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Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,

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Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg. I heard podcast.

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Speaker 1: It's Tuesday, August nine. Venture capitalists and certain people in

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Speaker 1: the music industry are enthusiastic about the potential for artists

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Speaker 1: to benefit from technology like the blockchain and like n

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Speaker 1: f t s, but there isn't universal agreement, especially among

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Speaker 1: musicians themselves, that any of this is necessarily a good idea.

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Speaker 1: What are the big trends and what are the big

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Speaker 1: areas of disagreement, Bloomberg reports. Lucas Show, who's based in

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Speaker 1: l A, joins me to continue our coverage of crypto

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Speaker 1: and the music industry. Upside with some of these newer

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Speaker 1: technologies is that you can build communities and maybe give

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Speaker 1: fans a sense of greater ownership. Lucas, what brings you

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Speaker 1: to New York. I'm seeing my family mostly out on

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Speaker 1: the North Fork, a long island that sounds very pleasant

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Speaker 1: and frankly, more fun than trying to convince people that

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Speaker 1: they are misunderstanding and f t s and music, which

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Speaker 1: is what we're going to try to do here. No

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Speaker 1: No Crypto discussion on the North Fork. My relatives they're

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Speaker 1: not up on it. Well, you can send them this

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Speaker 1: episode and change their minds. But you have spent quite

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Speaker 1: a lot of time in l A and other places

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Speaker 1: really getting into the nuts and bols of like the

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Speaker 1: business of entertainment, and you've written and reports it on

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Speaker 1: various stories around. Well, I would say like there's kind

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Speaker 1: of a theme of how people are misunderstanding the infrastructure

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Speaker 1: of creativity and the network that talent, whether that talent

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Speaker 1: is a musician or a Hollywood actor, are tapping into.

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Speaker 1: And I'd love for the purposes of this episode to

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Speaker 1: kind of start there. Right, people are hearing if t

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Speaker 1: s are going to solve music full stop. What is

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Speaker 1: your response to statements like that, Well, there's long simmering

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Speaker 1: frustration resentment in the creative industries, but especially in music,

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Speaker 1: that you have a small number of largely executives, largely

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Speaker 1: white male executives, who control the industry and they have

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Speaker 1: for for most of its existence, extracted a lot of

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Speaker 1: wealth from the work of other creative people. So you've

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Speaker 1: had famous examples like a prince who referred to his

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Speaker 1: kind of record contracts or referred himself as being a

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Speaker 1: slave and a record contract and broke off on his own.

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Speaker 1: On December thirty one, my publishing contract with Warner Chappo expired,

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Speaker 1: thus emancipating the name I was given before birth Prince

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Speaker 1: from all long term restrictive documents. I will now go

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Speaker 1: back to using my name instead of the symbol I

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Speaker 1: adopted as a means to free myself from all undesirable relations.

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Speaker 1: There's always been this desire for the artist to gain

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Speaker 1: more power, and I think any way of doing so

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Speaker 1: is probably for the net benefit of the creative class.

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Speaker 1: It would be great if we didn't only have a

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Speaker 1: few gatekeepers who controlled everything, but decentralizing that power is

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Speaker 1: much harder than people realize, and in some cases not

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Speaker 1: good because there are benefits to having kind of infrastructure

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Speaker 1: that most people use. And so I think there's a

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Speaker 1: lot of promise in what cryptocurrencies and n f t

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Speaker 1: s and the blockchain can do for music, but how

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Speaker 1: it will actually be executed is still a little bit

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Speaker 1: fuzzy to me. We've seen some pretty big names get

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Speaker 1: really excited about music, n f t s, music, and blockchain.

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Speaker 1: I'm thinking here like Snoop Dogg, Steve Aoki, These are

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Speaker 1: people who have created their own platforms or have argued

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Speaker 1: for the importance of music n f t s. And

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Speaker 1: then you have venture capitalist jumping on board as well,

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Speaker 1: who are willing to pour a lot of money into

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Speaker 1: these projects. They're willing to, you know, really back something

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Speaker 1: that we're kind of still figuring out what exactly the

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Speaker 1: best use for blockchain is in music. So I want

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Speaker 1: to ask you more specifically when you say benefits, like,

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Speaker 1: what are some of those benefits? What do I not

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Speaker 1: get if I, as a musician decide to release my

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Speaker 1: latest album as an n f T on a blockchain.

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Speaker 1: What am I missing out on? Well, for one, you're

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Speaker 1: missing out on most of the audience. Majority of music

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Speaker 1: listeners do not own cryptocurrency, do not use blockchain technology.

