very low level of understanding about royalties in particular

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so how to register your songs properly to collect on a global basis.

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all the bodies that are due to you, and then how to

...

actually put those in a place where you can actually to see those results

...

in some period of time. So you've got a register with certain entities then you have to

...

follow up and make sure you're collecting properly from those entities.

...

something is is minor as the wrong initial

...

in a song registration or the one letter or the wrong number,

...

on that registration could put your money somewhere else.

...

there's something called black box monies in the music, which are basically lost funds.

...

that someone has not been able to identify where they came from and

...

I think the standard is I think it's thirty six months. But after some period of time,

...

the powers of b can take those bodies and put them back in their pockets.

...

if no one identifies or claims that money. So if you wrote a hit song,

...

there there's a a saw we worked with the

...

gave us some songs that were not registered in France, For instance, we found

...

Sal, which is the collection society in France.

...

didn't have a record of these thousands Or big hits songs. So someone

...

along the way, whether it's the label to publisher or the the artists themselves,

...

didn't properly register these songs, and there was a lot of money being collected in

...

France. Was is a pot top ten music territory.

...

that wasn't being

...

illuminated back to that artist.

...

is something as simple as that. But I think that

...

Again, these platforms are being built by

...

very forward looking people that are that are that have little experience

...

in this collection side and don't understand the structure of it.

...

they mean well, but I think they've been selling things that

...

they don't know quite what they're selling. And they certainly haven't it put in place royalty collection mechanisms.

...

if any of the Feature participation in the world, he that's a very difficult

...

cult and more advanced

...

part of, and I think we're just starting to get into now. So

...

again, it's exciting times, but I think people have to be

...

patient that things will go up and down, and there will be some guidance

...

with with regard to what's offered now how it's disclosed and

...

how those royalties are being registered and collected on properly.

...

it is the top of the this is the

...

lab for and talk

...

that live, and my guest is

...

music business veterans. To stewart, and we're talking

...

We're talking about blockchain we are

...

because you've been quoted many times

...

versions, you know, variations on a fame if I may,

...

A block chain will reinvent the industry

...

oddly.

...

Perhaps

...

artists have been into two minds about blockchain Many artists.

...

or even

...

you, up in the danger of this technology, Brian You was

...

One high profile artist is

...

yet to be convinced and keep puts forward

...

arguments that are that Are formulated with his usual intelligence and insights

...

so it be full tour to ignore them.

...

what March you say to en email, for instance, and others,

...

suggested block in general and In particular a worth a look.

...

Well, my first question would be, I... I don't know

...

Britney knows exact words and his thoughts. But what I would say in general to that is

...

then you must not believe in accounting.

...

so if if you're okay with nobody having books,

...

on the collection of your royalties. Okay. But

...

when blot at its core is as a digital ledger.

...

Right? So

...

if you would agree that it's important to keep a ledger. Right? Some type of accounting of

...

monies that are owed money that come in money go

...

go out, then you could say, okay. Do I want a ledger that's efficient?

...

do I wanna a ledger that's...

...

transparent

...

Do I want a ledger that could be confirmed amongst others on this

...

in this ecosystem.

...

I would say, yes. Right? If if

...

that the existing model is this. Each publisher

...

has their own data silo of

...

who the ownership and rights

...

owners of songs are

...

each p or C, which is a performing ranch organization like As Bmi,

...

in Europe, that use Cnn collect the management organizations, but they're the same. They collect

...

from performing right. So any anytime a piece of music is used in a territory,

...

there's a governmental body. Like I said,

...

in France Su and Germany, It's Given, In england P, etcetera Etcetera, Etcetera.

...

each major territory is hundred and forty around the world has a society that collects

...

license monies for music used in that territory.

...

Okay. They keep their own rights, records.

...

there is not a unified

...

database right now that that is used by these one hundred and forty different

...

collection societies. So, again, if your name is

...

someone says hey, Brian, you knows up blind with an eye or buying of the why?

...

something as simple as one of those countries or territories

...

registering just his saw with a y instead of an eye

...

She doesn't get paid.

...

could cause

...

