Releasing the Next Wave of Artists into the Music Metaverse

25:29So we think there's a lot in there that needs to be considered, not just the creative process, but the ethical perspective on this, the kind of economy perspective, and also just the protection. Like, you know, just because we can doesn't mean that, you know, you should just kind of roll it out en masse. So there's a lot of consideration, I think, that needs to be, you know, needs to happen right now in the space as a whole. And so we're being very thoughtful, starting first with just the layer of can we make sure artists are protected when we bring them into this environment? Can we get them paid fairly?

26:00Can we make sure that this is transparent and that they have all of the kind of ownership and rights and royalties systems in place so that they can truly capitalize on what this is going to become? We are still in the infancy of it. Right. So I think there's still a long way to go for it to truly emerge as the business model. but very optimistic about what's happening here, for sure. Well, we're in the infancy of all of this, really. And it's fascinating because that seems exactly right. Those seem to be exactly the right challenges. It's interesting. We've seen this kind of step function leap forward in DRM with streaming.

26:34This sounds like marrying the DRM component with some of the decentralized components so you can have that transparency, so you can have that true decentralization. I mean, even as recently as five years ago, the idea of releasing STEM files was something that no artist would ever want to do, at least no artist who wanted to control the economic future of that music. But the idea that you can do with this technology, with Web3, so you can assign and have that transparency, I mean, these really are quantum shifts in the way the industry has taken place. This is probably more significant than anything to hit the industry since streaming, perhaps even more so because it empowers artists rather than labels.

27:16Yeah, I think it's a really interesting point. I mean, some of the things that we'll be launching this year will definitely be sort of world's first in many ways. You know, we'll be releasing albums and, you know, new music with artists where it's actually just an AI model. Like they've trained the model on what they want to release and then are going to give it to their fans to say, you can export it. You know, I've put all my DNA into this kind of this model and there's a thousand songs that can be kind of minted out of it. And so there's some it's just a really fun new dynamic and relationship.

27:48and medium. You know, I think the format of music as this idea is going to change as a result of this. And it's largely going to be driven by these new technologies that reimagine how the technology comes together. And I think what's great about NFTs is that it's a really powerful container for that, to bring media ownership, licensing, royalties, and package it into a set of tools that can really scale and untangle some of this sort of fragmentation that exists in the industry. So we are really, I think, at the precipice of something huge. I think the music industry will take a few years to catch up.

28:25But the most important pillar, if I was to kind of think about where what needs to happen is this idea of tokenization at the point of creation needs to be the sort of key growth piece here. So an artist makes a song and immediately puts it on the blockchain with all the right metadata is going to unlock this huge step change, where from there, all the data is now clean and structured in the right way. So, you know, we're moving towards this. I think it's going to take a few years, but, you know, the music industry has always been slow to adapt, but it definitely feels like an interesting sort of renaissance period for art and culture as a whole.

29:01I think music will naturally lean into that too. Yeah. And this technology may become a catalyst for the change, enabling this to happen much faster than it would if it had to go through large bureaucratic structures, because the artists themselves can sort of interactively create this. They don't need sort of the permission of a label or a music owner, rights owner to do it. They can generate their own STEM files, they can produce them, they can put them out there if they want to experiment. Andrew, let me ask you this. Obviously, this is an incredibly fascinating conversation. We've talked about the abstraction here, about the potential, about the promise, about what this world might look like.

29:35How far are we away from an actual usable beta product? Yeah, so we have been testing for the last few months. We launched our first open alpha in October last year, working with Spinning Records, which is a label that's signed to Warner Music. It's one of the largest electronic labels in the world. So we've been testing early beta and alphas for the last few months. And in three weeks, on the 27th, I believe, we're going to reveal our first sort of AI product. And that's going to be really exciting. The mobile game that we've been testing is sort of a music collection experience. It's really the first layer of our ecosystem where fans can explore the world around them.

