Decentralizing the Future of Music Licensing

And I start seeing in the news, PayPal is going to transact Bitcoin and Morgan Stanley is going to start looking at Bitcoin as maybe investment grade for its customers. I'm like, oh, that's really interesting. I just hadn't seen Bitcoin coming out in mainstream news for some time. And I was thinking it's going to zero, so you're not going to see it. But now if these big guys are supporting it, well, now it's not going to zero.

Keithly Haldeman from Dequancy have done something that a lot of people are tiny bit scared of. It's blockchain. Is it crypto? Isn't it crypto? Well, Keithly is working with improving the way you license music over Web3. And it's quite cool. Hey guys, and welcome back to another episode of Sound Conditions Podcast. Today I have Keithly Haldeman in the studio. Welcome Keithly. Thanks for having me. Happy to be here. Yeah, it's kind of...

It's kinda a studio, right? We're quite far away, nine hours difference, but uh, looks nice where you are. Where are you? We're in the New World. I'm in LA. Thank you, Keekly, for being on. We got to talk about some interesting stuff today. We actually made briefly over the vehicle talking about blockchain. You are a, what do you call it, professional music blockchain nerd. And I like to know about it as well. So we had a really good conversation and I wanted to take it to the podcast because you do some really interesting stuff. Thank you. Keekly, very briefly, could you tell us who you are and what you do? Sure. Who I am. Well, I'm...

founder and CEO of DequinSeat, which is the first Web3 sync licensing marketplace. What else do you want to know? How far back do you want to That was super precise. So, what? You know, I got the five second and I have the hour long who am I, you know, anything in between. We'll build towards the hour throughout this episode. That's great. And how did you get into the music industry? There we go. Now I can go way back. So I've been playing music since I was five.

years old, in bands since I was 11, always in some band or another from 11 years old until late 20s. And then, you know, even now I jam with a couple of guys every now and then. So music was always my thing. Love music. My buddies were always in my band, but I never thought that music was a career. I love my parents. They're incredible people. Very supportive.

And they said, son, you can do anything in this world that you want, anything at all, as long as you're a doctor, a businessman, a lawyer, or an engineer. Sure. So I'm like, okay, great. Thanks guys. You know, but music didn't fit in that at all. So, uh, it just, it was always just a hobby for me. Uh, so I went to school for electrical engineering, originally robotics. I thought battle bots were cool. I wanted to build robots that like, you know, beat each other up. Um, found pretty quickly that wasn't the thing for me.

Got into a couple of bands in college. And then I found signal processing, which is the engineering of music and audio and everything related to audio signals. So for me, I was like, great, now I can marry my love of music with a real job. And that's what I'm going to do. So, you know, I was determined, got myself into a band, applied to grad school in between undergrad and grad, moved into a house with my band to go try to make it.

You know, live the dream as a 22 year old guy. That was incredible. We didn't quite make it. So I was giving up music forever. That's it. Made the switch, tried it. And I went to go be an engineer at grad school. I decided though, you know, as a hobby, I still wanted to make music. I was getting into electronic music. This was the late nineties. And so I bought a rig and a DAW and you know, just for fun was making electronic music. Couple of weeks into grad school, I completely panicked because...

You know, I looked all around and everyone's a total nerd, which I say with great respect, but you know, I just wasn't living that world. When I was getting together with my friends, I'm talking about making music, playing music, everything related to music. And everyone around me, when they get together with their friends, they are talking about science and math and engineering and coding and other things. And I realized I'm not going to be competitive with anyone.

of my peers here after I get through this grad school program, which I could have figured out how to get through, would have been painful, but then on the other end of that, now what am I going to do? You know, I just don't have the same passion for this that they did. Fortunately, there was a program called Music Science and Technology that I was able to transfer into, which was amazing. And this was, you know, as it sounds, a mix between music and tech. And it was a feeder for...

people creating DAWs and hardware and other electronic instruments and software, a pretty amazing program. There was an elective I was able to take. There was a 3D animation program on campus, and they needed someone to do all of the music composition and there was no dialogue really, but sound effects and that kind of a thing. So I did that as one of my electives, loved it. That was really my first music to picture.

experience. Then I wanted to do more. So I answered a few ads on Craigslist to do a couple more, just again, 3D animated shorts. I was like, how can I do more of this? And it was just very fortunate at the end of my schooling, my cousin was producing her first film. She's gone on now to produce dozens of films. And she said, look, I need someone to do all the music and the dialogue and the sound effects and all. Can you do it? I'm like, yes, I just did this three minute short. You know, how hard could a feature length?

and like film be. So I signed up for that, moved in Venice Beach into her house and just hacked my way through it and just kind of like rolled out of bed in the morning. I had all my equipment in my room, you know, did what I needed to do during the day and then go back to sleep at night. Great learning experience. The thing, I think the biggest part of that experience for me was who I met in LA at the time. I grew up in Orange County, which is near LA, but it is not LA. It's a very...

culturally different than LA. So, at least, you know, when I was growing up and all my friends, we very rarely went to LA. And now that I was there, this was early 2000s, we'd go out and everyone I met was somehow related to the film industry. And for me, it was a lot of the music to film industry. So I met someone who started a record label. I met a composer, I met an artist who was writing music for TV and film. I met a sound effects library.

