On The Brink with Castle Island - Cherie Hu (Water & Music) on the evolving role of web3 in music (EP.281)

Episode Date: February 2, 2022

In the first episode in our web3 music series, Cherie Hu, founder of Water & Music, sits down with Ria to talk about transitioning Water & Music into a research DAO and Cherie's thoughts on the growing interest of musicians in crypto. We discuss: How Cherie found a niche covering the intersection of music, technology, and now web3 The decision to formalize the Water & Music community into a research DAO harnessing the wisdom of the crowds The shortcomings of early experiments with music and crypto and how the recent approach differs The salient macro factors contributing to enthusiasm and experimentation with music NFTs, DAOs, and social tokens The pushback against music NFTs by skeptical fans and artists

Today on the podcast, I had the honor to sit down with Sherry, who's the founder of Water and Music, which is a publication that's focused on the intersection between music, tech, and now Web 3. Water and Music started off as an outlet for Sherry to distribute her freelance work on the music industry. She then started producing original content that allowed her to scale her following on the newsletter and eventually focused full-time on building out the Water and Research brand and franchise. More recently, after falling down the rabbit hole herself, she decided to formalize the community of subscribers and contributors into a research DAO with a stream token to leverage the wisdom of the crowds in producing content on the music industry.

Sherry is easily one of the most educated and balanced critical thinkers that's researching this intersection. And we get into all of the above in this episode. So without further ado, let's turn to the conversation with Sherry. This is Ria from Castle Island Ventures. Today we have a very special guest, Sherry Who, the founder of Water and Music, which will get into what water and music is exactly, but high level research publication that recently underwent the process of becoming a research Dow. So excited to get into all of that focused on the intersection of music and technology. And this is the first episode in our Web 3 music series. So very excited to have you here, Sherry. If you could just kick it off by telling us a little bit

about yourself, your origin story, and how you got excited about the cross between music and tech. Yeah, for sure. Yeah, thank you so much for having me. Very excited. Honor to be the first discussion in this series. And yeah, very glad to be here. So my origin story and how I got here. So I guess to start off with what I do now, so yeah, as you mentioned, I run Water and Music, which historically has been a paid newsletter and community focus on analyzing music and tech trends. But in the last six months, we've been going through a very rapid and exciting evolution into becoming a Dow with our own governance token and a much more collective and collaboratively driven model for research and knowledge sharing. But I'll dive into that later. How I got here,

so I would say music for sure has been the three line throughout my whole life. So I grew up playing a lot of piano, was very intense on the classical side, especially, and was considering going to conservatory for piano for a while. So that side is still near and dear to me on the performance slash creative side. Academically, I was also really into math and stats. And so I initially was thinking of double majoring in math and music and diving into that intersection from a much more theoretical point of view, like how math could apply to music theory. Definitely my personality and way of thinking,

I guess with my mindset, I think that intersection, like, what's the right verb? It augments and like it improves my appreciation of music rather than takes away from it. I know that's not true for everyone. But yeah, that was like kind of how I was approaching music from very early stage. And then I only really learned about just the scope of the kinds of careers that were possible in the music industry around 2014.

This is when I was a sophomore in college. And it was also timing, as with so many things, plays a really important role. Around that time was when the streaming conversation was starting to change in really interesting ways. I think like Apple Music had just launched in 2015. I think 2014 and 2015 in particular saw a huge flurry of acquisitions by streaming services. Like I think Spotify and Apple were acquiring all of these like data-related music startups, like the Echo Nest for Spotify, which drives a lot of their recommendation algorithms now. So yeah, timing played a huge role in terms of me realizing that music and tech and data,

that intersection was a huge point of conversation in the, industry at the time and there was a lot of demand for people who were well-versed in data analysis and just were more quantitatively minded in the industry, whether you're working at like a label artist management company or a streaming service. So I thought that was going to be my path for a while working in data-facing roles in the industry and I did a couple internships in that world. So, so random. So, again, this whole time writing was never part of the plan at all. I'd done some writing on the side but had never planned to make that my full-time career by any means. What made me launch headfirst into the writing world was this very serendipitous encounter with

an editor at Forbes. His name is Zach Greenberg. So he's not at Forbes anymore, but he led the entertainment section for several years. But I randomly had a career fair that I almost didn't go to. My friend just dragged me to for media and advertising on campus. I walked past the Forbes table. They had their Celebrity 100 issue on the table. And I was like, this is the only music-related thing in the whole room. I'm going to go there and see what happens from this discussion. And they just happened to be looking for more music and tech contributors for their entertainment section.

And it was such a specific, again, like serendipitous interaction. And I didn't even know that that was like a thing that you could focus on as a writer. you know, like just having a beat focused on music and tech. But yeah, thankfully I like told Senator about my experience. He was like, you should totally submit samples and we can see if it's a good fit for you to come on as a contributor. And so very thankfully, I got that opportunity and just started writing about my thoughts on where music and tech was going, kind of analyzing the latest news. Yeah, as a contributor for Forbes's Entertainment section, which I wrote exclusively for a couple of years. And immediately, writing clicked for me as my favorite way of unpacking everything that was happening in the industry,

especially with such complicated issues as rights and the role that technology plays in the rights picture, for example, or in like understanding who all the various stakeholders are in the industry. So, yeah, I'll like fast forward a little bit because the story is like a little long. But I, so I like stuck. No, this is great. Yeah, so like that the first couple months is just like really quick for me that writing. I guess I should also mention that. Yeah, it's like perfect combination of my personal interests.