30:19It's a mobile AR game, very much like Pokemon Go, but a music version is one way to imagine it. And players can explore the world and collect artist DNA. And we've been testing that with a number of musicians and fans and getting some great results. And the next layer of this is now going to be the creation experience, which we launch in a few weeks. So now players have been collecting DNA and we're about to give them the tools to start creating new outputs with this DNA that they've uncovered. So it's going to be really fun. You know, I think that the next few months we have some major partnerships that we're going to announce some of the biggest labels, platforms, distribution companies in the music industry.

31:01So, yeah, it's going to be it's going to be an exciting time. And then from there, we'll be releasing a lot of stuff into platforms like the Sandbox. But right now, we just closed our last beta on Friday last week, and we'll go live with the next sort of early experience on the 27th. So, you know, definitely follow our Discord channels and, you know, keep an eye on where we're going with that. There's a lot of fun stuff happening. Absolutely fascinating. By the way, we're going to be doing some viewer questions in just a second. So I should say, viewers, please join us in this conversation. Put down your questions in the chat wherever you're watching.

31:33We'll ask the best ones on air. Remember, Real Vision members take priority, but the good news is membership is free. Let me ask you this. You mentioned the idea of labels. I've been talking about this as a disintermediating technology. What's the role of labels in this brave new world that you're talking about? Yeah, I think it's an interesting time for labels and anyone in the industry because, you know, the technology that's kind of coming has such a profound impact. I think labels have such an important function that they invest in artists, they help distribute and scale artists in a number of ways.

32:11The business model may need work. I think what's going to happen is labels will have more of an a la carte style offering. They can't necessarily, an artist won't want them to do everything from them. Artists are going to pick and choose the teams that matter the most to them and kind of help them achieve their goals. And labels will have this sort of, I guess, a la carte ability for an artist to choose, like, what does the label actually help them with? So there is going to be a little bit more of a sort of, I guess, lean, you know, modular way for a label to think. But yeah, I think it's an interesting time.

32:45Each label is approaching it very differently, right, from the majors to the independents. And, you know, what I think is key is that labels need to be thinking about technology, you know, they need to be bringing in tools so that they can continue to support and empower their artists. And that's what artists are going to expect is the tools to continue to grow. And I think one of the biggest challenges, if I'm just to track back for a second, artists' frustration is they want to do all this amazing stuff, but their deals make it impossible to because they don't own all of their content. They don't own their rights.

33:15So that dynamic shift is one that leaves artists feeling really frustrated because they want to tap into Web3 or do something in a game, but they may be restricted by the label deal that they have and they don't have control ultimately so that dynamic is going to change and this premise that artists need will have more control is is just a fundamental kind of future that i think we're always going to be going towards is control needs to go back to the creators and that's just a natural shift i think you know that that will you know will happen and labels will adjust and and right and support in that way my guess is that the demise of the label is a story that's been overstated too many times.

33:56And probably, I would imagine that there are some very smart, perhaps even some very brave young executives working at these labels, maybe getting yelled at by their bosses saying, hey, listen, we either interrupt ourselves here or we get interrupted. And I imagine that there probably are interesting and innovative ways for people to add layers of value, as you say, kind of this plug and play, a Lego type approach that can become a la carte where you can see ways where they can add value in places that perhaps the artists themselves don't have the resources to do. Right. Yeah, no, I completely agree.

34:26And I think Warner Music is really at the forefront of this in terms of the major labels. If you want to see a label that's making some great investments and has had real conviction within the future of technology, they've really been pushing the boundaries, investing in great products as well. So it is promising. I think that's the great thing to see is that even though the technology poses a potential existential threat, not just web three, AI also poses an existential threat to labels. You know, some are embracing it and sort of, you know, looking at how they're going to add value here. But it is a very interesting, exciting and scary time for all participants.

35:06I mean, the AI piece, I was speaking to an artist, a very successful artist last week, and they were talking about how they are genuinely scared about the future of their career, because they've seen AI produce things as well as they do. and they've been making music for 30 years. So it's a fascinating time. I don't think it's going to replace musicians or creators. I think it's just going to change the way we think about creativity. And labels and artists and fans and collectors and investors are now going to have a new space to operate in and to build value, which I think is huge. Yeah, that's so well said.