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Speaker 1: Most of them probably don't know what an n f

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Speaker 1: T is if they were pressed to define it. And

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Speaker 1: music is about ubiquity, you know, if you're Harry style

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Speaker 1: is bad, Bunny du a leap. But one of these

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Speaker 1: artists who has a new a new song out, you

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Speaker 1: want it to be everywhere to the whole reason why

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Speaker 1: they've never been able to quit a place like YouTube

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Speaker 1: or now at TikTok places that don't pay them a

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Speaker 1: lot of money, but introduce them to millions of fans.

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Speaker 1: So the upside with some of these newer technologies is

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Speaker 1: that you can build communities and maybe give fans a

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Speaker 1: sense of creator ownership in what you're doing, or in

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Speaker 1: some cases literal ownership. But you are niche casting and

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Speaker 1: not everyone wants to do that. Does this calculation really

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Speaker 1: depend on if you are literally bad money versus if

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Speaker 1: you're somebody who's up and coming. Yeah, I mean that.

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Speaker 1: That's definitely one of the reasons people are interested in

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Speaker 1: it because music royalties are incredibly complex, and it is

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Speaker 1: one area where the record labels and the music publishers

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Speaker 1: wield a lot of control and have often signed young

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Speaker 1: artists to rather extractive contracts that it takes them years

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Speaker 1: and in some cases decades to get out of. And

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Speaker 1: so if there's a way for you to maybe use

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Speaker 1: n f t s to raise money on your own

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Speaker 1: and then use the blockchain as a more transparent or

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Speaker 1: ledger of money, that in like in theory, sounds great

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Speaker 1: to these artists who are used to getting strewed over

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Speaker 1: by the record labels. Again, I think the challenge there

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Speaker 1: is how many people are you going to get to

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Speaker 1: transact that way? Only the artists at the very very

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Speaker 1: top of the industry make a lot of money from

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Speaker 1: streaming on Spotify and Apple Music and YouTube, and nobody

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Speaker 1: else makes money. Here's a clip from a recent episode

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Speaker 1: that we did about decentralizing the music industry. It featured

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Speaker 1: DJ and CEO of Royal Justin Blow. Justin have this

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Speaker 1: to say about a common misconception in the music industry.

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Speaker 1: I think a lot of people are stuck in the

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Speaker 1: illusion that music doesn't make money, um when in reality,

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Speaker 1: music generates quite a bit of money, especially on streaming,

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Speaker 1: which makes about of all recorded music income. It's just

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Speaker 1: the people who are capturing that income are our institutions

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Speaker 1: and the institutions that have owned rights over years and

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Speaker 1: years and years and years of time, decades of time.

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Speaker 1: What if the world was a bit different, What if

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Speaker 1: the public could actually own rights in their favorite artist music?

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Speaker 1: And so, if you are kind of an early adopter

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Speaker 1: that was able to kind of get a lot of

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Speaker 1: attention for what you're doing, you can probably make some money.

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Speaker 1: The question then becomes how scalable is that. One of

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Speaker 1: the things you've also highlighted is people have always paid

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Speaker 1: for merch, right, they will go to a call certain

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Speaker 1: then save the tickets and they'll buy the T shirt,

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Speaker 1: or they'll buy the album cover, the vinyl printing, the

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Speaker 1: rare vinyl printing. Like, a lot of music and a

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Speaker 1: lot of fandom is about stuff, and some n f

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Speaker 1: t s are really trying to tap into that. So

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Speaker 1: when we spoke to Hannah Miller in another episode, she mentioned,

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Speaker 1: you know, she talks about the deal that the Chain

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Speaker 1: Smokers did with Royal where if you got one of

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Speaker 1: their n f t s you got access to merch.

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Speaker 1: It strikes me that this is a more complex way

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Speaker 1: to have access to merch. But are you hearing any

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Speaker 1: musicians say, actually this is benefiting them more than just

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Speaker 1: the T shirt sales. Well, the benefit has less to

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Speaker 1: do with the basics of the transaction. It is much

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Speaker 1: easier if you're if you're an artist, it's much easier

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Speaker 1: to have your label, your tour promoter, someone you hire

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Speaker 1: take care of the merch. Right. That's what a lot

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Speaker 1: of this debate over what role kind of crypto will

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Speaker 1: play in the music industry comes down to, is how

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Speaker 1: much as an artist do you want to control and

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Speaker 1: dictate and if you want to take ownership of that process.

