The Prof G Pod with Scott Galloway - Office Hours: Blockchain in the Music Industry, Divisive Concepts, Gratitude, and the Value of DEI

Episode Date: May 17, 2021

Scott answers a question on how NFTs might disrupt the music industry. He also shares his thoughts on the importance of diversity, equity, and inclusion to any successful business. Scott then addresses the push in certain states to ban “divisive concepts” in schools and answers a question on how to practice gratitude. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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cards, savings accounts, mortgage rates, and more. NerdWallet, finance smarter. NerdWallet Compare Incorporated. NMLS 1617539. Welcome to the Prop G Show's Office Hours. This is the part of the show where we answer your questions about the business world, big tech entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehoursatprofgmedia.com. Again, that's officehoursatprofgmedia.com. First question. Dear Prof G, this is Dr. Siv from Toronto, Canada and Sao Paulo, Brazil.

My question for you is about blockchains and specifically on the strategic implications of NFTs or non-fungible tokens. Roger McNamee recently stated in your podcast that for non-established musicians, it is pretty much impossible to avoid YouTube. At the same time, we now see interesting new use cases on blockchains, such as NFTs with smart contracting, which enable musicians and pretty much anyone to connect directly with their supporters at very low transaction costs if you use a layer 2 application. So here's my first question for you. Do you see one day NFTs upending YouTube or Facebook? This would be another example of dispersion, which is something I've been talking about for quite some time. If yes, then how do you see the empire striking back, like Microsoft did to Netscape in

the 1990s? And finally, what can the rest of us do as members of the Rebel Alliance so that this dispersion story does not get derailed? Thank you so much for your wonderful podcast. Thank you, Dr. C from Toronto and Sao Paulo. Toronto and Sao Paulo, that's an interesting chocolate and peanut butter life. Toronto strikes me as one of the most livable cities in the world. And Sao Paulo strikes me as an incredibly livable city if you got serious reals. That city strikes me as having incredible income and equality. I've been to Sao Paulo a couple times and enjoyed it more than I thought. That was something where kind of the perception is, oh, no, it's dangerous.

And I don't doubt that it's dangerous, but I had a fantastic few days there. I love Brazilian culture. I love Brazilian food. I'm walking back my comments right now in case you can't tell. But anyways, that wasn't your question. So YouTube may be an essential discovery platform for musicians right now, but it's not a monetization platform. Complex reported in 2017 that on average, musicians made just 1,000 to 2,000 per 1 million views on YouTube. And some, Facebook and YouTube, have all said, oh, no, we're all about creators. They could give a flying fuck about creators. There's millions of creators on these platforms that have realized you can't make any money.

These guys are going to starch all the margin from it. And occasionally, there'll be some very well-publicized examples of some crazy gamer or crazy YouTuber that makes $2 or $3 million. But meanwhile, Google is literally making $2 or $3 billion every week. To be fair, people would say, well, there's two sides of that trade. People continue to create content, so they're clearly getting something for it. And I think that's a fair argument. The question is, are they sticking out their chin? Are they a monopoly where if you want any oxygen, you have to be on YouTube? And as soon as they stop using their innovation and intellect over in Washington and maintain their monopoly status, as soon as there's options,

as soon as there's competition, they won't be able to extract the same rents. And more of those rents will go to the creators, which might make, I don't know, a healthier economy, a healthier ecosystem. According to Statista, YouTube makes up just 6% of the streaming market compared to Spotify's 35%. The New York Times reported Spotify's current payout rate to artists is about 4,000 per 1 million streams. I don't know what that means, but anyways, I'm trying to figure out if that's good or bad. Blockchain-based music streaming platforms, including Audius, have emerged with the intention of creating a more direct connection between creators and consumers and pay artists fairly. But they've run into a lot of copyright problems. With today's music business, NFTs are less about replacing streaming and more about giving artists direct revenue sources with huge payouts.

They're like fancy exclusive merch drops serving as consolation prizes for measly streaming revenue and a year without touring. Grimes auctioned off a set of audiovisual NFTs for 6 million in February. The Weeknd sold a collection of NFTs for more than 2 million in April. One of the NFTs featured an unreleased song and sold for $490,000.