35:42I think it is going to be clearly a metamorphosis. There were people talking in the 70s and 80s about how technology was going to kill music then. And obviously, it didn't. It's become a more prominent part and component of the culture economically. It's an enormous, enormous industry. I'm curious, you mentioned Warner Music specifically. Are they investing in Web3 type technology? Are they investing in this idea of potential decentralization? That seems like it would be a very hard shift for a label to make. But for those who embrace it, also one that has manifold potential opportunities. Yeah, no, they absolutely are.

36:16Alex Kamines, I believe, is the VP of Investments and Iona. They've been very vocal about needing to change the business model and to reimagine the music industry and making some very strong investments into music NFT marketplaces, some infrastructure. So, yeah, I think it's very, very, very clearly investing. And I think they have to. Right. I think anyone who any label or, I guess, industry stakeholder who sees this technology, which may pose a challenge and a threat, it's only logical that I think they get in early rather than kind of just avoiding it and pretending it doesn't exist because that's going to be even more damaging, I think, right?

36:54But regardless if you're a major label or just an independent artist, it's hard to ignore the impact of what the potential of the technology can provide. Hey, everyone, we're going to take another quick break and hear a word from our partners. We'll be right back to the Real Vision Crypto Daily Briefing.

37:16Yeah, it really is fascinating. And I also have to make this sort of mental shift and not think about, you know, me being the age that I am today with the life that I have today. If I were 15 years old, I would never leave my bedroom if these tools were available. Yeah, I think that's fair. Yeah, no, I completely agree. I think it's really interesting as well, because, you know, you can see my background. I've spent years building music, you know, buying music equipment, And it's so exciting to see now that, you know, the next generation can go and learn how to make music without needing to have a huge investment and can just, you know, immerse themselves into digital spaces where you could have, you know, a huge studio, but it's all sort of at your fingertips.

37:56And any idea is sort of available to go and create. So, yeah, it is a very exciting time. I think the kind of culture and commerce, you know, convergence is really kind of driving a lot of this. But yeah, it's a good time to be in the music industry, I think, or in any sector of entertainment right now. Well, it's interesting you mentioned your room, your background there. Obviously, that investment is twofold. Number one, some very expensive equipment. And number two, also an enormous investment in time to learn how to use it. This really is the potential to eliminate or dramatically reduce, say, 80%, 90%, maybe more, the investment of economic sort of money itself, but also of the time that it takes to learn how to use this when you have things like natural language processing in AI models, really extraordinary stuff.

38:44I completely agree. It's going to, you know, it already is transforming people's lives in small increments and just, you know, making it easier to, you know, get things done. But I completely agree. It's, you know, creatively going to expand humans, you know, ability to express themselves and also functionally, you know, give us time to, you know, spend time doing things that we enjoy more, which I think is part of the promise of AI. So, yeah. Finally, tell me about the relationship with Animoca Brands. This is obviously, for people who don't know, a very large, publicly traded, I believe, an Australia company, Yatsu, the founder, has been on with Realm many times.

39:20Talk a little bit about that relationship. Yeah, Animoca Brands is, you know, an iconic leader in the space. They were our first investors actually two years ago. And, you know, big fans of Yat and Robbie and the team over there. Their vision, I think, is so clear. They saw this coming way before, you know, many people did and had such conviction for the space. So, yeah, it's been great. You know, working with Animoca was such a natural fit. As mentioned, they were our first investors. And, you know, we have a big vision to look at the music industry as an ecosystem and not just think about ourselves as a sort of single product company.

