Some of you might know that music is one of my big passions other than data science.
I personally believe that blockchain can really disrupt the music industry, but it hasn't done that yet. I thought I would show you to an interesting conversation I had with my friend Clay on this topic.
So what we're going to discuss with Clay are the music and blockchain. Clay Hawkins is the CEO and the founder of the Open Music Exchange, a blockchain startup in the music industry**.**
https://www.youtube.com/watch?v=mq3mUzfzrws&t=38s?embedable=true
Me: I was really looking forward to your thoughts on the current state of blockchain in the music industry and why? Do you believe that we need a new company?
For example, everyone knows about audio, but apparently, audio, you know, there are many things that it hasn't been done right, so I was really keen on hearing your thoughts about what you think can be improved and what the Open music exchange can bring to the table.
Clay: Well, I think NFTs outside of what the ledger capabilities of blockchain just to track sales and things like the traditional components of the record industry in our instance, this is a trend that we'll see in the future.
Outside of the way that they've been used thus far, which is more speculative and sort of collectibles and that kind of a thing. We see it as a way that you can give an artist the ability to gate sort of access to their music. And this is something that in a way I don't think is really ever been able, you know, something so cheaply and inefficient effectively that can give artists this ability now to decide.
You know, the current industry, the streaming paradigm, they set a rate at what they'll pay out their artists, which is, you know, terribly low to the point where there's really no money in recorded music anymore and a third of a penny. It's like what Spotify does.
So we're kind of the opinion that with blockchain and with Nfts being able to be minted so inexpensively, we can let the artists be their own record label, record store, and distributor.
They get to do all of this for almost no cost, unlike the old days of the music industry, where you had all that brick-and-mortar. Now for less than $0.50 using the 1155 smart contract, you can min an NFT for a song and min 20 million NFT copies for that, just like you had 20 million copies of an album back in the day.
Me: And each one of those acts as a digital key that unlocks the access to whatever content the artist has, has endowed that NFT with and without content, the majority of it basically being the music residing on our platform.
You know, the artists license their music to us, and then we just stream it to anybody who owns it. From our vantage point, it's unlike the audience, The current state of the music industry on blockchain at this point seems to be highly collectible. It seems to be favoring big stars.
Everybody's heard of Snoop Dogg and those guys all being involved in space. They're taking advantage of their name and brand and minting, you know, scarce quantities and very collectible elements. They're usually selling them for quite a bit. And I sort of feel like all of that is more of a niche use case for Nfts at this point.
Clay: I think that I was speaking to somebody at a financial company the other day and. And he kind of agreed that utility we're trying to bring utility to these NFTs where they give you access as the most basic fundamental utility that they have. And because they're unique in the sense that if you bought it, you own it. It's an NFT. This is hopefully where the NFT industry can really thrive.
Is this kind of intelligent access, opening capabilities, that kind of thing for data and whatnot. So I haven't really seen our other competitors’ audience. You know, they're not selling NFTs, and they're kind of going through their own growing pains. And there are a couple of other different platforms that, from what we've seen, like it still seem to be catering towards that collectible status.
I feel the beautiful thing about blockchain is that the technology around NFTs on blockchains is really democratization and, you know, brings this power back to the common man. I mean, as we know, we always hear about that with cryptocurrencies and stuff like that. But at least in our specific use case, we were able to. Tell the average musician, you know. Yeah, you can. You can put your music on our platform.
You can mint these for very little money, you know, under a dollar. And you can get them out there on the blockchain. The blockchain will take care of everything for you in terms of all your data.
Say what is about your music, about what? If there's some value in that music, then a blockchain can help you retain that value, capture it, manipulate it, sell it, and guide it rather than just throwing it out to the powers that now decide that you don't get anything for it.
So yeah, that's kind of where I'm pretty excited about the way that I feel like all of the merits and the benefits of blockchain technology, they really shine when it comes down to letting, you know, musicians and creators and stuff like that.
I think we're going to see a lot of that. The creative artistic markets carve out their use cases on blockchains, specifically with devices like NFTs and smart contracts; they'll evolve as well. Like then, the capabilities of what an artist will be able to do, curate, control, and all that stuff will grow as well.
Me: Do you think that blockchain can overtake the music industry as it currently is, like Spotify and record labels? Do you see that there's a potential to see this happening in the next ten years, for example?
Clay: I think that there is because not only because of the benefits of blockchain in eliminating middlemen, you know, allowing an artist and a fan to interact directly with each other, that's pretty hard to know, knowing all of the music, all of the money that a fan pays could essentially go right to the artist, know everybody can see all the accounting is out there for everyone to see, and it's a direct fan to artist experience.
I also think that the current music industry, you know, we've all kind of even if you're even passively involved with music. Everybody kind of knows that musicians have always gotten the short, short end of the stick, you know, like they don't get paid usually.
Even in the music industry, you know, the record labels took nine out of every $10 for every record. As far as from a musician standpoint, you know, a fan standpoint, from a consumer standpoint, it's in some ways it's never been better. You pay your small subscription, and you just get everything.
Yeah, but this is I don't think it's sustainable as a market because if you can't actually survive as an artist and make a living, then the quality of the art is going to diminish over time; artists don't have the time to sustain their careers and build their art and develop it into something.
And just from my experience in the music industry and with the peers that I have that are performers and are involved in the industry, they're clamoring for something, anything, you know, they just don't have an alternative right now.
So if you, you know, as a musician, you just literally do not have an alternative.
And I think that's why these platforms are going to have such a grip.
But technology's disruptive, right? And that's one of the beautiful things about technology.
