Bruno has been in the music industry since he started his own record label Quango Music Group in 1993, and his experiences running a record label - along with his own personal struggles - shaped new goals and ambitions for himself in the industry, particularly as a music tech entrepreneur.
His dream of bettering the music industry through digital means led him to create Revelator, a platform that enables artists and labels to manage their copyrights, metadata and digital assets all in one place. Through a constantly evolving cloud-based system, Revelator provides greater transparency and celerity to digital asset distribution and royalties collection.
Join Nick and Bruno for over an hour's conversation on cloud-based automation, Web3, NFT's, smart contracts, digital asset management and much more!
NICK SADLER: Welcome to The Label Machine series where we discuss with our guests how artists and record labels and industry folk sell music. Today's guest is Bruno Guez. Bruno is the CEO and Founder of Revelator, a digital asset and blockchain based distribution platform for creative IP. He has an extensive background in the music industry. Following on from the last 30 years as creative director of Cirque du Soleil, he was a CEO of Quango Music Group and a board member of Merlin and most recently has been focused on working with technology to help bring more speed, efficiency and fairness to an artist's renumeration, which is what all artists need these days. Bruno How are you?
BRUNO GUEZ: Hey, nice to be here and thanks for having me.
NS: Yeah, that's it's great to have you on the show. We've got a lot of, we've got a lot of familiarity with Web3, which I can't wait to get into in a little bit. But first of all, when I was doing my background research, I believe you're a recording artist yourself. Is that right?
BG: It's a hobby. I mean, I ran a label. I'm more of a producer. I've always kind of worked with artists and developed artists and produced artists. But doing music for myself, I don't consider myself an artist, even though I make music and I try not to. I don't promote myself as an artist, even though I do have some songs online.
NS: As it is. The album “Love is Possible.” Is that right?
BG: That's right. Yeah.
NS: Oh, nice. Yeah, I did try. I did try finding it in Spotify. But I think it's on Deezer.
BG: I'll put some songs up on SoundCloud. All the songs that are on the album are going to actually be part of a soundtrack to a book I've been writing. I'm kind of keeping the music to be a connect, you know, like the audio part of the book.
NS: Oh wow. You know what? Let's just let's just change track, jump straight into that. What are you writing a book about?
BG: Life. The life, love and everything else. Right?
NS: Oh, nice.
BG: It is. It's autobiographical. And I talk a lot about, you know, some of the different, you know, music, culture and heritage that I've been privileged to be a part of for the last 25, 30 years, working with Chris Blackwell from Island Records and also the founder of Island and producer of Bob Marley. And many, many others. And just about my music career and kind of how I got to where I am and all the music I've been listening to in the last two and a half decades.
NS: Wow. I mean, it's great. And that leads on to the, you know, my first kind of question is like, yeah, do you want to talk about your back story and you know, how you got started in the industry to where you are now?
BG: Yeah, sure. I was born in France and raised in Los Angeles, in California, then 30 years there. Went to UCLA, I studied ethnomusicologist. You know, I love world music. I love the anthropology and cultural side of music. I started deejaying after school after university, had a radio show on KCRW for about seven years in the nineties, from 93 to about 2000.
Through the show, I incubated my record label. I was playing a lot of great music that I was discovering on vinyl around the world that didn't have any distribution or any exposure. And I was licensing the music and licensing the recordings and working with the artists and kind of bringing them into the North American market so that the label was signed to Island Records.
That's how I met Chris. I was 23 at the time, pretty privileged and fortunate to have that chance and I am liking what I was doing and signing me as a label to Island. And from there I started kind of producing records and that kind of lasted two and a half decades.
You know, I went through the whole period of, you know, we were making vinyl, we were making CDs too, and we were selling them, you know, we were promoting them through a club that we used to DJ and host every week on Thursday nights called Bossa Nova.
And that was a great scene at the time. And from the days of Portishead and the Orb and Tricky and Massive Attack and, you know, even Daft Punk, the first time they played in the U.S. was at our club.
BG: And really funny thing is, there was an earthquake that night. Nobody felt that because the you know, the party was booming, that we didn't even realize that the earth was shaking.
We thought it was the bass. Right. But, you know, it was a great time to be, you know, broadcasting and promoting on the radio and then having the performance at the club and then having the, you know, the commercial part of it in terms of promoting CDs and selling your music from these artists. So that was a great trifecta, very powerful combination.
When you get promotion, commerce on production and performance going at the same time, you know, I have watched the space go from analog to digital. Obviously download, you know, we had a deal with iTunes going back to 2003, so we were pretty early to digital. I learned a lot about the challenges of digital metadata, supply chain, all those things and you know, try to already be solving problems around rights and royalties and payments.
And just how do you run a digital business online? And from 2000 to 2010, there were no software, you know, Web applications where you could easily run a label or distribution company and provide transparency and royalty flows and analytics to artists. Right?
So when I moved to Israel in 2010 and after spending, you know, a whole decade already in digital, I was very well versed and I was already, you know, distanced from my label and we had eight people running the label and you’re by yourself now in a different country on the other side of the world, you still have reporting obligations and still want to provide transparency to the rights holders. And now this is 12 years ago I'm talking about, right? And so I started developing a web app, you know, initially for my label, just trying to solve my own pain points of how do I process revenue, how do I show and visualize data, how do I manage rights? How do I do supply chain? How do I offer that? You know, as a portal to the artist, I work with things like that. And that began, you know, that became Revelator really early on. It took me three years to build the software because when you try to put all of the business workflows record label goes through, you know, managing catalog, managing rights, managing supply chain, managing reporting and royalty and payments.
