Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,
Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg. I heard podcast.
Speaker 1: It's Tuesday, August nine. Venture capitalists and certain people in
Speaker 1: the music industry are enthusiastic about the potential for artists
Speaker 1: to benefit from technology like the blockchain and like n
Speaker 1: f t s, but there isn't universal agreement, especially among
Speaker 1: musicians themselves, that any of this is necessarily a good idea.
Speaker 1: What are the big trends and what are the big
Speaker 1: areas of disagreement, Bloomberg reports. Lucas Show, who's based in
Speaker 1: l A, joins me to continue our coverage of crypto
Speaker 1: and the music industry. Upside with some of these newer
Speaker 1: technologies is that you can build communities and maybe give
Speaker 1: fans a sense of greater ownership. Lucas, what brings you
Speaker 1: to New York. I'm seeing my family mostly out on
Speaker 1: the North Fork, a long island that sounds very pleasant
Speaker 1: and frankly, more fun than trying to convince people that
Speaker 1: they are misunderstanding and f t s and music, which
Speaker 1: is what we're going to try to do here. No
Speaker 1: No Crypto discussion on the North Fork. My relatives they're
Speaker 1: not up on it. Well, you can send them this
Speaker 1: episode and change their minds. But you have spent quite
Speaker 1: a lot of time in l A and other places
Speaker 1: really getting into the nuts and bols of like the
Speaker 1: business of entertainment, and you've written and reports it on
Speaker 1: various stories around. Well, I would say like there's kind
Speaker 1: of a theme of how people are misunderstanding the infrastructure
Speaker 1: of creativity and the network that talent, whether that talent
Speaker 1: is a musician or a Hollywood actor, are tapping into.
Speaker 1: And I'd love for the purposes of this episode to
Speaker 1: kind of start there. Right, people are hearing if t
Speaker 1: s are going to solve music full stop. What is
Speaker 1: your response to statements like that, Well, there's long simmering
Speaker 1: frustration resentment in the creative industries, but especially in music,
Speaker 1: that you have a small number of largely executives, largely
Speaker 1: white male executives, who control the industry and they have
Speaker 1: for for most of its existence, extracted a lot of
Speaker 1: wealth from the work of other creative people. So you've
Speaker 1: had famous examples like a prince who referred to his
Speaker 1: kind of record contracts or referred himself as being a
Speaker 1: slave and a record contract and broke off on his own.
Speaker 1: On December thirty one, my publishing contract with Warner Chappo expired,
Speaker 1: thus emancipating the name I was given before birth Prince
Speaker 1: from all long term restrictive documents. I will now go
Speaker 1: back to using my name instead of the symbol I
Speaker 1: adopted as a means to free myself from all undesirable relations.
Speaker 1: There's always been this desire for the artist to gain
Speaker 1: more power, and I think any way of doing so
Speaker 1: is probably for the net benefit of the creative class.
Speaker 1: It would be great if we didn't only have a
Speaker 1: few gatekeepers who controlled everything, but decentralizing that power is
Speaker 1: much harder than people realize, and in some cases not
Speaker 1: good because there are benefits to having kind of infrastructure
Speaker 1: that most people use. And so I think there's a
Speaker 1: lot of promise in what cryptocurrencies and n f t
Speaker 1: s and the blockchain can do for music, but how
Speaker 1: it will actually be executed is still a little bit
Speaker 1: fuzzy to me. We've seen some pretty big names get
Speaker 1: really excited about music, n f t s, music, and blockchain.
Speaker 1: I'm thinking here like Snoop Dogg, Steve Aoki, These are
Speaker 1: people who have created their own platforms or have argued
Speaker 1: for the importance of music n f t s. And
Speaker 1: then you have venture capitalist jumping on board as well,
Speaker 1: who are willing to pour a lot of money into
Speaker 1: these projects. They're willing to, you know, really back something
Speaker 1: that we're kind of still figuring out what exactly the
Speaker 1: best use for blockchain is in music. So I want
Speaker 1: to ask you more specifically when you say benefits, like,
Speaker 1: what are some of those benefits? What do I not
Speaker 1: get if I, as a musician decide to release my
Speaker 1: latest album as an n f T on a blockchain.
Speaker 1: What am I missing out on? Well, for one, you're
Speaker 1: missing out on most of the audience. Majority of music
Speaker 1: listeners do not own cryptocurrency, do not use blockchain technology.