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Speaker 1: The odds are that if you execute properly, you will

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Speaker 1: make more because there will be fewer middlemen, or those

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Speaker 1: middle men will work for you. And you can also

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Speaker 1: do so in a way with an an n f

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Speaker 1: T or with regular merch where you're you're interacting more

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Speaker 1: directly with your fans. The issue then becomes do you

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Speaker 1: want to do that? There are a lot of forward

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Speaker 1: thinking artists who do like that, and you know, musicians

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Speaker 1: more so than almost any creative or sort of like

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Speaker 1: a small business, because everything stems from them. But the

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Speaker 1: vast majority of artists over time have have ultimately chosen

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Speaker 1: to have someone else do it for them right there,

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Speaker 1: like I'm going to be in the studio the shirts

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Speaker 1: or I want to I want to be in the

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Speaker 1: studio and then after you know, two months of recording

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Speaker 1: or whatever it is, I want to go hang out

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Speaker 1: on a beach for a bit before I tour. I

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Speaker 1: don't want to have to then spend a week or

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Speaker 1: two weeks coming up with the merch plan for my tour.

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Speaker 1: One of the other ways that we're seeing music record

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Speaker 1: companies artists interact with n f T s is through

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Speaker 1: intellectual property. So you've reported on an n f T supergroup,

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Speaker 1: tell us more about us. There is an executive at

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Speaker 1: at Universal Music Group, which is the biggest music company

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Speaker 1: in the world, named Selin Joshua, who is very zealous

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Speaker 1: about n f T s. I mean, all these record companies,

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Speaker 1: you know, they tend to have these digital divisions where

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Speaker 1: those folks are more forward thinking and looking to push

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Speaker 1: the envelope, and the people who actually run the companies

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Speaker 1: are more traditional because they see all the money just

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Speaker 1: coming in from streaming or record sales or whatever it is,

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Speaker 1: and they give their their team a little bit of

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Speaker 1: money or in some cases a lot of money to

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Speaker 1: fool around. And so Selene has both. She bought an

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Speaker 1: n f T for UMG, and she had this idea

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Speaker 1: to make a group that consisted of several board ape

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Speaker 1: n f T s. I assume listeners of this podcast

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Speaker 1: know what that is, probably more so than I, and

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Speaker 1: I think again, her idea was to try to facilitate

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Speaker 1: a community around this group. They did their kind of

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Speaker 1: first mint and raised a bunch of money that way

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Speaker 1: and have have built something of of a fan base

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Speaker 1: for this group. Before they've put out any music. When

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Speaker 1: she first told me about this, I was a little

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Speaker 1: confused because I'm a luddite when it comes to all this,

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Speaker 1: and I was like, okay, so, how like, who are

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Speaker 1: the band? Is this like a gorilla's situation? And how

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Speaker 1: are they going to make music? And what will the

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Speaker 1: visual aesthetic be? And so you know, she bristles at

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Speaker 1: comparisons to the Gorillas, but I do think it's fairly apt,

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Speaker 1: and that there will be people that you will literally yeah,

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Speaker 1: but there will be there will be people you don't

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Speaker 1: know behind the scenes making the music. The virtual manifestation

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Speaker 1: of this group will be these ape characters that she

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Speaker 1: has loaned or had worked out some commercial relationship with

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Speaker 1: the owner of those nfs. I have several questions, but

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Speaker 1: first I will start with why. Oh, I mean, if

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Speaker 1: you're one of these executives in a digital department and

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Speaker 1: trying to find a way to put your company into

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Speaker 1: crypto in some real way, I think this is a

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Speaker 1: good experiment, I guess if you will, and it's it's

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Speaker 1: a way to test and improve a lot of different

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Speaker 1: theories that she and others have around how kind of

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Speaker 1: music and cryptocurrencies can play together, and if you form

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Speaker 1: it in the guise of of a group. It's certainly

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Speaker 1: a way to kind of get attention of fans, and

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Speaker 1: it's you're putting something together in a way that your

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Speaker 1: bosses understand, like Lucy and Graine who runs Universal Music Group,

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Speaker 1: like he understands what a music group is. Yes, I

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Speaker 1: would hope it seems fair and other than these being

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Speaker 1: you know, I P licensed apes. I think it was

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Speaker 1: like three board apes and a muse and ape and

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Speaker 1: some musicians behind them who will hopefully be making interesting music.

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Speaker 1: Is there anything blockchain native about it? So is it

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Speaker 1: that to listen to this you have to be on

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Speaker 1: one of these decentralized music platforms or is it that

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Speaker 1: too by the music you're going to be doing it

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Speaker 1: on a decentralized music platform. They haven't shared a ton

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Speaker 1: about the plans for that, in part because unless something

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Speaker 1: has changed in the recent few turn I don't think

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Speaker 1: it has. There's no music yet, and they're really slow

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Speaker 1: playing it because you know, when they first announced this group,

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Speaker 1: it was near the zenith of cryptom November and obviously

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Speaker 1: some of the optimism has faded, and so I think

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Speaker 1: they're trying to properly navigate how best to position it.