That's quite a lot. You're trying to replace what eight people did as a small label into a platform, into a web application, to a software layer so that took me four years to build. I funded it myself. I kind of brought it to market, and then I kind of realized by 2015, it's everybody's problem that says, like every label has the same issue.
At that point in time, streaming had really kind of boomed and taken off and there was so much data, you know, everyone was screaming, Where's the transparency? We don't understand where our tracks are performing and where they're playing and where we’re making money and etc.. So the platform was a really good tool for distributors and record labels to do exactly that.
But we started, you know, having success and finding our way into the customers we were working with. Now, from cdbaby to Wix, and we have API customers and we had large distributors that wanted to scale up and launch new distribution platforms and what they know, the Revelator platform is used by hundred and 15, you know, distributor and label clients, which power about 250,000 artists through them.
So we work B2B and we offer B2B2C platforms and distributors can interact with the artists. Those are the end users of the platform. Even though, you know, distributors around the world from Hong Kong to Indonesia to North America, Canada, US, Colombia, Brazil, Africa, Nigeria, Italy, France, UK, Germany. I mean, they're pretty much in all continents. The platform works in 25 languages in their local language, so that the artists that use the technology can monetize their, you know, their assets, their content and do all of that stuff in their own language. Pretty nice. And that infrastructure, if you wish, kind of provides the backbone of what we're doing on around the Web3 stuff. Once my, my vision for this company was always threefold. First, solve the platform layer, this IP software layer where you manage your music assets and all the royalty flows that are connected to those rights and provide the rightsholders with easy to use tooling and transparency around the money flow and the supply chain and the royalties, etc.
We've been doing that successfully, and the second phase of this strategy was the protocol there. You know, let's learn how to tokenize assets, let's learn how to embed rights and smart contracts. Let's learn how to make royalty payments, know blockchain transactions along with the reported information. So when you see you got paid, you actually know what you got paid for.
That's the protocol. We've been kind of working on that. The protocols are called original works and it's all about registering your original work on chain and kind of collecting the money through that. So what we've been doing the last few years is doing a lot of testing with large publishers and societies and record labels around. How do you bring web to transactions that are blockchain traditionally, historically?
How do you kind of bridge that and bring them on chain? That's where we are today and we're launching a protocol this year and there are different application that we built for the protocol that are on top of the protocol. One is a web application and the other one is a mobile wallet we call the artist wallet where you can not just deal with all the royalty flows, but you can create smart contracts, you can create splits with rights holders, you can create NFT’s if you want.
You can even create split smart contract as a royalty recipient of the NFT if the band members all participate in the NFT income. So you don't have to only one person get paid through a wallet.
BG: Protocol is the second phase of the strategy. The third phase is around the marketplace and the exchange there. How do you bring more liquidity in these music assets since we solved the problem already of providing the cash flows into the music asset on the platform side and we bring that on chain through the protocol layer, then the obvious next step is can these assets find more liquidity, more lending ability, more defi, more credit, more staking and those kind of things, opportunities for interacting with Web3 protocols. That's kind of how I got here.
NS: There is so much to unpack from here. I'm going to, I'm going to rewind a little bit and go back to I guess how you how the company kind of started. And I've just got some questions, you know, kind of how it works. So like how I guess, how is it different to a, a royalty, music royalty program and which you okay, maybe a better way of describing it is from like an independent record label, I am getting all these spreadsheets from my distributor saying here all my streams, right and I can there. There are few platforms out there in which you upload these CSV files, like one that I used for many years, which was Label Engine, which was put together by Lazar, which I'm sure you know, him and his platform. And that basically puts it in there. You can say for this release the, you know, the splits broken up with this amount of people and then it goes out.
So I guess my first question is, is it was it just is it the same as that originally or was it anything different? And it's and second of all, what was the… no, answer that question first, actually, because I come to the second question after that.
BG: I mean, that stuff, is part of it, the revenue validation, the financial reporting and the splits and the royalty flows and the payments. But I think it's a lot more than that because we integrate with different payment providers. We can automate batch payments to tens of thousands of people. At the same time, you know, we can deal with the supply chain. You know, we have a great inspection tool for distributors to inspect releases that are submitted by the artist so that they can make sure that they comply with best practices around the metadata style guides. With the DSPs, there's a whole approval submission workflow. There's an approval submission workflows around the financials as well as around the royalties and payments.
But it's really built as an enterprise level tooling where the distributor is able to manage the labels, the labels are able to manage the artists. There's this kind of multi-party enterprise level, what we call “multi-tenant,” you know, capabilities, which is different than label engine where it's, you know, you and them, right. Usually here there's, you know, different portals for artists for labels or as the distributors admin account and they have different permissions and abilities to create content, to approve content and to run their business.
There is a big data infrastructure layer, but we automatically ingest the DSP data. The distributor comes in, they say, I have a deal with Merlin or I have a direct with Spotify and I want to go through Revelator for Apple and Amazon, for example. So the fact that they can actually enter their credentials with Merlin, with, DSPs, with and distribute through us where they need it creates this hybrid environment, which is part aggregation, part distribution and part platform where you have your own direct deals.