39:56And we share this vision with Animoca that, you know, we think the music industry is going to transform. And it was very aligned. You know, for us, what we're doing with Artist DNA is all about identity and ownership and giving that back to creators and musicians so that they can really build, you know, their future. And all of our products take advantage of this tooling. So very aligned philosophically. We'll be rolling out a number of activations this year in platforms like the Sandbox, but also really functioning as the music arm of Animoca. So looking at how do we bring music across the Animoca brand's ecosystem and also invest and acquire companies that we think are going to help shape the future of this.

40:37We made our first AI investment acquisition a few months ago, and we'll continue to look at what's going on in the space and then really just supporting the ecosystem. You know, we want to see new products emerge that can help artists and creators, you know, ultimately earn revenue in this space. So, yeah, working really closely with the team there. And it's perfect in terms of a partnership. You know, we have this distribution channel into so many games and digital touch points that we'll be tapping into, which is a key part of our long-term vision is to bring music not just, you know, onto the blockchain and into these interactive environments, but really distribute it out into the metaverse as a whole.

41:17So we'll be working closely with Animoca on that initiative to take music and really just set it free. I wanted to ask some questions because they're coming in right now. This one comes from a regular viewer, Ralph Humphreys, who always has great questions about this, particularly from the framework from a legal and rights management perspective. And the question is this, what potential does Inder see for the streamlining and creation of transparency for performance and mechanical royalties? Yeah, that's an interesting question. I mean, we kind of touched on it earlier, like the biggest challenge is just the disconnect between systems.

41:54So, you know, we can kind of think about this in a number of ways. One is just like the business model and how do we think about, you know, the distribution of revenue. But I think the biggest challenge was always just the disconnect between the pipes. So if we can get closer to figuring out how do we let all of these systems talk to each other more effectively, there's a lot of overhead that starts to be diminished. And I think through that, we'll start to unlock new business models or whether it's mechanical rights or just thinking about sync licenses or more. there's just new ways to think about this once we have data that we can you know actively measure and you know operate transactions on you know in a more permissionless way where royalties can be paid out without intermediaries or you know tracking can be provided you know just very quickly without you know waiting 60 days for a report so I think first is it's all going to come down to the pipes and making sure that the pipes are you know in place and then you know we have a whole industry and ecosystem that's built on top of this that will slowly adapt.

42:56So let me just follow up because Ralph has a second part of this question, which is an interesting one. He says, one can see a mechanism where an artist can see royalties flow from, I think this is pronounced, Gemma in Germany to ASCAP in the US in real time on the blockchain. This probably requires a little bit of background for folks who don't have Ralph's knowledge of this industry. ASCAP is the American Society of Composers, Authors, and Publishers. It is a not-for-profit performance rights organization, PRO. This is the sort of body that manages the royalties flow. Talk a little bit about, I mean, there are just so many layers to this landscape that could potentially be interrupted, could potentially be disintermediated, but that also means the risk of figuring out how these players in the space can find a way to participate in it in a meaningful way.

43:42Talk a little bit about how that might work. it's been trying people have been trying to do it for years decades and and not really made much progress so there is this challenge where we sort of look at the incumbent kind of infrastructure that's in place and just the resistance to move because it's so hard right when you have this industry and an ecosystem that's been functioning so i think um the process to get there is already moving companies have exist that are building the tools and they are sort of slowly getting the kind of adoption that they need. But I think it's a much longer term journey.

44:16How do we get there? I think it's the independent music industry. I think it's independent artists who think about direct channels of distribution, direct kind of ownership of their content, direct ownership of their fans. Those independent artists are what drive the music industry right now and are pushing the industry forward. And it's where we're seeing some of the most exciting growth come from. And you see it with even sort of streaming market share, major labels are kind of falling, independent artists arising. So where does the change come from? It's from independent artists. You know, the movement that the long tail of musicians can create is so much more profound when they're aligned.

44:52So that's my lens on it. I think it's definitely going to be driven 100 % by the independent sector. And then we'll start to see the industry kind of slowly evolve and adapt as more, you know, layers are sort of put in place. But this is a, you know, I'd say a five-year journey to get to at least the first meaningful state for the industry? I should say here a correction. I believe Animoca Brands was delisted from the ASX Australian Stock Exchange. I'm not sure if there's any new information on that. I'm looking at their website right now from March of 2020, which is when it was delisted. Okay, a lot more questions coming in.

