Hey Everyone! Dez here from All Things Venture. I used to have this conversation with my friends in college every few months where we’d ask each other,
Would you rather be an athlete or a musician?
Given that a lot of my friends in college were also student athletes, it was always funny to hear about how people would consistently say musician. They’d say things like, “same amount of fun, doesn’t physically tax your body” or “you are literally the man/woman and everyone loves you,” or “I would get to party all the time as part of my job, I’m so in.”
While my opportunity to be a world touring musician has absolutely passed (and realistically never existed), I absolutely love listening to music. On my morning commute to work? Airpods in, jamming to Tame Impala. At Equinox trying to get a lift in? Airpods in, bumping to Key Glock. At home, cleaning my apartment? You guessed it, airpods in but surprise, surprise - I’m listening to Amy Winehouse. In any event music is a big part of my life, and it’s also big business. Spotify has 172 million premium subscribers, and back in May 2020 Goldman Sachs estimated that the entire music industry’s revenue was poised to reach $131 billion by 2030. But the music business has also been historically extractive, squeezing artists every step of the way. Agents, lawyers, record labels, radio stations - they all play an outsized role, relative to the value they provide, in digitally delivering an artist’s body of work for public consumption. Today’s startup, Decent looks to rethink the music industry from the ground up, and realign incentives across artists and their fans and create a new incentive mechanism that makes every music fan an A&R rep.
I recently had the opportunity to interview Charlie Durbin, one of the co-founders of Decent, and for anyone interest in NFTs, Web 3, and the future of the music industry. This one’s for you. Let’s dive right in.
What is Decent?
Decent aims to be the first decentralized record label. We provide direct-to-fan monetization and facilitate discovery for artists through our novel royalty-collateralized NFTs. Decent is creating efficiency and fairness in the historically inequitable music industry by putting artists and fans on the same team.
Our NFT platform allows artists to mint and auction NFTs collateralized by royalty revenues. By tying investors’ ROI to artists’ royalty growth rates, Decent creates a synergistic flywheel between fans, investors, and musicians, incentivizing fans to market on behalf of artists. Just as streaming platforms democratized audiences, we aim to democratize ownership with Decent.
What led you to build Decent, and why are you excited about Web 3?
This is going to be along answer, but bear with me. One of our co-founders, is an artist currently signed to Palm Tree Records at Sony. Over the past few years, he has run the gauntlet, advancing from a self-releasing artist to independent label to, now, a major label. His frustrations navigating that process and negotiating label deals motivated us to develop Decent. On a personal level I really loved studying behavioral economics in school and I wrote my senior thesis on information cascades, using sentiment analysis of tweets to derive a variable called “Agreement” which tracked how information disseminated through networks. Information cascades are powerful in financial markets because they theoretically define the residuals between an asset’s expected fundamental value and trading value (this interview is a sweet synopsis of two schools of thought). I was immediately taken by the music industry because it is the purest grounds for behavioral economic models; I believe that few people would argue against the perspective that the music industry is an industry entirely predicated on consumer taste. In most cases, taste is not derived in isolation; therefore, information cascades play a huge role. So what’s cool about information cascades as it relates to Decent // why provide that context? Information cascades can be manufactured AND they have tremendous implications on financial value - e.g., Agreement stemming from celebrities’ tweets is a highly correlated predictor of individual stock prices. Accepting the above, success in music is a function of the ability to create an information cascade that a particular artist is really good & the magnitude of that cascade. The outcome of information cascades is herd behavior; in music, these herds are fanbases. It’s no secret that success as an artist is predicated on the size of your fanbase, but I think this is an interesting framing of an entirely obvious conclusion.
The reasons why I’m excited about Web3 is because we now have the power to reinvent every industry through (hypothetically) perfectly efficient markets via shared ownership and responsive monetary policies. Like Decent, crypto aligns incentives between market participants to achieve unique and mutually beneficial outcomes. Crypto distributes wealth creation while disproportionately rewarding engagement and positive contributions. I think it’s beautifully egalitarian without designing for or codifying equality or relying on retroactive redistribution. Hopefully, this answer illustrates how crypto alters economic structures such that there is no need for gatekeepers or middlemen.
There’s lots of platforms/companies today looking to monetize NFTs via royalties - how do you all think about the current stage of competition?