But we're not even a party to those deals. But you can still manage your business, the way your met your business runs. So today we're seeing a lot of distributors and labels that have hybrid deals. You know, they work with Merlin or they work with direct, but DSPs. And there is no other platform out there where you can decide how your business runs and combine the different tools and deals so that you can adjust the data, you can process the data, you can process royalties, but you can also consolidate all that data and provide aggregated and uniform analytics no matter where your data comes from, whether it's from direct Spotify or Merlin.
So we create data warehouses for all our customers. We provide a business intelligence reporting layer on top. There's so much more than just the supply chain and royalties.
NS: No, I understand that. So I guess you know, for the listeners as well like that might not be party to see a lot of the stuff that happens behind the scenes. You know, you're like a almost like a Swiss Army knife for distributors to then, you know, because a distributor, you know, whichever distributor you're using, you're right. They have to speak to Spotify, they have to speak to iTunes. They have to make sure this is in place. And you've got toolsets that allow them to use that efficiently. And as you say, like, we're going to use this, but for these people over here and this bit for these people over here, but you've got these data warehouses that connects it all for them and gives them a nice, a nice, I guess like layer over the top to easily manage all of that.
Which yeah, which is incredible. I, you know, I'm always learning about behind the scenes stuff as well and you know, and you know, until, you know, we connect it. I wasn't even aware of that. So that's a great insight.
BG: And because it's a platform, it means that we can power distributors around the world in their own language. We can offer to them as an API, as a white label, and they run their own white label solution. Imagine you have a Soundrop or Distrokid or Tunecore and all of that is running on the same platform, but they're running their own brands and that's kind of the level we're working at.
NS: Yeah, yeah, that's amazing. And so yeah, just for clarity as well, at the moment you're covering the master right side of music, not the publishing side.
BG: That's correct. And we do have publishing metadata, you know, connected to every sound recording. So we do capture it right now. I think over the next 12 months will integrate. We're probably UNISON was a great publishing admin based out of Spain and we'll try to work with them as the administrator and then provide the CMS and the frontline layer.
I don't think we want to be a publishing administrator ourselves, but we want to provide the reporting tooling and the royalty tooling around the publishing data.
NS: Yeah, awesome. So, you know, I speak to a lot of people at different levels of the industry and I'd be really interested to hear like, what is the day in the life of a CEO of an enterprise level music company? Like, you know, what are your what are your sort of main activities as a CEO?
BG: So I'm very a product and marketing-driven CEO. My day starts talking with our product team in Australia and then moves to Europe, you know, by 10, 11, 12 and then by, you know, 3 or 4 or 5 (PM) in the afternoon I'm dealing with, you know, the East Coast and then the West Coast through the evening right until about 8:00 at night.
I work usually eight, eight (hours). It's kind of my time frame. You know, we're a team of 50, you know, broken down half in Israel and now across Europe and Australia and the US. So I depending on my days, I can have 8 to 10 meetings a day. I'm usually pretty tired after talking for 10 hours, you know. But I think the best days for me are when I don't have too many meetings that naturally get some work done.
I like to work on strategy, I like to work on product and marketing. So I interact with our product teams quite a lot. I try to share the vision for where the product needs to go, and then kind of look at the different presentations and demos of the app and the product names and engineering teams on a weekly basis.
Wednesdays and Thursdays usually are demo days, so we can kind of see what's going on on our Web3 and wallets side, and Blockchain tech; on Thursdays, what's happening on the platform side and the work we're doing. It's a good team, great people, really passionate about solving problems for the music industry and enjoying the work while we're doing it.
The best, best day in the life right now. Yeah, it's ending with music. I usually end with music and during the day when I'm doing meetings, I can't have music playing at the same time. Yeah.
NS: What do you if you've got to go and like you've got a particularly complex problem that you've got to make multiple decisions on to find the answer. What, what do you personally do to get to, to kind of do that to, you know, like go for a long walk biking, listen to music. What's your kind of go to for that?
BG: Listening to music. You know, usually Fridays and Saturdays are more quiet for me and I do more reflecting where we are, what we're working on, you know what I'm seeing in the market and how do I bring that and communicate that to the team? But I'm listening to music pretty much all the time that I'm not on meetings now.
NS: You mentioned earlier on music, you know, you mentioned Portishead, remember who asked you what that sort of Orb, that kind of old nineties, you know, what's it called, breakbeat, like almost trip up. I was a huge fan of that as well. Do you still listen to that today? And if so, if you got is there any kind of tips on some modern bands or musicians doing that music?
BG: For sure. So I don't listen to as much of the 90’s music today. I do have my moments, but I do want to listen to some, you know, chill out stuff. But let me see if I open up my Spotify. But very kind of what I'm discovering.
NS: Sometimes it's nice to put a little bit of dummy on.
BG: Yeah. I mean, last year I listened and discovered 7000 new artists and based on my Spotify Wrap. But I do listen and try to discover a lot of new stuff. I listen to a lot of music from around the world, you know, from Afrobeat to flamenco to Brazilian. And now I know a lot of a songs, but from Brazil, from Africa, from Arabic quite well.
And I go back and listen to tell you, you know, I was playing 50 years ago in those markets and I love, I love that music from the seventies, from the sixties. You know, I love giallo classical as well. So depending on my mood and what I'm in the mood for, I'm in a quiet mood. Or if I'm in a energetic mood, you know, kind of figure out what is the right playlist.
