Music catalogs made liquid: NFTs embedding Music IP

Transcript

[Music] thank you hi everybody thanks for joining hi everybody who's watching us through the live stream my name is William Beatty I'm the co-founder and CEO of Bolero music Bolero is a platform through which you can actually build up your own

record label and today as you as you know SCC is a great place to learn new stuff learn new insights so I'll do my best to share valuable insights with you so I wanted to talk about specific topic something that we've been working on lately at Bolero which is making music catalogs liquid so we'll see what it means and why we are leveraging actually web 3 to do so so it's my third year in a row here at CC so I'm pretty glad to be part of the community to spend a lot of time with you guys um I think that it's the best place to actually take a deep breath and analyze where we

at as a community as an ecosystem but also to understand where the state of the art is so this year like last year I was talking about you know crypto adoption and how music was an interesting field to actually achieve Mass adoption this year it's rather about music AP and what actually can we put inside nfts and what are like the basics and the specific series of Music a b so what is music IP it's basically the underlying intellectual property of any record or any song that you can listen to so let's take a few examples

This Record is the last it's the latest album of CJ which is called SOS and as any kind of Records there are several stakeholders involved behind the record and they are involved before the production during the production and after production so for instance if we take this record there are three like major entities behind the record there is Top Dog entertainment there is RCA which is the record label and there is universal music publishing Group which is the editor the publisher let's take another example much more older but a classic AB wrote from the Beatles

back at a time so 20th century and you know the kind of the first step of the global music industry even at the time there were several stakeholders so if you look at Abbey roads they are Apple records Paul McCartney and Emi which is the record label let's take a last example much more recent this is the latest album of Metro Boomin which is called heroes and villains Behind these records there are another like another time three different stakeholders there is Shamrock Capital Luminati worldwide and Republic records which is the record label so why involving so many stakeholders and why and like actually what happens regarding

music IP like based on your involvement based on your action based on your expertise what do you get actually when you are involved behind the recall production you get AP so this is a pretty nice like draw to actually understand how this works and how music AP is actually split between the stakeholders so imagine a vinyl there are two sides it's the same for music AP site a we've got what we call the master recording this is the IP that actually protects the MP3 file it protects the performance so it's the kind of finalized product of the record

on the side B we have what we called the publishing bot and this sort of Ip is actually protecting the lyrics the composition keep this in mind the thing is why did we create actually two kind of music AP it's simply because these are not the same Revenue sources so each music IP side has a specific Revenue source for the master recording it's all about the final product conception so it will be like streaming downloads it will be synchronization contracts which mean placing the the the song inside movies TV shows and advertising

and regarding the publishing it's all about the consumption of the lyrics of the composition so it will be public feature it will be radio it will be like imagine when you get into a nightclub you're basically getting into the nightclub for the music okay let's say that the thing is the nightclubs have to actually pay for playing music inside uh their their place so when you own this IP you will basically receive a share of those revenues and when you own Master recording you will receive a share of this of these revenues and at Bolero without like what if we let millions of listeners get a stage

and the music they are streaming on The Daily like why do the music fans or you know people who are just interested in music couldn't have a share into this IEP and like if we do so maybe this could resolve a lot of issues inside the music industry because it's a little bit Shady you know not everybody knows how it works but if we make it liquid public and open to anybody accessible maybe we could create a new music industry and the thing because I know that people love the figures here's um we could actually unlock a 38.3 billion music AP Market so why such a figure and what like how

is it possible that it's worth like dozens of billions simply because artists producers composers are seated on their IP they have no places to trade it on a daily basis and Beyond this they don't have a place where they can monetize it and keep control over it so maybe with web 3 and maybe by embedding music IP inside web 3 assets we could actually deliver liquidity to the owners and keep control to them so after several months of research and actually experimentations we found that Bolero that we could actually use three

parts of the AP that I've introduced you as you can see the songwriter share is actually missing because you cannot sell the songwriter share it's part of the moral IP but regarding the three other parts you can totally fractionalize those shares and embed it in two nfts so this is what we did and we were like we could actually reach out to each kind of stakeholder and maybe at the end we will have I don't know maybe a hundred percent shares a hundred percent IP of a specific record on Bolero but even if you know the manager who maybe owns 20 of a recode if he sells then the record is decentralized

so we launched ourselves in Mission which was decentralizing music catalogs and Records and to do so because as you know if we want to reach method option we got to put web3 in the background in the backstage we've called this new kind of token the song shares so how did we do that it's pretty simple we have three specific components behind this Tech so first of all the classic erc721 standard so it's what makes an nft and this is how we make sure there is a limited Supply on the market and that one share is equal to one specific share second component is the payment splitter as you've seen there are many