Correct. A chunk of his money to be diverted somewhere where he'll never see it.

...

okay. What I'm saying is if there was a unified universal

...

ledger that everybody agreed on Those was hundred and forty

...

societies and collecting for everybody around the world. Said we all agree on this

...

database.

...

Now you're gonna save... I would say

...

you have one point of correction. Right? If if you did notice an error,

...

you don't have to check a hundred and forty different societies around the world to see if that eyes is

...

Manually right.

...

in place

...

Yes. And not even I I

...

Do I still have faxes?

...

cap a few years ago.

...

Yeah. Alice a few years ago, only was accepting facts.

...

I love it.

...

which is a

...

it's a joke. So imagine imagine having to craft a letter to every one of these

...

insanity.

...

societies,

...

and wait for a response from an accounting department to correct something.

...

Right? It's a nightmare. But if there was a universal database,

...

that had a single point of correction.

...

anybody could see, hey, that's proper. These are all my songs. Out you? They didn't

...

they didn't forget that third song off the fourth album, whatever.

...

and you could see that transparent. And, by the way, I think this

...

business will have to change when everybody can see your money. It's

...

it's that's a core issue with many artists, many managers, lawyers,

...

executives are very reluctant to have that change happen. But I think

...

when when it becomes a retail business, somebody becomes open if

...

you wanna participate with consumers, you're gonna have to just say, hey, these are my royalties.

...

here it is, like it or love it or hate it.

...

this is what this song earned. And here's is the statements to support that.

...

Right. But back to blockchain, It's a digital ledger system.

...

that can be agreed upon by all the parties in the ecosystem.

...

and it's transparent so any of them can look at that and reference it at any point.

...

it's hard to argue against that. Right? If if you say, hey, I think it's better if there's a hundred and forty different book

...

keeping systems, and it's impossible to see all of them at once.

...

and some impossible to know if I make a correction on one if it's reflected in any others,

...

versus now if I make a correction on this one spot,

...

everybody is gonna see it at the same time.

...

it's transparent to all

...

to me, that's a much better cleaner, more efficient

...

solution. And, again, if that leads to more money is being distributed to artists,

...

rightfully so that are due to them,

...

I support it.

...

And that's literally what the basis of blockchain is it's built for rights management.

...

of the best case uses for blockchain is in managing a set of rights.

...

And as you know, songs they are becoming more complex with more and more writers as a mixer that's

...

producers and engineer is a label. There's four com writers. There's ten base players, whatever.

...

as we get more complex and that rights,

...

composition

...

it's gonna be more stress on the existing system and they're gonna get more things wrong.

...

right that nice space player she's all gonna get paid, maybe

...

Right? And how does he resolve that today? It's a nightmare.

...

probably can't. It probably doesn't even know the money were due to him.

...

But with a, again, a universally accepted database,

...

that will be resolved. And I think that alone is

...

forget all the other ackerman events that go on top of that,

...

that alone a universally accepted database of rights management.

...

is wins all arguments.

...

So

...

from, you know, where where you're sitting and viewing

...

they... Oh this this unfolding are the sync licensing firms and the royalty

...

collection bodies is all over the world. And the labels are they are they shared

...

in their foundations. So are they

...

is the they response more subtle

...

and complex and are they actually realizing that that that way lawyers

...

the future, and they should really maybe do something about about

...

upgrading their assistance.

...

That's interesting. You know, I I was wondering the same thing when neighbors happened about

...

two thousand. I mean, are they shaking? Or are they licking their chops? And

...

having known some record executives. I I would say they're

...

probably doing the latter. They're they're they're they're looking at this offer.

...

to is another way to have another bite of the Apple.

...

That's just, I think, by nature, they're they're aggressive and they're progressive. They're they're

...

they're they're business guys out of the wild west. I mean, the record

...

business is one of the last vest of

...

of freedom in in the business world, film another place where it's

...

it's still come a while west, but most businesses been corporate

...