Speaker 1: Most of them probably don't know what an n f
Speaker 1: T is if they were pressed to define it. And
Speaker 1: music is about ubiquity, you know, if you're Harry style
Speaker 1: is bad, Bunny du a leap. But one of these
Speaker 1: artists who has a new a new song out, you
Speaker 1: want it to be everywhere to the whole reason why
Speaker 1: they've never been able to quit a place like YouTube
Speaker 1: or now at TikTok places that don't pay them a
Speaker 1: lot of money, but introduce them to millions of fans.
Speaker 1: So the upside with some of these newer technologies is
Speaker 1: that you can build communities and maybe give fans a
Speaker 1: sense of creator ownership in what you're doing, or in
Speaker 1: some cases literal ownership. But you are niche casting and
Speaker 1: not everyone wants to do that. Does this calculation really
Speaker 1: depend on if you are literally bad money versus if
Speaker 1: you're somebody who's up and coming. Yeah, I mean that.
Speaker 1: That's definitely one of the reasons people are interested in
Speaker 1: it because music royalties are incredibly complex, and it is
Speaker 1: one area where the record labels and the music publishers
Speaker 1: wield a lot of control and have often signed young
Speaker 1: artists to rather extractive contracts that it takes them years
Speaker 1: and in some cases decades to get out of. And
Speaker 1: so if there's a way for you to maybe use
Speaker 1: n f t s to raise money on your own
Speaker 1: and then use the blockchain as a more transparent or
Speaker 1: ledger of money, that in like in theory, sounds great
Speaker 1: to these artists who are used to getting strewed over
Speaker 1: by the record labels. Again, I think the challenge there
Speaker 1: is how many people are you going to get to
Speaker 1: transact that way? Only the artists at the very very
Speaker 1: top of the industry make a lot of money from
Speaker 1: streaming on Spotify and Apple Music and YouTube, and nobody
Speaker 1: else makes money. Here's a clip from a recent episode
Speaker 1: that we did about decentralizing the music industry. It featured
Speaker 1: DJ and CEO of Royal Justin Blow. Justin have this
Speaker 1: to say about a common misconception in the music industry.
Speaker 1: I think a lot of people are stuck in the
Speaker 1: illusion that music doesn't make money, um when in reality,
Speaker 1: music generates quite a bit of money, especially on streaming,
Speaker 1: which makes about of all recorded music income. It's just
Speaker 1: the people who are capturing that income are our institutions
Speaker 1: and the institutions that have owned rights over years and
Speaker 1: years and years and years of time, decades of time.
Speaker 1: What if the world was a bit different, What if
Speaker 1: the public could actually own rights in their favorite artist music?
Speaker 1: And so, if you are kind of an early adopter
Speaker 1: that was able to kind of get a lot of
Speaker 1: attention for what you're doing, you can probably make some money.
Speaker 1: The question then becomes how scalable is that. One of
Speaker 1: the things you've also highlighted is people have always paid
Speaker 1: for merch, right, they will go to a call certain
Speaker 1: then save the tickets and they'll buy the T shirt,
Speaker 1: or they'll buy the album cover, the vinyl printing, the
Speaker 1: rare vinyl printing. Like, a lot of music and a
Speaker 1: lot of fandom is about stuff, and some n f
Speaker 1: t s are really trying to tap into that. So
Speaker 1: when we spoke to Hannah Miller in another episode, she mentioned,
Speaker 1: you know, she talks about the deal that the Chain
Speaker 1: Smokers did with Royal where if you got one of
Speaker 1: their n f t s you got access to merch.
Speaker 1: It strikes me that this is a more complex way
Speaker 1: to have access to merch. But are you hearing any
Speaker 1: musicians say, actually this is benefiting them more than just
Speaker 1: the T shirt sales. Well, the benefit has less to
Speaker 1: do with the basics of the transaction. It is much
Speaker 1: easier if you're if you're an artist, it's much easier
Speaker 1: to have your label, your tour promoter, someone you hire
Speaker 1: take care of the merch. Right. That's what a lot
Speaker 1: of this debate over what role kind of crypto will
Speaker 1: play in the music industry comes down to, is how
Speaker 1: much as an artist do you want to control and
Speaker 1: dictate and if you want to take ownership of that process.