owner, I met a production music library owner, I met a music supervisor, I met a music publisher. So it's like, there are all of these different job functions and different kinds of companies and very entrepreneurial, lots of people who just work for themselves. And it was all business, music business, and specifically sync. It was all related to sync really. And so this was it. I discovered it. This is real. This is business, right? I can do music and business and actually have a real job. So I was very inspired. I moved back in with my parents.

to start a company composing and producing music for TV film, advertising, video games. And then now that I'd moved back home, all my friends were there, all the guys that I played music with, and I showed them all this music that I was making when I was in grad school. And they'd say, ah, this is great, you know, hook up a mic, and you know, one guy would sing, and one guy would play guitar. Next thing you know, we had five or six songs, and we were like, oh, this is pretty good, you know, should we do this? So for that next four years, Half my world was trying to build up this custom composition company. Half my world was trying to make it with the band. I had a friend who was music supervising a film, SirFilm, and he put one of our songs in the film and we made a little bit of money. I was like,

oh cool, like we can make money there, interesting. So, you know, I think I met somebody else, a friend of a friend who was a music supervisor, pitched my band. So it was early 2000s, you could still call a music supervisor randomly. and say, hey, we can check out my band. They listened to it and said, this is really cool. What I really need right now is hip hop. Do you have that? So I call up the hip hop group that we played with and then call up somebody else. Hey, this is awesome. But what I really need right now is heavy metal. Do you have heavy metal? And I realized, okay, I can get these opportunities.

It's actually pretty easy to do that. I just need more music. And I realized very early on that the chances that they need my music is zero, basically, because it's needle in a haystack. The chances that they need some music is a hundred percent because they are working music supervisors and they are always in search for something. So I just needed to build up a catalog of the kind of music that is generally needed that could be licensed fairly easily. And then I can make some money that way. So, so that's why I started doing, I started gathering, you know, more and more music around. I had a friend who was working for a production music library and they were starting to do indie artist deals and

And so it was a 50 -50 non -exclusive retitle deal. If people remember those kinds of deals, I think they still exist. And I didn't know how to read a contract, so I scratched out their name and I put my name at the top and I just started giving that to bands and say, let me pitch your stuff. It's non -exclusive, you know, it's no harm, no foul. And that worked for a little while. And then I partnered up with a guy that I had done some production work with. He started a small publishing company in the UK called Pig Factory.

had built up a really cool roster of songs writers with hit, some of these writers had hit songs with Madonna and Backstreet Boys and Celine Dion and that whole early 2000s pop music period. And so this was great for me and I wanted to pitch that music. Cause now, you know, my pitch was I check out all my cool indie artists to I've got music with the songwriters of Madonna and Britney Spears and blah, blah. So now all of a sudden I could be taken more seriously. I ended up.

merging my business in with that business. We raised a little bit of money in 2006, built that up. We ended up merging that business with Riptide Music Group in 2014, raised some money in 2017. And that's when I met my co -founder for Dequency.

And I remember this is the height of that last wave of blockchain was 2017. And it was around 2015, 2016 or so was kind of like the real early music blockchain conversations. When Ethereum first came out, this was now a smart contract blockchain. And so now people started thinking about, okay, what could you do in the music industry? And the issues that people were being talked about at that time are the same issues that are talked about today because it's a huge issue in the music industry. You have all of this bad data.

for example, is one issue. There's no centralized source of information. And now that you have that poor data source, it's very hard to pay people for the different royalties that are generated from streaming, from TV film, from everything else that's out there. And so how can you take out these middlemen sources? How can you pay artists and writers direct from the source?

Blockchain is an amazing way to do that. Crypto is an amazing way to do that. And so you have this early wave, this first wave of music blockchain companies. And my co -founder was early in that space. And so he came as an advisor when we raised money. He said, all right, he's all excited. He said, we have a catalog now. We have to create a sync licensing project on the blockchain. And I remember just looking at him going, I don't know what you're talking about.

Why would we do that? What is the value of that? I don't get it. I wasn't involved in the space. I just really don't understand. And I said, we just raised money to build a music company. That's what we have to do. So I kind of just, you know, shove that aside, but you know, but it always stuck with me. I don't get it. Anyway, I dabbled. I lost a bunch of money in crypto was not good. And then, you know, everything goes down and I'm thinking, ah, this is going to zero. This is all, you know, nonsense. I just was not.