I saw this job as just like being like getting paid to learn and like getting paid to do research and like learn just about what was happening in the industry. And then also even today there aren't that many other people who focus on music and tech. as there be, especially in writing and media, I can probably count on like one or both hands, like max in terms of the number of other writers out there with this focus. At the same time, if you think about music and tech on the surface, it sounds kind of niche, but it really is the whole music industry at this point, like the way that tech impacts the recorded music side, especially the live business thinking the last couple of years of the pandemic. the way tech impacts artist branding.

It's like, it's, I feel like you can't, you cannot talk about the future of the industry without talking about, or any industry without talking about tech. So it's like really niche and specific, but also you just never run out of things to write about. So that's definitely like what kept me going. And then so fast forward to 2019. I had, yeah, been freelance writing at that point for a couple of years. I also had this newsletter that I named Water and Music on the side, but I was just running it entirely for free, primarily as a way to aggregate my freelance work elsewhere. So aside from Forbes, I was also writing a lot for Billboard, music business worldwide, and some one-offs in a bunch of other music and business publications.

So this newsletter, I would just combine all those articles, occasionally provide my own perspective on what was happening in a more like experimental kind of out-there way in the newsletter. and then just send it to anyone who was interested. And so by 2019, the follower, the follower based around that newsletter had gotten to a point. It was like low thousands of people. So like small but pretty substantial enough of a community of people who were interested in following this very specific part of the industry and this very specific angle on the industry,

namely music and tech that I figured like maybe there was something there and I could try to build some kind of like dedicated resource or community just around this intersection and like treating the newsletter as a source of like also a lot of my own original analysis as well as opposed to just aggregating stuff from elsewhere. So that's what compelled me to again, yeah, like with no intention or with no expectation that it would become what it is now or even like a full-time thing, I launched a Patreon page tied to my newsletter. So this was February 2019.

The framing back then was just as a way for people who wanted to support my work to do so financially. But I still treated it as a side thing next to my freelance work for a good part of a year. I didn't want to give up my freelance career income just overnight. So I kind of juggled the two for a year. And then February 2020, and timing, the timing of all this is also like pretty surreal to think about hindsight. Because this is like right before the pandemic really hit the U.S., like February, March 2020 was also the point where I was able to pivot from primarily focusing on freelancing to being able to build out the Patreon membership full time. It also would ultimately become a year where the music industry grappled with technology in, I think, an unprecedented way, especially with the live industry. So, yeah, there's just so many, so many different angles.

One, the live industry, obviously being decimated and then a lot of people experimenting with live streaming and with gaming for the first. first time as like performance outlets and kind of grappling with how effective or not that was for engaging with fans. And then on the flip side, with the live industry going under, people realizing that the economics of streaming just don't work for the vast majority of artists. I would say 90 plus percent of artists, at least looking at like streaming income alone to people to sustain a living. So then it sparked, at least in my career, some of the most.

thorough and critical discussions I've seen about digital music economics and how it could be improved. And I think that's a huge part of why we're here in the current moment with like the whole craze around Web3 and NFTs and music, among other things. So yeah, so the, I guess 2020, yes, like 2020 through 2021. That was like when I started working on water music full time. there was a lot more demand for these kinds of perspectives on music and text. So I started bringing in more guest writers and building water music into its own brand. That wasn't just tied to me, the individual. And then very quickly how I got to where I am now, which is building out at Dow,

which is very, very different from like a more individual-centric newsletter, like what water music was previously. So the community continued to grow around water and music. We have a Discord server with over 1,600 paying members who are active in the server currently. And the server has kind of become a daily water cooler for people across music and tech to exchange their thoughts on the latest happenings in the industry. So unsurprisingly, Web3 is the all-time top. channel now, at least in like the news and trends category in the server because there's just so much, there's so much news to talk about all the time. But there's like a Metaverse channel. It's very

popular. There are like, you know, catalog acquisitions happening left and right. People always talk about that too. Anyway, so there's this culture of collective kind of knowledge sharing and sense making about what's happening in the industry. And what we started doing middle of last year is actually using those conversations to drive editorial. So even just like a simple community update we started with, like a weekly Discord Digest, which our community ops lead cat puts together every week, just taking the conversations that are happening in the server

and issue an update every week to all paying members, just saying, you know, here's what our community is thinking about, XYZ, and just synthesizing our collective thoughts on the topic. I have learned a lot just from reading, let alone editing those updates, and it made me realize that, especially with more nuanced topics or especially with topics like Web 3, where information flows are already so distributed and fluid. Sorry, it makes more sense. It makes a ton of sense in a lot of these cases to have like the wisdom of crowds. and more collective and collaborative models drive our understanding of what's happening

rather than just one individual writer or like a small editorial team of writers. So seeing like the growth of that, yeah, just this weekly community mailer and like that becoming a really big source of value for a lot of members for understanding what's happening in the industry. But then also critically realizing that,

you know, thinking now about the community like capturing that value that definitely wasn't happening. It's like they're generating all this value for members for each other. But, you know, all of the membership revenue is still going to like water music the brand. So I was trying to think of, okay, like what are new kinds of rails to distribute some of that value back to the community and to have, to give people more of like a direct stake in the community's growth apart from, um, apart from this more kind of abstract benefit that's already being generated in the community. So that is what kind of made me switch from simply covering Web3 from a critical perspective,

