The Future of Monetizing IP and Digital Content | SXSW 2021
Hi everyone, and thank you so much for joining our panel, The Future of Monetizing IP and Digital Content. My name is Vladislav Ginzburg, CEO at Blockparty and we're gonna be talking about NFTs, and the way that leading brands and talent are leveraging collector culture, and new technology to change the way we interact with fans. I'd like to introduce our panelists, and I'll give them the opportunity to introduce themselves. So please go ahead panel, maybe beginning with Shara, introduce yourself and let us know a little bit about what you do in the space of visual collectibles and non fungible tokens. Sure, so I'm Shara Senderoff.
I run an investment fund called Raised in Space, which is focused on music tech. And we sort of sit at an eco center nucleus between all of the labels, publishers, artists, and we sit at that place in order to be able to advance digital collectibles and NFT as one example, but just generally, any technology that can allow the music business to increase or create new revenue streams. Thank you so much. How about you Roham. Hey everybody, My name is Roham Gharegozlou, I'm the founder and CEO of Dapper Labs. we're the developers and one of the first set of T projects, cryptoKitties.
And more recently, we just launched NBA Top Shot on top of the new Flow blockchain. So I'm excited to talk about today. And Justin. Hi everyone, My name is Justin AKA 3LAU. Some people say 3LAU, you can say whatever you'd like.
I'm a DJ, musician, and also huge enthusiast of financial technology. Been involved in the distributed ledger tech space for about six years, and very active in the NFT space as of about six months ago. Thank you so much, Justin.
And to round it out, I'll introduce myself. I am co-founder and CEO at Blockparty, which is an NFT platform that looks to bring music, art, and culture collectibles onto the blockchain and in an interoperable way. Something that I was excited to bring Shara and Roham and Justin onto this panel for is, first of all to talk to an audience that is perhaps savvy with technology, familiar with cryptocurrency maybe, but is eager to learn about these non fungible tokens, and these digital assets that are making headlines. Between some of the panelists here, we've really been fortunate enough to be at the forefront of non fungible tokens, and making different headlines every day with some of the value that we've generated for both the music, and the sports and collectibles business in general. So before we go any further, I would love to just get everybody's best two sentence, one on one explanation, definition, of what's NFT? How would you define it? I guess I'll start.
Go ahead. My view of an NFT very simply, for those who are both in the space and outside of the space, it's a digital certificate of authenticity. It's an identifier for a piece of digital content, and that content manifests in a lot of different ways. But that digital identification lives on a blockchain, could be any blockchain. And that's kind of the simplest way that I view an NFT. Awesome Roham.
Shara go ahead. I like to break it down super, super simply, which is, I think of it in my head as a unique item that can be both intangible and tangible, and the tangible is the second part of it, which is when it's exchanged or it's sold or it's traded. And so I like to think about the first part being what an NFT really is, which is the association and the scarce item that can exist in an intangible way and some forms though, obviously we can see it and we can trade it but that represents its digital nature. Yeah, I 100% agree with both of those.
I mean, I think it's anything that's unique and digital, from a digital asset to a bundle of rights, to a promissory notes, to an insurance contract. Is really anything that's unique and digital and tracked on a ledger, on a distributed ledger on a blockchain. So therefore it's transparent and tradable and holds value. That's kind of how I think about NFTs.
And my prediction is 10 years from now, NFTs are just, everything is unique if you think about it in real life other than money and currency. It just happens to be that the first things that made it to the blockchain are money and currency. But once everything else makes it to the blockchain, most things are gonna be represented by, what we call NFTs today. Thank you Roham. I'll run it out from my perspective, and I come from the fine art world. I think about an NFTs, partly as certificates of authenticity like Justin mentioned, but I also think about an NFTs as certificates of title, and the way in which that we can productize digital content, collectable digital content, digital art.
In my opinion has been around for decades. It's been around since digital, it's been difficult until now to monetize that kind of content simply because demonstrating a certificate of ownership, and demonstrating it as a product that one can own, has been challenging and has been flawed. I think all of us here as panelists would agree that, within non fungible tokens and with the blockchain, we found a way that we can hush that ownership data about a digital file, and thus we can treat it with true collector ship, and the other details that Flow downstream so to speak, from that initial point of collectorship are, all things that we can solve for, with technologies that exist that are not necessarily blockchain.
But the blockchain component does help us understand that digital file from a point of view of ownership, just like Shara mentioned. And so thank you. I think it's super important for us to talk about NFTs and sort of approach them from their non blockchain analogs, certificates of authenticity, promissory notes stripped as of title, are all things that people relate to stand.
And that brings us to this point in time, as of the moment that we're recording this panel, just so much has come about and changed in digital collectibles and the space. And I'd love to get the audience up to speed, on just what has been happening over the past year. Some of the work that all of us have done to get the NFT space where it is now, has been, you know, I'm not afraid to say it's been pretty groundbreaking and starting with Roham, what have you been up to at Dapper Labs? And can you tell us a little more about what your team has been doing to create and promote NFTs.
Yeah, sure, happy to. I mean, most recently we launched NBA Top Shot on the new Flow blockchain, which is a blockchain that is designed to let applications scale to the masses. And so let products that are based on NFTs, be able to reach hundreds of millions or billions of people. And so we launched Top Shot in October public beta, it's been going really well, I think we're on track to be the fastest growing marketplace ever, got about $50 million in peer-to-peer sales alone in the last 30 days. And in Top Shot, we don't talk about blockchain or NFT specifically, but every individual digital asset is a non fungible token on the Flow blockchain. Every single user account, is a wallet on the Flow blockchain.
