Decentralizing the Music Industry

to fans for free. These n f t s gave fans a one percent cut of the streaming royalties from their latest album, as well as priority access to concert tickets and free merchandise. The Chain Smokers might not be the first musicians to experiments with crypto n f t s or the blockchain, and it's unlikely they'll be the last. What artists and musicians like the Chain Smokers hoping to

achieve with these moves, and how are fans responding. In this episode, you'll hear from Bloomberg Reports Hannah Miller and from Justin blowm the CEO of Royal a decentralized music startup. What if the public could actually own rights in their favorite artist music. My DJ name is Blow, which is also my last names. That's Justin Blow a k A. Three Law a k A. The CEO of Royal Royals the Stars Up. That's trying to give fans more access

and more investment opportunities in the bands they love. His company partnered with the chain Smokers to give their fans a stake in their success, they say, by creating and offering up n f T s that allow that share of stre eeting ownership. Justin joins me now, Justin, thank you so much for joining us today. Awesome, thank you for having me. Can you tell me a little bit

more about the history of Royal Yeah, absolutely so. I was really interested in the intersection of crypto and music about for the past eight years now, and I've been experimenting with lots of different things. Did some of my first early n f T experiments, and Royal is kind of just the amalgam of different manifestations that I've that I've thought about over the past call it eight years, um in ways to disintermediate music and give artists more power,

give fans financial upside in an artist success. Now, when you say dis intermediate music, what exactly do you mean. I think a lot of people are stuck in the illusion that music doesn't make money. You've seen that the media narrative quite often um when in reality music generates quite a bit of money, especially on streaming, which makes

about of all recorded music income. It's just the who are capturing that income are our institutions and the institutions that have owned rights over years and years and years and years of time, decades of time. So what we think about it, Royal is what what if the world was a bit different? What if the public could actually own rights in their favorite artists music, so that you have a combination of labels, artists and fans co owning

songs that they love. So when I hear you say the folks who have been benefiting are like the big institutions Spotify shaff crisis tanked over the last year. They're facing stiff competition from Apple Music is the world's most valuable company, pivots more aggressively towards kind of the ecosystem of services. But look for Spotify, the most important asset is artists. So if we see more complaints coming forward that could be a major problem for the streaming service.

But what about the musicians themselves, Like, how does Royal help the musicians or does Royal help the musicians in that kind of framework. Absolutely, I think the most important way Royal health musicians. And this is kind of, you know, leaning a little of it into my background as a musician, is that with blockchains and immutable, transparent data, any artists can actually see who owns their tokens and interact with

those particular people. In the regular world with Spotify and with you know, ticket you know Ticketmaster, all these different services, artists don't actually participate in any of the data collection that they help generate. So for music specifically, I might have done over a billion streams, I have no idea who my top listeners are. For ticketing, you know, I might have sold over millions of tickets in my career, and I have no idea who those people are. I

don't have the data. So what's really interesting about block chains is for for tokens, artists can actually identify their audiences and communicate with them in a way more efficient way. I want to pick up on something you said. They're about transparency, I don't know of anyone who would ever describe the music industry is like a paragon of transparency or probably not, you know, clarity about how things work.

What has been the reception of this fairly radical idea, um, you know, with folks that you've been working with and talking to. You know, we're lucky that it's been so insanely positive, both but both on the kind of artist side and the existing the existing industry player side. I think everybody's really excited about this technology, and they're curious

how it might benefit their their incentives and their ends. Um. Realistically, right, having a more transparent, immutable data structure for music is probably good for all parties, right, And so the world is just kind of beginning to explore how it might apply to their specific niche of music. And you know, while Royal does focus specifically on artists, we believe in a future world where people could co own all types of I P. Now, in this potential future world where

you know, there's multiple different models. Different people could be owners, people could be producers, and you know that more traditional but of course also forward looking sense of the term. This perhaps assumes that n f T S as an element of crypto, like have legs right that people are going to continue to be interested in this. We are talking right now in a period when you know, n f T s have had a bit of a challenging run.