stakeholders behind every record so we were like how do we make sure that the right stakeholder is paid at the right time and how do we make sure that through the secondary Market if the record is traded if the song Share is traded that the right people will get paid because it's also something interesting for the artist maybe you give away a piece of your IP but at the end maybe that the secondary Market commissions that you will get will actually compensate what you've been giving away so this is the second component and the third one which is really important is non-custodial we didn't want to actually reproduce some centralized model and you know make your asset depends of bolero's Health

so we made sure that each IEP share was actually really embedded into nfts and that even if Bolero disappear tomorrow and make sure it will never happen but if we disappear tomorrow you will still own your IP and you will still be entitled to the advantages that come with it so how does it work actually like in the front end like regarding the user Journey it's pretty simple an audience the producer comes to us or we talk with him or her he decides to sell a piece of a record first thing we do is actually make the song valuation so we take the past revenues and it's

pretty much something really classic like evaluating a company we take the past revenues we project it in the filters and then we are able to Define evaluation in USD we provide this valuation to the artist of the producer and then he or she decides how many like how much IP they want to sell on the platform once they have decided decided this we make sure that the supply is actually fair so we make sure that the supply is actually a little bit low so not too many shares and the purchasing price so the price tag is actually accessible because our vision is millions of listeners owning records so to do so we

got to make sure that each nft is actually affordable based on your purchasing power so most of the time our Shares are priced around 20 bucks to 80 bucks so that if you want to invest a thousand bucks you can do so but if you only have 20 books to invest you can do as well once you have actually bought your song shares you have two things two actions that you can perform either you hold it it's your treasure you love this record and actually the simple fact of listening to the song and feeling like I've got ornish ownership and Beyond this I can actually earn money if it's satisfying for you you can hold it and each quarter or each month

you will receive a proportional share of the revenues directly in your wallet in usdc if you want to get rid of your treasure that's your rights then you can go to the secondary Market of bolero and then you can list your song share and it's an open market so each user each holder is able to list there are set at the price that they want and to that extent the market is regulated by the users this is how it works on bolero and this is how we think we will be able to create a global decentralized Marketplace for music AP so I just wanted to share this example this is the the latest drop that we did with agoya I don't know if anybody knows a Goya here sorry

agoya is um is a techno DJ and producer and label owner he's really famous and really engaged into with three because he's been experimenting in this space for a few few years now and uh in June we had the chance to collaborate with him and he became the first producer to actually share a hundred percent ownership of one of his record Masters recording on Bolero so this is what we did with agoyan which was actually a record composed and produced for his community so what we did is pretty simple we took a hundred percent of the master recording which is the side A of the music IP we split it into 200 and 2500 shares

and we simply embedded this music AP into nfts people were able to actually claim based on their past activity they were able to purchase a few shares and the thing is the share was at 25 bucks so pretty cool right because it meant that you didn't beat you didn't need to be a well to actually access this drop everybody was welcome and open to it once you had your song Share you needed to wait one month before the secondary Market the secondary Market open so this is what we did and now people who own these shares they have two choices either they wait for October 5 it will be the first royalty payout

date either they can trade it on the Sunday market to maybe project you in the future and maybe tell you how we envision things at bolero we like to say that in 20 in 2028 we think that 25 percent of you know music streaming platforms subscribers and users will own a stake in the music they play on the deity and why do we think that it's because music is actually the best artifact to prove your belonging feeling to prove your community belonging through the nfts but also because you are consuming it on the

deity it's the only way to actually monetize the natural practice that you can have on your daily basis so this is what we think and we will be at the Forefront to make sure that this future exists thank you very much guys [Applause] if somebody have a questions please raise your hand and we will give you microphone hey hey um I have a question so you know you mentioned that like if Bolero goes away you'll still own your happy share but I've noticed like on one of the slides it says that Bolero collects the royalties on behalf of all the users so

we're Bolero to disappear they would own the token which represents an ownership of the IP I guess According to some contract that they also have to sign like a wrapper contract so actually each song shares has a contract that engaged the artist the producer and the user so if Bolero disappears tomorrow and that you still need to collect your royalties right eventually it's easier when Bolero is here because we do it for you if we disappear it will be much more difficult okay so you would be entitled to do so so you should receive your royalties does it when you sleep so okay so hold down I would have to go directly to the artist and say hey I earn five percent

of that song I haven't been paid for six months legally you can't do so okay cool legally you can okay thanks uh hi thanks [Music] you know you mentioned when it comes to valuation right you look at uh prior revenues right but like song You Know creative output product is not like other ones right like how do you do you have like over time are you developing an underwriting model for this or do you know where you're where you're able to sort of value so your question is related to like with a new record how do you how do you value it yes yeah so we have two solutions to do so either the audience Auto producer has raised other