which I had done for the previous five years, to becoming like a builder and operator in the, yeah, in Web3. And again, timing played a huge role because I like had this light switch go off in August. and it was right before the Seed Club Accelerator closed their applications for the third cohort. And I had been following them for a long time and decided to just take the jump, apply with water music. Did not really expect to get in actually because I knew that there were a lot of other, like, more Web3 native founders, at least people who are like more familiar with the technology who were applying. But thankfully I got in and had like the best world. of an experience through that accelerator, and then that really helped create the framework for

a collaborative research model that we're piloting in our community at the moment, where people come together to collectively produce these reports and articles and analyses on a certain music tech topic. So our first kind of proof of doubt or proof of concept of this model, what we call season one, was a five-part report on the state of music and web page. three. If you go to stream. Waterandmusic.com, you can see all five parts of the report. And yeah, I have been talking for a long time.

So I will stop suddenly ask follow-up questions. But I guess in short, the agenda for the report, like the research agenda was entirely led by the communities and needs and interests. The ultimate format of the report was also like directly shaped by the community. and then they also were like compensated for their contributions in our token and with NFT sales as well. So yeah, we're spending a lot of the last month or so kind of refining that model and creating this kind of system for collaborative research within the water music community and putting more of that work and the reward in the hands of community members. So yeah, very excited to see how that goes. There's so much to double click on there.

but I'll just start by saying that, you know, one, it really seemed like the stars aligned. It's also amazing that, you know, I feel like people have an interest in some kind of hard skill like math, data, statistics, and then they have some artistic interest but struggle to marry the two. And it's really cool that you recognize that there was an unexplored area. at the intersection of your interests and really took it upon yourself to explore that area. So that's awesome. Just rewinding a little bit. What led you to, I guess, leverage Patreon as a platform that you wanted to use?

And then, you know, I think last year before you even underwent the process of entering the Seed Club Gort and evolving into a Dow, I think you made the decision to move off Patreon. So maybe talk about what limitations were you facing that motivated that move as well? Yeah, for sure. So, yeah, I guess what prompted me to start a Patreon membership was like not just having this community that was growing around the newsletter, but then also thinking at the time about the career that I wanted to have, again, as like an individual writer. Thankfully, I didn't run into too many, I guess, issues during my freelance career,

but I'd seen, I mean, all the time you hear stories in the freelance world in a way that actually has a lot of parallels to the music world, but for example, like not owning any of the IP of like the articles that you write, waiting a long time. I'm to start waiting a long time to get paid for certain articles, not really feeling like you have control over your brand as individual creators. So I was also thinking, like, long, long term about the kind of career that, I guess, that I wanted to shape as a writer. And I wanted in the long term to, like, set up a system that gave me more predictable revenue,

that gave me more creative control, ownership over IP, and a more. direct connection with my readers and my audience. So all those different criteria led me towards launching some kind of paid membership. And then I guess the next question after that is what membership tools were the best for me at the time. I decided to go with Patreon because they were one of the few membership platforms, one that people recognize the name of in terms of like So I was thinking about yeah like lack of reducing friction towards like moving to a new platform

But then also they were able to set up multiple price tiers So I'd set up like three to five different price tiers With different benefits that I would give to people who supported me Based on how much they gave And then they also had An integration with Discord And I think to this day I think to this day, they're one of the free membership platforms that has a direct pretty

like low lift automated integration with Discord. So I knew I wanted to have some kind of like closed real time chat experience around the membership as well. So that was just easy and easier lift. Yeah, from my side as a creator who is like newer to this model to set up. So yeah, I'll say those are the two main criteria in terms of like the ecosystem of app integration. and then also the multiple tiers of pricing. And then, yeah, the second question was just you eventually decided to move off Patreon

before you even kind of started thinking about a Web3 strategy. I'm curious to know what prompted that decision. For sure. Yeah, this is, and this is, I enjoy talking about this, like, transition because I think it is something that every, how do I say this? Every, like, newsletter brand that has ambitions to become a bigger brand eventually moves off of these, like, off the shelf membership platforms. And so I think it creates an interesting question for those platforms in terms of, like, retention. But as an example, like Patreon, substack, I think would fall under this category.

I know a lot of, like, writers who, in building their brands and wanting to have more custom experiences eventually move off of substack. And I say that encapsulates why I wanted to shift as well. Patreon is a really good membership experience. It doesn't have the best editorial interface. Like this very, very little you can do even in terms of like customizing the layout of articles. Like being able to center text, I'm pretty sure you still can't do that on Patreon posts. Which like if writing is not the core product, maybe it's not an issue. But if it is, then of course, you know, if it's like,

leaves a lot to be desired there from like a writing and editing perspective. So just like formatting. I know, oh, an important like pretty granular but very important detail from like a business standpoint is that I think the best way to put it is that Patreon owns the payment relationship with the end customer. So it's not like you can like plug in your stripe account like you can do with on substack or. some other membership platforms. Patreon, yeah, just Patreon owns that relationship fully. And so I knew, I didn't, and so just from like a platform migration, flexibility, interoperability standpoint, definitely wasn't the best setup for me long term, I think,

or for like water music as a brand. So I knew I had to like migrate off sooner rather than later. So that was a big motivating factor too in terms of just having, a more direct relationship from a payment standpoint, which, yeah, again, is not, is more of a priority for brands that I think want to, like, become more diversified and have more custom experiences. Understandably, it's not a priority for all artists or creators necessarily. But, yeah, it was big enough that I decided to kind of move off to a separate step.