educated. Then, you know, so we're building up Riptide, things are going well, COVID happens. And now all of a sudden, I have all this time on my hands. I just like everyone else in the world, you know, not traveling into an office, I'm not going to meetings. What am I going to do with all this time? And I start seeing in the news, PayPal is going to transact Bitcoin and Morgan Stanley is, you know, going to start looking at Bitcoin as maybe investment grade for its customers, like, oh, that's really interesting. Like, I just hadn't seen Bitcoin coming out, you know, in mainstream news for some time. And I was thinking it's going to zero, so you're not gonna see it. But now if these big guys are supporting it, well, now it's

not going to zero. I better start learning about it. I don't wanna miss out, you know, this next wave, that's bad. And so I started researching it. And then the more I researched, the more I was excited to learn more. And I got to this point of like, well, I don't wanna just know. you know, how to make money from this. I want to know why is there any value here? Like, why is anyone deciding to invest in this? It can't just be all pure speculation. It can't be all everyone's just gambling. There has to be some truth and reality to, you know, the concepts and the technology here. So I started going down coin market cap, which is, you know, the main place where you can view crypto token prices. And I started going at number one, then number two, then number three, and just really researching it and

starting to look at white papers and starting to just, you know, dive in and the more I learned, the more I knew I didn't know it and I was just fascinated. So I was spending two, three, four hours a day reading books, watching podcasts, watching videos, the whole thing, talking to people. I was that annoying guy that was like, hey, have you heard about crypto? You know, which was, you know, I look back at it. I kind of rolled my eyes at myself then, but I just was enthusiastic. It was, it was an exciting time. Yeah. And, you know, I still kind of wasn't getting it. I wasn't getting it. And then I, and then I heard a podcast with Vitalik Buterin, founder of Ethereum, speaking to Tim Ferriss and Naval Ravikant. This is the most shared podcast episode that I've ever shared with people because this was the moment they say in the crypto world,

what was your red pill moment? What was that moment where you just got it and there's no going back and now life will never be the same because you understand it on a whole other level. And this was it for me. And what did it was Vitalik was talking about, you know, this through line of all the different industries that are going to be disrupted by blockchain and how it is. And that through line was peer to peer transactions. So being able to actually transact with someone directly without a middleman, so taking out the middleman and decentralized applications that allow you to create this application, put it up into cloud servers.

effectively and then kind of walk away and, you know, doesn't need to be controlled and owned by centralized company as a centralized source. And if you do that effectively, and if the, you know, the utopian vision is achieved and that's a big asterisk for, you know, the reality and the ability for this to work. Then you can replicate all of these different software platforms that exist today and make them better with a much lower transaction fee because the overhead to run these applications is just so, so much lower than what it takes to run a current software company today. And so, you know, I heard that,

it's like, oh my God, that's sync licensing, that's online sync licensing. Cause if you look at any of the online sync licensing platforms that exist, they all operate pretty much the same way. There's a centralized middleman in between the music rights owner. and the end user, the licensee. And that centralized company takes a very hefty fee, often 50%, sometimes even more. They don't allow any control for the music rights owners. So any artists, labels, publishers, they don't have say on what the fees, the licensing fees are.

Many times they don't have approval rights over how their music can be used. They almost certainly don't have the right to use their own documents, their own contracts, licenses. And because of that, none of the major players will use any of these online licensing platforms because they just have to have more control over that. Their contracts with their artists and writers oftentimes require consents for the writers and artists before they can do that. They need to be able to use their own licenses, contract forms, high 50%, even 30 %...

service fees on that, it's just way too much, they just won't go for it. So because of that, the only music that's available for people to license online is indie music, production music, royalty free music, now AI music. And that means that when somebody who's creating content wants to use a specific song, they most often can't. And it's because the whole system is broken. I mean, it comes back to this data issue. You wanna...

license this Justin Bieber song. All right. How? Who do you even contact? Right? So you have to know that you go to ASCAP or BMI and look up who the writers are, look up who the publishers are. You hope it's complete. You hope it's accurate. You hope there's contact information for who to contact. Who's the label? You know, for Justin Bieber, it's easy for a smaller artist. It may be very difficult to figure out who the label is.

And then now once you figure it out, who is the person you contact? How do you contact them the right way? You have to license from all the different rights owners. You have to parallel negotiate the deal because everyone's gonna want most favored nations on it. It's just this nightmare situation. So then you have to hire a third party clearance company or a third party music supervisor, which is fine if you have the budget to do that. And if you just look at the growth in sync licensing, where it's coming from.

The top, top most expensive licenses, like the big ad campaigns and the big films and the big TV shows, yeah, that's growing a bit, but that's not where the volume in the growth is. The volume in the growth is happening at this smaller scale. And if you just think about everyone that has an iPhone, everyone that has an iPhone is a content creator, a content producer. And if your only goal is to put it on TikTok or Instagram, and you not monetize it and not have a sponsored account. Okay, you can go through the deals that they have, although TikTok, you can't use Universal Music at this moment, which is interesting, right? That's all part of this. And so if you wanna use that,

you have to negotiate a deal on the side. Actually, that probably can't even get done right now. But regardless, on YouTube, for example, the usage rights are very narrow. You can't... put up any sponsored post or any advertising post. And if you want to monetize it, if you're a professional creator, you can't do that unless you have a license outside of the platform. And that's just one thing about all the student films and the film festivals and podcasts and audio books and just, once you start thinking about that, you realize there is so much production that's happening that is continuing to happen.

And if somebody wants to use that song, because it speaks to them, it's meaningful to them, it's how they're going to be able to achieve their artistic creative vision, how are they going to do that? And, you know, so that was what we were trying to solve. And what we thought was if we can get the music online, that's the first step, right? Is just make it so that you can actually, you know, get a quote for it and then...

complete the licensing transaction to do it. And we thought Web3 Blockchain was the way to do it. Interesting. That's sequence. That is that was a longer one than the first five seconds. I told you, look, we can go deep too. You might have to edit that one. We'll see. No, we don't need to edit that. Well, I think that's super, super important to understand sort of what you're doing now. Well, so just explain to me and for everyone out there. So when you say the best way to do that was using blockchain, what specifically do you mean?