So look, I think all of this is a perfect example of dispersion and perhaps innovation from the blockchain. Specifically, I think of Ethereum where you can put smart contracts. And when I say dispersion, what I'm essentially saying is there's kind of two key parties here or three key parties. There's the source or the creator of value, whether it's someone renting their human labor, whether it's someone creating music. And then there's the end consumer, that is someone, a company who's getting the benefit of your human capital, your design expertise, your UI, UX, whatever it is, your facility with AI, or a consumer that loves listening to your jam. And then there's this supply chain in the middle, whether it's book publishers, whether it's agents, whether it's the people who distribute the music, the labels. My sense is that the blockchain kicks the shit out of the middlemen. The dispersion or the

great dispersion is going to put a lot of pressure on the middleware, if you will. And that is, artists have complained for a long time, and I won't call myself an artist, but I do write books. And I oftentimes wonder, okay, what is it about this process? I feel as if I add most of the value. And that is I write the book, I proofread it, I have a group of people. My editor, I think is fantastic. I think she's kind of the best in the business, but primarily she'll say things like, would start over or please punch up this section. And I don't even know what the publisher actually does other than print a book for 67 cents, which is what I think it costs them to print a book out of a factory in China and then distribute it. I don't think that's worth

whatever they get, 50, 70, 90% of the revenue. There's probably going to be a lot of blockchain applications that say, all right, let's take the source material from the creator, let's deliver it to the end consumer consumer and let's figure out a way that the end consumer, and by the way, by the way, now I'm really ranting about books. It takes a minimum four months from when it's pencils down to more likely nine months to get a book on the shelves. That just makes no goddamn sense in a digital age. How did that happen? So I do think that there is going to be tremendous reconfiguration of supply chains across every major industry. The one that's really stuck its chin out is healthcare, where they have said, all right, in order to optimize the people in the middle, the insurance companies, the hospital administrators, the lobbyists, whatever it is, the pharmaceutical companies, they are just going to put in place so much supply chain friction and impose and push all the costs, not only financial costs, but time costs

on the consumer. Think about what AI, think about what blockchain could do with healthcare. A mother who's managing her child's diabetes, and let's be honest, it's always the mom, 12 weeks a year managing that kid's diabetes. 12 weeks a year. Imagine AI-driven healthcare that has smart contracts on payments that says, okay, you get approved. There's a smart contract that says you're eligible for Medicare, or this smart contract says if you sign the stock you sign that's HIPAA compliant. We get access to all your kids' medical records. And boom, we start delivering advice over a smart speaker and over a smartphone, a series of AI-driven questions. And boom, mom and the kid don't need to come into the doctor's office 12 times in a month. They need to come in, we use some sort of AI to figure out appointment scheduling such that their primary physician sees them at 12 and in the same building at 1 o'clock, the specialist sees the kid. None of that shit is taking place in healthcare.

It's literally as if they said, your time is meaningless. Think about an industry that's more screwed up than healthcare. I just can't figure it out. I've been trying to get a vasectomy for six months. Is that too much information? Is that too much information? Because let's be honest, let's be honest, it is time to close up shop. And I went in for my initial consultation.

I'm like, why do I need a consultation? Why do I need him to point to this weird mummy or this weird figure and show me how he's going to take a laser to Big Ed and the twins? Why did I need that? Why did I need that? Anyway, I do think that blockchain, and more specifically, just dispersion, is going to create tremendous opportunities in the arts, in healthcare, and in education. Thanks for the question. Question number two. Hi, Scott. My name is Caitlin and I'm from Melbourne, Australia. I work for a retail business that is trying to improve the way it approaches diversity and inclusion. It's doing this through a committee of employees who are going to look at hiring policies, but also looking at the way that the workplace is actually set up and then also how we address our customers. I just was wondering if you had any good examples of where it's been also a financial benefit for a business to change these

things and not just a matter of workplace culture improvement. Thanks so much. Melbourne, Australia, just like San Francisco, but less shitty. Love Melbourne. And by the way, Caitlin, you should Thanks so much. So comforting. And so I just love Delilah. You could be the Australian Delilah. You have a rich, buttery, lovely voice. Anyways, a McKinsey study that found that companies with gender diverse executive teams outperform male dominated companies by 21% in terms of earnings before interest and taxes. Racially diverse executive teams provide an advantage of 35% higher EBITDA and 33% more long-term value creation over the least racially diverse companies. Harvard Business Review published a study that looked at tens of thousands of VC investments and found that, one, the success rate of acquisitions and IPOs was 12% lower on average for investments by partners with shared school backgrounds than