I love that, you know, the underlying theme through all of this is maybe you consciously didn't know that you were trending towards like a Web 3 native model, but there are so many things throughout your journey that just made for the perfect transition, which is really cool, including, you know, you mentioned earlier that you prioritized Patreon's integration with Discord and early on you wanted to create a vibrant community and kind of watering whole for people to discuss, you know, what you were writing about and have organic conversations. And that's so core to a lot of that community building aspect is so essential to creating really vibrant Tao experiences.

So it just seems like all of your experience kind of trained you for this moment. Yeah, thank you. It's, it's, and I think looking, yeah, in this like very early stage at the Dow landscape right now and getting to like speak with other people who are starting their own DAO's or like participating in them. One of the most, and this is actually one of my biggest takeaways in the CED Club Accelerator as well. the most fundamentally, the tech layer, of course, is like very, very important to have a good handle on and like to understand. But what like makes Dow's in particular last longer and be more sustainable, so much of it just comes down to the very like non-technical issue of human coordination and community building and community design and making people like genuinely feel like they are included. and almost having like the intrinsic reward.

What's the right verb? Like having the intrinsic reward outlevel the extrinsic rewards, which I think is it feels counterintuitive. I think given how central like defy and finance are in general to a lot of the discussions happening around blockchain and Web3 right now. But for Dow's specifically, that's been my biggest takeaway. Like, yeah, you can, I think it's, if you know nothing about Web3, but go in with a really strong vision for a community or really strong already established community and a strong point of view of how that should work, you probably will last longer or be more sustainable than someone who's like trying to build a Dow and it like knows a lot about Web3, but not that much about community design. or like doesn't care that much about it.

Obviously, I'm biased by how I've approached water music, but that's been a pattern that I've seen across the landscape right now. On the technical side and like the more tokenomic side, you recently did go through the process after building this vibrant community of designing the stream research token. So how did you determine the appropriate retroactive distribution model? And then what role is stream going to play in watering music going forward? Yeah, both very great.

Definitely, I would say like emergent questions at this point. So I guess I'll start with the retro Airdrop, which was definitely an intense but exciting design challenge. So I guess to start the whole process, I was trying to find other. examples of more web-to-native communities that made this transition, specifically in the form of dropping tokens to their top members. And I could only find two examples, and one was not a social token. So one, and both of them actually do have to do with music. So one is the indie artist RAC. he gifted his RAC social token to supporters across his channels or his profiles on bandcamp, Twitch and Patreon, I believe.

And then for people who bought his merch as well. And the only other example I know of which is more recent is Poole Suite formerly known as Poulside. They're like a music creation, music curation brand with a very summary kind of throwback vibe. And they both sold and dropped NFTs to their community kind of as, and they had been around for seven years, I think, at least. So very excited as a longtime fan of theirs to follow their transition into Web3. But aside from that, yeah, I couldn't find any other examples of similar communities that have made that transition. And so I realized that we essentially had to make our own rules for how to do the AirDrop. And so I say that because for anyone listening, I think the whole point of doing this kind of retro air drop is that it is going to be so specific to each community.

I think it's going to be very hard to copy and paste models that work from one community or one Dow to another because that almost is the whole point of being a Dow is you can kind of design your own incentive system. So just like have that as a disclaimer. So with water music in particular, there were three, actually I'll say, yeah, there were five main groups of people we wanted to reward. So one was long-time active supporters, particularly people who transitioned or came with us in the shift from Patreon to our current membership stack, which includes memberful. Because that transition was definitely not the smoothest or easiest process, especially because we had to. to collect a lot of people's payment info all over again. So kind of recognizing people who kind of stuck with us to that process, rewarding guest writers, rewarding people who were active and engaged in our Discord server over the past

two years, and then our core team. And then also people who were contributors to this first collaborative report, but I would actually consider that separate from the retro AirDrop. the retro portion across all those categories. The purpose is just to like, yeah, thank our historical community for helping us get to this point and kind of supporting us through that process. Within each of those buckets. So there are certain buckets like the guest writer allocation that was pretty straightforward. Like if you wrote an article for us, you would get a certain allocation.

Or like, you know, if you're a core team member, you get a certain allocation. with the Patreon so with the long-time Patreon supporter bucket and then with the Discord engagement bucket that could get a lot more complicated with the

Discord engagement bucket in particular there were questions like of like what metrics we wanted to track that represented the most valuable kinds of contributions I think we didn't want to just take a straight approach of rewarding people who sent the most messages

I think that is very easily gamable, kind of maybe sets a bad precedent for future community engagement. It doesn't really speak to the quality of the discussion is happening. Doesn't speak to like how much or how little you were interacting with other people in the community as well, as opposed to just like spamming the chat with messages. So we ended up like analyzing all activity in the server for the previous two years. I have a full-time developer on our team, Alex,

who's been helping out with this. and having some blended waiting system. So we measured messages sent, character count, so like length of messages sent, number of reacts given to other people. So like how much you, that was like a measure base level,

you know, measure of engagement with others in the server, and then number of reacts that you've received. So that was the system that we ended up with. Of course, you could like measure so many other, there's so many other possibilities for like, I guess, custom designing that waiting system for Discord engagement. So, but we'll dive into, we might dive into later on, like, measuring, like, sentiment or