And I think this particular technology, blockchain, just like its power to disrupt so many industries. It has the same power as the music industry, and they've really put itself in a box. They've created something that does need to be replaced. You know, they've created a really drastic need for an alternative.
I so I kind of am. I'm hoping that if we provide an artist with a simple, straightforward, practical way to utilize these tools, what do they have to lose? Right? You can, you know, as an artist, and so there is that working in the evolution favor. And the trend pushing that trend is that, well, on this side of the trend, you have a bunch of artists that are not making anything anymore.
You can give an artist a way to monetize their music again. This is most important with emerging artists. You know, we're not talking about the 1% that earns most of the money in music, just the superstars. Yeah.
How does the average everyday emerging artist that's trying to get their career off the ground, how did they get going And that's where this technology with blockchain stuff really shines because, as we know, it's available to everybody worldwide.
And so yeah, I think it's inevitable in some ways, like a lot of industries that are going to be disrupted by blockchain. I think that they're like banking, all of these industries that just can't compete because they're working from a very old model, you know, that I just don't think the current generation of artists want to.
If somebody's serious about earning money from their music and taking that responsibility seriously, then they would naturally migrate towards something that might be a solution. So that's kind of.
Me: And what do you find that audience is currently doing wrong, which could be done better?
Clay: Well. The main first thing you know, I was surprised that they really put a high bar like that. A hurdle in terms of just their user experience. I haven't spent a ton of time going through their platform, but as we all know, crypto's not simple. If you're not initiated, if you don't know about wallets and how blockchains work and stuff like that in crypto, the volatility involved.
To me, just this is just from my vantage point. It seemed like, well, for one, they insisted on paying everybody out in their audio token, and I know that at the height of the bull run was like trading at around $6 or something.
Last I saw, it was at $0.16 or something. Yeah, that's a big market. , If you got paid out in audio tokens, that's a real bummer. Then on top of that, you have to take, you know, I looked up I think Binance was the only big exchange that I saw that was actually carrying the audio token.
So as far as then cashing those out to your, what kind of off-ramp do you have? What are your choices? If you wanted actually to get into Fiat to spend your earnings Now, are you dealing with the taxes in your country related around cashing out your crypto? So by the time the depreciation of the coin and then the going through the off-ramp taxation, kind of getting it in the fiat process into your bank.
As far as emerging, like what I was saying in the last question, you need to make it sort of easy, feasible, and profitable if you're trying to offer an alternative to artists. Right. And it seemed to me like by going down that road. They've really got to have a huge leap of faith. There's something's going to happen here that they're audio tokens going to skyrocket.
Me: And so, yeah, I think essentially the problem was with their tokenomics, right? I think this is where many projects get it wrong. Like many projects, they launch during a bull run when everything is easy, and money is abundant, and you know, during the hard times, they just don't survive or do very poorly.
Clay: Right. I was I clicked on a thread on a Reddit thread about the audience. And there, somebody was complaining about not getting their tokens. And then I think because I clicked on that, I started regularly getting Reddit thread posts in my email, and there were a lot of emails that or a lot of Reddit threads that people were complaining that like, Hey, I can't get paid in my audio tokens, I'm still waiting on this. I can't get a hold of anybody. So yeah, I think it does seem like as the bear run, the bear markets kind of progress, and everything sort of compressed
It seemed that, and again, I'm not an authority on any of it, obviously, but just from my perspective of what I was noticing and observing, it seemed like there was a lot of user frustration around the way that their business model was not functioning as the token decline, you know, and as everything kind of contract.
So we're trying to stay very simple, as simple as we possibly can for musicians, and make this as easy of a user experience as possible, given that it is in the crypto space.
We're not going to be basing any of our payouts or any of the monetization on our coin on our token. So our token is more of a participant to earn at this point, and we will be using more stablecoins and stuff like that. Something I think that you have to ease people into this space a little bit, especially when it concerns their money.
Me: Yeah, thinking foreign blockchain business that's in the B2C space. I think this is a major point. Like making the transition smooth. And I think that's a very good point. What you described like not everyone wants to deal with crypto per se, so you need to make it more friendly.
Clay: The whole industry needs to do this, right? I mean, it's all across every sector. Like, that's it's that adoption is basically with just the UX of all of these crypto companies. You know, we get used to it because we're involved in this space. But it's amazing, you know?
I mean, you know, you just go talk to somebody who's not in the space, and their eyes just glaze over because they just don't understand. It's just immediately; they've got some idea of what they've read or heard in the market. Some NFT news came down, and that's all they know. And so, yeah, to the degree I think that any company can take that into account and not assume that their users will embrace this just because I think you really have to do that legwork for now.
You know, the trends are in our favor. I mean, like the on-ramps and payouts, all that stuff will come into play.
And I think all the user experiences for the wallets and blockchains and everything is, you know, obviously, gratefully, it's changing and working in our favor.
But if you're starting up a company now...., I mean, it's just we're still in the early stages of so much of this. Everybody's trying to figure it out, whether it's the government, it's trying to figure it out, Corporations trying to figure it out, or banks trying to figure it out. Yeah, let's try to figure it out. And we are, too. But we're pretty clear on what we're doing. So now it's just a matter of getting it out there in front of people.
Me: Yeah, absolutely. So great. And if people want to learn more about you and the Open Music Exchange, where should they go?
Clay: Home audio. It's OMI. Audio that's got everything on it. I just put a bunch of music on it over the weekend, and we've got a few more little tweaks and some things we're trying to work out.
We started onboarding artists in august. We started around August 10th and 11th.
So it's crypto-based, with Fiat on and off ramps developing as we go.
Me: Perfect. Thank you, Clay. Have a good rest of the day.
Clay: Thank you, Stelios. Thanks so much. Take care.