77. Mark Miller On Investing On The Next Big Song With Labelcoin

 

TPM 77 | Labelcoin

 

With blockchain technology, even music can be invested in. Labelcoin is a “song” exchange where fans can invest in songs while the artist gets paid. With this system, artists can get paid now for any future revenue! Their goal is to stamp out artistic poverty with the help of blockchain. Join Bree Noble as she talks to the CEO and Co-founder of Labelcoin, Mark Miller, about how exactly Labelcoin works. Discover how he and his business partner Chad Petterson combined music with Wallstreet to create Labelcoin. Learn how you can start a music career as a musician or how you can invest in the next big song as a fan. Start embracing the world of Web3 and NFTs because this is the future of the music industry.

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Mark Miller On Investing On The Next Big Song With Labelcoin

I’m here with Mark Miller from Labelcoin. We are going to talk about his journey and how he got started in this cool new venture. Mark, let’s start with your artist background. I know you were an indie artist. How did you get into music? What made you decide to pursue a career in music?

I started into it right from college. Back in 2005, when I had finished there and started going into house shows. How I decided, honestly, is I heard somebody singing on the radio when I was fourteen and I’m like, “It would be fun to do that.” I started going down that path and learning a little bit about how to record my own stuff and things but I was not a good singer and I was not confident. I did not feel like I wanted to do it.

I could do it. I wanted to do it but I couldn’t do it. I started out in college going for Electrical Engineering. Honestly, I felt a strong divine intervention like, “This isn’t where you are supposed to do. There’s no Plan B. Music is where you are supposed to be.” I jumped into going to music school in Indiana. Since you asked about it, I will give a quick story to you. I don’t tell the story often so that it might be relevant to your audience.

I was going to study guitar. When you go to college for music, you have to pick a primary instrument. Mine was guitar because that’s what I was best at and most confident at. I called the school to apply to get into school and they were like, “What instrument are you going to choose?” I was like, “Guitar, for sure.” They are like, “Are you sure you don’t want to do voice because we need more male vocalists in our program.” I’m like, “I’m pretty sure that you don’t want me to do the voice.”

I then thought about it, “Maybe this is what I was supposed to do. If I’m going to be a singer and are going to perform, I need to learn how to sing.” I went there and auditioned. This was a classically bass school, which had no concept or grid whatsoever. I go in there and perform this contemporary pop song on my guitar by myself. They expect you to have an accompanist on the piano while you sing in Latin or German.

That’s the kind of school I went to, so I’m familiar with it.

Here I am shaking uncontrollably, trying to accompany myself on this song. After I finished my 2 songs, there were 3 professors on the judging panel. I kid you not, there is silence for at least ten seconds. Finally, one of them speaks up and says, “Are you sure you don’t want to study guitar here?” I got a letter three weeks later that said, “Congratulations. You have been accepted into pre-music.”

It means, “We are too embarrassed to officially associate you with our program, so we will let you come and pretend that you belong. If you improve enough in a year, we will let you stay. Otherwise, we kick you out.” I improved enough to get to stay, and that’s how I learned. That was the journey coming in. After 2005, going into it, I started playing in small venue house shows.

I recorded my first album in Nashville. I was doing that for about five years. In that journey, I got to do some cool stuff, even being an artist in residence in Japan for a year. I met my wife. In 2010, on our honeymoon, she told me that she wanted to quit her job and join me in music full-time. I said, “A) That’s awesome, and, B) we need a new business plan.”

We discovered the college market and jumped into that space. We learned how to do that well. By the end of our touring career in 2015, we were touring 8 to 10 months a year. We had broken $120,000 in 2015. We are like, “We are making it. This is working.” We are able to buy this house in Nashville, have savings, and record our albums. It’s crazy, Bree. You could probably relate to this, and with the people, you work with too.

In that year, we made $120,000, $40,000 of that was expenses, so we made $80,000. We split that between my wife and me, who were both working more than full-time. We are making $40,0000 ten years into our career. At that point, we are officially in the top 2% of our industry, which is crazy. What other industry is there like that? We had our second child, and then we got off the road. In 2016, we started brave enough entertainment, representing artists with much higher ceilings who were way more talented. We did have great voices to get on shows like American Idol and The Voice and did.