I remember remember when the major labels in the Us and probably the late nineties

...

started to become governed by quarterly earnings As all companies

...

get to that point when you scale. But the the record industry in particular started to look

...

like,

...

a bank you'd walk into the the building and instead of people having posters on the wall and music a

...

playing. There cubicle, and it looked like people were just

...

they could have been in an insurance company. But that said, I think they realize

...

they have to make changes. I think the napster experience

...

really woke some of them up. I mean, I had a chance to speak with Char fanning and

...

he's like, look, we went to the labels and asked them the partner. We wanted to work with every major label.

...

they all said, except I think one, we're gonna sue you.

...

Right? So they lost because as I said,

...

Each Cd is as a digital master. The horses were out of a barn.

...

They were they were... Were well gone over the horizon

...

And do you think you're gonna

...

not just to have out of the barn.

...

they were out for the horizon. People were sharing hard drives worth the material for free. So

...

Yep.

...

to come out it at that late point in the game and think you're gonna run it. I think they suffered they saw

...

huge, you know, revenue chops and roster cuts and

...

they'll make the they'll make it sound pretty today, but it wasn't pretty

...

i I can tell you they went through a major major

...

sea change in the early two thousands where they had to really reevaluate

...

and I think today, they would jump on this opportunity. They're they're assessing it now because it's

...

Again, the dust hasn't settled yet. It's still very, very new.

...

but they're gonna look at this as as some other exponential revenue opportunity

...

they're gonna say we hold rights to most of the popular songs because

...

you know, they had the rights because they were the ones that bank them and and

...

and you know, monetize those rights and marketed those rights and

...

made them very popular in most cases and are benefiting from those today with

...

even with streaming.

...

So they're sitting on a large portion of the world

...

valuable music catalog. So

...

they're a good position if they can negotiate away and build something that allows

...

consumers to pop into that, and and they could benefit. You know, it's it's

...

they cost them nothing to distribute music now. I mean, their distribution costs were much higher

...

fifteen, twenty years ago.

...

But that cost has been gone. The production cost for music

...

Again, almost zero. You could just tell an artist say deliver the record to me. I don't care why you

...

do what you're doing your bed in your bedroom.

...

right the it on the ipad.

...

but back, then, you had

...

Yeah. On your my iphone, back then, you had to go into a studio at

...

Yeah.

...

at their expense because they were generally advancing the recording costs.

...

higher an engineer, higher producer be that room, and

...

a thousand dollars a day for a month or two months or whatever it was.

...

and those costs were very high, and I that was a big barrier to entry for many artists. So

...

the labels, you know, took advantage of that and they had a

...

closed ecosystem. They control the still control radio to to me

...

many respects today, which is the point of their last bunch frontiers. But

...

today, their bank. Right? They they you could hire any of those

...

service they provide individually as an artist yourself. You don't have to

...

have a major record do that for you. You could

...

be much more efficient, I'm gonna hire a publicis at this rate.

...

and we need them for six months and they're off. Right? I

...

hire legal team and negotiate my deals, and when there's there's no deal there and off to pay them. So

...

you can keep overhead under control, but

...

back to your question. I I think they're looking at this as an opportunity

...

I think they're starting to circle around and and figure out how they can

...

digitized digitize and token a lot of this

...

all the rights they already own, and they will win, they will make

...

wins phone out the right term, They will they will make

...

good use of the rights and and

...

optimize them as best they can and and because they hold,

...

rights to the biggest pop songs ever in most cases,

...

they're gonna come out on at that level when when everything shakes out. So

...

future artists, you know, artists that are coming up right now, I think we'll look at this on a much different

...

way. The opportunities are there. Again, it's like

...

production distribution or almost at zero cost, and how do they get out and how do they even

...

it the analogy is Amazon for books. Right? If I go you a

...

publishing new Simon,

...

my pay ten a book.

...

If I do a deal on Amazon, I could get ten dollars a book.

...

Right. Same book.

...

The differences now, okay. Do I have a machine a big

...

company financing answering me and taking ninety percent of my income.

...

but in return for giving me the money and and also doing some marketing distribution,

...

or do I take the marketing distribution cost on myself?

...

but my book on Amazon made ten dollars a book. Right? And that's

...