Right, so what we thought, you know, things have definitely evolved over time, but what we originally thought was if we can create a decentralized protocol that is not owned by a centralized company, and that protocol is what allows for direct peer -to -peer licensing transaction to happen between the music rights owner and the end user, and then if we can have...

Network effect, if we can get everyone to buy into this protocol, all of the rights owners, the labels and publishers, now you have network effect where somebody who wants to come license a song can just seek that clearance from one source and then it gets served out to all of the different licensors, then that solves at least the initial problem of removing the friction of how to license.

Doesn't mean that still that license can be obtained, doesn't mean that you can afford it. You know, those are all things. It's not a price conversation because we were going to allow the labels to set their own price in each case. It was purely just how do you streamline the process of actually doing the license? Yeah.

So is it the underlying technology that uses blockchain and sort of the sync licensing I used in any ordinary case? Like if you were to be the creator on YouTube, you can use this technology to license? So the idea is that we were going to create this protocol that was out there where it literally was just an interface that would allow a music rights owner to upload their own music, set their own fees, upload their own terms, and then any...

User who is interested in licensing it can browse through all the music that's available and seek a quote or in some cases, usually indie artists it would be, there might be like a buy it now button where for certain types of uses, there isn't this need for seeking a quote and waiting for a response. You can just do it immediately.

And then at least the first version of it was all using crypto. And the interesting... thing about crypto is you receive that money directly. You know, it doesn't go through a bank and then you have to wait for it and pull it out or any of that. That's also, you know, that was the earliest form of taking out the middleman and peer to peer transactions. You know, that was the whole thesis behind Bitcoin and then any of the different cryptos do the same thing. Now, what we learned was outside of people who are enthusiastic about crypto and blockchain, most people don't want to deal with crypto. So we enabled credit card processing to allow for that. And you know,

There's a whole host of other things that we learned along the way, but yeah. Before we dive too deep into the company, I do want to understand the transition between Riptide and what you're doing now. Can you just talk about, you know, you were skeptic when you heard it first and now you started doing, reading all the white papers, becoming really curious. What was the spark that transition from Riptide into what you do now? Yeah. I mean, the, so it was very interesting when the idea came around for Dequanzee before we had that name even. It was purely just from an enthusiastic.

Place of, I'm excited about this technology. I think it's really interesting. There's a whole culture around it. There's a whole philosophy around it as well. That's really interesting. And it was just kind of a side project. Like, hey, this is cool. Let's write a white paper. Let's see what this looks like. And then, you know, we were talking with Algorand. Algorand is one of the layer one blockchains out there and they were excited about what we're doing. And then, we found a path to get a grant. It's like, oh, that's cool. We can raise some money for it. But the whole time this was happening, I never thought I was going to leave Riptide.

That wasn't what I was trying to do. I was running Riptide. This was just a side thing. And I also felt along the way, because we got introduced to VCs and Borderless Capital, who was very big in the Algorand ecosystem, is who led our round. When... you know, as we were having those conversations with them, I thought, oh, great, let's raise some money so that we can hire a CEO and an executive team. And I'll just, you know, stay on, on the board and be an advisor because what business do I have running a crypto blockchain company? I'm a music guy. Um, and then when we got the, uh, offer from borderless, they said, you know, it's contingent on, you know, one of you guys coming over and

Stopping everything else you're doing and coming in and running this with blinders on. You know, my co -founder was like, I don't want to do that. And I was like, cool, I'll do that. That sounds amazing. You know, let's, let's do this. And so it was, you know, it was, it was, it was an interesting transition. Like I wasn't looking to lead Riptide and I love Riptide. That's great. Yeah.

I need to understand something. So there's been two mergers as a part of your journey. And as far as I understand it, it's, you know, I had two similar companies that sort of joined forces and brought the catalogs together. How did you end up becoming the CEO of Riptide? Was this a conversation of you emerging things together and you're the one who should lead the ship or what happened? Yeah, that's a good question. So Rich Goldman, who's the president of Riptide.

And he's the founder of Riptide originally. He and I, we actually started a production music library called Pacifica in 2008 now, which is crazy to think that far back. And there was a joint venture between my company Pig Factory and Riptide. And it was a 50 -50 partnership. We both had kind of bits and pieces of music around. We're like, well, let's organize this into a production music library and really try to push that.

We'll combine resources. We'll do it. And as part of that, I worked out of the Riptide office one day a week, and that was my Pacifica day. And I got to know Rich, I got to know the Riptide team. We had very similar philosophy, similar concepts around sync and Pig Factory had built up an international publishing administration infrastructure. And Riptide had, you know, this amazing trailer music division and just this, had some real success on the sync side. And.

You know, like I said, we just liked each other. I mean, that was a big part of it. We enjoyed each other. And so then I don't actually remember who suggested it, but one of us was like, well, what if we join forces? Like, what would that look like? You know, do you want to have that conversation? And so we just started dreaming a little bit, seeing what that would look like. And then we put the numbers together, put it together and it was attractive. The, you know, who's going to be CEO or not? Honestly, I think it was kind of.