doing some more, like, cluster or network analysis of people in the servers, like, seeing, you know, who stayed only within a certain cluster versus intentionally jumped out of their cluster and, like, talk with other people. So, yeah, it can get as, like, I guess, simple or. complex as you want it to be, but that's kind of the base waiting system we went with. That's another example of how math, stats, and data analysis is, you know, proving itself useful in this whole experience. 100%. Yes. Yes. Great connection. Yeah. And then, okay, yeah, then last but not least,

for the retro air drop calculation, the Patreon supporter bucket, we ended up using some combination of measuring lifetime spend. So not only lifetime membership spend, but also how many years they've been a member, those two being a factor in determining kind of relative weight in the Patreon supporter bucket. And we ran into, so in like talking out loud through all this,

definitely like a realization, an important realization is that like the most intensive dev work that went behind this AirDrop were all like Web 2 issues and not Web 3 issues. So with the Patreon Supported bucket, for example, this is just like a general database

data modeling problem of like bridging the Patreon and memberful customer data to be able to get the most accurate picture of like lifetime spend because people may have changed their Discord handle or changed their email or changed their name.

And so how do you like, what's the most efficient way to accurately match like there's no this is this is actually a very good argument for web three because in these web two systems there's no like consistent identifier for a member that can like travel with them across platforms so yeah spent a lot of time trying to like merge those two data sets together and then yeah the discord server allocation like once we got all the weights very easy to kind of figure out the top members but like figuring that out was a very like web two rather than web three issue so So yeah, definitely it was a lot to like reflect on and definitely something that I see other like Web 2 communities potentially running into. Like if you're trying to create the most, the fairest and most holistic kind of reward system, at least around a retro air drop, how do you reconcile your followings across all these different platforms?

that's like general marketing and data problem that far transcends Web3. But I think like Web3 definitely like amplifies the importance of that kind of solution, especially, yeah, if you're trying to get to like not relying as much on any of these centralized platforms, being able to have consistent identifiers for members, et cetera. That is amazing. Thank you so much for going into that in such depth, I think. And also for being so thoughtful about the whole token distribution, I think oftentimes smaller communities kind of just slap on a token and distribute it equally to people

who have participated a little bit. And this just seems like a very fair and thoughtful distribution model. And I think there's a lot that people can learn from listening to. your thought process. Of course, like you said, there's no one-size-fits-all. But yeah, that was, that was a great case study in token distribution. So, I mean, I feel like we could have two separate conversations, one about just this whole process of water and music becoming a research Dow and your takeaways from coordinating such a big group of people, especially into creating that body of work that you mentioned.

But I do want to spend the second half of the conversation kind of digging into some of that work. So you mentioned that you recently published this five-part series on Web3 Music with a focus on music NFTs and music NFT platforms. So I'd love to talk about that. Maybe, and you touched upon this a little bit in the beginning, but from your perspective, what do you think are the salient macro? factors that have led to this influx of talent, builders, and capital into Web3 music and

specifically NFTs. Let's just start it off there. Yeah, sounds great. So, yeah, what's so interesting to me about the current music web three wave. And I wonder, I think some people are aware of this, but it's always important to reiterate that like this was not the first one. So yeah so like and this can be generalized to like crypto in general you know with the whole like iCO boom slash scam moment around like 2015 and 2017 um yeah all the hype around that and yeah with with music specifically actually the first year i started writing about music and tech was also the first year i learned about what blockchain even was it was around 2015 and at the time there were a ton of startups that were trying to use blockchain specifically as a solution to solve the rights issue and the crediting issue around music.

So a lot of startups had a vision for like a global decentralized rights database where you could go, you could tap in and see at least like clear credit information, let alone rights information for any given song. because like figuring that out is actually like the extent to which is still so difficult to figure out in a lot of cases, like who actually owns what percentage of what song, even if you work internally at a label or publisher is kind of alarming. So yeah, so a lot of startups kind of had that vision, but then ran into, again, a very web two rather than Web3 problem of dealing with industry politics. and in particular, a lot of these, in order for that kind of database to work, you need the biggest players who have the most catalog and the most data to agree to opt in. At least that is maybe my personal point of view. And so if you're like an emerging startup, trying to convince all these major players to share data with each other that they otherwise would keep as proprietary for some strategic reason, they're like, obviously, probably going to say no or

might say yes, but on like a six to 12 month timeline, which if you're a startup is like, that's basically like, you know, years and you can't really afford to wait that long. So I think a lot of startups in that world kind of buckled in their attempt to create this kind of right solution.

It's like B2B right solution for incumbent players in the industry. What is super, super different about the current wave is that there's like almost no interest in that approach. Instead, it's all about how can we create entirely new kinds of markets and new kinds of economic models and fan engagement models for emerging artists. And especially for like individual artists or collectives who would otherwise not be recognized by mainstream culture or these mainstream like industry gatekeepers. I think that is, at least in my view,

what is driving a lot of the discussion about, yeah, kind of the future of music in Web 3. Obviously, there's like a big a big asterisk to that and that there are like the biggest NFT sales of all time have unsurprisingly gone to some of the biggest like celebrities or creators. And this is like definitely true in music. Like I think Blow who is an independent artist. And I think he also is the bestselling artist by like NFT. sales has been active in crypto and in music for a very, very long time. So by all arguments, he already has an established audience. And I think, like, Grimes is, like, not far behind him.