Every single trade is a trade on the full blockchain, all the transaction history from the creation of a a card to when a user buys it off a peer to peer marketplace, is completely transparent on the blockchain. So, we don't say, hey, this is a blockchain app. We say, look how transparent the marketplace is and our users ask, how come this is so transparent? We say, oh, because it's the blockchain.
How come these assets are so valuable? Oh, because they're NFTs. So that's kind of what we've been doing in the space. And if folks haven't tried NBA Top Shot, its nbatopshot.com, go check it out. It's super, super easy to get into. Thanks Roham, can you talk to me about sort of the culture of collector ship that's emerged around Top Shot? Yeah, for sure, I mean, Top Shot's brought a lot of different groups of people together from, you know, gen Z people who are already spending time opening packs, and an NBA 2K or ultimate team or whatnot, but now can do it, and then they can trade the things they get inside the packs, complete collections, get special items that are only available to people that go through the process of completing their sets. And, and then when, if they got something super special, or if they time their trades correctly, if they bet on their rookie that ends up having an amazing season becomes rookie of the year, they can actually either monetize that or sit on the collection that's very valuable, and it would be impossible to attain after the fact.
So, you know, we've seen, for example, the first season that we did, October to December, once it was over and those assets became scarce, and the smart contracts got locked, and nothing else could be created ever again basically, those print runs were over and we threw away the ink kind of thing. Then the price of those assets skyrocketed on the market, And that's really because they are very, very limited edition. And so if you're a fan and you wanna collect a full set from NBA Top Shot today, I think it costs, 50 or $60,000 for just the base set. And individual moments have been going for $100,000 plus, over the last few weeks. Thank you, from what you're seeing so far since that beta in October, are you viewing naturally the early adopter is the crypto savvy user who's familiar with the blockchain, but how much engagement are you seeing from fans that aren't necessarily blockchain savvy or first time blockchain users? Yeah, so vast majority of users are actually credit card only.
And, and what we've seen is, for example in our marketing, if you don't already hold blockchain or crypto, telling you that it's a blockchain or crypto experience is actually kind of scary. And a lot of people I talk to, they say, well, oh, Top Shot looks really cool, I wish I understood crypto. And my answer is, well, you don't need to, you need to understand basketball. In fact, if you had to time basketball you can probably, you know, you can probably make smarter trades than a lot of people who are coming with a lot of cryptocurrency, but not a lot of basketball knowledge. So I think the technology is sort of what's powering it.
And because of the way we built the marketplace, we do follow a fair amount of regulatory compliance. And we do know your customer checks on our customers, and we run a pretty tight ship on the marketplace, and so, we don't have a lot of people that are coming in with millions dollars of crypto, and sort of speculating on things and swinging the market around. It is mostly trading card collectors, people coming from a few faults and a team, or not an Ultimate Team, or NBA 2K or things like that, or daily fantasy players that wanna interact with a more active marketplace. And it's a really interesting mix of people. So in other words, what I'm hearing you say is that, you've got people that are already engaging with sort of digitally native ways to experience their favorite sports, that isn't necessarily, that does take place in a digital way.
And you're giving them another activity, you're giving them another thing to do in the space. Absolutely, it's digital but better. I mean, that's really what blockchain does, is it makes the digital world better because, it lets you own the things you pay for, it lets you give them to someone else if you want to, it prevents anyone from taking it away from you, that sort of thing. If you're a developer, you can build on anything without asking anybody's permission. It's just, it makes the digital world a lot better. Thank you.
Shara, we'll go over to you, you mentioned that you run Raise in Space, and it's exciting to see venture capital evaluating the NFT space. And I'd love to hear from you what Raise in Space, and your individual current involvement looks like, in the NFT space. So interestingly enough, we've been very very deep and interested in the space for for three to five years, which as you all know, was when no one was interested in the space. And when you look at Raise in Space as a whole, our singular LP is ripple. And that was intentional because we wanted to be able to maximize our opportunities and our eye, and our ability to play in the blockchain and crypto space. Now, that doesn't mean that we can play in other worlds, but why I referenced that, is because of our interest in the exploration of it for a long time.
And what we wanted to do was, we wanted to figure how to bring it to the music industry, in a way that that music fans would be able to digest. So for example, we love what NBA Top Shot has done, because I think what you just said regarding it's for basketball fans, is the most critical part of how we need to create an on-ramp, which 3LAU and I've talked about a bunch as well. We need to create an on-ramp for a music fan to not get caught up in the weeds. They have to not think about blockchain and crypto because frankly it doesn't matter.
All they need to be able to think about is that, this is a cool new way to hold an asset, or to trade an asset, or to exchange an asset. or to engage in an area that they love, basketball being in this example, and music being in the example of the space that the rest of us are hyper, hyper focused on. And so from my perspective, my view is how to commercialize it, in a manner that a music fan doesn't think twice it out. And then on the other side of the token, no pun intended or maybe the intended, I'm focused on how to educate the artists, and their management team, and the record labels, on what this allows us to do from a potential revenue opportunity, to overall the creation and expansion of our creative.
So like we mentioned at the beginning of this chat, it can be, an NFT can hold a digital piece of art. It can hold a right of music right, It can hold anything, It can hold a ton of different things. So when you look at music, there's a lot of opportunity. And so what I'm focused on at Raise in Space is, what is the on-ramp? What is the easiest way for the largest number of music fans, to be able to engage with these assets from their favorite artists, and how can I help the artists and their managers lean into this, in however it fits into their pie? Which adds 3LAU knows can be different, if you're in EDM DJ, all the way over to a pop artist, all the way over to hip hop artists, your overall landscape of your brand might look differently, and therefore it might fit in differently, and there might be different opportunities, or there are some of the same, but that's kinda where I sit, is in the middle trying to bring the music industry from the talent perspective in, and also help the companies in the middle that are creating incredible opportunities, be able to speak to the music fan at the same time. I actually love that you could see me nodding along as you're speaking because, it could be a part of something that you just said, it's super important to us. We think about the culture of fans, and the culture of fandoms.