I used to love making playlist. I made playlists for Chris Blackwell's Hotels in Jamaica and Miami and Bahamas for 25 years. So, you know, I was creating compilations throughout the 90’s and throughout the first decade of the millennium before we were calling them playlists and before Spotify existed. I would love to kind of blend music from different parts of the world and kind of create the soundtrack to people's vacations for these resorts across the Caribbean.
I obviously love Kaytranada. I love, you know, listening to, you know, Bonga from Angola. I know about it from Mali, from his son Gary from Mali. I love Ebo Taylor from Nigeria. I love Afrobeat and highlife. I love your factory, I love Ben. Then there's a great remix that they've done of your factory. That's great. I love Submotion…
NS: I feel, I feel the rest of this podcast. Could you be just going down? I think you love.
BG: Just this year alone. I've discovered 2000 songs that I didn't know previously that are in my life song and that I'm listening to on right now on repeat. So I like discovering, I like not being stuck in one song book and just listening to the same stuff all the time. I get tired of it after a while. I want to listen to some new energy and I want to inspire me and kind of let me explore something I didn't know before. Musically, right, music is rhythm, and if there's an emotion to music and there's culture in music, I like to kind of explore, you know, what the world has to offer, not just what I used to listen to when I lived in America.
NS: Yeah, I agree. I'm very much the same. I like discovering new music and it's funny. You're right. I… compilation CDs were the first iteration of playlists. Sure.
BG: Yeah. Actually, in 1993, I used to have a Mac computer, a Central 650 with a sound card called Sound Designer before protocols existed. And that was the first digital card I had that, do, you know, stereo digital audio. I taught myself how to deal with digital audio editing back when I was 23, and I had a1x CD burner at the time. I used to use Master List CD to create a playlist of these digital recordings, which I received by that 80% from producers around the world that would digitize those audio recordings. And then I would kind of compile them into a compilation using Master List, and I would make a playlist, which would then be a Redbook audio, and I would send off to get, you know, produced and manufactured.
And that's how I made CDs when I met Chris. And, you know, at the age of 23, he came into my house and he saw that I had thousands of CDs and vinyl on the floor. And this computer in the middle of the room where I was manufacturing CDs, it was like, this is a great, you know, great outfit. I love your taste in music. And you're producing records for far less than I'm spending, making them.
NS: But he was like, you're signed.
BG: I want to, you know, made quango, a record label on Island and give you guys distribution. So that's how we got started.
NS: Oh, man, that's an amazing story. And you still, like you said, still doing today making these playlists, discovering new music.
BG: Or not selling CD’s anymore. That's changed. But I'm sharing playlists. And a lot of people still.
NS: As a side question, just slightly off the side. But on this topic is complex. When you were able to sell digital compilations, you know, in the Ministry of Sound doing them and whatnot. Right. Is there still money? And with people streaming compilations, is there still money, do you think, in putting a compilation together? But then it essentially is released on Spotify, but it really is a playlist from a if you were a company to, you know, licensed music or for the record labels, do you think there is still a model in the streaming world?
BG: So I don't know about the licensing model as much anymore, but you know, Ministry has a great brand and they probably still do it on licensing. But I do think that once you produce and you own masters and you can use those masters and playlists, it's really about creating a playlist network today and kind of getting your songs played in playlists, whether they're owned by you or a third party or DSP created and operated. And that's the real marketing. I think it's how do you get a song on a playlist with 8 million people? How do you get 8 million streams for a new song, right? How do you get it picked up by the algorithms that we get added to the playlists that are DSP owned and operated? So it's a challenge breaking through today. Getting through the noise is a challenge. I think there are more opportunities that are emerging around the NFT space and around kind of creating for that market, for the Web3 market. Now how do you create original content that is not just the same content that exists on Spotify because that has no cultural value. Just reproducing more across a different tokenized aspect isn't going to make it more special, but making it more exclusive. Having more of a digital scarcity layer to it, more exclusive and premium layer are what you do on Web3, I think is super interesting and differentiates from what's existing on the Web3 layers.
"it's a challenge, breaking through today. Getting through the noise is a challenge. I think there are more opportunities that are emerging around the NFT space and around kind of creating for that market, for the Web3 market."
NS: Yeah, well, we're going to jump to that in just a second, but just before we do, though, I did want to ask you about some of the labels that you do currently work with and some examples of when they've worked with you, how you've helped them essentially grow their their royalties and revenue. So, you know, let's say I'm a let's say I'm an independent record label.
I've you know, I'm still starting out a maybe I've just passed our 50th release. I'm distributing through Ingrooves. I come across you, like, how would you how would you help me out?
BG: Sure. So there are a lot of aggregators and distributors around the world, you know, from not from Ingrooves, Believe, Orchard if they don't figure ourselves regulator we all focus on the B2B side of the business right? Unlike Bass Rocket, SoundDrop, CDBaby, Tunecore, they focus on the B2C. The artist based inside. What's different is you know we are also B2B2C power distributors so and grooves and you know food I believe and orchard don't have that infrastructure and say you signed to us as a label but we can also power your distribution company as a platform and allow you to, you know, have artists sign up, direct them.
That type of infrastructure is unique to us. I think if you want to run a distribution company, that's something you would look for a platform that can help you do that under your own brand, give you all the tooling to do the admin part, the supply chain, the inspection, the royalties, all of those artists, etcetera. The other B2B providers I think are good as well.