I think what's happening to music where artists are saying. I don't necessarily need that up upfront

...

financing because I can bootstrap it because it's nothing to make a

...

and something to get it distributed now and need for marketing and and promotion and maybe touring

...

those places, maybe you can go to your fans. Right? Maybe you can let them participate in your royalties maybe

...

you can go on patreon and raise money's back way. But

...

there are ways or maybe I could sell an N. Right? I'm gonna n the artwork.

...

and raised fifty thousand dollars, and that's what I'm gonna use to go tour

...

to build my fanbase base.

...

I think you're gonna see more and more models like that start happening.

...

There's a there's

...

a number of interesting stories

...

going back a while of fan involvement and

...

getting artists to to tour, I think

...

The earliest that I could find was was

...

where they had never...

...

remember if it was Us of Canada, somewhere in North America, that never been that never

...

that turned out they had a massive massive following

...

And they did. In fact, what we now call

...

ground. They the fans came up with, I think, fifty

...

sixty grand to make sure that they could come over and play.

...

And I did

...

this kind of model, the shift

...

that we're saying away from music as as commodity and

...

back towards music as craft It's been going on for some

...

but it's speeding up now, isn't it?

...

I think so. And like I said, I think with the technology coming into

...

maturity to a certain level words... It's easy to

...

plug and play now. You don't have to do how a code to get your song up somewhere.

...

the focus can be brought back to the craft itself and and

...

when you've got millions of songs being uploaded every day,

...

you're gonna see people gravitate to the songs or more appealing. And I think if

...

if you you can tell if someone's put time in love and effort into

...

crafting their saw someone just, you know, hit a couple loops and

...

put pasted them together. There's a big difference. A lot of it also though

...

music you're talking about

...

just appealing to a certain audience. Right? And and there are songs that are

...

let's just call them trivial songs where

...

it's almost like a nursery rhyme or someone like this is cute. Right? It's it's

...

capturing some flavor capturing some point in time,

...

and it becomes popular because that we always have this songs even back in the fifties and forties.

...

you, there were there are songs that were just considered kind of bubble gum songs, but

...

I think, for long term fan,

...

acquisition and and people that are gonna follow you for many years through many

...

iterations, you wanna touch people and move them physically. And

...

to do that, you've gotta have craft. You you've really gotta spend a time and

...

energy I'm making your songs as as as great as they could be.

...

We've seen a few

...

high profile acts getting on the act. If you allow me the indulgence,

...

of of selling their work as and after you

...

And if these start that so far,

...

it's been pretty standard fair. If you if you think about it,

...

she mind your album, you can get a collectible of it.

...

we're all just starting to scratch

...

the surface, I think of what's possible with this technology.

...

Where you say the compass needle pointing?

...

what are some of them more exciting

...

potential uses for Specifically.

...

that that you can think of

...

Well, N is it stands for non fungible token.

...

So on its surface, that could be anything. That that's saying saying a token.

...

So it's a digital good. Right?

...

a digital token really that that's unique

...

Oh, it it's a

...

It's a it's a digital object. Call it. Right?

...

it is a union unique

...

it's a unique digital object. Yes.

...

But at it's root, it's also a token that can be attached to almost

...

any type of

...

physical or digital product and then it has been to many.

...

So I think you're gonna see some type of structure or a reference

...

so when someone says this is a digital

...

this is my digital album mart.

...

that's gonna become known as exactly what that is. Either you're getting a share of that Al

...

or you have a chance just to have it a collectible form or maybe you'll participate every time that

...

that Al is shown or used somewhere. So there's different use cases for each

...

one of these tokens. But I think you're gonna see more standardization

...

so people gonna go okay. Al bring your boom, music,

...

Okay. I can I can use this personally.

...

it's on a commercial license that I can use this. I can play it It's like a download almost

...

a rights royalties. That's over here. I'm gonna be able to participate in

...

the master world of the sewing royalties the publishing royalties, whatever that might be

...

that will be over here. So there will be some standardization if

...

cross where you say, I know exactly i'm buying the publishers rights over here I'm buying this piece

...

of artwork over here. That's starting to get there now because the boots

...

fields very broad. Eventually, I mean, I think

...

to me, the holy grail many... I I could imagine is

...

when you could identify each piece of a song, those are called

...

stem. So and I would say anything after two thousand

...

seven that was recorded digitally on pro tools or able Turner,

...

garage band, even

...

each track used to call tracks.