So, in the NBA for example, I mean, I'm a huge fan of Ethan, the culture, and I use that word pretty specifically in that fan category is very different than fans of other franchises. The culture around fandom for 3LAU and his music is quite a bit different than the culture around, other performers we've spoken to in the hip hop, in the heavy metal categories, things that You mean 3LAU is not similar to Cardi B? I mean, I'm waiting for the 3LAU like Cardi B crossover, but I think the way the fans, I think the way that fans experience their favorite artists, might vary from artists to artists, genre to genre, and understanding the culture around that fandom is so important. And then we think about, Roham, you said it yourself, right? Like a blockchain makes digital better. And how can we make that fan culture a little bit better? And thanks for sharing all that with Raise in Space, especially the way you guys look at it across the different, across the different areas of the music business, to drill down more specifically for a musician.
Justin, tell me about the last six months, tell me about your work with NFTs. Tell me how NFTs have impacted your brand as a musician, especially at a time that I think you haven't performed in live, in nearly a year now. Yeah, it's nearly been a year, I think March 11th last year was my last show of 2020. And, you know there have been other artists that have performed, but we've been on the safer side. I think a lot of artists of all genres have preferred to stay on the safer side of of a negative press, and try to not play out too many shows in this kind of awkward environment.
But for us, I kind of started my journey in the collectible space, not necessarily NFT specifically in 2018 when I threw a festival, that was powered by a Stellar Lumens. And that festival in San Francisco had a mobile wallet that we integrated, where fans could earn crypto rewards at the festival. They didn't have to know anything about crypto, It all ran on Stellar, and all they had to know is to scan a QR code to receive free tokens, and to spend them by also scanning another QR codes.
So we also, I'm a very big fan of abstracting the blockchain element for a newcomer, for someone who's onboarding to the space. But in 2018, we did something that was really surprising to me and kind of inspired what we've done recently, where if you found me at the festival, and scanned a QR code on my phone specifically, you got a 3LAU badge ,and we only issued 50 of them. It was actually a fungible Stellar token, it wasn't an NFT at the time, but just the excitement that I saw in fans who were trying to find me at the festival, and I had like two security guards on me, and everyone was trying to scan my phone. This idea of digital scarcity in the form of loyalty, was really exciting to fans. And that was a wake up call for me to say, wow, like digital collectibles are real and it's coming in a really big way.
There's something emotional about owning something digital, that you can't really compare to consuming something digital, right? Owning a song, or feeling like you own a collectible layer of a song, is emotionally impactful compared to just streaming that song. And so I found NFTs, as a unique path to capture all of the value that music creates for people emotionally, that has previously been unable to be captured. And so, in the sense that one stream of a song, is represented by about a third of a cent, the value that's created emotionally for someone's probably a lot more than that. And so I've always kind of experienced and tried to figure out ways to recapture that value for artists, who traditionally don't receive very much money from the streaming side of things. They only really make a majority of their income from live performances at least in 2021, in the past 10 years.
So that's kind of what got me excited about collectibles. And six months ago, we kind of started our journey with Blockparty, issuing some audio visual tokens for the first time with music that was unreleased songs, that you couldn't find anywhere else, songs that you can only hear in the token. And that was enormously successful. And it's just kind of only rocketed from there, You know, every additional sale we've done, has doubled in revenue, and the excitement around both crypto native people and around my fans has been unprecedented. And, I'm just super thankful to have been involved, and glad to have your kind of nudge in the right direction back six months ago, when we started. And in the future, I'm particularly excited about securitizing these tokens, and actually giving fans ownership in the master recording rights of music, where there are real cash flows associated with ownership.
I think that that's gonna be really exciting, and the regulatory environment is becoming a little bit more friendly towards that in the near future. And so, yeah, I'm really excited about giving fans more than just collectibles, but actually giving them ownership in my music. And I think that it aligns incentives in a really interesting way. And I'm super excited to explore it. Thank you for that, and thanks for the shout out.
I mean, that was such a privilege for us to be so early in Blockparty's launch. And to get to work with you as well as Slime Sunday, and something that you and I spoke about, about a year ago, when things were starting to shut down, we were like trying to wrap our minds around, shows being gone for an questionable amount of time, or who knows how long, but I kind of thought about various like lab performance that I've been to, 'cause now over the past couple of years, I've been to quite a few. And I remember thinking there's such an artistic element to what you do. There is such a visual art element to what you do that it would be hard not to call you an artist, and you were like, pump the brakes. Like actually there's a great artist I play here, his name is Slime Sunday, look him up he's got half a million Instagram followers. And so I did that.
I took a look and here you see somebody that is a great artist, and clearly a great artist because he's captivating half a million people on social media to follow and engage with his artwork. But how do you monetize that artwork? And I think that the interesting thing about that was, your your fans end up are becoming sort of art collectors themselves. They listen to your music, they stream your music, but the visual element they experienced, it sort of the first draft that I saw of an SSX 3LAU and NFT, we had been quarantined for four months at that point. And bam, took me right back to the club a year ago of like, here's that visual element? Here's that music element.
And now this is something that can be packaged and owned, and forgive me Roham, but I think I'm sort of like flirting with something that you guys have pointed, which is owning the moment. And the moment is something that happens in the real world, whether you're experiencing something in person, or you're experiencing digitally, that's very real. And to own something that's very real, and to record that ownership is I think where this space does get so exciting. And this is maybe a little bit more of a question for Justin, for Roham because, a specific music brand that is 3LAU, and specifically something that has a history like trading cards for NBA Top Shop, and Shara please feel free to chime in. Can you guys talk a little bit about how you bridge the analog world into the digital world for things that have existed? You know, we talk about collecting the visual element and owning music, like, that's something that people did for decades with vinyls and CDs, to this moment in time with event posters, people have been trading baseball, basketball cards for decades, and now, we're onboarding them to a digital experience.