I mean, they're all providing services that are very similar. Let me do the supply chain. Let me tell you, I'm going to pitch playlists and not do it. Not everyone's really good unless you're big enough that you can kind of warrant that influence where they can't ignore. And it's not that they ignore willingly, it's just that they're saturated with hundreds or thousands of companies and they can't catch everyone. We're going to focus on their top earners and the ones that are, you know, providing the most bang for the buck in those companies.
NS: So do you think in the future you sort of we're almost getting where if a label gets a big enough and a big enough catalog, it's like, why am I going through a distributor, an aggregator who's taking 15%? Yeah, you're not putting me on any playlist. You're literally just providing a web page for me to upload stuff. What you're saying as well, you're right, just become like labels should really be becoming their own distributors. Keep that extra 15% and focus on their own marketing.
BG: Yeah, you can be part of the Merlin network, you’re going to add to the independent's market share that Merlin provides. You know, you can be operating at anywhere between 1.5 and 3% on the distribution. So you can save 12% and invest the money you are making from that 12% into your own marketing infrastructure. You to have your own in-house kind of playlist and marketing team. You'll make more money as you'll get more attention because you're focused on your catalog and you'll be able to be in control of your assets and your masters and your promotion and everything. That is what it means to be a label as opposed to outsourcing it to somebody else who’s got to do it in part or not at all. I think you need a platform like Revelator to kind of be the backbone infrastructure, but run your own deals and be in charge of your own fate and destiny.
NS: Yeah, it does seem to be that where it's going, it's hybrids of hybrids. Of hybrids. And you can just design your own structure that works for you. Yeah. Which I think is is really exciting. So and now of course, you know, we're now introducing Web3 into the mix in the last couple of years. Obviously not right now. The best time in the market we are. Yeah, we're recording this on August 2022. And so yeah, the, the crypto markets are down but looking like they're coming back up. I guess my first question to you is why do you think artists and labels need to embrace Web3?
BG: So I think it's a cultural shift, not just a technological shift. I think the whole, you know, token economy is kind of a new approach to the way we market. And so I'm connect on the relates now to music and culture and so we provide them with more of a like a new discovery channel, a new distribution channel where they can actually have ownership and the music IP and music assets and not just music assets, they can also be visual assets.
I think all peer to peer is coming back. It started with Napster and it took us for a 20 year run now. But that's essentially what's coming back in. The music industry, thanks to streaming, has kind of come back from a revenue perspective. But what we've experienced from going from downloads to streaming is this disconnect between, you know, the audience and the consumer side. For now, it's still harder for us to connect with our fans because the platforms, the DSP’s, are basically the gateways to that market, to that audience. They're the subscribers of that audience, of that platform. So as an artist on Spotify, it's hard to reach my audience as an artist on Amazon and you know, and YouTube and Apple.
I don't have their email address. They don't have their wallet address. I don't have a way of interacting and connecting with them in a way that's meaningful, but Web3 kind of brings that audience relationship back to the artist and the whole concept around community, Web3 is about optionality and community at the end of the day, it's about the direct access and direct relationship and the decisions you make as a creator or as a curator or as an owner of content.
And you're actually able to not only prove that you have verifiable and unique access to that asset that lives on your wallet, but that you're creating that asset and sharing it and, you know, with other rights holders or with fans or with investors or you decide basically you have the option to decide, as opposed to depending on other third parties that are making those decisions for you.
NS: So you sort of, you know, I think in some ways it's going back to Direct-to-Fan, which was in early 2000’s. You know, I had a label and I saw that the benefit of that and you know, cutting out the middleman and we, I forget the name of the platform that we used, but we did a lot of like put your email in for download and then we built our email list up and then we would sell.
We really focused on apps and then around those EP's were create merch products. So you know, you get a t shirt, a CD, plus the download or the “superfan” pack and that was, that was a huge part of our success because each of them, because it gave me something to connect to like something physical rather than, because even back then, with digital still, you started moving away from that connection to the artists even before streaming.
And I think, you know, that's something I always push as, you know, like you need to connect to your fans, get their email addresses. So do you think that Web3 is just taking that to the next level and that, you know, instead of creating maybe merch packs, you're creating NFT packs or like digital packs?
BG: Absolutely. If you think about it, you know, Web2 was about information. About information-economy. Web3 is about ownership-economy. And you got to have different forms of ownership. You call it fractional ownership or ownership of digital assets or NFT’s or whatever. You know, type of tokens, whether they're collectible tokens, membership tokens. But ultimately, you also have smart contracts and fungible smart contracts where when you meant something, you basically discover what's inside that you can have, like this unlock mechanism that gives you access to things that you may or may not know what's inside. It can be a remix. It can be merch packs or digital packs, but at the end of the day, it's about scarcity. By creating this unique digital experience. And smart contracts are a great composable layer to do that, right? So I do think that this whole open-source technology will lead to more co-creation. And I think that composability as creation unify on a smart contract you interact with and you do your own thing with it and you create a derivative product. You basically co-created with me on this original composable asset. So for sure this kind of exclusive premium content both at unlock access to exclusive stuff is what's exciting to me, at least on the utility side of the tokens.
NS: Yeah, we're seeing the same thing in the film world as well. I've got a crowdfunding platform for filmmakers on the blockchain and what we're seeing is people creating characters that you can own and you get the rights to then put those characters in another film, and then they become like a co-creator, which is, which is, you know, I think it's allowing people to really think outside the box.