Easy for us because Rich's title was president. I mean, he was effectively CEO of Riptide, but he had always used the title president. I had always used the title CEO. So I was like, well, great. You stay president. I'll be CEO. I mean, I think, I think what, what we always really got along very well. I can think of very few conflicts that we had. I feel very blessed.

Um, for that, like we had an amazing working relationship, uh, no egos, either of us. So it wasn't this like battle of wills. Um, there was sort of a natural, uh, um, splitting up of duties. Um, we, we both always, we both always just took the attitude of like stepping, I will step up and do it.

And he would step up and do it. And so there was never this shying away from work. It was like, give me more. Like I just, let's do it, give me more. There were things I was naturally better at, and she was naturally better at, or naturally enjoyed doing more. Like I still continue to run the publishing and publishing administration side of things. I think I just sort of got that more. He ended up running the creative side. You know, not that I, you know, wasn't interested in that, but it was like, well, I can't do it all. You can't do it all. So cool. Why don't you go handle that? I'll go handle this.

Um, and then just most bigger decisions, we just jointly made those big decisions. So yeah, it was, uh, it was, he handled the sales side of things. I handled the administration publishing side of things. Yeah. I don't know. It was, it was easy, which is nice. It's a, I think it's not always that way. Um, so I like that. So now with Dequan C you, as far as I can read, you don't have a co -founder.

Per se. Of course, it's initial days, but when you actually launched with VCMoney and stuff, did you do it alone as a founder? Basically, yeah. I had a co -founder who absolutely we couldn't have gotten it off the ground without him. I credit him with the idea and early relationships with Al Grand and even with Borderless Capital. I think it was a almost half and half that we both raised the money for the business. When we co -authored the white paper and a lot of that. Once it came time to run the business,

He stayed on effectively as an advisor. So yeah, I was day to day on the ground basically with me, although Margaret Link, who's a... RVP of operations and marketing. She was kind of like a co -founder with me because she dove in early before we had even raised money. So she's good friends with my fiance. And I overheard them talking before Dequancy was even funded and they were talking about crypto. And so I just jumped in. I was like, oh, you're into crypto? I told you I was that annoying guy that just wanted to talk about crypto. I like, oh, I love crypto too.

Um, yeah. And so, and so I told her what, what I was doing. I was like, yeah, this is kind of getting off the ground. It's pretty exciting. And, and so she was asking me these questions. I was like, oh, you get it. And then she kept going layer deeper, deeper. I'm like, oh, you really get it. This is cool. You know? And then I don't know, a little bit after that, a few weeks after that, she quit her job. She just decided she didn't want to do her job anymore. And I think we had either just gotten the offer from the VC or it seemed like it was coming and I was going to need to build a team.

And I called her out and I'm like, Hey, what do you think? Do you want to, I'm going to need some help with marketing and just some general help. And this is what you do. She's like, I don't know anything about crypto marketing. I'm like, that's okay. No one knows anything in the crypto world. Like that was my biggest eye opener. Cause I came into it. I was like, I don't know anything about crypto. I'm not qualified to do this. And then I ended up talking with some people.

I talked with the founder of, you one of the most successful blockchains. And I remember he was. asking me questions and I was telling him some things and I was educating him. I'm like, oh, this is amazing. If I can educate that guy and he doesn't know everything, wow, great. We're all just figuring this out as we go along. Like no one knows anything. So then she was like, well, I don't know. I'll just, maybe like one day a week, I'll kind of dip my toe in the water. I'm like, okay, great. And then that just became two days and three days. And then I got invited to this Algorand community conference.

Before I we hadn't even been funded yet and she just bought a ticket and came out I was like, okay, that's cool and then at the conference like I was the keynote in all this thing and like they were really You know very welcoming to us and by the end of that she was like, I'm man. This is awesome. Let's go Wow. Yeah, so it's cool There's probably some listeners out there who doesn't know a lot about blockchain and you know more than everyone here well, not everyone here, but like more than most that sort of it's gotten a bad reputation in association with crypto. But for the listeners who might know what blockchain is and might have like the basic understanding, can you explain to me the potential of that technology in the music

Industry? What is it about the potential of blockchain? And you can go a bit deep. You can dive a bit deep. What is it that people don't understand yet? So there are a few things. And I think this is why music really gravitates to the blockchain space, because there are a handful of different problems that blockchain could solve if the industry decides to adopt it. That's a, that's a big if, right? So I will, I will explain all the possibilities, but really it only works if everyone wants to adopt it. And so here's the deal. If you think of streaming, for example, What is the money that's made on streaming? You've got a recording, it's making streaming royalties.

You've got composition publishing that's making mechanical royalties and public performance royalties in certain cases. On YouTube, you have content ID and you've got neighboring rights on satellite digital streaming here. And you have analog royalties from TV and film and all this. So there's all of these royalties that are generated from this collective source.