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Speaker 1: They may have waited a little bit on the minting

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Speaker 1: because it has now gone well, but they had to

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Speaker 1: time it correctly, and so I think a lot of

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Speaker 1: the rollout of this group will depend on what we're

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Speaker 1: seeing in cryptocurrency markets, and of course on the creative side.

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Speaker 1: Thank you, Lucas. We'll be right back if you are

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Speaker 1: in you know, artists discovery or whatever. Those kind of

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Speaker 1: specialized functions of things are in the same way that

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Speaker 1: sometimes like reporters just feel like they have to have

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Speaker 1: a lot of fans on Twitter in order to get

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Speaker 1: a job in media. Are you seeing any kind of

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Speaker 1: similar metrics for up and coming arts? Are people saying, hey,

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Speaker 1: it really helps if you have a crypto community or

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Speaker 1: aboard eight or is this still like a fairly niche

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Speaker 1: as you said earlier, like a niche casting proposition. I

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Speaker 1: think it's having a big following on social media is

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Speaker 1: the baseline. If you were to talk to someone who

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Speaker 1: works in artists in repertoire an R which sort of

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Speaker 1: the scouting and creative side of a lot of these

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Speaker 1: record labels, you know they are finding acts based on

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Speaker 1: what data they're seeing in Spotify, streams, YouTube, and and

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Speaker 1: a lot of that's given by a lot of that

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Speaker 1: is given by TikTok exactly. So one of the things

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Speaker 1: that's different, I mean to go back to this idea

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Speaker 1: of decentralization putting more power in the hands of the artists.

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Speaker 1: One thing that has given artists more power is they

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Speaker 1: do get a following on social media with their music

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Speaker 1: often now before they get signed. It used to be

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Speaker 1: or often that you'd have to get lucky and hope

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Speaker 1: that some A and R would walk into some club.

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Speaker 1: You probably moved to a major city because that would

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Speaker 1: give you a higher probability of that they find you,

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Speaker 1: they sign you, and at that point you're nobody, and

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Speaker 1: so they have the leverage. But now if you're big artist,

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Speaker 1: if you're a little nos X who goes viral out

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Speaker 1: of nowhere, you can dictate some of the terms because

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Speaker 1: everybody wants you, because you have proof that people like you.

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Speaker 1: And that has given artists more power to to dictate terms.

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Speaker 1: I mean, it's probably not the majority of cases, but

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Speaker 1: it's it's a good number. I haven't heard a lot

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Speaker 1: about music companies wanting people who have large followings in

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Speaker 1: the crypto community. I'm sure there are some examples of it,

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Speaker 1: but I think a lot of the big music companies

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Speaker 1: are also a little wary. A lot of the promise

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Speaker 1: of these new technologies has the potential to erode their power,

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Speaker 1: and so their job is to figure out how they

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Speaker 1: can kind of co opt it and not lose any

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Speaker 1: of that authority. I think this is a key point. So,

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Speaker 1: just to go back what you said previously, you know,

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Speaker 1: TikTok is a deeply centralized platform, right, and so so

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Speaker 1: as Twitter is always Instagram. These are things that are

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Speaker 1: run by companies that are themselves trying to make plays

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Speaker 1: in music, and they have relationships with labels. And part

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Speaker 1: of what we've heard folks say is well, in a

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Speaker 1: decentralized few, sure you could have fans that would be

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Speaker 1: listening to one thing over here and something else over here.

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Speaker 1: The centralization and scale are like opposite to each other,

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Speaker 1: and it strikes me as something that would be a

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Speaker 1: challenge for folks in A and R if they had

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Speaker 1: to go to fifteen different places to look at stream

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Speaker 1: data rather than a handful. Yeah, I have a question

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Speaker 1: on that note for you, though, Do you think so

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Speaker 1: you brought up those social media platforms, right, And they

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Speaker 1: started off by offering people a chance to speak too,

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Speaker 1: smaller communities of fans. Right. It didn't seem like the

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Speaker 1: big scale play at first, but then as people had

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Speaker 1: success and really connected people that way, more and more

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Speaker 1: users wanted to come onto Facebook, Instagram, TikTok, whatever. Exactly.