records in the past so we simply look and measure how it went for those records and what were like the trends and the projections either the artist and the producer didn't released anything before and then we look at this specific musical genre and we have industry standards regarding evaluation so we know for instance that for an emerging artist who has six months of career who has only raised one single and who has I don't know 50 000 monthly centers on Spotify we know that the right valuation range is between X and Y interesting so we know that but most of the time we have enough data to actually make a real like quote a real

valuation for each song okay thanks thanks foreign I will use this beautiful ability to ask the question if some artist is watching us now online how they can join if they are just not the producers just artists who produce some so who create some musics and they want to participate in this what they need to do so as an artist what do you need to do to join bolero yes yes how to be how for the artist to begin for example the owner of his her own shares of his her own music yeah so basically everybody is

welcome and we are trying to adapt the song shares to any kind of musical genre the only thing is we got to make sure that our users invest in something like that is valuable so we have a music team internally who basically do the duty Legions work and assess the artists so how do we assess artists there are there is nothing like you know mean in this it's just about having conversation look at the data we measure the success of the artist and we try to see that if the artist has a potential if he's going to grow in the near future and if we see a fit or potential into the artist he's

definitely welcome to actually sell X percent of his records so the only thing is we do not want to open it up to anybody because if you as a user or as an investor you come on bolero and you invest in a bunch of songs and those songs Don't generate anything you will be disappointed and then we lose our mission so at the end we need to provide you with Good Records good songs thank you very much any other questions yeah this is more about the business of Bolero itself like um what about your Revenue model or uh hold the shares themselves or uh that's a good question so we have a

pretty basic business model so we earn a commission on the primary Market which is 25 75 for the auto install the producer and then on the secondary Market we take between two and four percent on each grade that we split with the artist and finally we also earn three percent of commission on all the royalties that we collect for you so these are the the standards of our business model but since we have a strong music DNA and we've been in the space for two years and a half now we start to actually work on specific projects where we can actually create song shares before the record is finalized and to that extent we will be able to sometimes take a little stage in

a specific record to first of all show our support show our appreciation but also to see bullet or grow as a company and as a decentralized platform with beyond the assets that are traded on the marketplace the assets that we own and maybe sometimes we will sell as a company our assets on the platform like our vision as mentioned it's not only about music fans we think that ultimately if we if we succeed at creating such a Marketplace and such a liquid you know Market ultimately the majors and all the record labels will come on Bolero to buy some assets so maybe in the near future you will be dealing song shares with Universal Music

you know this is a future that can happen so at the end if body will trade some shares it will look normal you know any other question guys [Laughter] only because I've like I've really I've done a lot of thinking on this this uh the same problem I didn't actually build I built like a prototype but I never like launched like I never went to Market with it but I thought about it a lot and one thing I thought do you think there needs to be like a non-profit Foundation that is just for tokenizing these like these IPS and so that the the like a company like a for-profit company

like yours would be more about like The Guiding the artist through the process marketing like you could do things like you give them advances or whatever like functioning more as a as a partner for taking those shares to Market than the tokenizing itself so then you have this like incredibly neutral entity that is responsible for collections like the pros or you know any in the in the Trad music industry that have separate organizations that do the collections and then you have the for-profit companies like as a separate thing do you think that they could be something like that I think like we gotta go step by step you know and I think that music like the music industry

is a really old industry with as you mentioned specific pure players who have a specific task or a specific job um so you cannot actually disrupt everyone tomorrow just because you're tokenizing IEP so here we feel like we are the first layer of innovation we are the first layer when we you know give back power to the creators and eventually all these pure players will have will have to adapt to what we are building or they will be disrupted but I think that at the end you cannot have a central Authority or Central platform who is taking care of each task in the value

chain I think it will be like a weak way to innovate in the music industry but I'd like to imagine that those pure players who you were talking about at some point will embrace the decentralized model and actually like I don't know maybe you open up an office dedicated to this specific task I don't know well see the thing is all we are creating and distributing on Bolero is based on what we call real life assets um regarding those new models or the new rules of those pure players in the music industry we gotta have an eye on what's Happening really on a music conception which is another part of Music in web3 and this is what is doing like soundwix YZ and

all these platforms the thing is what it means to actually play music for free but creating nfts attached to it I don't know if it's like if it's the economy of tomorrow and if it is it's great how do we adapt together all the models you know so there are a lot of question marks actually and I don't know like I'd like to know but I don't know yet and I feel like that succeeding in this first layer will be amazing first all right so friends if no more questions thank you very much thank you guys thank you for listening

foreign [Music]