And then they have to be distributed to all of these different participants. And you got a data issue as a first problem. So the data that Spotify has is different than the data that SoundCloud has and everyone's got different data. So step one, blockchain, with blockchain, you could have a singular centralized database of music rights that everyone around the world agrees to maintain and that is the single source of truth. Now, if that's the case, you also have a money distribution challenge. So there's something known as the black box in the music world. That

Black box is just this pot of money that has been generated and is sitting in the royalty societies around the world, but can't be claimed by the rightful owners, by the writers and... and the artists and the publishers and labels because they don't know about it, because the data isn't good. You know, there's all these reasons and there's various estimates of how much that could be. I've seen half a billion. I've seen a billion. I've seen some people talk about over a billion. Um, but the point is what happens is, you know, Spotify pays a lump sum to the MLC, which is the, uh, mechanical licensing collective in the U S so that's who's dealing with the mechanical royalties.

And also a lump sum to Ashkaff and BMI. And then they say, you guys figure it out. Like we know how much we're legally supposed to pay. Here you go, you figure it out. And here's the best data that we have to support that. And then these collective societies need to go crunch through all this data and they say, yeah, okay, we can match this ISRC to this composition. And then this composition as this splits and this is the best data we have. So we're gonna send it. Uh -oh, this one has claims.

You know, it adds up to over a hundred percent because we've got these publishers and these publishers and they're all claiming, okay, well that's frozen until they can figure it out. Or you've got the data that comes is like, there's money that comes in and I can't figure out who to pay. So it just sits there until someone comes and claims it. And then you do that all around the world to all these different collective societies. And it adds up to this massive bucket of black box money. Well, if there was this single source data source that is also connected to a payout, payment mechanism, now all of a sudden you don't have any black box issues. So if you imagine, so smart contracts, so we're going deep now. So smart contracts are a function,

One of the features of Web3, blockchain, you know, kind of people lump that together. And a smart contract really is just a piece of code that, you know, if this, then that, and that usually accompanies some kind of a financial flow. So within a smart contract, you can have the different payment wallets, who you're paying it to in terms of how much, what percentages you're paying, and you could have various other terms in there. So one way this could work is if you had every single song in the world is represented by a smart contract, and in that smart contract, it says, yeah, here's how the payment should flow. You've got a recording smart

Contract, you've got a composition smart contract, and they're linked in some way, and then, you know dollar hits in and it's gonna be paid out, you know a third of this party a third of this party and a third of this party and then Spotify agrees to pay into that so then everyone can get paid directly. Now, this is the utopian vision and now there's a lot of like, how do you get there? Why isn't this happening? Why is everyone afraid of this? And a big part of it is there are disputes, you know, there's real world stuff where just, you know, I don't agree that you're claiming this. Well, I don't agree. Well, you know, we can't settle it until we go to court, but no one's really going to court. So then it just stays frozen forever.

That's one scenario. You know, if it was paid out incorrectly, there has to be some way to, to correct that in the future. There has to be some mechanism to be able to, you know, update this over time. But this is where blockchain is really great because blockchain... is a time and place date stamp effectively. So blockchain is sort of just like ticking over, ticking over the data, the data as, and then you have this historical record of everything going back in time. And actually chain of title is such a great use case for blockchain because you can say, well, at this point, this is the data that we had that everyone agreed to and it was owned by these parties. Okay, now at some point that

Ownership has changed. This rider has sold now to this other publisher. Great, lock that in time. and then going forward, going forward. Now you can see a chain, although going back to day zero of who are all the owners of this song. And you can extrapolate that out and say, okay, who are the producers? And now you can have producer royalties being paid out. You can have artist royalties and recording royalties. So it's a pretty elegant way to do this. Benji Rogers created something early on, .blockchain, it was a super OG music blockchain project. His idea was it

Should actually be a new file type because we have .wav files and AIF files. And, you know, there really hasn't been any progress on that for a long decades, right? So what if there was this new file type, a .bc, .blockchain file type that was actually created at the DAW level? Because now you have at the point of creation, now you can document in there, who are the rightful owners? What's the provenance of this piece of audio? And then from there, now you can figure out, okay, are there disputes? Or do we have to do different split? Do we have to do this thing? Okay, fine, but it's all documented publicly online. But again, that only works if...

Everybody buys in all the royalty society, all the publishing companies and labels, and there's all kinds of political reasons why they may not want that. You know, they don't necessarily want this transparency out there. And to get everyone to agree to a standard is very challenging. Anyway, that's one thing. The other thing is ownership of digital files. So, you know, this is where the music NFTs come in and NFTs come in. The idea of actually owning something. So, you know, if you have an MP3, if you have a digital file, well, you own that file, but you don't own the IP on that file. You don't own that unique digital asset

Because every MP3 copy of an MP3 is the same copy. There's no differentiation. On an NFT, you have a unique token, a unique address that says, I own this thing and it's pointing to that thing. So I technically own that. And then that's one thing. Do I just? own it and collect it or does that mean something? And it could mean I own a piece of the royalty string. And now when I've bought that, now every time that song makes money, I earn a little bit of that royalty. So that's an interesting use case for this in the music space as well. And there's other things too, but yeah, good place to stop.

No, it's great. It's great. It's, I think it's really, we hear that conversation just directed towards music. And I think there's a lot of entrepreneurs listening to this podcast where that's sort of an important explanation. But going back to Decon Suite, you have, you know, you launched this company, you get VC money into it. What happens? How do you start building it? Yeah. Uh, so we raised money beginning of 22, it closed. Um, I needed to, I had.