Speaker 1: The odds are that if you execute properly, you will
Speaker 1: make more because there will be fewer middlemen, or those
Speaker 1: middle men will work for you. And you can also
Speaker 1: do so in a way with an an n f
Speaker 1: T or with regular merch where you're you're interacting more
Speaker 1: directly with your fans. The issue then becomes do you
Speaker 1: want to do that? There are a lot of forward
Speaker 1: thinking artists who do like that, and you know, musicians
Speaker 1: more so than almost any creative or sort of like
Speaker 1: a small business, because everything stems from them. But the
Speaker 1: vast majority of artists over time have have ultimately chosen
Speaker 1: to have someone else do it for them right there,
Speaker 1: like I'm going to be in the studio the shirts
Speaker 1: or I want to I want to be in the
Speaker 1: studio and then after you know, two months of recording
Speaker 1: or whatever it is, I want to go hang out
Speaker 1: on a beach for a bit before I tour. I
Speaker 1: don't want to have to then spend a week or
Speaker 1: two weeks coming up with the merch plan for my tour.
Speaker 1: One of the other ways that we're seeing music record
Speaker 1: companies artists interact with n f T s is through
Speaker 1: intellectual property. So you've reported on an n f T supergroup,
Speaker 1: tell us more about us. There is an executive at
Speaker 1: at Universal Music Group, which is the biggest music company
Speaker 1: in the world, named Selin Joshua, who is very zealous
Speaker 1: about n f T s. I mean, all these record companies,
Speaker 1: you know, they tend to have these digital divisions where
Speaker 1: those folks are more forward thinking and looking to push
Speaker 1: the envelope, and the people who actually run the companies
Speaker 1: are more traditional because they see all the money just
Speaker 1: coming in from streaming or record sales or whatever it is,
Speaker 1: and they give their their team a little bit of
Speaker 1: money or in some cases a lot of money to
Speaker 1: fool around. And so Selene has both. She bought an
Speaker 1: n f T for UMG, and she had this idea
Speaker 1: to make a group that consisted of several board ape
Speaker 1: n f T s. I assume listeners of this podcast
Speaker 1: know what that is, probably more so than I, and
Speaker 1: I think again, her idea was to try to facilitate
Speaker 1: a community around this group. They did their kind of
Speaker 1: first mint and raised a bunch of money that way
Speaker 1: and have have built something of of a fan base
Speaker 1: for this group. Before they've put out any music. When
Speaker 1: she first told me about this, I was a little
Speaker 1: confused because I'm a luddite when it comes to all this,
Speaker 1: and I was like, okay, so, how like, who are
Speaker 1: the band? Is this like a gorilla's situation? And how
Speaker 1: are they going to make music? And what will the
Speaker 1: visual aesthetic be? And so you know, she bristles at
Speaker 1: comparisons to the Gorillas, but I do think it's fairly apt,
Speaker 1: and that there will be people that you will literally yeah,
Speaker 1: but there will be there will be people you don't
Speaker 1: know behind the scenes making the music. The virtual manifestation
Speaker 1: of this group will be these ape characters that she
Speaker 1: has loaned or had worked out some commercial relationship with
Speaker 1: the owner of those nfs. I have several questions, but
Speaker 1: first I will start with why. Oh, I mean, if
Speaker 1: you're one of these executives in a digital department and
Speaker 1: trying to find a way to put your company into
Speaker 1: crypto in some real way, I think this is a
Speaker 1: good experiment, I guess if you will, and it's it's
Speaker 1: a way to test and improve a lot of different
Speaker 1: theories that she and others have around how kind of
Speaker 1: music and cryptocurrencies can play together, and if you form
Speaker 1: it in the guise of of a group. It's certainly
Speaker 1: a way to kind of get attention of fans, and
Speaker 1: it's you're putting something together in a way that your
Speaker 1: bosses understand, like Lucy and Graine who runs Universal Music Group,
Speaker 1: like he understands what a music group is. Yes, I
Speaker 1: would hope it seems fair and other than these being
Speaker 1: you know, I P licensed apes. I think it was
Speaker 1: like three board apes and a muse and ape and
Speaker 1: some musicians behind them who will hopefully be making interesting music.