those by partners from different schools. Similarly, the effect of shared ethnicity reduced an investment's comparative success rate by 26% to 32%. In addition, VC firms had increased their numbers of female partner hires by 10% on average of a 1.5% increase in overall fund returns each year and had nearly 10% more profitable exits. This is something, and it's not me being Alan Alda or more evolved, but I recognize it at a very young age. And that is greatness is not only in the agency of others, it's in the agency of diversity. We're not supposed to be too close to people like us. We are supposed to have diversification in the gene pool and we're supposed to have diversification of ideas. And the way you get diversification of ideas, and for me, it's been kind of like sanity checking my

ideas. I try and surround myself with people with different backgrounds and I find that when you, and by the way, just the first step is you got to be open to checking ideas with other people with diverse viewpoints. When I was younger, I made the mistake of thinking, oh, I'm just so fucking awesome. And the way I express leadership is by making decisions and then advocating for that decision rather than going around and listening and asking people from different backgrounds and with different skills what they think about an important decision. And you will learn every day, every day, somebody saves me from myself. I got, I read a newsletter called No Mercy, No Malice. And we were talking about, I drafted something and then I hated it and I thought, I'm not going to do this. And then my creative director, Catherine

Dillon, my managing editor, whatever title she has at this point, basically saves my bacon and runs our company is what we should call her. I called and said, no, this is a really strong thing. And what I realized is that I was hangry and that I was upset and I just wasn't thinking clearly. And there isn't anybody that is able to get everything, think through clearly on any issue or all issues all the time. And so your ability to surround yourself with people who aren't you is a key component of success. Absolutely key component. Is it the right thing to do? Yeah. But more importantly, it's the smart thing to do. Thank you for your call, Caitlin from Melbourne, Australia. Delilah, Delilah. We have one quick break before our final two questions.

Stay with us. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their

next great idea. Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Support for this show comes from Constant Contact. You know what's not easy? Marketing. And when you're starting your small business, while you're so focused on the day-to-day, the personnel, and the finances,

marketing is the last thing on your mind. But if customers don't know about you, the rest of it doesn't really matter. Luckily, there's Constant Contact. Constant Contact's award-winning marketing platform can help your businesses stand out, stay top of mind, and see big results. Sell more, raise more, and build more genuine relationships with your audience through a suite of digital marketing tools made to fast-track your growth. With Constant Contact, you can get email marketing that helps you create and send the perfect email to every customer and create, promote, and manage your events with ease

all in one place. Get all the automation, integration, and reporting tools that get your marketing running seamlessly, all backed by Constant Contact's expert live customer support. Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca. Welcome back. Question number three. Hi, this is Ellen from Vermont. I'm a retired educator, but I keep up with the latest news in my former profession. What do you think about the number of states proposing bans on the teaching of divisive concepts at both the K-12 and higher ed levels? What do you think is behind these efforts, and why now?

Thanks, Ellen, from Vermont. Republican legislators in eight states have drafted bills in the past few months that would ban teaching what they call divisive concepts. What do we mean by that? In states including Idaho, Iowa, Louisiana, Missouri, New Hampshire, Oklahoma, Rhode Island, and West Virginia, they're saying the concepts, including that the U.S. or specific states are fundamentally racist or sexist, that that should be banned, that individuals, because of their race or sex, are inherently oppressive, whether consciously or unconsciously, or that individuals bear responsibility for actions committed in the past by members of their same race or sex. GOP lawmakers in Idaho just banned state schools and

universities from teaching critical race theory, which looks at how race and racism intersect with politics, culture, and the law. Texas and Tennessee are following suit. So, when the CDC says every school should mask up, it's all about letting individual schools decide. But when they decide they don't want to come to grips with some of the bigoted, really ugly parts of American history, and let's be honest, I mean, this is a nation whose economic vibrance in large part was built off the slave trade where we basically, America was kind of founded on this premise of people trying to escape oppression such that they could travel to a new

land and then enslave another people. I mean, there's tremendous hypocrisy and uncomfortable topics in our history that we should absolutely discuss. And I think it should be up to the teachers and the parents of that school to make those decisions. But the idea that Republicans are in any sort of position or have any moral authority to begin dictating what content should and should not be taught at schools, you know, it feels like kind of a book burning with a tie on it. I just, it's totally inconsistent with GOP beliefs. And it's primarily trying to say, all right, let's not have a difficult discussion if it reflects the kind of heteronormative values of the Republican Party,