Going back to some of those, what I wanted to ask you is, you know, I'm new to this whole Web3 world, I've heard about NFT’s, I want to create some digital products in this world. What are some, like you mentioned earlier about having a NFT you open up and there's something inside, what are some of the great examples of these digital assets or NFT’s that you've seen working for artists so far?
BG: Are you familiar with Song Camp and Chaos, where you have 77 different musicians kind of co-creating and creating these digital parks?
NS: What what's what are they called? What was that called?
BG: You look at Song Camp.
NS: Song. Camp. Yeah.
BG: After Project Chaos, that came out of that. It's a great community of different types of creators, musicians, visual artists, developers, engineers, label owners that are all kind of collaborating around kind of creating unique music that are, you know, packaged as NFT’s and different products that can be minted and you know, you can still purchase the pack and you can not open it and kind of, you know, you could just open it and see what's inside or not.
You can just like you just hold that. It's really kind of gamifying the experience of digital scarcity. I think they're great. I really like what they're doing. There's, you know, I'm tracking more than 50 different projects. So, you know, there's people sitting on the, you know, royalty investment side, which I think is a great use case. And I do believe in that model.
If I don't believe the market, the regulatory environment is quite there yet. I think there's still some risks around that. I see, you know, other a ton of projects around collectibles beyond just kind of selling stuff. I do think that obviously in this market, the value of those NFT are going to come down from $600,000 for a JPEG to $2. And I think NFT should be if you know, collectibles should be inexpensive and accessible to more people. And then I see a lot of projects around utility, whether it's membership and access and vaults and different things like that. So I do like what's going on in the experimentation, innovation layer that's happening right now. We're still very, very early in this cycle or a year or two in terms of the music NFT’s and it's still very early. Imagine that, you know, we were talking about 1999 or 2000 and from what you perspective, from social media’s perspective, that would have been very early and that lasted 20 years or so, right. We're in that same cycle right now.
NS: Yeah, I agree. It's a very exciting time. I wanted to jump on to talking about the fractionalized ownership. So there is from a creator's point of view, a way in which you could say, “hey, my thousand fans, you will buy a NFT of the album for $10. So I have $10,000, which allows me to go and record the album. But you will all own 1,000th of that album. And when I distribute it on the, on, on, you know, the, all the platforms like Spotify, it'll all get fractionalized and divided up to you on your on the bitcoin, sorry on blockchain, which makes it easy because apart from gas fees, it's a whole lot easier than transferring small amounts of money to everybody's bank account.”
Now what is, the only problem with that is that the SEC and the FCA can hold but kind of like technical on this, but I think you have some really good insight on here and that if it is a asset class that earns you royalties, you, you know, you have to be you have to be high net worth individuals. How, how are you seeing this unfold and which it will actually be something that we can implement? Because my understanding is anyone who is doing at the moment is dancing with the devil.
BG: I mean, you do have crowdfunding regulation in the US and other parts of the world. So what you talked about first is like, you know, Hey, fans, invest in my album, that's a crowdfunding layer. Go ahead. And you can operate that legally under our crowdfunding regulation, what's called Reg CF in the US. And yes, you get something in return, you can kind of get a fractional claim to that royalty stream. If you do it through a regulated platform that it's all good. You're not dancing with the devil, you're actually using, you know, the regulatory frameworks that exist specifically for that.
NS: So that already exist, you can do fractionalized ownership of music royalties.
BG: You can there's Reg A, there's Reg A+, you know, there's a company called SongVest. There's that in the visual arts. There's a company called Masterworks, or you can buy a fraction of a Picasso or Basquiat. So there are regulatory frameworks for that in the US. Let's call it Reg A, Reg A+, Reg CF, there's even Reg V for accredited investors, Reg A and Reg A+ are more for retail investors or the mom and pops of the world that just want to invest in something that are not high net worth individuals.
So that exists. What doesn't exist is the tokenized securities, right? They exist as a regular, regular securities where you're buying shares or stock. Right? But what about tokens? The FCC has not approved any tokenized security exchange or market. So when you have a company like Royal or Oculus or others that are basically doing, you know, NFT tokens with claims on royalties, now they're dancing with the devil because ultimately the FCC is saying you're selling unregistered securities as tokens.
They have enough money that they're going to figure it out. I'm sure they have the best lawyers that a $77 million fundraise can afford. And so create the regulatory framework, you know, for that, they'll have a way to tell the FCC that this is what we're doing and we're not liable or we're not the platform or we're not the ones doing X, Y, Z, and they'll figure out how to skirt around the issue.
BG: And the FCC at some point will have to make a, make a stand, as to what they see as selling unregistered securities or, you know, or…
NS: Well, you can do it, but up to a value of $1,000 or something like that.
BG: Perhaps. There is going to be still some time required for the FCC to come around and be more friendly on the regulation side. And right now, they're taking a very hard approach to, you know, tornado cash and to other projects that are getting fined either for having done an ICO or money laundering through privacy. You know, payment channels and things like that.
NS: Okay, gotcha.
BG: But we are, in terms of the market.
NS: So in summary, what you're saying is the whole fractionalized thing does exist in Web 2.0, but if we're trying to put it on the chain, it's not regulated yet. And that's what we're kind of waiting to kind of the bigger players to figure out. Awesome.
BG: The technology exists, but it doesn't mean that the market will say it's a legal right to do it.
"labels should really be becoming their own distributors. Keep that extra 15% and focus on their own marketing."