Can you guys talk about the things that are pretty much, same, same as well as things that you found to be surprising and different. Happy to, I mean, for us it's a little easy actually, because a lot of the analog behaviors are already being, are being digitized. I mean, in fact, a lot of what's fueled the rise of trading cards and secondary sales in terms of sneakers, is digital trading rights, StockX, Go, eBay and also Pack Breaks that are being streamed on Twitch, YouTube, that sort of thing. So, people are tuning into Twitch, watching someone else open up a physical pack, that then that person is mailing them based on what they got inside.
And digital is just so much better, right? You tune into a live stream, the person just sends the stuff to you right afterwards, and you can put it on the marketplace. You can arrange a new collection you can do whatever you want. And in terms of the actual collector side, star stock, all of these, you know, vaults that collectors are actually not, they're not trusting themselves to have these things at home because, what if I put it in the wrong sleeve or, my dog gets it or something, right, or I pour coffee on it.
So people put most of their valuable stuff in vaults. They can buy, sell each other without even taking custody. And it's just a lot easier to do it with purely digital items.
So, for us it was a little bit easy because that the collector behaviors are already moving, we're already moving digitally, and just pure digital objects make that so much better. People are already trying to track, you know, hey, marketplace movements and things like that will boom. Here this is all transparent start to finish.
So that, I guess would be my answer. But the thing I'm really excited about when we're ready to kind of turn on the taps, and also when the world comes back to life is, what if like Pokemon Go, you know, you have to go specific places to get access to specific packs. So if you're in an arena, and you get watching a particular game, well, you have to be in the audience to be able to get access to that special content. So on and so forth, like catch that rare Pokemon.
And then you can see really interesting kind of offline online engagement tactics, because these packs are more, more exciting to people than, than even going to a live game, I think depending on the kind of people. So that would be my answer. Yeah, and if I could respond to that for a sec, before opening up into digital collectibles and music and art and things like that, Blockparty was initially conceived as a ticketing tab on Ethereum. And so in the time that I spent around venues in that time, there was a real, there's a real nervousness around venues, for continuing to attract fans to come in especially with the at home experience getting better all the time. And some something that, an expression we'd hear a lot was, the fluid fan, the fluid fan, the fans nowadays are equally into Steph Curry as they are their hometown team.
And and they're competing with equal fandom, but a much wider interest in watching league pass, for example. So can you talk me through a little bit, how you think through using this natively digital experience like an NFT to actually get the physical realm, to get fans to seats at buildings. Well, to be honest with you, that's not at all part of the plan for this season, or maybe it's sort of second half of next season. I mean, if you think about kind of that crossing the Chasm diagram, we're still barely trying to get over from like the absolute insiders, like the blockchain people that have been diehard about NFTs for the last three years, to the actual early adopters, the tech audience that's watching South by like NFTs is, what are these guys talking about? And by the way, I think a new acronym for NFTs instead of non fungible token should be next next effing thing. Meda Alex tweeted it.
So that's kind of where we're at is just, the people were like, what's the next big thing? Oh, wait, what is $50 million sales? 30 days? And like that's where we're at. I think we're nowhere close to, someone showing up to an arena to be like, oh, it's like the, you know, the Pokemon McDonald's game, like that'll come but it's still maybe your way kind of thing. Maybe more you still got to kind of, I think worked through that early adopter crowd. Yeah Roham I totally agree.
I think that there isn't really a UIUX tool that integrates lives yet. And I do think that we're years away, but just as you said digital is better for a lot of reasons. And for an artist, one of the reasons why I'm such a big fan of NFT technology is, I've actually never had the opportunity to control my own data outside of an email list. So my songs might have billions of streams over different platforms, but I don't know who any of my listeners are.
So NFTs give artists a unique opportunity to actually like know who their fans are for the first time. Where their data isn't being controlled by a platform or by an intermediary. And that's really powerful ended up itself because you can go back to those hardcore loyalists, and continue to monetize over time to those people. Something that, you know, as an artist, like I said the only tool you've had in your toolbox is email, because Facebook and Twitter and Instagram, all throttle back distribution no matter how many followers you have. So having this like list of loyalists and being able to at least identify, even if it's just an Ethereum address or a Flow address, being able to identify who those people are, is so powerful in and of itself.
And, you know, that's just another thing I wanted to add on to what you were saying Roham. Sorry, go ahead. Also on the opportunity here, sort of wearing my music cap but it also speaks to the athletes side of also which I do some work in sports. But if you think about just the art of a single, and 3LAU has done stuff in this space but this is a great example.
If you think of artists and their album art, and their single art, it's so one dimensional, it's the art and you'll see it maybe print it on a sweatshirt and that's what it'll be, or they'll have some brand extension of it in their live performance. But the association of it, to the song is only for really the super, super, super fans. A lot of people often don't connect the two. And one interesting example was the Weekend's super bowl halftime performance. A lot of people were really confused like, oh, this is really dark. Who are these characters? And what are these masks guys? And a lot of people didn't realize that was the visual branding of his entire album.
So he was very, very authentic to everything he was doing, but there were only so many places especially with touring being out of the question throughout the pandemic, for him to introduce and immerse his fans in that overall branding. All he could really do was share a photo here and there, or they could see it on the one dimensional art, but there wasn't a big opportunity for him to immerse them into that branding. And that's why the reaction of the Super Bowl halftime show was for fans who weren't super fan, they were very confused. I think the NFT world offers an incredible opportunity for the creation of creative.