And so, like, celebrities do definitely still, I think, lead in terms of sales numbers, but in terms of, like, defining new models around music and Web3 and, like, who the most exciting startups in the space are building for. I think it's about, it's still. they're catering to a much different kind of group of artists. And then, yeah, then I mentioned earlier the pandemic. I'll just mention again to reiterate, the pandemic, I think, woke a lot of people up to the unsustainability of music streaming from just economics perspective for artists. And so there's just like much more of a hunger for alternative models for monetizing music

and monetizing community, again, especially. for artists who are, would otherwise be kind of left out or just instead of devised to participate in the dominant streaming ecosystem. Like, yeah, like major labels and publishers who have thousands, tens of thousands, millions of stalls in their catalogs are doing like perfectly well with streaming right now. Ironically, even though it's hard for Spotify to make a profit, I'm pretty sure all the major labels are like doing just fine and like are generating like more profit than ever off of streaming.

if you're like a solo independent artist who relies a lot on touring obviously very different questions so yeah I think just those general critical discussions have created um it's almost like like artists feel like they have more of a license and more of a desire to experiment with new models in a way that they maybe otherwise would not have yeah it's kind of like they've had a fire lit under them that is kind of forcing them to explore new models. And it just seems like, yeah, like all the stars aligning for this exploration into Web3 music and music NFTs. And yeah, I think I want to pick up on one point you mentioned that this is this idea of artists who have been. kind of vocal like blau about music, the issues in the music industry and how Web 3 can maybe

start to address some of those issues or at least give artists an option. And one thing that I've noticed as a fan of this movement, a fan of artists experimenting in this space is it really seems like the artists who are successful are and actually I'm going to quote you something that or water in music said in one of the reports is do hard things that don't scale right so this idea of building a web three native community you know going on Twitter spaces and sharing their story or writing a really in-depth article about their vulnerabilities and why they're here and what they need support for and what they want to create and really building this organic brand for themselves from the ground up.

And it seems like those are the artists who have been the most successful to date. So I guess the question here is, you know, longer term, do you think that that is the type of persona that is going to be the most successful? Or is there room for artists that are maybe a little bit more introverted and secretive? Yeah, like would just love your thoughts there. Yeah. Definitely an important question. And I have, so I have thought about this. This was mentioned briefly at some point in the, yeah, our stream season one report, but it's an issue that has come up a lot more to the point where it's like,

does definitely warrant a whole separate piece, which is the issue of discoverability. Yeah, and I realize that like with Web 3, yeah, like a lot of the platforms out there are focused on trying to create the strongest financial rails for these interactions, that they're not like thinking about, say if an artist is emerging in Web3 and wants to grow their fan base, like how can you use tech to do that at the same way that at the most extreme level, you know, Spotify and YouTube, you know, for better or for worse, I've built these like very substantial, you know, recommendation. algorithms and systems just keep surfacing new content all the time.

I'm not saying that's like the best model, but like Web3 is like all the way the other extreme where if you go to, I think most music NFT plot. Yeah, if you go to like sound or catalog or Zora, I think the reality is that you, those are only really good if you like know what you're already looking for. and if you don't know what you're looking for sure you can of course you can kind of browse through and like look around randomly

but I don't know if that's like the best experience at least for the typical like music fan so yeah so I say all this and in like realizing also that so if the platforms don't have like a discoverability layer the way you get discovered is just by who you know and so it

the opportunities that I've seen have been very like relationship driven, which definitely has like good and bad sides in that, of course, you know, artists who already have like, a certain artists already have existing connections to people in the industry or to like people in crypto, of course, are going to kind of like come out ahead in terms of revenue. The like flip side of that is that you can be an artist that doesn't really have a good following or like does like terribly on. Terrible is not the right word because it's all relative, but like, you know, isn't generating that many streams on streaming services, like on Spotify. And so like,

you wouldn't get picked up by a playlist or something. But you could be like one of the highest selling artists in Web3 if you have a solid like community strategy. And then to, yeah, connect this all to your question about like artists who are more introverted. I think So I think the whole point of Web3 And you I forgot the exact word that you use But you alluded to this idea of like Yeah giving artists more just more of a choice

To design the kind of economics they want around their work Definitely the ideal Like end state Or the ideal state to arrive to for Web3 Is where like an introverted artist Who isn't interested in engaging with Twitter spaces can just create whatever music they want, price it however they want,

and they can find that one person who's willing to pay that amount to support that work. And I think that that is what I think will make Web3 more welcoming, ultimately to people who are more introverted or like who aren't as outspoken all the time is that you have more that flexibility over pricing in that way. Whereas with something like Spotify, you know, you upload your music to a streaming service

and you're automatically fuddled into the system that rewards scale and that incentivizes scale in terms of like reaching millions of listeners. So I'm trying to think if that answered your question. So I think there is space. I think there is more space for, Yeah, artists of like wide range of personalities and kind of demeanors of Web3 for sure. But definitely like one barrier on like the platform level is the lack of discoverability. And like the ecosystem relying a lot on kind of building relationships over like showcasing the art itself.

which yeah this is I think it is like it's important but very nuanced conversation to have that could be like good or bad depending on the context but I would say that definitely that dynamic definitely defines the landscape right now yeah no that's that's super helpful and I totally agree I think discoverability sucks but one thing that I'm excited about that I don't think has really been tapped yet is this maybe idea of curate to earn and bringing back like the human element to curation of art and music in the Web3 space and rewarding that curation in a way that people haven't been able to be rewarded in Web 2. So I'm hopeful that that kind of helps address some of the challenges with discoverability.