NS: It's the same thing in the film world as well, where we're under the same umbrella and you know, we're going to see how it kind of plays out as well. So, you know, I going back on to the, you know, one of the cool things as well that you want to do at Revelator is, you know, to help bring more speed and efficiency to the artists renumeration. You know, we've got this existing system that is opaque and it probably benefits the bigger players. And in some ways, that putting it on chain makes it all very transparent. That's not going to happen overnight. I know that you believe there'll be a hybrid system that starts off. Like what? How? Talk to me. How you think that might look in five years, what that hybrid system might look like?
BG: So it's possible today if you take off chain royalties with Web2 and bring them on chain that's what we’re focused on, but also to take Web3 native royalties, NFT’s and others, and also kind of bring those already on chain and bring those into the same music IP asset, what we call an original media asset as part of the protocol asset.
So ultimately you can have different revenue streams coming into a smart contract. And I do think for some time, you know, the hybrid model is going to work. It's going to be the only way that you can get adoption and scale and part of that is because of user experience. I'm not… everyone knows how to manage private keys and digital wallets and how to fund wallets and how to transact and sign transactions, you know, using Metamask or Coinbase or Rainbow or other types of wallets.
So there's already a bit of a disconnect between the way the transactions happen and the way non-custodial wallets work. So I think you'll have this hybrid model, and I think platforms like Coinbase and Binance have done a good job at getting a lot of people on those platforms, but they are centralized, even though they're letting you interact with decentralized assets and protocols.
It's a Web2 experience. So it's same thing will happen in music, the approach we've taken is, you know, there is a Web2 product experience that looks and feel like a distribution and royalties platform. Now you have the ability to register assets on chain or create and mint NFT’s and tokens or membership or collectible tokens. And it still feels like a Web2 experience, but in the background interacting with a smart contract and you know, basically recording transactions and minting tokens on chain. From the original work’s perspective, on the protocol side, we also offer Web3 non-custodial applications. It's not like, “hey, we're going to be your custodian.” If you know how to do Web3 and how to manage your own custody, you know, through self-custody, basically, then you can do that using our applications. And if you don't, you can also do it. You know, you can kind of say, “okay, the smart contract wallet is going to be managing the assets in the background. At any point in time, I can just push a button and cash out my money out or I can push my assets to a non-custodial wallet.”
NS: Can you just for that, for the listeners, explain what you mean by like custodial wallets and having your own, I guess, custody over it.
BG: So a custodial experience is like where you log in to Coinbase with an email and password. Coinbase is managing your account, right? And you put money in and you buy and sell and trade assets, but they're still your custodian of those assets. You know, you're not using a wallet to authenticate and log in and where the assets are held on your phone, in your wallet.
In this case, when you buy Bitcoin or Etherium, Coinbase is facilitating the transaction as the exchange and they're holding those assets under your name, your email and password. That’s custody.
BG: It's not your custody. It's they’re the custodian.
BG: The difference with Metamask or a Web3 wallet or even the artist wallet that we've made is when you register an asset and you fractionalize ownership, let's say you and I are co-creators and we each hold 50% of the tokens in our wallet, in our phone, we're actually holding those tokens. There's no one, regulators that are between you and me.
So if you lose your phone and you lose your wallet, you lose your tokens, like we always say, your key is your crypto. So that's non-custodial. You got to be responsible to know how to manage your self-custody of your own assets. There is no email and password. No one can recover your account.
NS: That's like if you lose your wallet and it's got a bunch of cash in it, you can't just log on somewhere and it will reappear for you and… reality, you've lost it for good.
BG: I believe Web3 is about optionality. You should provide applications where people have the option to either do Self-Custody or interact with Web3 without even knowing anything about it. That's custody.
NS: Okay. Yeah. Gotcha. Well, there's something else I wanted to kind of unpack around this, getting. There's just so much. There's so much to kind of cover off on all of this as well, I guess. Yeah. Where do I want to go back to was, so I guess what you're ultimately what you want to be doing in the future with this hybrid system is you guys are going to create the hybrid system in a way.
So because you're on this enterprise level, you'll be able to take the streaming data from Spotify and then incorporate it into these data warehouses. But then these data warehouses will also be able to say, Oh, and I've also got this. I've created this NFT over here. And is worth this match and that comes in and then it has a value, and then you have that layer that's over the top for the, for the end user. Like whether they be the label, the artist that hasn't connected, is that sort of the vision?
BG: So it's true. I mean let me unpack that a bit more. Because it's a platform, any distributor or a label can run the same process as we do. When an artist uploads a song, they can mint the NFT; once they distribute that song, that can actually become a smart contract address. So when the royalties go back from Spotify, we make the payments in that smart contract address, which may be you and me for example, doing 50/50.
So we get to split over money directly to our wallets automatically. So we've already kind of created this onramp and this bridge to allow creators or labels or distributors to create digital assets, basically what we call tokenization. We tokenize that music assets into tokens where you kind of transfer them on chain and they become tokens. And then you hold 50% of the token’s supply, I hold 50%. Revelator sees the smart contract address as opposed to saying For this song I need to pay Nick and Bruno in their PayPal address. Now they're paying it to the smart contract address and Nick and Bruno get paid automatically, things like that.
NS: Gotcha, gotcha. Okay, so we're kind of goodness me, we've got like about 5 minutes left, that went so quickly. Yeah. I'm going to just try and quickly ask some sort of like industry trend questions. At the moment… you're actually probably the best person that I've ever had on the show to ask about these.