if in any way diminishes our, you know, it forces us to face hard truths. It feels like it's kind of the same where this is a cousin to this bullshit voter suppression laws. It's the Republican Party saying, you know, we don't want to own up to our own ideas. We don't want to have a real intelligent conversation around this. And by the way, I think a lot of parents probably feel the same way at certain schools, and they should decide. And then those parents can decide whether or not they want to keep those kids in that school. I mean, there should be basic laws around discrimination and ensuring schools are segregated and ensuring, in my opinion, there shouldn't be capital punishment in schools. Yeah, there should be some basic laws. But this feels very, very kind of one-sided, politicized, and trying to spread Vaseline over the lens of what is our history, which, by the way, has some amazing components.

The American history, on the whole, taken in the full 35-millimeter frame that is our story, is a good one. But it has a lot of ugly scenes. And the way we prevent those scenes from continuing to repeat themselves is by acknowledging them and understanding them from a very young age. Anyway, Zellent from Vermont, at the end of the day, I think this is just, I think it's a bad idea. And I think it reflects this ongoing trend amongst the GOP that they think the way to promote Republican values and ideas is not to address them or not to fully debate them, but to starch them white, if you will, and to ensure that non-whites can't vote. Anyways, different talk show. Thank you, Ellen from Vermont. Next question.

Hey, Prof G, Adrian out of Mountain View. I have a question about gratitude. I graduated a year ago from a top engineering school and now I'm making over 200K at one of your favorite, quote, unregulated monopolies. With so much luck and privilege in my life, I found it hard to actually register how good I have it. I journal my gratitude, but don't always feel very authentic. What would you recommend? Should I be more patient? Do I need to figure out how to be genuinely more grateful and happy now, or will this just slowly drip over the years? Thanks, Prof G. Big fan of yours since 2018. Adrian from Mountain View. That's a very thoughtful question. The fact that you're even asking yourself that question means that you're,

God, about 3,000 clicks ahead of where I was at your age. Look, I'm an atheist and I don't, I have not introduced my children to religion. I plan to because I think there's tremendous learning in religion and I like some of the basics, if you will, around religion. But what I do is a form of praying is I ask my kids to grab my hand and before dinner, and we go around and we talk about something we're grateful for. And I just find that just articulating, and it's not hard, but just taking the time to say, I'm grateful for living in a wonderful country. I'm grateful for the things we have. I'm grateful that, you know, my kid at one point said he was grateful for his grandparents.

And then the next day said he was grateful that we got to have a dog. And I just think at a young age or an old age, looking at all the reasons you're grateful creates such incredible perspective. So I think a gratitude progress is a tremendous practice. I think it's also important to purposely mix it up. And that is expose yourself to people who are less fortunate, whether it's through philanthropy or even, I mean, this sounds weird. I'm going to the movies and going to the mall. I think it's important. I take my kids to the movie and to the mall just because I want them to see people from different economic and ethnic groups. We're so easy to begin segregating, and you get less tolerant. You become less forgiving of people when you don't segregate.

So I'm making kind of a purposeful attempt to get my kids out more. I'm trying to get my kid a job, my 14-year-old. Well, he'll be 14 next year, a job at CVS because I want him to interact with more people than just his parents and all the other privileged kids at his school. Anyways, boss, I think there's a ton you can do around forcing yourself to interact with people who aren't as fortunate as you, whether it's through philanthropy or just reaching out. But my man, you are on your way. Anyone who's thinking that way and is that self-aware at your age, dude, you're the least of our problems. You're the person that's going to help others employ a gratitude practice. The one thing I'd be mindful of as an engineer in Silicon Valley

is conflating luck with talent. I find there's a virus in the Valley and among tech pros that they've bought into this notion that society continually reinforces that you're something special because you're in technology, that what you're doing is almost godlike and it feels that way. But I think that those of us who've made a lot of money in technology need to acknowledge a lot of this is not our fault. And to every day be appreciative of it and to every day try and share those blessings with other people. But again, my man, Adrian, you strike me as very self-aware. Thanks for the question. Thanks for your questions.

That's all for this episode. Again, if you'd like to submit one, please email a voice recording to officehoursatpropgmedia.com. Our producers are Caroline Shagrin and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to The Prof G Show from the Vox Media Podcast Network. We'll catch you on Thursday. I want AI around my scrotum. AI my scrotum, for God's sakes. Hey, it's Scott Galloway, and on our podcast, Pivot,

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