Much like pretty much every other asset class in crypto, once red hot, n f T s are now cooling off a bit. The secondary market for the majority of people's paintings today is down from the peak, as is most an f T art. What is it about the model that you're proposing that works despite other pressures in the market, or does this work despite other prostos in the market. That's great, Absolutely, that's a that's a wonderful question. I think at Royal we've we've never really considered ourselves

an n f T platform. We consider ourselves a platform that enables anyone to invest in music, and we just so happened to use crypto rails to make that possible. We just so happened to use the technology behind non vungerible to cans to make that possible, because it actually becomes more efficient um for payouts, for transparency, for all the other kind kind of reasons that we've we've briefly touched on in the past. I think that you know, the concept, no matter what you apply crypto to, it

has to solve a real world problem, right. Um. A lot of people kind of leverage the technology and talk about it in the sense of, you know, whether it's investable or not. Um. Even even a board eight right, which is arguably one of the most well known type of n f T s UM. The image itself is not the n f T. Right, So there's this giant misconception, what is the n f T. Well, the n f T is a certificate of authenticity, and why are certificates

of authenticity valuable? UM? For tons of reasons? Right. So the underlying technology isn't going anywhere. I think that we we've all established that. I think that some of the brands and the most recognizable projects will ebb and flow

with the times um. But the most powerful aspect of it is again the ability to you know, authenticate ownership of digital types of assets, and that something that we really haven't seen in the past that we're going to see a lot of development in the future, you know,

when you talk about authenticity, verification, validation. We've had episodes where we interviewed Nicola Julia, who's CEO of so Rare, which you know provides like this kind of service, but for fans of fantasy sports UM and sports based on real teams. We have talked about, you know, situations in which n f t s give people access to real

world experiences. And that's also something that in the chain Smoker's concept UM you'll provide it right where it's like, the owners of these tokens, and there were five thousand of them, didn't only get access to streaming revenue, they got tangible other non financial benefits. Can you talk a little bit more about those. Yeah. I think the beauty of tokens is once they exist on a blockchain, the issuer, whether that's an artist or a team, can kind of

provide whatever benefits they want to. The beauty of cryptois that it's composable, it's you know, the architecture of it enables anyone to build on top of it, so you could even be another artist and still engage the chain smokers fans by looking at all the wallet addresses that have interacted with the actual chain smoker token set right, so there's it's all transparent. You can see everyone who

owns it. UM. The non anonymity of each owner is up to the owner, right, Like they can choose to you know, identify themselves on the Internet, or they can choose to remain anonymous. But the beauty of tokens in general is that once they exist, they're not going anywhere, and anyone can interact with them. So the idea of you know, creating real world utility, whether that's tickets or other types of social engagement, extras, exclusive content, you know,

we're really just seeing the beginning of that development as well. Um. You know, fan clubs in the past haven't always been the most successful model for achieving you know, additional value for an artist or for a team or for a musician. And when you begin to wrap your head around when when when the public begins to wrap it's head around this concept of co ownership, the incentives are aligned in

such a stronger way. At the beginning, you said, you know that there's this really popular misconception that there's no money in music. What's another misconception that you're trying to address with Royal Interesting, Yeah, I mean I think another misconception is maybe more along lines of like what the technology is capable of um at Royal, were we try to be realistic in that you know, the tech is still developing and there are a lot of challenges as we go. UM, so we we really attempt to make

it as easy as possible for a user to get engaged. UM. People have the misconception that crypto is really hard and difficult, and you know, it's easy to get hacked, things could be a scam, etcetera. You know, we we've heard that over and over again in the media and at Royal.

What we do is quite simple. We keep it very familiar, so you can log in with an email and password and you can pay with a credit card, and we do that in order to show people how easy it is to get engaged in the crypto ecosystem without even knowing that it's cryptop. So I would say those are the two big conceptions that we challenge. Last question, what's your DJ name? My DJ name is blow which is also my last name. There's a three in in my DJ name. I was in college and that was we

all did that. It was that the whole thing. Oh yeah, excellent, Well, thank you so much for joining us. Really appreciate you taking the time. Thank you. Next up, Bloomberg reporter Hannah Miller joins me for a look at how n f t s are reshaping the relationship between artists and their fans. So what exactly are artists like the Chain Smokers and platforms like Royal hoping to achieve by giving fans a piece of ownership in the band's success, and how are

fans responding? Joining me now for more on this is Bloomberg reporter Hannah Miller. Hannah, you are back. Welcome. Always great to have you on the pod. Hi, thanks for having me today. We're going to talk about n f t s, which you know, I feel like we talked about n f t s a lot, and specifically, what I want to hear from you is about the story that you wrote about the Chain Smokers. Now, I confess I had not exactly listened to any of their music before I read your story, so I had to go

and study up before we recorded this episode. But now that I have, and clearly you have, what is it that the Chain Smokers have been up to in the blockchain space. Yeah, well, they released a new album called so Far, So Good, and basically this album was connected to an n f T where if you own this n f T held this n f T you would get a very small sliver of the audio streaming royalties