So everyone's always interested in royalties, record sales, where, where in your opinion are most, are you finding much the royalties are coming from in 2022, from the different major platforms like Spotify, Apple Music, Amazon, Tidal, etc.?
BG: It's obviously Spotify and Apple and YouTube are still kind of dominant platforms and not everyone provides the best revenue per stream. Apple does a great job. Spotify, it does a good job. YouTube does not as good of a job, but the scale is so much bigger. You still make a lot of money on YouTube, even though you get paid less per stream and we see some platforms still paying them about the same year after year, some platforms and less and less, but their volumes are just growing, so you don't actually feel it even though you're making less per stream.
I do feel that, you know, vinyl obviously has a resurgence, though. People still like to hold and touch and, you know, something to a certain cultural elements to physical, you know, and vinyl where you could read the lyrics and you have a record cover that's beautiful. That's 12” by 12”. And you know, you might have liner notes and… exactly.
But I do think that NFT’s can also unlock this “on-chain, off-chain” and, you know, “physical through digital” reality. Or they can also be concerts of goods or you can actually, you know, get, maybe a QR code inside of vinyl. It gives you access to a digital experience, things like that. So I do think we'll see more and more of those types of hybrid experiences.
NS: Yeah, I, I love the whole QR code and you know, goes to a secret website. You know, it's a web 2.0, but like people love that kind of stuff.
BG: The wallet that unlocks the vault and that vault gives you access to stuff that's not available publicly.
NS: Yeah, yeah, I completely agree. And you know, and artists as well, they need to be thinking about when they do write music, you know, it doesn't all have to go and be released on Spotify, hold some of that stuff back. There’s huge value in that.
You mentioned, you know, earlier briefly about the you know, getting on Spotify playlists and and that being really important. What have you been finding works well for artists that are that want to get on the Spotify playlists?
BG: So the reality is you've got to do some of that traction yourself. You got to kind of create the audience and the followers before, you know, the algorithms pick up on you. Right? You can also do some promotion and stuff like that and come out to the editorial teams and curators and influencers, try to kind of get on some playlists that already have tens of thousands, 105,000 listeners before the algorithms start to say, hey, this is kind of rising and stuff like that.
It's not easy. Building an audience is not easy, and that's where you want to work with a team. I don't believe that labels are just going to go away because artists can distribute themselves. You know, labels are curators of communities and they tap into specific communities, whether it's metal or hip hop or country or whatever it is. Yeah, that's your team. You need to have a team behind you at the end of the day.
NS: So what you're saying almost is, you know, if you are wanting to get those onto their Spotify playlists, focus on building a fan base and focus on getting a team that can build a fan base around you and build an audience first.
BG: And use Web3 to kind of build that audience as well and monetize and interact with that audience directly. It's a great way.
NS: So I mean, so at the moment, the way I say for people to grow an audience is get email addresses, right? Still a huge amount of value, email people. You can tell them to go to Spotify, go wherever you want them to go. How would you now say someone? How could they use Web3 to like grow that to then grow your audience, like you mentioned?
BG: Mint NFT’s, create storefronts with the regulators app. We have an app called NFT Studio where you can kind of create your own storefront, you know, promote back on social media to your fanbase and get them to come and interact with your NFT by connecting their wallet. Now you have their wallet address and then you can start airdropping stuff to them that can basically be equivalent of the email list or you have the ability to airdrop the wallets.
NS: Do people get a notification when something gets airdropped to your wallet?
BG: If the application provides you that, it depends on what you use. Metamask doesn't give you an application and notification, but you know, our artist wallet does. You get notified when you create an asset, when you register an asset, when you receive royalties, you get push notification again from talking about on the Web2 experience.
NS: Can you, can, so for the wallets can a fan have a wallet to store music so they can get notifications?
BG: We haven't got that. We built the creator wallet.
NS: Yeah. Because I can see that being a real advantage as well.
NS: Amazing. So you just sorry. Is that the NFT Studio?
BG: Yeah, that's correct. We’re launching on September 15th and you know, any creator can kind of create and mint NFT’s, create storefronts and sell direct to their fanbase, whether they're, you know, buying with a Web3 crypto wallet, crypto payment or with a credit card, you know, we're partnering with payment gateways, empower also Web3 experiences on the checkout so that, you know, even my mother can kind of purchase an NFT even if she doesn't have a wallet.
NS: That's amazing. That's a key part for yeah. “Onramping” artists. What protocol are you building this on?
BG: So original work’s built as a multi-chain protocol that operates across the EVM chains. The NFT stuff is on Polygon, but we also support Binance as well as Ethereum. Now we'll be adding more chains like Flow and Solana, our first non-EVM chains to be added, and we’ll be working on that for the rest of the year.
NS: Awesome. So September the 15th. Well, I'll do a little email out for that as well. Maybe we can try and put this, we can try and put the show out on the day as well to kind of help promote it. And I'm glad to hear that it's on Polygon. That's what we're built our platform on as well. I think, you know, it's a great community over there as well.
So yeah, thank you so much for your time. I absolutely love this. Yeah, we've got so many shared interests, which makes it a really fun conversation. Very quickly, where can if people want to kind of find out, you know, more about you or follow what you're doing or Relevator, where can they go, what's the addresses?
NS: Awesome. Well, thank you again for being here. I had so much fun and yeah, cheers!BG: Awesome, Nick. Thanks for having me.