That can be much more elevated. And for example, we go back to the art piece for an artist to be able to offer art as an NFT where when you hold it, you can go into other worlds and other rooms, by way of that original static asset that the rest of the world might see. But the owner of the NFT might be able to live in. That's a tremendous opportunity for the super fan. And the athlete example, and Top Shot is like the best example of the expansion of the worlds.
Because if you think about a sneaker to the athlete, the same way the artists to the musician, the ability for it to unlock tremendous opportunity or utility to follow it is just limitless. And the beauty is for us, at least and Roham I'm sure you would agree, anything that we've issued in the past as an NFT might not have that full functionality of unlocking different privileges today. We can track who all those people are and we can track the secondary sales of those assets. And so in the future when we choose to integrate that utility, it's gonna be incredibly powerful and it may only serve to improve and increase the value of whatever assets we've sold in the past. So I imagine Roham, owning a certain moment might not entitle you to first access at tickets today, but it might in the future, in my case owning an NFT might entitle you access to a meet and greet, or access to music before it comes out.
And then you start to see these secondary markets form around this access, that I think will be so incredibly exciting, because in my case, if you wanna book me to play private party, there's a premium to that. Who's to say that like my biggest NFT holder doesn't deserve a private event if they've spent a certain amount of money on my collectibles, right? And so when we start announcing these features in the future, and Roham I'm sure you guys have a roadmap for this with Top Shot. I imagine it only serves to kind of improve and increase the value of of any of the assets we've issued. And of course it also makes our original collectors, and our first believers super happy. So, yeah, I'm super excited for the utility of all this stuff.
On the thread of utility, just let's follow up on that Justin. When you do get back to performing, when you do get back to a lot of events, what are you, what are you imagining for utility in the live event space? Absolutely so, maybe we'll start with the digital space because I do think it's kind of easier to comprehend how that will work in the short term, and then I can kind of guide it to the live space. So one of the things that we've been working on and it's not out yet, but just having an integrated wallet on my website, where, you know, for any Ethereum token holder, they can just sign my website to get access to exclusive content. That's something that we can do in the short-term, that adds real utility to our assets. And then I think a lot of people will be excited about. In the long-term when it comes to live, there is this question of a simple mobile application that doesn't have too high of a barrier of entry to a fan to download and to use.
There are a couple of companies that I'm really excited about, they're developing this specifically for the music space, YellowHeart is one of them where Josh is the founder of YellowHeart is thinking about tickets as NFTs, and actually building in like content assets to a ticket. And I think that that can be really powerful in the future where, you know, with a Super Bowl ticket for instance, anytime I've left the Super Bowl and I've gone the past three years, I didn't go this year. And there are people outside just waiting to buy the paper ticket that's absolutely useless just for their memorabilia safe. And to see how that translates across the digital assets is so obvious, right. You know, if you have a ticket to a show, that could become an exclusive asset in and of itself, and that may unlock the IP access at a future event, the way to execute that of course is with this kind of mobile application or this hub, that brings all this data together, that's otherwise on chain and decentralized, and brings it to kind of a point of concentration. So I think we still have a little bit of time before we see these applications exist, that can process a lot of this stuff in real time, off-chain right.
But that's where Roham, what excites me about Flow, is you guys think about it from a very scalability oriented perspective, instead of just worrying about decentralization, you think well, if we wanna build these applications in the future, it can't cost a hundred dollars to like swipe a token to get into a VIP area, right. So that's kind of what excites me about Flow and what you guys are building is long-term, I think it's gonna be as simple as just scanning your phone and proving ownership of something, to get access to something at a live event. And, you know, one of the examples that I've given is in my case, I'll be playing EDC Main stage whenever it happens, whether it's this year or next year, I'm not quite sure.
And there are a hundred thousand people at the stage, who are all willing to do whatever you say, whether it's to jump, put your hands up whatever it might be. And I imagine a world where those people can scan a QR code on the screen, and get access to a song that I play in the set before it comes out. And only those people can have access to that media because they were there in that moment. And so NFTs can kind of serve as this proof of memory concept the same way Roham you've thought about moments in sports.
I think the same is true for moments in music and in live performances. And so I'm really excited to see that evolve, but I do think we're maybe a year or two away from that. I'm glad you bring up Flow, something that at Blockparty, not too long after we did our first blood drop.
Something that Blockparty was very proud to do was make an announcement that we're moving on to Flow. As soon as we finished bridging our internal blockchain over to the Ethereum. And that's the process that we've started in earnest. And we've certainly worked hard with some of the finer artists, whose work we expect to sell for the tens of thousands, for a singular thousands. And when you have transactions that are comparatively expensive especially for fine art, you don't think twice about gas fees being a little bit higher on one day, or gas fees being a little bit higher on another day.
Just like when you buy an expensive painting, you don't really think twice that white glove shipping for a painting is very, very different than freight shipping for other objects and concurrently, it's much more expensive. It's just part of the game. And so the ownership and sort of the decentralized nature that, and really where the digital art community has found itself being quite at home with theory it's fine, but this is something we talk about at Blockparty all the time. You know, we're in conversation with music festivals, that once they return are incredibly interested in adding a NFT element to what they do and we talk to them about, well, how do we serve your customers? And more often than not, we talk about collectibles that fans are already collecting.