And then on the point about, you know, is there room for artists who maybe aren't as vocal? I think one thing that I think we've kind of seen is it's easier, it seems, for artists to collaborate and find partners in this space. So maybe what's going to happen is for those artists who are maybe a little bit more soft-spoken and secretive, they partner with people who become their champions and do that community building kind of on their behalf. half. So hopefully that room for collaboration allows them to have an equal footing in web three music. Yeah, definitely. Yeah, there are a couple of layers there. There's one, personally, one of the things that I love the most about now being active in Web3 as a builder slash Dow leader is definitely the mentality of a rising tide lifts all boats. And at least from what I've seen, like a very quick dismissal of anyone who like doesn't

embrace that because, you know, the nature of decentralization is that both information and resources are going to be shared much more openly. And so there definitely is a much more collaborative, yeah, collaborative rather than like zero-sum game mentality around resource sharing. And so that definitely is a, yeah, I think a very important factor in making the space more inclusive. And then I'm thinking to some articles that Lee Jin, who's one of the top or at least, yeah, kind of foremost investors in the creator economy sector and now moving into. Web 3. She's written, so yeah, this is not a new concept, but Kevin Kelly is written about

the notion of a thousand true fans. And as like an artist or creator, you only, in theory, you only really need a thousand true fans paying $100, you know, dollars a year to start to make, you know, six-figure income. And like, you don't necessarily have to aim for millions and millions of fans, especially if you're like a more niche artist. Lee, Lee Janbro, a post falling up on that, scaling it down even more to 100 true fans.

Like if you don't just aim for 1,000 true fans, but aim for 100, like, super premium fans who are kind of like willing to go to the moon and back to kind of like support what you're doing and are willing to put like a higher kind of price on that from say like a membership standpoint or VIP standpoint. Like you can start to think an even like smaller scale in terms of the number of people you really have to reach. And then I feel like NFTs at least might even like make that pool that you need to sustain yourself as an artist even smaller.

Of course it also raises, yeah, important questions and concerns around. on exclusivity and, you know, especially if you have an existing fan base, how many people can participate in, say, like, a one-of-one NFT auction. But it is true that in terms of, like, the threshold in terms of the number of fans you have to reach to sustain yourself in crypto and in Web3 is like a complete reversal of streaming, where you have to necessarily generate tens of millions of streams to make us a same. living, at least off of streaming alone. So yeah, I think that's, that is what is very exciting to artists, again, especially those who are, would otherwise kind of be dismissed or left out of the

dominant system right now. Yeah, I love that concept so much. And I hope that has the downstream effect of, you know, with this streaming model, it optimizes for our, our, our, and music that will reach the most people. And with NFTs and crypto, I'm hopeful that, you know, artists feel like they have more creative freedom and more room to experiment and need to only reach a certain amount of people that are the right people that support them. So I'm really excited about that. So there's something I wanted to ask you. And I think you have a lot of thoughts on this. So one thing that's been pretty wild to see is that music NFTs have been super polarizing. And I think over the weekend, I don't know if you saw this, but there was a lot of

discussion around should artists just take advantage of existing Web 2 platforms like BandCam, Patreon, Twitch, if they want to directly monetize their music. And, you know, I think as people who have been in this industry and following this industry for a while, we understand that the limitations that NFTs and DAOs and social tokens hope to address is that they offer things like ownership and digital property rights that isn't popular or possible in Web2. They allow communities to be interoperable across platforms, which is something you expanded on earlier. You know, and they also allow fans to forge like a codified direct connection with their favorite artists and other fans. But I guess my question is, are these reasons enough to convince skeptics?

Is there anything else you would add? You know, do you think it's a valid criticism? And then is, do we even need to, or do artists even need to win over these skeptics or should? should they cater to their Web 3 native audience? Yeah, this is a really good, really good way of framing it, especially the last part of like, should we even be trying to convince skeptics? So the way that I think about Web 3,

and water music is a, I think, a living, breathing example of this. I think Web 3, is genuinely new and can provide a lot of benefits as a new, like, layer of financial incentivization. So like baking financial incentives into existing behaviors or social structures. As a general, like, experience layer. And as a general, I was reading a good article. I forgot the title.

like a marketing article about Web3 as an activation layer. So as an experience and activation layer, Web3 is terrible right now. And I'm like very open to admitting that in terms of just not being the most user-friendly experience, being very like clunky. Oh gosh, like around our like stream token launch, trying to like walk people through even how an app like Coinbase works, like the difference between Coinbase exchange and coin-based wallet, like, to the average person who's, like, not that familiar with crypto or with finance.

That's, like, very confusing, you know, kind of difference to navigate. That's just, like, you know, one example that comes to mind. But as, like, experience and activation layer, Web3 is terrible. And so for better or for worse, the, like, novel utility that Web3 brings to the table is inseparable from some aspect of finance, I think. And so if your goal as an artist is just to create like more engaging and interesting fan experiences in general, absolutely like that does not require you to move into Web3. If as an artist you don't really, you happen not to care that much about community

or you don't have this idea for like how your fan base operates as a community. and what incentive structures can be like baked into that, then absolutely does not make sense to move into Web3, not to call out a particular artist, but just as an example. Like when, okay, I think this was last year, Maroon 5 had an NFT sale. And if you bought the NFT, you got into some kind of. charitable doubt that they had announced, where you can kind of collectively decide on where to allocate the funds raised from these sales to, I think, to environmental causes specifically. So in concept and on paper was a great example.