45:31This one comes to us from Gnosius from YouTube. How do I get my favorite artists involved? Really interesting question. How do you get your favorite artists involved? Reach out to our team. There's one way to go for sure. You can reach out to me on LinkedIn or just go to our website, the PixLinks website and message the partnerships team. There's an email address on the bottom. That's one way to go if you're specifically managing artists. If you want to suggest artists for us to work with, then for sure just jump into our Discord and let us know who you think would be great. And we can think about that in our curation.

46:10Okay, here's a skeptical question from Greg Diamond. As an independent artist that has lost his shirt making albums, I see more harm than benefit. Centralized streaming platforms and the DIY revolution have already been disrupting the label artist paradigm because it's practically impossible for record labels to remain solvent. I guess Greg's question here is really about does this become a race to zero as the margin gets sucked out from various components in the space? Great question. So I think about an artist in the context of their economy. And I don't think many artists may think about themselves like that.

46:46But your economy is a whole mix of consumers, right? Super fans, fans, maybe some people in the kind of, let's say, if you are in Web3, maybe coming in for different purposes, kind of looking at you, you know, to kind of collect and, you know, support you. So there's a number of different participants that, you know, engage with your content as an artist. And I think the key is to understand first, who are these audiences? And your super fans are always going to be the ones that you need to super serve. They're going to be the ones that pretty much drive your business model and ability to sustain a living.

47:20So I think the technology could drive things to the bottom. But first and foremost is you need to own your fans. And if you have that great relationship with your fan base, I think they'll follow you where you go and support your career. So definitely think about, you know, the economy that you kind of have around you and then how this technology is going to first help you own that audience, you know, use NFTs as a way to build meaningful bridges with your fans or, you know, and use gaming, for example, as a space that, you know, create new interactive experiences. But, yeah, I think the first step is all about ownership, understanding who your audience is and then trying to form a bit of a design of your, you know, your economy as an artist.

48:02You know, where do you make your money from? Is it 5 % streaming, 50 % live streams, 10 % collectibles? Like artists need to think about this, you know, continuously and then start understanding who, you know, their customers are ultimately. Who's buying these products and how can you start to engage them more effectively? But I think I do think that, you know, there is there is a huge challenge for the music industry here where, you know, If NFTs, for example, don't catch on and collectibles don't catch on, that's a really important revenue stream that potentially goes missing. So we have a responsibility as an industry to protect customers, to make sure that we're communicating and educating fans in the right way so that this opportunity doesn't disappear because of just a mindset to extract value without really thinking about the principles of building an ecosystem and an economy.

48:54So there's a lot of stuff to unpack in there, but my thought is definitely just first, it's like, who is that ecosystem and economy of fans and participants that you have around you? And then just understanding how you can own that relationship better will prepare you for whatever is going to come, whether it's AI, Web3, gaming, or neural interfaces. I think this idea of owning your audience is a foundation of it all. Yeah, here's a question that comes to us from Richard Morey. Is there a way for retail investors to invest? Before I let you answer that question, I should probably comment here.

49:29I'm incredibly enthusiastic about this technology, but it seems to me that this is extremely, extremely early, which means very, very high risk in understanding what this space is going to look like. These are probably sort of hyper-bleeding-edge kind of venture investments, I would assume at this point. That's how I would think about them, at least, that you could never have access to before Web3. and people need to understand when we're talking about this, this is very, very high risk. Go ahead, please. Yeah, so, sorry, just to repeat the question, are you talking about buying like securities?

50:03I think the question is probably more about tokens would be my guess. Yeah, so I think the token piece is, yeah, the token piece is, I guess, a slightly more nuanced question. So I wouldn't want to go too deep into that. I think in terms of investors in this space, I mean, just making some assumptions on what the question is about. I think, you know, the music industry is a slightly more challenging one to think about when it comes to NFTs and, you know, the idea of it being an asset to invest into just because of the nature of how music is designed. Multiple songwriters and stakeholders, there's just a lot of complexity in there.