Fans are already collecting posters, fans are already lining up to collect ephemera from those things. And most of the music festivals that plan on going live with Blockparty once events come back, are thinking about not only access but they're thinking about, well, instead of selling 10 collectibles for $10,000, why can't we sell 10,000 collectibles for $10? At that point, the business model falls apart when we start consider taking into account variable gas fees and transaction speeds. So Blockparty made the decision to move over to a different kind of blockchain, and a blockchain that can support a greater amount of transactions. So this is the part of the conversation where, you know a lot of people be a little bit careful about not getting to blockchain for, you know for a South by Southwest audience, but can you guys talk to me a little bit about, different blockchains, different approaches, different capabilities of general blockchains and how they can serve in a teamwork it's best, maybe starting with you Roham's Flow is well, it's pretty much your thing, isn't it? Yeah I mean, I'll try really hard not to get into the the technical things, but the reality is most blockchains have been built for financial and payments first use cases. They are made for currencies, for trading currencies for building applications, to trade currencies.
And at the very core, everything about what they're structured about, is to do that a similar, I guess, to phones, right? Mobile phones were made to be phones first and foremost, and then people say, well, let's put apps on phones, right. And you had Nokia snake, and then now you have the phones with little screens on them, and then you had phones with the start menu and all of this stuff. And that's kind of the stage that I think we're at with blockchains, where everyone's tried to take the phone, the Bitcoin, right, the payments network, and then smash a computer into it, and say like, oh, you can program this computer build apps. As so all of us developers are sitting there trying to build apps and bringing users onto the apps saying, well, why isn't this working well? Because there there's no, the product platform fit isn't there.
It's hard to build the kinds of products that 3LAU says it's years away, I don't think it's years away, people are doing it on mobile all the time. You just need the right connection between the product layer that the user touches, and the blockchain. And the current blockchains aren't built for that, they're not built to be application networks, or they're not built to be platforms for applications to be built on top of like that, they're built to be payment networks.
And so there're built to have the things like cryptocurrency trading, making more cryptocurrencies, fundraising, all of this stuff. And that's what we built Flow for, it's not, you know, it's not as mature as all these networks, right. It's three months old rather than being sort of six years old or whatever.
So it's a lot of tooling, a lot of bits and pieces that I think people need to build up, but it's kinda like the first iPhone didn't have copy paste. But you could sort of see it was a wait a second, "Like you can sort of look, it's a computer first. It's not the best phone ever yet, right. It's not the best thing for payments, but it is a better computer, and you can build better kinds of applications on top of it.
That's I guess how I think about it, without getting into the technicalities. So yeah, to that point without getting the technicalities, it's gotta work for business, it's gotta work for fans. And so Shara can you talk about, what's gotta work for the music business to get on board. You know, we talked about, you know, Justin and then the shows that, and the way that he thinks about his business, but on a on a 10,000 foot view as an industry, what do you need to see from this technology to be acceptable for the music business? I think it's all of what we discussed so far. I think it's hiding the intricacies that they don't understand. It's knowing your audience, which we've actually talked a lot about in the past.
It's kinda getting out of that really tricky spot of, are you for the crypto enthusiast, or are you for the general music fan? And when you, when you have to sort of leave the crypto enthusiasts behind, not because you just can't focus on them 'cause they already know what you're doing, they know the intricacies, they understand what it is they're seeing when they're seeing underneath the hood, the music fan can't see any of that. And so what Roham gave the best example of, all you need is a credit card. And that's your way in, that's what I'm looking to as the simplest way for a music consumer to just be able to pay with a method that they understand, and not try to make them think about the rest. And then where I spend a lot of my focus, which will be more long term but is critical, is what 3LAU was mentioning, which is the interconnectivity of course of the industry, political challenges, which is where Roham, just mentioned, the blockchain and the overall technical intricacies, and interconnectivity that has to happen, it has to evolve and has to grow, and we have to be able to see the early iterations.
I'm helping the second layer, which is what are the live nations, and AGS, and the concert promoters, and the ticketing companies. How do they all then interconnect? How do they share the data? So that it's all interconnected. What does it mean for us to be able to, or what does it require for us to be able to put the rights to a copyright into an NFT when the rights are not owned by a singular, independent music artists? But when they have nine publishers and nine songwriters around the table, how do we communicate that with all of those parties? So that it's possible, and that we don't have to spend years and years saying, oh, well only the independent artists that controls all their rights can create an NFT. So I think the second layer of the of the education and the communication and the process, is just as important as the technology part. But if they both go at the same speed, we should be able to get somewhere quickly that that creates a world that's much larger than we can all imagine.
Yeah Shara, you mentioned something that's really important, which is allowing not just independent artists to start utilizing the stuff. And of course I am independent and own all of my rights, so it's a little bit easier for me to issue this stuff and not worry about the rights questions. But we do need to kind of create like standardization for these types of assets and what, you know, I imagine in the future when we negotiate artists splits on a song, there will be a separate split for collectibles, between all the people that contribute. And that's not even like, that's a conversation that we're just starting to have for future music. That's not out yet. You know we're going to start including a collectible split on on our side artist agreements legally because we know that we're gonna be issuing these things as tokens in the future.
And we wanna make sure that there's no ambiguity about that down the road when we do something, but you're a hundred percent right, that there's a lot of legal framework that needs to exist in the music business before we start seeing the standardization really take place. And Roham in your case with the NBA I imagine it's a licensing deal. So it's kind of, you know, it's easier. In music there are all these counterparties, from the publishing side of the master rights side that when you start tokenizing, it gets a little bit complicated.
So it'll be interesting to see what standards managers and you know, it's really up to the industry, right? It's up to the industry to decide what the new standards will be. But I do think, Shara it's great to have people like yourself kind of leading that conversation and educating the bigger companies on, you know, what they what they will see in the future. And hopefully it kind of helps speed up the process of getting people to agree to terms , and getting the stuff out there. Shara, both Justin and Roham have sort of shared or hinted at like timeline. What, you know, what years away? Or months away where, you know, where's the state-of-the-art? What's, you know, if you had to put a number on it, where are we? Where is the state of the art in terms of timeline from coming to the mainstream? I think we're in, at the end of 2021 and early 2022, I think we're gonna see really big A list artists, really engage in NFTs and it's all about, which is where I'm spending the majority of my time, working with a handful of them, to really determine a long-term view because they can't be shortsighted with this.