The majority of music-NFT projects do not contemplate NFTs as anything more than JPEGs. It’s cool that artists can issue NFTs and fans can have some demonstrable proof-of-fandom, but honestly, who cares? If the platform just facilitates a discrete drop or the incentive is some experience with the artist, then the amount raised is entirely predicated on the artist’s existing fanbase. On one hand, yes - these NFTs and projects are a realization of Kevin Kelly’s 1000 true fans and can be exciting for artists. However, these projects do not advance us in any meaningful way towards the vision painted above of why crypto is exciting. Does a major label care if their artist drops an NFT for a quick buck? No, probably not. Do they care if their monopoly on attention evaporates? Yes, big time - that is real change and movement towards a brave new world in music economics.
To that end, some cool and competitive projects are:
Catalog / Songcamp
Opulous (Opulus’ royalty advances are more of a debt instrument which makes them quite different from others on this list)
Pianity & Catalog involve minting a single song as an NFT which really isn’t a ton different than the “discrete drop” model. There’s some incentive for fans to promote the single song, which might trickle back to the artist’s popularity; however, it certainly is not a “mutual fund of audiences.” The homepage of one of our competitors listed above even reads: “Everyone can listen to music. Only one can own it.” My POV: they are self-advocating that they’ve missed the point.
Royalty Exchange and particularly Royal are definitely competitive - can’t make light of those guys. Decent is differentiated because we never force the artists to give up any IP or royalties in perpetuity. We wrote about it in this blog post - the work-to-rent concept - but our ultimate goal is to empower artists such that they retain 100% of their future royalties post listing with us. We believe this is critical in treating each copyright as the cornerstone of a vibrant career rather than a time card.
Other differentiating factors: due to our time-constraint, our NFTs will trade like futures contracts vs. bonds (betting on popularity of artist over listing period vs. having royalties remitted to NFT holders). Positive externality here is it should provide a sense of urgency for fans to get out and promote artists.
Ultimately, as this space matures, competition will be almost entirely a function of the artists that each platform attracts.
What defines success for Decent over the next few months?
A few things, but I’ll walk through it on a month by month basis:
November: We launch our closed beta, issuing our first royalty collateralized NFTs
December: We analyze data from our first launch, proving Decent can generate a more popular release post listing (some indication of our manufactured information cascade hypothesis working); we also follow up with 3 more launches in closed beta
February: Our core focus switches to development of the fully integrated platform (automated royalties on chain) and community. We’ll do a few more launches in the closed beta to continue building community by giving that community something with which to engage; however, we want to be in market with a fully integrated platform in early January.
What advice do you have for any aspiring Web 3 entrepreneurs?
KERNEL really changed my perspective on web3 development. By focusing on the ethical and philosophical considerations, it really broadened by conception of what is possible in web3 and the extensive implications for successful projects. For example, Hayden Adams could turn out to be our generation’s Alexander Hamilton. This blog describing how we should value L1s as national economies makes a solid argument for the implications of Dapps by extension.
I think a16z uses the word “skeuomorphic” a lot. It’s my perception that word characterizes the rapid pace of innovation right now. To pick on the “discrete drop” companies again, I think they’re competing in a skeuomorphic land-grab; it is hard for me to see how they have engineered incentives or leveraged cryptography to derive a novel socio-economic framework, but this is the potential of web3.
This might be awful advice because there’s definitely a good reason to produce the products you know with certainty people will buy - like Beyonce will sell however many NFTs she wants. But, I hope people aspiring to build in the space are entering with a truly ambitious goals rooted in web3’s values.
What is your wildly ambitious vision for Decent?
Circling back to something mentioned in the competition section: new revenue.
At launch, Decent restructures incentives to change the earnings potential for artists, but we operate within the existing construct of the music industry. Frankly, the fact that we’re complementary with existing music players is what enables us to even enter the market. A secondary effect of our incentive engineering is likely the reduced power of labels, but we don’t change how revenues are produced in the industry - we just enable artists to earn more.
Without disclosing too much, we spend a lot of time thinking about how we could rebuild the music industry from the ground up. Because discovery is the fundamental problem, it is the one to tackle first. However, to reinvent the industry, we think you have to reinvent how revenues are generated in the first place.
The power of web3 is to align incentives such that the contributions of one are to the benefit of all. That is an extremely interesting premise from which to rebuild an industry currently antithetical to that sentiment...
Okay last question, if you can go back and time and have any artist release their first album on Decent, who is it and why?
Probably Jimi Hendrix -- for me, he sounds like no other and wasn’t beating to the drum of any other artists in his era. He’d be an amazing steward of an industry revolution + some $evergreen$ royalties!
I’ll say it again for the people in the back
The power of web3 is to align incentives such that the contributions of one are to the benefit of all.
Love it. Hope everyone is having a great week. Drop us a note and let us know what you think of Decent, and let us know if there’s any startups you think we should cover/feature. DMs are OPEN! And as always,
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