50:46So thinking about music as an asset class that, you know, investors can come into and invest in, whether that's through an NFT or through the medium of a token is not our business. You know, we're really focused more on this, the fan and creator economy. And, you know, we do give commercial rights, you know, in our assets for people to create with. But it's all about value creation in our product. And we see the role of a token is something that comes later when you really have a clear idea about how your ecosystem and economy operates, like who are the stakeholders and, you know, how do you start to really add value into a more decentralized system?

51:22So that's just my lens on it. I think tokens are extremely interesting and work very well. But, you know, you do have to design it around a product and an ecosystem in many ways. So, yeah, hope that helps. Yeah, and by the way, I should say, you also brought up another additional layer of risk there when you mentioned this idea of securities. Obviously, we know the SEC here in the United States and CFTC have issued complaints, have filed suit against companies for censorally infringing upon a regulated space. You know, I think about going back to the late 90s, the so-called Bowie bonds, when David Bowie and a banker named, I believe, Pullman essentially securitized the rights for the music.

52:05And, you know, I think they raised some$50 million, which is quite a lot of money at the time. But this idea of how this might work, this really is the potential to see this sort of upgraded for the digital age. No, I completely agree. I think, you know, it's such a fascinating space. There are, of course, huge challenges here because there is not that much guidance. And so it's difficult for, I guess, developers to come into the space or entrepreneurs to come in and think about how you kind of take music rights and evolve them and package them in a way that kind of taps into the potential of this space.

52:41But, yeah, it requires a lot of careful guidance. And I think there's a number of companies doing some really cool stuff in the space, but also, you know, being challenged by the SEC because some of their considerations a year ago now sort of, you know, aren't stacking up. So it takes a lot of careful consideration, I think. You know, for us, it's a few years away in terms of thinking about music rights as sort of an asset class that people can invest into, I think is, yeah. Yeah, and the Bowie bonds, we should mention, of course, were fully registered. and sort of a distinction between some of the things that we've seen happening in the space.

53:15Obviously, not investment advice. Talk to an investment professional if you're confused about some of these points. Great conversation. Really fantastic. Really enjoyed this. So much I learned, and I'm sure our viewers did as well. Final thoughts, key takeaways that you'd like to share with your audience. No, it was great to be here. I really appreciate your time. I think, you know, key thoughts, it's a really exciting time for the music industry. It's been an industry that has never really got the attention, I think it deserves when it comes to technology. It's always sort of, you know, under-invested into in many times.

53:47But we are at this stage now where I think music is kind of experiencing a bit of a renaissance in many ways. So, you know, anyone who's interested in kind of learning more about where that's going would love to, you know, catch up and talk. And, you know, I think definitely keep a close eye on, you know, what's going on in the music NFT space. You know, I think there's going to be a bit of a revolution there over the next few months as we see new products, you know, change the way people consume and collect music. But yeah, really great to be here. I think we all know we're still at the precipice of this kind of technology and this future kind of really emerging.

54:20So, you know, probably be here a few months from now, you know, talking about where this is going and there may be a completely different lens that we need to consider. So, you know, it's about just being fast and, you know, thoughtful about, you know, what we're building and how it impacts people. Right. Really fascinating stuff. If you saved me, Inder, for an entire day from talking about the Fed, I appreciate that. And I hope we can come and do one of these conversations again soon. Yeah, I really appreciate your time. Thank you. That's it for today. Remember to sign up at Real Vision Crypto.

54:51It's free. Go to realvision.com forward slash crypto. That's realvision.com forward slash crypto. Thanks again for watching, everybody.

55:09What's up, revolutionaries? Thanks for tuning in to the Real Vision Daily Briefing. For more content like this, head over to realvision.com and get unfiltered access to the very best, brightest, and biggest names in finance.