They have to understand just like 3LAU mentioned that, they have to start to rethink about how they do contracts now, for certain assets that are gonna come along. They also have to think about the, and they have to look at technology to understand the long-term secondary market opportunity. So obviously this is states that we all live in, but one of my favorite examples is to talk about the hoodie, the music hoodie, and a merch item is an amazing example So if you're an artist and you sell your merch either on e-comm or at your show, what's stopping all of the fraudulent fake versions of those hoodies being sold outside every arena, nothing.
And therefore the artist is also not participating in any of that, or any of the resale of the original authentic item. So this brings us back to your all of your great examples and utilization of the art authenticity, and the definition of NFT, because that is the true example, if we take something as simple as a music merch item, well, an artist can participate in the resale, because there can be a royalty that they participate in all the way through, no matter how many times that item gets sold, that's a revenue stream of exponential proportion that they haven't even fathom they could take part in. So when they think about that opportunity, you can imagine where the large artists are, when they're thinking about, okay, well, what platform do I align with? What are the terms? Is this set up for me to participate accordingly? Are these assets continue to be resold? And so we're at such an such a beautiful infancy where we're seeing amazing, amazing examples out of Dapper and out of Blockparty, and all everything you guys are doing is incredible for the growth, and is the required foundation to get this stuff out there. But an artist is looking at it saying, well, who is really thinking ahead? And who really has the technical roadmap and infrastructure for me to be able to trust? So that I can sign up and partner with you, and then ultimately continue to build a 5 to 10 year roadmap.
So I'm encouraging them to not think short term, not only think tested out here and there, but find the right partner that can be in the whole growth from the technical side to the creative side with them. In addition to the point we have, I'm lucky to have invested in a company that has a lot of great distributed ledger tech engineers specifically on Ethereum. But I have like a team of eight people working on a lot of these products direct on my website. I imagine, you know, artists need to start thinking about not being too dependent on platforms to start issuing things. And at least being able to control some of the variables themselves, without having that kind of engineering know-how, it's gonna be difficult for artist to integrate, but like you said, I think we both know there are some really big names that are about to kind of enter. And I think it's going to set a really amazing precedent on the music scene.
The whole thing goes spiral. So it's this year for sure, every day it's like something new happens every day. It feels like it's sped up light years, in comparison to where we were last year. So I'm really bullish on 2021 and 2022, being huge years for the birds of the, the NFT is the next whatever thing, the next Not to name any, I don't wanna reveal too much information, but something crazy happened the other day where, where a manager of a very, very well-known hip hop artist hit us up up to do an exclusive remix of a new single, just as an NFT never do exist on Spotify or any platform. And so we're starting to see like really big artists who get excited about this stuff getting involved. And I think that that will only help fan onboarding, like with every trend that we've ever seen, content proceeds integration and proceeds mainstream onboarding.
The consumers follow the creators, and the consumers follow where the best creations live and exist. And so I think that as more creators integrate in this ecosystem, the fans will just have to follow , because they'll wanna participate. And I agree, I think it's about, think within the next 12 months we're gonna see some crazy stuff happen.
I think of something that you said Shara, that stuck out to me, 'cause I always look for analogs and precedent. So much of what we're doing in a tease is so unprecedented. But is it right? Like where have we looked at history to see what works, the idea of artists sharing in resale and royalties, is one of the things that think is the most attractive to the entertainment space, whether it be sports or music, that's something that artists and athletes just have not had access to, and suddenly you have it, but actually this hasn't existed in the past, right? So the EU has been proactive about getting artists paid long after their works at secondary.
It's called an artist resale right? The problem with the artist resale right is that you kinda have to trust that the auction house is gonna do it. And you brought up the word trust, in what you were saying, and that's what a word that is, and how much weight it caries in the blockchain space. As we try to transition to a trustless system of sharing resale rights.
So getting off platform, you know, as somebody that's a VC in this space, how do you view this problem, where on one hand platforms need to acquire content, need to grow, need to grow as businesses, and yet trying to foster a trustless ecosystem of resell and resell rights. I think you guys brought up really valid points to that larger question, which is I think it's going to require the ability, and the open-mindedness of the artist's side, and the management side, and just the music side, to be involved in a lot of different things, and to encourage the interconnectivity and the interoperability of all of varying tech, and companies at different intersections of where we are, because this isn't going to happen, if we all don't find a way to connect. We'll have silos all over again, which we know is what we're trying to avoid. So we need to be able to just continue from my view, I'm looking at it as I'm not, like trying to place a bet here and there on one, I'm trying to figure out how can I blend everyone together? How can I be a part of a lot of different things, whether I invest? Or whether just I invest my time and my energy to conversations like this, or to continue to work with all of you with just the general sort of ethos and mindset that if we all push the boulder up the hill, it will work together. So from a venture standpoint, it's interesting because, I don't want to get stuck into just one, because I know that the interconnectivity of a lot of amazing ideas, is going to just foster the beginning of the future of what this is. So that's my personal predicament, is that I wanna be able to work with everyone and figuring out how to do that, is actually just a new way to look at it at investing in opportunity, 'cause there are so many amazing things that people are working on, and it's all gonna be interconnected at some point.