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Speaker 1: Do you see a similar pattern of playing out in

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Speaker 1: the crypto space where it starts off as this decentralized

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Speaker 1: notion and then you just end up having three or

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Speaker 1: four or five companies that really run that part of

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Speaker 1: the Internet. We are definitely seeing it in like the

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Speaker 1: financial part of crypto, for better or for worse. But

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Speaker 1: I think the point on the social media side is

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Speaker 1: one there's like almost no fully functioning proof of concept.

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Speaker 1: Here is a desentralized social media platform based on crypto

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Speaker 1: that is used by anybody who is not like a

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Speaker 1: gigantic crypto nerd. Right now, I always think of, like,

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Speaker 1: what are people in my group text talking about Nobody's like, Hey,

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Speaker 1: I was on this one thing and I signed up

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Speaker 1: with my wallets and it's great and you should all

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Speaker 1: get there. Like it has not even hit the point

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Speaker 1: at which those niche communities are bigger than micro micro niche.

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Speaker 1: What I do think will be interesting is if you

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Speaker 1: do start to sort of realize network effects outside of

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Speaker 1: the as you mentioned before, the tiny universe of people

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Speaker 1: who do have a crypto wallets and are comfortable in

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Speaker 1: these spaces, then we might be having a very different conversation.

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Speaker 1: And as I think we know because we've you know,

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Speaker 1: we've we've been in and around technology and entertainment. Sometimes

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Speaker 1: it's like slowly and then all at once, right, but

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Speaker 1: right now it is so early and so slow that

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Speaker 1: there just hasn't been a lot of evidence of it.

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Speaker 1: To your question, it would be a drag if you're

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Speaker 1: an an R to have to follow people along fifteen

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Speaker 1: different platforms. The part that I think has the most

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Speaker 1: potential to make things a little bit cleaner and easier

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Speaker 1: would be blockchain, because music royalties are so thorny. You know,

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Speaker 1: you have artists who will wait months or years to

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Speaker 1: get paid because everyone's trying to track it down. Now

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Speaker 1: that's all potential. Right now, I think it's also muddled,

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Speaker 1: and you'd have to get everyone on the same technology

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Speaker 1: that it could be years before this gets adopted, if

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Speaker 1: it ever does. But that's certainly one where there needs

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Speaker 1: to be a simplification of the payment process, and a

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Speaker 1: lot of startups have come around and try to do it,

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Speaker 1: and I don't think the industry was ready, and so

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Speaker 1: then they had to change what they're doing. Right, So,

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Speaker 1: in an ideal world, you would be able to track

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Speaker 1: in real time on this public ledger how much money

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Speaker 1: you made from like record sales in Japan and the

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Speaker 1: concert tour that you did in Austin, and your merch yeah,

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Speaker 1: and your share. I mean, songwriting is the one where

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Speaker 1: it gets really complicated because it gets split like oftentimes

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Speaker 1: fifteen different ways. And so any time your song has

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Speaker 1: listened to on any platform in the world, if you

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Speaker 1: had a ledger that could immediately put that into your wallet,

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Speaker 1: that would be would be much better than what happens

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Speaker 1: right now. It's got it. Well, thank you so much

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Speaker 1: for joining us today. I really appreciate it. Thanks for

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Speaker 1: having you. Can find more of Lucas's reporting on the

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Speaker 1: Bloomberg Terminal, on Bloomberg dot com and on Twitter. He's

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Speaker 1: at Lucas Underscore Shore. That's s H a W. On

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Speaker 1: the next episode of Bloomberg Crypto. While the link between

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Speaker 1: n f T prices and the prices of other tokens

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Speaker 1: or coins like Ether and Solana is not always straightforward.

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Speaker 1: It's true that non fungible tokens haven't been entirely spared

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Speaker 1: from the chill of this crypto winter. To better understand

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Speaker 1: n f t s and where they stand in crypto's

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Speaker 1: recent downturn, I'll be joined by Bloomberg Report Pratana Prakash.

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Speaker 1: This is Bloomberg Crypto, a daily podcast from Bloomberg and

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Speaker 1: I Heart Radio. For more shows from I Heart Radio,

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Speaker 1: visit the I Heart Radio app, Apple Podcasts, or wherever

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Speaker 1: you get your podcasts. Send us your comments, questions, or

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Speaker 1: suggestions for the show to Crypto at Bloomberg dot net

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Speaker 1: or find us on Twitter. We're at Crypto. The supervising

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Speaker 1: producer of Bloomberg Crypto is Vicky very Galina. Our senior

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Speaker 1: producer is Janet Babin. Our producer is Sharon Burriro, associate

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Speaker 1: producer is Ty Butler. Desta wonder At is our engineer.

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Speaker 1: Original music by Leo Sidrin. I'm Stacy Marie Shmal. We'll

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Speaker 1: be back tomorrow.