Been talking to a third party development company, all of 21. So let me back up. So the idea came about, I think it was February or March of 21, then around April or so, as we were talking with Al Grand, and we became aware of this potential to get a grant. We said, you know, how do we do that?

Give us some guidance on this and how much should we ask for? And they said, well, you need... You need developers. Do you have any?" they said, no. They said, okay, well, I talked to these people here. These are some dev shops that we like and get a quote. And then depending on what that quote is, then go for that amount of money. I said, okay, great. So we go talk to the dev shops who liked one of them and got a quote. Went back, got a grant for that amount. I said, great. And then it takes a while. The grant doesn't happen that quickly.

One of my friends that became an advisor early on, he really liked what we were doing. He said, I can get you a quick grant. I think you need to build a prototype first so that you can really lock down the grant, lock down the VC money. Let me get you a small grant for that. 2021 was a special time in the blockchain crypto space. I mean, you could like, you know, say the buzzwords and then people were just throwing money at you. It was pretty wonderful.

Um, those, those days are not there anymore. Uh, but, but yeah, so, you know, we, we created this clickable prototype, uh, that demonstrated what the vision was, you know, visually what it could look like, what the flow would look like. And, um, that took about three weeks to get that completed. By the end of that, even I was like, oh, wow, that's like better than what I had in my head. This is amazing. Then we showed that to the Algorand Foundation. Um, and then we got.

We got the grant, we showed that to the VCs. Over that next few months, we ended up raising that money. But in the meantime, we had been working with this external dev shop. They are the ones that did the prototype. And then they just sort of started working on the product. And I said, guys, please don't. I don't have any money to pay you. And they just kept working. And then they're like, don't worry about it. We want to put in the time here because...

We're confident you're going to get funded. They had talked to some people behind the scenes and all the signs were pointing to go and wanted to make sure that we didn't waste time because this was also the thing that was happening at that time too, is that there was just so much forward momentum. If you did, if you took the foot off the gas, you were behind. And so I was really thankful for them that they did that. They did it. They, they called it risk capital that they were choosing to put into it.

Um, so that by the time we got funded, I think a couple of weeks after that, we had launched our, our beta product. And I remember all of our investors were like, how'd you get that done so fast? And it was because we were working on it behind the scenes, um, just on a handshake. Uh, so yeah, so we got, we got the beta product out and then we worked over those next couple of months to internalize our, um, tech team. So we, we found a head of engineering and then we found full stack engineer.

Uh, I found another engineer and then we, one of our early employees who really started off as, as an assistant to be kind of a catchall, um, for me became, uh, on the product side. He was really good. So yeah. And then it was just sort of heads down building, um, building and brand building. That was a big part of it for all of 22 was going to the conferences, building up our Twitter account. Twitter is kind of where everything is X now, um, you know, for anything crypto, Web3, that was really the spot. And so, you know, we needed to make sure that we were embedding ourselves in the culture of Web3 music. Had a big presence at NFT NYC. Yeah, it fun times.

But you know, there's a big difference between 2024 and 2022. What happened in between from the journey of you building that product and the money was easy and readily available? Yeah, so it was a bunch of different factors. So in the beginning of 22 when this was just coming out and we had this great idea and the white paper and everything, we were talking with all the music companies and there was real enthusiasm to...

to participate and be part of this and be part of the movement. And yes, I can see the vision and all this. And then, you know, throughout 22, we had this massive implosion of Terra Luna, which removed billions of dollars from the crypto industry and was this huge scam. And they had FTX fall, which is this huge scam, many billions of dollars. Then you had the SEC come and...

prosecute all these token projects and NFT projects and everything. And then, you know, there's just general downturn in the economy and then all the dry powder from the VCs went away. And by the end of 22, you know, there was no longer the ability to launch a token.

There was a very difficult time raising additional capital. And actually, most importantly for us is we realized we weren't going to get participation from the music industry for our blockchain protocol because they just like, I don't want to know about it. I don't want to know about crypto. I don't want to know about NFTs and blockchain right now. Like this is, this is a dirty word and we just can't, we can't play that game. So yeah, that was, that was interesting for us. And you know, we actually haven't announced it publicly. You know, it's not a secret, but.

Um, you know, so we've merged now with, uh, the rights, which are very excited about, and, um, what this allows us to do is really fulfill our mission, which was always to simplify sync licensing. I mean, that's always our goal. You know, we felt like web three blockchain was, was the way to do that. Um, I think it's, I think it can be in the future. I think right now it's a little, we're still early, you know, we.

We were hoping that this wave was the wave that was going to take us to that next level. I think it's going to take one more wave to really fully realize what blockchain can do and get full adoption from everybody. So, yeah, but still foot on the gas to help simplify, streamline, seek licensing for the world.