Thank you for all of that. That's and thank you for articulating it that way, because I think that kind of encapsulates where we're at the precipice of this huge opportunity. I can tell you guys, like off the bat, from like our seat at Blockparty, and at the time that we air this, we will have released NFTs featuring the original content from the Atari games, including educational content from the creator of the games, and original cabinet digital artwork that comes along with it. And just to pull together the various, all the various parties at play that touch, and the rights that go with it. It's a hard slag, but we're getting, but it's getting standardized, it's getting figured out. And it's really exciting to see brands start to like, as you guys said, think ahead of how this plays out.
Not as like a drop, which by itself is a singular revenue generating event, but it's something that continues to get ingrained to fan culture over the course of time, it gets shared around fans and I think that from all four of our perspectives, we're kind of sharing this excitement, this like quiet excitement of like, oh my gosh, like the next 12 months, like you guys are like, this is getting crazy. So the four of us, I mean, we know the NFTs are here to stay. We live, you know, eat, sleep, drink it. Starting with you Roham, Just, you know, let our audience know, to close it out. Why are NFTs here to stay? I think they're here to say because they're better for all sides of the table. I mean, you've heard a lot about why they're better for creators and brands and even from independent creators who wanna you know, have their own direct channel to their fans, to big brands like the NBA.
Who also want to have a direct channel to their fans, that doesn't involve digital assets that, you know live on Facebook, Twitter, et cetera. So it's better for the brands and the creators. They're gonna create lots of good stuff. It's better for the fans because they're getting for the first time, they're paying for digital assets that they can actually sell. They're getting stuff that don't go away when the product manager deprecates the feature, or when when the new version of the game is released or whatnot.
And it's better for developers, they can build new tools services, marketplaces, fractionalization, you know, loaning tools like all of these games, et cetera, all of these things that, for example, rally exists and fractionalized as cards, but that process takes so long. you can imagine just entire ecosystems emerging on these sorts of digital assets. So that's why I think it's inevitable, it just kind of needed a lightning in a bottle moment, which the rise of digital art combined with kind of the traction we're seeing with NBA Top Shot.
And you know, when you have the marketplace is getting close to a billion dollars in annual GMV, no brand could ignore that. It's big enough that sort of gravity will pull up all the creators to this new medium. And I think for consumers, it's just so much so different, so much fun when you can you pay for stuff you really own it, you work peer to peer with other other fans and it just, it becomes like a currency of fandom. You sort of choose to own stuff that represent the things you're passionate about, and that's just super cool. And it's a very native natural human behavior rather than, you know, putting all your money into US dollars or things that maybe you don't have an emotional connection to.
So that's kind of what, why I think they're here to stay is just a better for everybody. And the genie's out of the bottle. Yeah I guess in my mind, NFTs are the Uber to transportation, the Airbnb to lodging, NFTs are that for content where you don't need an intermediary, and you can directly interact with people who collect content, and who engage with content. And that end of itself is just so powerful because there hasn't really been a way to do that in the past.
Content is just so easily replicated and there's no way to show provenance. There's no way to access data as an artist, and like you mentioned Roham, brands going direct to fan, this whole concept of going direct to consumer has been pervading all other industries, but it hasn't really pervaded the world of content. And so when you think about how big the world of content is, it's pretty unbelievable. The potential that we'll see this, how this technology will disrupt all brand artists fan engagement. And so, yeah, I think this is the text that will enable this process of change, and this inter mediating in the entire content world where we don't have dependencies on platforms, And that's just really exciting to me. I'll add the philosophical view, which is I think that we're at a global place, where we have so much distrust in authority, and in information and just overall transparency.
And we're at a place as a humanity where we're starting to question almost everything. If not hopefully we continue to do so more and more and more. And I think as a result of that notion and that emotional feeling, that there's something being hidden from us, the next phase is going to be out of transparency and visibility into how everything moves around us.
And I think that people want to take authority back into their own control, so they're their own authority and nobody else is. And I think nothing speaks to that more in a tangible manner than the world of NFTs. And so I think we're at a place where there's no turning back from that, and we can see it in sort of the unrest as a whole globally, as it relates to everything I just mentioned, and I think that that means that this is not just a trend, this is absolutely undeniably the future.
Thank you to close out, I mean, everything, all three of you said about why entities are here to stay, It's inspiring. It's inspiring because so much blood, sweat and tears have gone into the last few years, of being passionate about a token standard has turned into a culture of its own. And I think that to me is why we're here to stay.
Because there's now people, there's huge amounts of people that are now here about this culture. I talked to artists every day, use a graphic, I've talked to many athletes and the excitement to sort of bypass the traditional path, to get out to the consumer is palpable. And it just happens again and again and again, including talking to a musician on this panel, it's it starts with NFT is like what's that, or like entities like CryptoKitties, right? And then I'm taking that into a whole different place, which is productizing creative content, and making sure that it gets to the fan not only as something that you sell, but you're not, but Justin brought it up. And this is, again, this is something we think about all the time at Blockparty and why it's here to stay. You're no longer just selling content to fans, but you're linked to fans via blockchain. And you're tracking the content.
You're tracking the tokenized content. You're not even tracking the purchaser. You're you're you track this content through the various people that own it. You know, we in the ticketing world we know that, you know, oftentimes at a popular event, there are two or three buyers behind the ticket. And this could be true of content as well.
There can be two or three owners behind a piece of music or a piece of art. And the connection between fan and creator allows for interchange of value, and to take place and real engagement. And the passion is among everybody working here is I think why we're here to stay.
So Shara, Roham and Justin, I wanna thank you guys on behalf of myself, on behalf of Blockparty, on behalf of South by Southwest, everyone thank you for joining me. Thank you for talking in NFTs. I can tell you off the bat, the conviction behind what we're all doing even through Zoom, it just shines through. So truly thank you, and it's been an honor.
Thank you guys. Thanks, great to meet you guys.
2021-05-08 12:50