...

is got its own digital identity. Right? So say there's a baseline

...

that baseline could be token. Right? I can assign an Of or or token

...

to that baseline.

...

Now what does that do? Right? So a song might have twenty tracks or fifty tracks.

...

In the past that was on a maybe a two inch piece of analog recording tape.

...

those tracks were married together because they're all the same piece of tape.

...

is very hard to separate those tracks identify. That's the baseline, and that's

...

and you'll see that when people are going back to old music and trying to pull out the vocals or erased the

...

closer or

...

give me that without the drums. Right? That's very difficult unless you've got a mixing console.

...

Hard work.

...

that's set up. Yes. But today, with digits digital

...

Yep.

...

dolls, you know, digital production tools,

...

you can easily. I say that's the baseline. Okay. And then

...

Iso saw the baseline and all your hearing is baseline. What I'm saying is once you can

...

tag that baseline.

...

And and by the way, every other track or every other element of that song,

...

and let that go out in the world.

...

Right? So people were very precious they're, like, I don't want my

...

song out because someone might use this line but some of my copy it, somebody might use it.

...

in the past, that's a big issue because if someone uses it how you gonna know number wanted and two, how you gonna get

...

paid for that or compensated for that. You it was very difficult.

...

today, when you can tag that baseline, and you're no longer

...

free. You're not gonna say, oh, I don't want it to go anywhere. You want it to go everywhere.

...

and of some kid and

...

Estonia.

...

puts together a Dj mix

...

and it happens to include your baseline.

...

and that mix

...

is listen to by or stream by a hundred million people

...

you should be paid.

...

Right? And the fact that you can track it,

...

allows you to monetize it. And if you can monetize it at scale,

...

you will not be afraid to put your music out to everybody.

...

And and I I call this, you know, I call it Paper use because

...

P paper use is where you're paid for every use

...

of the song are people go how's I could have?? Well,

...

most listening today is done through digital platforms. Right? I would I would argue ninety five

...

son of listening is either through a phone, some stereo system

...

coming through streaming service like these or Spotify fire and Tommy,

...

it's coming over a Tv, wherever it's coming from, There's a digital source

...

of record as to where and when and what was played.

...

Right That Spotify tracks that every single minute of every single day.

...

they know what device played what song at what time and where it was. Right? So that information there.

...

If you can track that, you can also go one level deeper and track

...

the base line for that song. And even if it's embedded in

...

twenty other or two thousand other songs. Once you aside a very or

...

you to that. Right? So we say, hey, look, a baseline. That's three minutes in twenty seconds long.

...

and they saw written by this artist, agreed to receive point

...

zero zero zero two cents.

...

per play.

...

Right? And if that's fungus played,

...

and it and it will add up Right.

...

Oh,

...

Exactly. If the song gets played ten times, maybe you get a penny.

...

song gets played ten million times

...

you get a hundred dollars. Right? And at that point, here's what's gonna happen. Right? So

...

Youtube a great example. Youtube is probably... I would call it a ninety eight two

...

structure. Right? Two percent of the Youtubers are

...

getting probably, you know, the the lion's share of income right now.

...

right they're they're the top creators. The other ninety eight percent

...

is what we call long tail.

...

Yeah.

...

those are the people are putting up videos that don't get a lot of traction, but there's millions hundreds of millions of that

...

it's it's way more than the two percent that are getting paid well.

...

The problem today is nobody can use music legally

...

in their video unless there's a license for it.

...

Right? So I've got a sixth grader that's graduating from elementary school. He wants

...

put bond Job living on a prayer in his high school video.

...

Of course, you would.

...

for Youtube

...

Of course, we... It loves a song. Maybe there's so ways gotta a prop school, whatever the

...

reason to use it.

...

but he can't do it because it's illegal.

...

That's copyright infringement.

...