We realized, as we were booking them and doing artist development for artists with hundreds of thousands of followers or even into the millions, that it was stunning to see that they had the same challenges. They still have second jobs. They had to find all these different ways to make ends meet and struggled in finding and building their team. We always kept in the back of our minds, “How do we change this?” It brings us up to what we are doing now with Labelcoin.

When you were on the college market, did you have a name? Were you a duo name or was your wife backing you up? How was that?

We started out, and The Other Mark Miller was my old name because there are 7,000 Mark Millers in the US. MarkMiller.com was a car dealership. MillerMusic.com was a clarinet teacher or something like that, so I’m like, “I’m the other one.” That’s how we started but we had to change that because it made no sense since we are a duo to be The Other Mark Miller and His Wife, Heather. It’s awkward, especially on the billing. We changed our name to So Long Solo. That’s what we did, touring together for five years.

Investing in NFTs can be tricky. But with Labelcoin, you don't need to know anything about crypto to invest. Click To Tweet

There are seasons. You probably enjoyed that but you get to the season where you are having kids and all that. You look back and say, “We are making $40,000 a year. We are busting our butts, and we are not home hardly ever.” I know that because for me, I toured when I had young kids. It was great because you can drag them along. They might complain but they think it’s cool because they get extra things at Starbucks when we are on the road. They get to man the merch table, meet a lot of cool new people, and see new places.

Little kids don’t care but when they get older, first of all, they have to go to school, so you can’t take them, and then they get annoyed that you are gone. I completely understand why you might have switched out of that. That’s totally fine. We have seasons. You made the most of that season, and now you are making the most of this season and helping other artists. That’s similar to my journey.

It’s amazing for people to experience what you had and to be able to share that because I’m not sure what your journey was like starting out. I loved and learned but for me, I had no idea what I was doing and had very few people to lead the way.

That was me. Going to a college, as you said, where it’s all it’s more a conservatory style. It wasn’t a conservatory. It was a Liberal Arts in college but it’s not teaching us anything about business whatsoever. It’s like, “We are going to make you an amazing musician but then we will throw you on the street and hope what to do with it because we are not going to tell you. We are not going to give you any clue. We are not going to give you any career guidance or anything.” I was floundering for many years. I had a degree in Accounting as well. I got a double degree, so I was accounting for years.

I ended up working at an opera company. It was great getting the opportunity to work with artists but here, I wanted to be an artist watching all these other artists doing what they wanted, paying them their paychecks, and I was frustrated because I wanted to do my thing. That was how mine started until I was able to figure out how to marry a new business plan. I had to figure out how to marry the business and the music. Being that I had both of those in my world and wasn’t putting them together, which seems a little crazy now but I didn’t know. I didn’t realize.

What a credible skillset to have and bring in at that point.

You have some business background or you are learning because you are starting this. You had an entertainment company. You are helping artists, and now you’ve got this cool Labelcoin. Why don’t you tell us a little bit about that?

Fast forward to Nashville. In 2019, our artist agency was the College Booking Agency of the Year, which was pretty cool to even get those accolades and know that people liked working with us as much as we liked working with them but then. COVID hit, and we were in 2020. All shows are canceled, and things are looking pretty ugly. I met a guy who’s my Cofounder, Chad Peterson. He was a former Wall Street guy. He was an investment banker and a VC investor.

He was there working in the finance world during the big giant Wall Street crash of 2008. He lost his job along with a lot of other people, and he started a nonprofit at that point to help people that have their lives devastated get back on their feet. Over the long course of his story and history, he moved to Nashville to be the CFO of Skyway Studios. That’s why he was there doing a lot of other nonprofit work. When COVID happened in Music City and not knowing a lot about the music industry, he’s like, “This looks a whole lot like Wall Street and what we went through.”

He’s like, “I’ve got to do something to help.” He started a nonprofit called HOPE-20. He got a big grant from the government and was able to help a ton of musicians get through that season. That’s how we were introduced to help in part with that. Chad, being the finance guy, had this idea that was brewing in his mind of, “What happens if we could bring the future income of musicians forward to now.” What he’s been doing on Wall Street with securities and trying to value future revenue, bring it now, so people can invest in it.