It's very hard to, you know, argue against the concept of a charitable doubt. But Rune 5 is like one of the last artists on my list, at least like in my head to, they're like a very traditional web two celebrity and I'm not really sure what their like community engagement strategy is so yeah just again just another top of mind example of an artist of like an artist or group that can already and is already serving fans in like really good ways through web two means and they're not like thinking in a like a way that they would have to

to make sense to go through the very complicated, very arduous, very non-scalable process of onboarding fans into Web3. And yes, it's not a bad thing. I think definitely a certain kind of like flexibility, agility, community first mindset is very, like those are like shared traits among everyone who I've been following very closely in Web3 and who I think have been succeeding. That's super helpful. Yeah, that's something that I've been struggling with. So I really appreciate the insight there. I promise, I could talk to you for hours, but I'll make this my last question. You know, one thing I've been thinking about is like it seems like the majority, and correct me if I'm wrong, of musicians who have been experimenting with Web 3 are independent artists. And if that's true, is there an avenue for artists that are. assigned to labels to get involved. And longer term, do you think that this force that we're creating right now is strong enough to convince more artists to go independent?

And then this is like many questions in one. But if that's the case, like what role do labels, for example, have in that future? I'm just thinking to, so at Water Music, we have this music NFT sales database that I set up long before moving into Web3 in the sense of like building water music into a Dow. But so we have like a little over a year's worth of NFT sales. And I think the current stat is that 70% of NFT sales have gone to artists who are not signed to major labels. So I think it's a really also interesting, complete flip of market share in traditional

record of music where the major labels are taking like 70 to 80% of market. share in any given year. And I think, and so major label artists have taken part in the NFT market. I would say vast majority of the activity took place in like March to May, like 2021. And I think I think that activity was very much an instance of artists asking for like forgiveness, not permission, just being like, oh, well, like, releases NFT and then see what happens. And then it was like later in 2021 that I heard a lot of examples of like publishers trying to chase down royalties that they thought they were owed because one of their songwriters was like credited on this song that was included in in this NFT. So yeah, I think why more major label artists have not gotten involved is because the rights issue is just so complicated. This is, yeah, this is a realization I've had only recently.

about music NFTs is that the music industry is becoming increasingly multiplayer and that if you look at the number of songwriters on a song on the Billboard charts, it's increased from like two to three to like four to five in the last like couple of years. So it's increasingly becoming like a larger group effort. but music NFT infrastructure and even like the kind of data that you can encode into an NFT it's optimized for single player like a single player environment so it's like I'm mostly seeing just like individual artists who own all the rights to their work and who like make all their own stuff for the most part selling music NFTs on these platforms so as long as

yeah like most music NFTs don't allow you to like encode credits or revenue splits for say like songwriters or producers who also worked on your track and like that is that to me that kind of information and functionality to me is is table stakes for even having a chance of bringing the more traditional music industry on board because that's just like a natural part of how the recording process works let a lot of how payments work. So, yeah, to me, there's just still such a fundamental gap between how licensing and crediting work in the traditional music industry and what NFTs can even do to the point where, yeah,

I don't see, I, the major labels for sure are, like, watching the NFT world very, very closely. But I think it'll be a much longer time span, even, like, towards the end of this year or, like, a couple of years before that infrastructure really comes to fruition. That said, okay, one specific example that I love because I am a fan of them is the duo disclosure. I think I'm pretty sure the first NFT they ever minted was also the day they announced they were going independent and they did it via a Twitch stream. So they, I clearly remember the day because I like tuned into their stream.

Yeah, they announced their. going dependent on this Twitch stream and then that produced a track live on Twitch and then minted it on Zora as an NFT. And they like did a bunch of those kinds of stream to mint kind of like events in the weeks after. I thought that was I thought that was really cool and that like encapsulated the mindset that I am seeing with Warmore artists. Like they're realizing that they do have this option to, you know, raise money directly

from fans in this way and without having to necessarily opt in to or over rely on this other kind of streaming system that's dominating right now. So yeah, I think that mindset shift is definitely happening. But yeah, there's a lot of work to be done in terms of Web3 giving artists the same, like, tools and the same infrastructure that they would expect anyway, like this kind of, you know, co-acrediting revenue split multiplayer kind of mindset. I think those kinds of things are important regardless of whether the traditional industry gets involved, but especially if you do want bigger players coming in.

We need to get you on for another episode because so many more things I want to pick your brain on. But thank you so much for mentioning this idea. That was actually one of my questions is there are so many. contributors involved in creating music is the current Web 3 system calibrated to compensate them in an efficient manner that's fair to the amount of work that they're doing. And clearly we need to make more progress there. And then, yeah, shout out disclosure.

I think they're definitely one of the artists who, have, despite how massive they are, entered and engaged in this industry in a really organic, authentic way and have so much respect for them. And shout out to our friends at Delphi Digital for buying their first disclosure face NFT. So I will let you go, Sherry. But it's been such an honor to chat your foray into Web3 and how quickly you. you've navigated this industry and built such a strong, compelling community is so inspiring. I know that people will take away a lot from this conversation. Yeah, thank you.

And yeah, I can also talk about all this for hours. So more than happy to come to the episode later if needed. But yeah, thank you again for having me. Yeah, of course. And we'll definitely do that.