But imagine if he could do it, and imagine if he... Only the thirty people is

...

class saw that saw or saw video.

...

Right. So maybe the rate would be point zero zero two cents.

...

per view, and thirty people saw. So he owes point zero three three cents.

...

guess what? Youtube will cover that three sets. Right? They have bad revenue coming in set

...

they have no problem covering that. But what happens when you allow every creator to use

...

every piece of available music in the world.

...

Right? Without restriction, not worry about license or

...

I gonna pay for this? Or is this stealing now? Just use it. And if you have a

...

ten million views, you'll pay ten million views worth of money.

...

because your channel will be making more money because of your ten million views.

...

Right? On the other hand, if you've got Ten views, you're gonna pay ten views worth of money.

...

But what I'm saying is once you have that point of equalization where

...

creators are free to use the full palette of music. Right? Anything,

...

I wanna use this little of course from the song, Boom

...

as long as the creators that have created that song are getting paid,

...

they won't mind

...

Right? As long as the creators that are creating the media in their social networks that they're just

...

distributing. They won't mind

...

So now you've got a system or everybody that creates something

...

is paid fairly. And, by the way, maybe it could be in

...

near real time because, you know, again, who's using it where and when

...

And now you've got a collections and distribution system that that's efficient

...

transparent in

...

and at at, you know, a reasonable amount of time versus waiting eighteen months for royalties.

...

So I think that's the holy grail when you can start to identify

...

each piece of music down to the track, we'll call it a stem.

...

and that stem is encoded with a token that stays with it no matter where it's used.

...

right? If he tracked and monetized anywhere on Earth,

...

when you have that, I think the fear level goes down

...

the litigation law goes down,

...

the usage goes way up. Right? And now the exposure for those artists goes way up

...

because maybe a lot of people aren't using songs because they're afraid to. I see it all the

...

time on podcast. Right? You'll hear a theme go,

...

wow, They could use this song Because is the name of our podcast is exactly

...

after part to this title, long title, but they can't use a long because it's way to expensive.

...

Sorry. No can do. Yeah. Yeah. Yep. Yeah. Yep.

...

Yeah. But if they didn't use it, they probably have ten times the audience

...

it would flow better. The content would seem more

...

fitting in, but they're using some, you know, a a a

...

a piece of royalty free music or they just did something on there, You know, their own

...

their own laptop or whatever if the quality is not there.

...

even though they're willing to pay for it they just don't have a way to do that right now.

...

Mhmm

...

I'm saying if that's automated the technology allows that payment method.

...

will change the business.

...

on a on a related note where does vest or more precisely,

...

where the users of of stand?

...

in terms of the they forever tricky questions of compliance,

...

What have you been able to dig up, for example,

...

in terms of clear answers out of the the regulator, whether or not

...

In fact, participating in the royalty fractional is

...

a security and thus subject to Sec roles.

...

because that in itself is very terrifying.

...

is. We spent a lot of time and money on that, and I've

...

got the legal bills to prove it. It's... It's say

...

uncharted waters, many respects, but we modeled our

...

company after music publishers it exist today. Right? So music publisher are like,

...

sony, for example, they will pay an artist in advance. Right? They'll say, hey,

...

here's two hundred and fifty thousand dollars. We want your catalog from

...

I don't know two thousand fifteen until two thousand twenty, and we'll do a three year deal.

...

Right? So you'll take the two hundred and fifty thousand dollars of the advance. They pay you.

...

and then Sony will go out and collect money that those songs earn.

...

during that period. And at the end of say that three year period,

...

if Sony has made five hundred thousand then

...

you have the chance to walk away from that dealer or re up with them. Or if they

...

made less than that two fifty. He said they only collected two hundred thousand

...

of the tooth that they advanced you, they stay in those rights.

...

and so they recoup that extra fifty thousand dollars or you could go to them by the mountain

...

in this music publishing space. It's generally a one point two five percent bio

...

you're gonna pay them twenty five percent see to buy out it at that point.

...

but best model is exactly that. So we allow users

...

to provide an advance against a royalty stream.

...

it's not a purchase that not a sale of copyright. There's a transfer of ownership transfer ownership.