He brought this idea to me of securitizing music. I’m like, “There’s something here that’s truly brilliant. What happens if we marry this with what’s happening in the blockchain technology now,” which I’ve been getting a lot deeper into, “We will focus on song specifically and find a way to make songs investable to the average fan. What would happen if an artist could bring ten years of their streaming royalty income forward to now and then be able to have a more engaged fan base?” That’s how we started what is now Labelcoin which we’ve coined Robinhood for Music. It’s a stock exchange, a song exchange where it’s aimed at stamping out artistic poverty and making a living wage for artists.

I’ve definitely had people on my show talking about NFTs and things. I would love to know how you would compare this to the income an artist can earn from an NFT. How is this different?

There’s some cool stuff happening in the music NFT space that’s exciting. One of the biggest challenges now with that is you have to change your business model, your marketing model or the work you do as an artist significantly. It’s like Patreon. You can get people doing NFT but now you are writing 150 postcards every month trying to send out T-shirts, trying to do fan shows or specific things outside of your norm of recording, performing shows, and connecting with fans online.

TPM 77 | Labelcoin

Labelcoin: Labelcoin is like the Robin Hood of music. It aims to stamp out artistic poverty and make a living wage for artists. It’s a way to make songs investible to the average fan.

 

I feel like a lot of the NFT space, there are some artists being successful, which is exciting but you have to be in Twitter spaces and learn that world. It’s learning where the people are that can invest because it’s tricky, and there’s a little bit of a barrier still on how to invest in an NFT and what it means, and the technology is all a little bit confusing.

While we are implementing that into our second phase, in our first phase, we are building on blockchain technology, the underlying thing that the NFTs work on but it’s all done under the surface so that people don’t have to know anything about crypto to invest or as an artist to do it. It works seamlessly within their current workflow. What we do is we have a song valuation formula that goes with a lot of what’s happening now with song catalog sales.

If you’ve seen Bob Dylan and Bruce Springsteen and how they are selling these catalogs for hundreds of millions of dollars. They value those. They look at basically the average of the past three years of revenue from those songs and project forward anywhere from 18 to almost 30 years, in some cases. That’s the value of the catalog that they are selling.

We were taking those models in what’s called Discounted Cashflow. That’s Chad’s world, especially. We are adding a bunch more factors into it. How do we value these people that are more independent? We built this for independence all the way up to the major labels but when they are newer or when they don’t have all that history, how do we still find a valuation? We are pulling in other data such as their shows, their tour history, their teams, and the history of their other songs that are going on. We project out over about ten years. That’s our goal targeted.

That gives us a valuation but there’s still a fantasy football number. We all think Patrick Mahomes is going to get 4 touchdowns but he might get 2, 8 or he might break his leg. Please don’t, Patrick Mahomes. I love you. It’s that ballpark number. The artist chooses, “What do I want to sell this for, and how much do I want to sell?” Specifically, they are selling their digital streaming royalties and not the masters but it’s under the masters so that way, they have full control. They are sharing that profit share of the royalties.

They would say, “I want to sell 10% or 20% or whatever of those royalties at this value at this price.” The fan sees our valuation. They see what the artist is selling it for. They see one other important number, and that is the estimate of how many spins that song would have to get for them to get a 10% or a 20% return every year or whatever their goal is so they can have a clear expectation coming upfront.

We tie in with the distributor at that point, so if the artist wants to sell 10%, then we get a 10% split with the distributor. We pay out all the song holders, so it’s super easy to lift on the artist, and it fits into their normal workflow, their normal life. If you have a show, “If you like this song, you can buy it. Go ahead and invest in my song,” and then they earn 98% of that listing, plus a part of the transaction fee every time it’s resold in the future.

If I owned part of your song, I could resell it to someone else?

Yeah. Exactly.

I love the idea of the artists earning every time someone sells it because that seems totally fair and helps the artists versus the thing where you buy something at a store, and then you sell at a garage sale, and then someone else sells at a garage sale. That original person that made that thing didn’t get any more money.

I love the idea of it continuing to pay the artists forward. I have a hard time wrapping my head around it is number one, is it valued around their current fan base? How much can they bring in, and how many streams they’ve already had? How much does it relate to how good the song is? Sometimes there’s an amazing song but it hasn’t been out there, and not enough people know about it.

