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This week we spoke to Mikel Jollett, author of New York Times bestseller Hollywood Park and lead singer of the Airborne Toxic Event, about how NFTs could reset the economics of music.
What excites you about the prospect of NFTs and music?
Let's just take ticketing. With smart contracts, you can tokenize anything and when it's resold, you can have a percentage of the sale go back to the originator. Right now, if I play a venue that's say 1,000 people. That's an underplay for my band that will sell out immediately. And then 10 minutes later those tickets are on StubHub. And they're inflated to four times the value of what I charged. And who makes that money? StubHub, because they get their fee. And believe me, musicians hate StubHub for this reason. And then the scalper.
But who should get that money? It's the musicians. It’s their show. It's their ticket. It’s their value. It’s supply and demand — there's all of this value that we are creating by playing the show that we are not capturing ... So instead, you could make it a smart contract, you could tokenize the ticket and attach a QR code you would use to get in. If I put a ticket on sale for 50 bucks, and I write in the smart contract that 60% goes back to me on resale — that's my compromise with you, Mr. Scalper. That’s my compromise with you, StubHub. You can make 40 percent off my ticket but I'm making 60 percent. Why? Because it's my f*cking show. So I make a 60 percent commission, and they still have an incentive to sell it and create a secondary market, that's fine. But at least then that value is going back to the artist and that artist can manage it.
Could this streamline processes for things like royalties as well?
For sure. You could take your publishing and you could put it on the blockchain. And every time a song gets streamed, a percentage goes directly to you and you don't have to go through an eight month accounting process, or whatever it is, to get it. There's tons of lost revenue for artists. You can sell your publishing to your fans, your masters, you can tokenize it. And you can say, all right, you now share in this song.
And you can imagine this as a model for like, let's say a newer band. Let's say you've got a high school band, everyone loves the band. Everyone's like, ‘oh, man, have you heard The Jerks? The Jerks, they're great.’ And ‘I was like, The Jerks are so good, they played the prom, they were great, they're gonna be huge. They've got a coin, I'm gonna buy their coin. It was worth five cents yesterday, and now it's worth 30 cents. And so then there's a sense of investment. And it's also ownership.
A) The artists are now owning, because they're not going to sell all of it, they're going to share a percentage of it … And, B) then their fans own it as well. And there's this sense that the value that's created in their culture, and the listenership is something that you could share with fans. And that means that everybody's incentives are in the same direction, as opposed to now. Now, if you stream something of mine the way it is … Spotify basically puts a third of a cent into a bank account when you stream my song. Then Sony comes along and says, ‘Okay, cool. We'll take 86 percent of that third of a cent.’ So what's that left, I get 14 percent of a third of a cent. So 5 percent of one penny goes to me every time you stream a song.
Is this a chance for labels and artists to work together? Or do you see an arms race occurring?
My hope for this is that it arms artists against labels. My hope for this is that it makes labels have to come to the table with some real value or else artists can be like, ‘you know what, screw this, I can do much better on my own.’ That's my hope. And I think that in order for that to be true, tools need to exist, which maybe don't exist now. But I don't think they're that far off.
The promise of the internet was always going to be that you were going to get rid of the labels so that the music industry would not be soul sucking for artists. And I would say labels coming in and saying, well, we'll run your NFT for you and take 86 percent of it is a great example of how at each point, they just come in, and they make it soul sucking in a new way.
And I think that, because there is a real chance for decentralization and direct connection between artists and fans, that artists should not just sign that away to labels. There's really significant value to be captured. Because, frankly, your music is worth more than the labels tell you it's worth. It's worth more. And I feel like fans kind of know this too.
Is this a new opportunity for artists to capitalize on their value?
The people who are going to win in the internet of value, the people who are going to win in the creator economy with this coming Internet 3.0 are people who have community around them; people who build culture around them.
You have a social currency that exists on two levels. Let's take music as an example. On one, you can measure it by how many people like a song. The other way you can measure is by how much a smaller group of people love a song. And right now we're pretty good at capturing the value of how many people like a song. If a billion people like your song, the current model kind of works for you. It's good … If 50,000 people love your song, love your band, love your record, we don't really have a model for that right now. And, we will.
Mikel Jollett is a musician and writer. His memoir, Hollywood Park, debuted on the New York Times Bestseller list. He has fronted the band Airborne Toxic Event since their inception in 2006. You can find him on Twitter @Mikel_Jollett.