That's so interesting. And I really believe that the sort of the world is ripe for change. You need to explain the waves for me. What kind of waves are you talking about? The crypto wave. Yeah. I mean, you can see since Bitcoin came out in 2008, there's been waves. There's come crash. You have this big, you know, upswing and then a massive crack. And then you have a winter and they call it the crypto winter for a couple of years in most cases. And then it starts all over again, bigger than the last time and then crash. But the crash isn't quite as low as the last crash. And then a big upswing again. And each wave is characterized by different

things. A lot of what drives it is the Bitcoin halving. So every four years, the amount of Bitcoin that can be mined is cut in half for the same amount of compute power. And so then Bitcoin becomes more scarce at that time, which means it's more valuable. And so there's a lot of momentum leading up to the halving and then it continues on past that. But, you know, along the way, there have been other things that have driven it in the last wave, which peaked at the end of 2017. Really, that was about Ethereum and all the ERC -20 tokens.

that were being launched on Ethereum. And so there was just this crazy gold rush. People were buying into whatever crazy token was out there. And so then that put a lot of money into the system and then got pulled away real fast. And there was market manipulation and various things. There's been tons of scams throughout the whole thing, which is too bad, but that's part of it. And then the last wave, started with DeFi and called it DeFi Summer. So it's where you had Uniswap and DeFi protocols that had maintained their health throughout this, which is really exciting

to see decentralized finance. And then NFTs were a huge part of the story in this last run as well. We'll see what happens in this next run. I remain a massive believer in... crypto in blockchain. You know, so, and I think we're on the cusp of the next wave. You know, this is not financial advice and I've been wrong more than I've been right. But, but it definitely feels like we're, we're starting to go again and you know, what's going to drive this. I think the Bitcoin ETF is definitely huge for bringing liquidity into the.

market and you've got the having coming up here too. And then, you know, the tokenizing real world assets. I mean, there's a lot that we can talk about, but what we think is going to drive this next wave. But yeah, I fully expect that we're going to see this next wave. And when you finally get adoption outside of, you know, the core crypto heads, that's when, that's when it's just.

now part of society and we get to realize the benefits of what's there and they, you know, probably need some regulation to make sure we can weed out the scams. That's so interesting. I'm so interested in following Dequan C and the rights and sort of what you guys are doing. I'm not as big a nerd as you, but I do recognize the potential of this whole space.

And also the music industry can be late to change and skeptic of change, short story, speak to the bin, even though they try to renew themselves faster. But I also do believe in this. But Keekley, you've been on a quite interesting founders journey and obviously that's going to continue for a long time. For founders in the music industry, and this is going to be one of the last questions I ask you that are interested in blockchain, that are interested in the potential of this technology. What's your advice to them?

What should they work with? What should they focus on? I would say the first things first is to really dive in and understand it. You know, what does that mean? It means go and look at all of the blockchain music projects that are out there now, read the white papers, learn the tech nerdy jargon as part of it, because everyone who's doing it today, everyone, Many people, most people that I know at least, that have chosen to build in the blockchain space for music and blockchain, got enamored with the technology first and said, oh wow, those

concepts are so cool. That philosophy is so cool. The culture is so cool. I want to do something in that space. And so I think it's important to get that, to really be a part of that. But. that I would say also, don't drink the Kool -Aid and realize that these are all the...

You know, this is the sort of the beautiful utopia of what it is, but understand the real world challenges and that if you're going to build in the space, you need to have a business model and you have to understand what the benefits of blockchain are to your business model and also what the downsides are to your business model. And token as a business model is not a good business model. And many people in the space really view it.

it as that is like, I'm going to launch my token and then I'm going to do this thing on the side. Um, and, but really everything that I'm doing is to accrue value to the token. And then that's what my business is going to be. That's not a long -term business strategy. That's not a long -term business model. So figure out what your, your business model is and how, if you're going to mint a token, you know, how does that augment your business model? Or if you're not going to do a token, there's plenty of, of blockchain based.

music projects that are out there that have no token and maybe never will have a token, that's great. What is that business model? How are you going to use it? How are you going to do something different? Look at the pitfalls of other Web3 companies and what challenges they ran into so that you don't replicate them. Here. Keith, this has been a great episode and it's not often that we go full on nerdy. And I...

I expect you have another level of nerdy as well we haven't touched upon and we probably won't do that today. But it's very freeing because music can oftentimes just be very centered around itself and we don't talk a lot about the surrounding industries to enable the progress that we need to make as an industry as well. So I do want to thank you for your time. I want to thank you for telling your story and giving advice and It's been very inspiring to me and I'm definitely gonna go home and read some more about this space. Even though I work with it sort of as an advisor in one of our companies, I'm more on like the industry side and sort of navigating the politics of the industry. But

this is so interesting. There's gonna happen some amazing stuff to your lives with this technology evolving and really happening. Yeah, I think it's fascinating. We didn't get into AI at all, but that's kind of the next level. And there are some... crossover between blockchain and AI, but really at the end of the day, I think what I'm fascinated by is emerging technology generally. And yes, blockchain and crypto is one form of emerging technology and AI is another form of emerging technology.

And just the, it's, I always get very excited, you know, to see where emerging technology and music have these crossovers and where the effect that emerging technology can have. on music, on the music industry, on the creators and ultimately how people can make more money, you know, as creators. I think that's what the potential is for this technology. And so how do we keep learning that and building on that and building products and building those into our products for the benefit of music creators.

That's a great note to end the show with. Thank you so much, Keepee. Thank you for being guests. Thank you. That was cool.