Speaker 1: Is there anything blockchain native about it? So is it
Speaker 1: that to listen to this you have to be on
Speaker 1: one of these decentralized music platforms or is it that
Speaker 1: too by the music you're going to be doing it
Speaker 1: on a decentralized music platform. They haven't shared a ton
Speaker 1: about the plans for that, in part because unless something
Speaker 1: has changed in the recent few turn I don't think
Speaker 1: it has. There's no music yet, and they're really slow
Speaker 1: playing it because you know, when they first announced this group,
Speaker 1: it was near the zenith of cryptom November and obviously
Speaker 1: some of the optimism has faded, and so I think
Speaker 1: they're trying to properly navigate how best to position it.
Speaker 1: They may have waited a little bit on the minting
Speaker 1: because it has now gone well, but they had to
Speaker 1: time it correctly, and so I think a lot of
Speaker 1: the rollout of this group will depend on what we're
Speaker 1: seeing in cryptocurrency markets, and of course on the creative side.
Speaker 1: Thank you, Lucas. We'll be right back if you are
Speaker 1: in you know, artists discovery or whatever. Those kind of
Speaker 1: specialized functions of things are in the same way that
Speaker 1: sometimes like reporters just feel like they have to have
Speaker 1: a lot of fans on Twitter in order to get
Speaker 1: a job in media. Are you seeing any kind of
Speaker 1: similar metrics for up and coming arts? Are people saying, hey,
Speaker 1: it really helps if you have a crypto community or
Speaker 1: aboard eight or is this still like a fairly niche
Speaker 1: as you said earlier, like a niche casting proposition. I
Speaker 1: think it's having a big following on social media is
Speaker 1: the baseline. If you were to talk to someone who
Speaker 1: works in artists in repertoire an R which sort of
Speaker 1: the scouting and creative side of a lot of these
Speaker 1: record labels, you know they are finding acts based on
Speaker 1: what data they're seeing in Spotify, streams, YouTube, and and
Speaker 1: a lot of that's given by a lot of that
Speaker 1: is given by TikTok exactly. So one of the things
Speaker 1: that's different, I mean to go back to this idea
Speaker 1: of decentralization putting more power in the hands of the artists.
Speaker 1: One thing that has given artists more power is they
Speaker 1: do get a following on social media with their music
Speaker 1: often now before they get signed. It used to be
Speaker 1: or often that you'd have to get lucky and hope
Speaker 1: that some A and R would walk into some club.
Speaker 1: You probably moved to a major city because that would
Speaker 1: give you a higher probability of that they find you,
Speaker 1: they sign you, and at that point you're nobody, and
Speaker 1: so they have the leverage. But now if you're big artist,
Speaker 1: if you're a little nos X who goes viral out
Speaker 1: of nowhere, you can dictate some of the terms because
Speaker 1: everybody wants you, because you have proof that people like you.
Speaker 1: And that has given artists more power to to dictate terms.
Speaker 1: I mean, it's probably not the majority of cases, but
Speaker 1: it's it's a good number. I haven't heard a lot
Speaker 1: about music companies wanting people who have large followings in
Speaker 1: the crypto community. I'm sure there are some examples of it,
Speaker 1: but I think a lot of the big music companies
Speaker 1: are also a little wary. A lot of the promise
Speaker 1: of these new technologies has the potential to erode their power,
Speaker 1: and so their job is to figure out how they
Speaker 1: can kind of co opt it and not lose any
Speaker 1: of that authority. I think this is a key point. So,
Speaker 1: just to go back what you said previously, you know,
Speaker 1: TikTok is a deeply centralized platform, right, and so so
Speaker 1: as Twitter is always Instagram. These are things that are
Speaker 1: run by companies that are themselves trying to make plays
Speaker 1: in music, and they have relationships with labels. And part
Speaker 1: of what we've heard folks say is well, in a
Speaker 1: decentralized few, sure you could have fans that would be
Speaker 1: listening to one thing over here and something else over here.
Speaker 1: The centralization and scale are like opposite to each other,
Speaker 1: and it strikes me as something that would be a
Speaker 1: challenge for folks in A and R if they had
Speaker 1: to go to fifteen different places to look at stream
Speaker 1: data rather than a handful. Yeah, I have a question
Speaker 1: on that note for you, though, Do you think so
Speaker 1: you brought up those social media platforms, right, And they
Speaker 1: started off by offering people a chance to speak too,
Speaker 1: smaller communities of fans. Right. It didn't seem like the
Speaker 1: big scale play at first, but then as people had
Speaker 1: success and really connected people that way, more and more
Speaker 1: users wanted to come onto Facebook, Instagram, TikTok, whatever. Exactly.