...

they're providing merely advance against a royalty stream.

...

and the royalties come in, they participated a pro rata pace

...

for those royalties. So and there's also a recursion periods

...

generally three, five or ten years depending on on the artist, they get to choose which royalty when they like.

...

And if the fan doesn't recoup up to that

...

three year period have they put in ten dollars in year three comes around, they've only received

...

five dollars back. They stay in those rights until they get their ten dollars back.

...

maybe years and years and years, they take a long time, but

...

our model is based exactly like the music publishing model is

...

And in the Us those music publishers aren't subject to you regulation.

...

And that's that's literally a corner of the business that we had to figure out

...

and a lot of these other platforms where it's a sale of something. If you're selling

...

a royalty stream to thousands of people

...

there's questions as whether that's, you know, a security or not.

...

That's that's

...

always tricky, and it has uncharted waters mostly because, of course,

...

as we know, the regulator is playing catch

...

always.

...

with with... With technology always,

...

So maybe maybe to close

...

saying as, unfortunately,

...

we are coming up to to the end of our chat

...

although I will like a point of dragging you into the creative farm

...

one Monday, Monday afternoon your time because

...

Sure.

...

there we can talk

...

more about the music and less less about the business.

...

I need any predictions for the next

...

twelve to twenty four in terms of crust, you know, this this

...

confluence of of art and technology. It is January, you know? So let's let's

...

hit some predictions.

...

I would say in the next twelve months,

...

you're gonna see at least one major artist, really come in and embrace

...

the full gamut of technology, including N fuse, but

...

they're gonna figure out a way to

...

take some of their art off of a major label now

...

they negotiate their way off that deal or they partner with the label.

...

you're gonna see label level artists start to participate.

...

same token, I'm gonna say labels and perhaps publishers with labels to start

...

we'll start to play in the N space. You're gonna see a number of them

...

release Entities in the next twelve months. I don't know

...

I doubt they're gonna be royalty based. I'm gonna guess gonna be more artwork or and collectible based.

...

because the royalty issue is is, you know, that's their bread and butter

...

you probably don't wanna jump in full full force with that yet.

...

But I'm gonna guess you're gonna see Coming from all the major label groups.

...

within the next twelve months.

...

And I'm gonna say consumers are gonna be much more

...

open to working with artists, participating with artists,

...

in a meaningful way. And again, beyond just oh, thank you, or

...

here's a, you know, a shout out. It's it's gonna be sharing in in production

...

and cost sharing and touring costs.

...

sharing in in royalty participation. I think that's gonna become much more standardized

...

I think this new generation of of listeners, especially Gen z,

...

wants to participate. They wanna be involved. They're not just passive.

...

they don't just want the music to flow or their ears They wanna actually

...

have something to talk about it and and be able to to

...

to bring others into it, build a community right community building, I think is

...

is very key. I'm seeing a lot of platforms that lack that

...

even spotify they're doing their best to build communities, but a lot of

...

Harbor manufacturers, a lot of distributors

...

haven't really thought about that. It's been a one to one relationship. You're a a user on the platform,

...

you and me have a relationship but that user doesn't have relationships with other users.

...

which would only benefit the platform if they did that. So

...

think you're gonna see a lot of community based platforms

...

come out, and that's again, gonna help with that N being sold and promoted marketed that

...

music being sold and promoted the marketed among social networks.

...

those are... That... I can see that pretty clearly. So beyond that, it's just

...

I'm taking portraits shots.

...

Well, that is a conversation We are having in parallel offline.

...

But we will talk about that when when the right time

...

comes

...

artists will create whether or not they're getting paid. Let's hope.

...

that

...

they use the mechanisms we've been talking about tonight.

...

do contribute to them getting paid so they may indeed continue

...

to create

...

this has been

...

and I've talked that live and it's been my

...

great pleasure to chat

...

does steve do it all the way from La or, at least all the way

...

from for for for me, have a great evening. Thank you

...

steve, and we'll catch you

...

another time very soon.

...

Thank you, Ralph. Thank you, everybody.

Fortune Cookie