from the album, which was pretty cool. And it was not really that surprising that it was the Chain Smokers doing this because they are totally into crypto, They're totally into web three. They actually have a venture fund called Mantis that has made some pretty big investments in the space, you know, some really notable names like Moon Pay, Magic, eden Um, So it kind of just fits overall that they would do something like this with their new alb

them fascinating. I mean, I'm very interested in the ways in which crypto and venture capital and music and musicians and DJs, even if those musicians are cover bands, are merging into What sounds like one conversation in the reporting of that story and others that you've done, what do you think are some of the trends that are causing

all of these factors to converge. Yeah, I think people are constantly looking for sort of mainstream use cases for crypto, and when it comes to n f T s like it's pretty easy to see, you know, fun things that you can use them for, whether it's art, collectibles, gaming, things like that, and they really do fall into the category of music. So we've seen multiple projects try to define what a music n f T is. Like there's

some decentralized music streaming platforms. There's platforms like Royal, which is the one that helped make the n f T tied to royalties that the Chain Smokers released. Um, you know, there are all these different projects that are kind of trying to figure out how can we best use crypto, blockchain n f t s with music And is all of this coming from the musicians? Is it coming from venture capital is it coming from those platforms you mentioned,

Like what's the direction of all this innovation? Yeah, it's a total mix. Um, we've seen some pretty big names get really excited, um about music, n f t s, music and blockchain. I'm thinking here like Snoop Dogg, Steve Aoki. Um, these are people who have you know, created their own platforms or have argued for the importance of music n f t s. And then you have venture capitalists jumping on board as well, who are willing to pour a

lot of money into these projects. They're willing to you know, really back something that we're kind of still figuring out what exactly the best use for blockchain is in music.

So a couple of last things before you go. When we think about blockchain, when we think about crypto, and we think about n f t s. Something we've also discussed is this this tension between centralization and decentralization, right where on the one hand, you've got these theories that are about we're not going to have centralized control manifest in this space, but actually what you see instead is specific companies, specific platforms, specific venture capitalists that are very

centralized and do have a lot of power. Are you seeing anything, especially in music and music and f t s that is looking more like something decentralized or are we still really dealing with concentration here. Yeah, Well, part of why artists are seizing upon blockchain in the music space is because they want to take back control of their art, their music away from the music industry itself.

The music industry takes a huge cut of artists streaming revenue, so something like a decentralized music platform would in theory allow an artist to have a more direct relationship with their fans. So that's like a lot of the push here that they're sort of decentralizing in the sense that they're moving away from the control of huge music companies and it's more direct between artists and you know fan, Okay, I'm a fan, or if I were a fun and I like to chain Smokas, the chain Smokas has a

decentralized platform. Maybe I'm also a fan of the Winkle Bye cover band. They have a decentralized platform. I want to listen to Snoop, He's on a different decentralized platform. How is that not annoying for me as a fan having to due all of these work to listen to them. Yeah, because we're still trying to figure out which is going to be the biggest decentralized music streaming platform. There are

some names out there like Audience is one. I think it's pretty interesting, but yeah, it's gonna be quite the battle to get people to consolidate on one platform and also to actually get artists on board with blockchain. While you have people like Snoop Dogg and Steve Aoki really cheering this on crypto and blockchain and tease, there's still scary concepts to a lot of people. Crypto is still a very complex thing that a music artist might not

even want to get into. So it's gonna be, I think, an uphill battle to try and get people to come over and really embrace this technology. Thank you, Hannah. You can find more of Hannah's reporting on the Bloomberg Terminal, on Bloomberg dot com and on Twitter. She's at h G. Miller. On the next episode of Bloomberg Crypto, you'll hear from two of our Crypto editors for our Editors Roundtable tomorrow. I'll be joined by Anna Errera in London and Philip

Blagger Kransa in Zurich. We'll talk through this week's highs lows, the biggest stories of the week, and answer any questions books have sent in. I'm Stacy Marie Ishmael and this is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Email your questions, comments, or suggestions for the show to Crypto at Bloomberg dot net, and you'll

find us on Twitter at Crypto. The supervising producer of Bloomberg Crypto is Vicky very Galina. Our senior producer is Janet babin Our producer is Mohammed Peru. Our producer is Sharon Burriro, our associate producers of Zanam Sidehi, Thie Butler and Moses and um Desta wonder At is our engineer. Original music by Leo Sidron. Special thanks to Justin Blow for his track Worst Case