Speaker 1: Do you see a similar pattern of playing out in
Speaker 1: the crypto space where it starts off as this decentralized
Speaker 1: notion and then you just end up having three or
Speaker 1: four or five companies that really run that part of
Speaker 1: the Internet. We are definitely seeing it in like the
Speaker 1: financial part of crypto, for better or for worse. But
Speaker 1: I think the point on the social media side is
Speaker 1: one there's like almost no fully functioning proof of concept.
Speaker 1: Here is a desentralized social media platform based on crypto
Speaker 1: that is used by anybody who is not like a
Speaker 1: gigantic crypto nerd. Right now, I always think of, like,
Speaker 1: what are people in my group text talking about Nobody's like, Hey,
Speaker 1: I was on this one thing and I signed up
Speaker 1: with my wallets and it's great and you should all
Speaker 1: get there. Like it has not even hit the point
Speaker 1: at which those niche communities are bigger than micro micro niche.
Speaker 1: What I do think will be interesting is if you
Speaker 1: do start to sort of realize network effects outside of
Speaker 1: the as you mentioned before, the tiny universe of people
Speaker 1: who do have a crypto wallets and are comfortable in
Speaker 1: these spaces, then we might be having a very different conversation.
Speaker 1: And as I think we know because we've you know,
Speaker 1: we've we've been in and around technology and entertainment. Sometimes
Speaker 1: it's like slowly and then all at once, right, but
Speaker 1: right now it is so early and so slow that
Speaker 1: there just hasn't been a lot of evidence of it.
Speaker 1: To your question, it would be a drag if you're
Speaker 1: an an R to have to follow people along fifteen
Speaker 1: different platforms. The part that I think has the most
Speaker 1: potential to make things a little bit cleaner and easier
Speaker 1: would be blockchain, because music royalties are so thorny. You know,
Speaker 1: you have artists who will wait months or years to
Speaker 1: get paid because everyone's trying to track it down. Now
Speaker 1: that's all potential. Right now, I think it's also muddled,
Speaker 1: and you'd have to get everyone on the same technology
Speaker 1: that it could be years before this gets adopted, if
Speaker 1: it ever does. But that's certainly one where there needs
Speaker 1: to be a simplification of the payment process, and a
Speaker 1: lot of startups have come around and try to do it,
Speaker 1: and I don't think the industry was ready, and so
Speaker 1: then they had to change what they're doing. Right, So,
Speaker 1: in an ideal world, you would be able to track
Speaker 1: in real time on this public ledger how much money
Speaker 1: you made from like record sales in Japan and the
Speaker 1: concert tour that you did in Austin, and your merch yeah,
Speaker 1: and your share. I mean, songwriting is the one where
Speaker 1: it gets really complicated because it gets split like oftentimes
Speaker 1: fifteen different ways. And so any time your song has
Speaker 1: listened to on any platform in the world, if you
Speaker 1: had a ledger that could immediately put that into your wallet,
Speaker 1: that would be would be much better than what happens
Speaker 1: right now. It's got it. Well, thank you so much
Speaker 1: for joining us today. I really appreciate it. Thanks for
Speaker 1: having you. Can find more of Lucas's reporting on the
Speaker 1: Bloomberg Terminal, on Bloomberg dot com and on Twitter. He's
Speaker 1: at Lucas Underscore Shore. That's s H a W. On
Speaker 1: the next episode of Bloomberg Crypto. While the link between
Speaker 1: n f T prices and the prices of other tokens
Speaker 1: or coins like Ether and Solana is not always straightforward.
Speaker 1: It's true that non fungible tokens haven't been entirely spared
Speaker 1: from the chill of this crypto winter. To better understand
Speaker 1: n f t s and where they stand in crypto's
Speaker 1: recent downturn, I'll be joined by Bloomberg Report Pratana Prakash.
Speaker 1: This is Bloomberg Crypto, a daily podcast from Bloomberg and
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Speaker 1: or find us on Twitter. We're at Crypto. The supervising
Speaker 1: producer of Bloomberg Crypto is Vicky very Galina. Our senior
Speaker 1: producer is Janet Babin. Our producer is Sharon Burriro, associate
Speaker 1: producer is Ty Butler. Desta wonder At is our engineer.
Speaker 1: Original music by Leo Sidrin. I'm Stacy Marie Shmal. We'll
Speaker 1: be back tomorrow.