It’s important. We built in a song discovery mode that people can swipe over in the app and go into that mode. When they listen to a song, it’s unbiased. They don’t know the name of the song. They don’t even see the album art, they get to rank it on a few things, and then they get a reward for ranking it. Once they rank it, they see the song. They can buy it and follow that artist but they get rewarded for doing that and with that, they can buy song shares of notes in a secondary market that we have or different merch items like that.

It’s a way of trying to create that opportunity. Some of the initial people that we saw doing this are a lot of the artists that maybe have $100,000 or $50,000. If that traction is tuned regularly, there are a lot of those people. There are 1.75 million songs with more than 200,000 spins on Spotify. That’s a lot of artists and a lot of people that could value their songs easily by at least $20,000 or much more.

With Labelcoin, instead of begging your fans, you're actually giving people a chance to invest and make their money back. Click To Tweet

Initially, there’s going to be people that maybe they are selling that song for $2,500, $5000, or maybe for 50% of it or whatever they want to come in at but that can make a big difference at that early stage. Also, it gets fans engaged. What if you do discover that person, and then this song or this artist blows up? If you are the first one to get into Taylor Swift or Ed Sheeran and find these artists at that level, it’s a pretty cool investment opportunity.

That’s super exciting and fun. I don’t know if you know but I have another branch of what I do call Women of Substance that I’ve had since 2007. We are a platform that promotes music by female artists and all genres. I’m the person. I’m the curator. I’m the one that says yay or nay and last say on all the songs. I choose them all. I have over fourteen years of listening to people’s songs, and knowing what I think is really good and hits me immediately.

It’s cool and exciting to think if I found a song through Women of Substance where I’m like, “This song is amazing if only more people knew about it,” and I could invest in that but then as a person that invested, I would have a vested interest in making that song blow up. As an investor, do I have the right to go out there and rally the troops and say, “Everybody, goes stream this song. It’s amazing.” Is that a conflict of interest? It’s almost like gamifying the system or something.

There are some Security Laws because all the songs are registered securities but as long as you are not saying, “I don’t own any of this necessarily,” there’s still that fine line between, “This is a great song.” You can always say, “This is a great song,” because it is. That’s fine. We built a feature just for people like you called Curated Collections, which are basically song mutual funds. As a song picker and curator, you would be able to choose.

I need to own a song mutual fund. That is so cool.

Anyone can do that. What’s cool about it is as the curator, you would earn 5% of the royalties for that fund. It’s creating a new revenue stream for the people that are great at finding the next great song.

That’s pretty neat. I love that. There’s insider trading and all that stuff for stocks. Is it okay for me to go out there, promote the song, and share it on all social media if I own a percentage of it?

Absolutely. That’s what artists are doing. They own this song but they are like, “Please listen to it. We make money from it.”

I’m having trouble wrapping my head around the distribution. Do they still go through a regular distributor like CD Baby? Are you the distributor? How does that work?

We partner with distributors so they can go through their regular distributor as long as they have splits enabled or ones that can partner with us. CD Baby, DistroKid, or different places like that are great. It’s simple to do that. We are tying into their normal workflow. It’s pretty seamless.

You would enable it inside of your distributor platform.

We are working on those integrations. Those are coming in the near future. Now, what we are talking about with distributors is specifically doing a split. We have to confirm that you own the rights to the song. If you are selling 10% of the song on our platform, then we get a 10% split with the distributor, so they were Labelcoin’s listed. When the distributor gets that money from the DSPS, Spotify, Apple Music, etc. then they give 10% of that to us that we are going to distribute to all the rights holders.

As the artist, I decide how much of it I’m going to sell, so you don’t have to sell any percentage of it. If I chose 50%, then I would give over 50% to Labelcoin, and then you would offer that in your marketplace for people to buy, and that’s where the artists would get the money. Is that right?

TPM 77 | Labelcoin

Labelcoin: With Labelcoin, artists are selling digital streaming royalties and not the masters. So that way, they have full control. But they’re just sharing that profit share of the royalties.

 

Yeah, exactly.

What if nobody buys it? Do they give away half of their royalty until someone buys it?

We keep paying you all the royalties for any unsold notes. It’s never gone until it’s sold.

I’m getting this now. Sometimes in this Web3 technology stuff, I’m like, “How does this integrate into the system that we already have with the way distributors work?” This cover all streaming and anything that you’ve selected inside of your distributors. If I’ve selected TikTok, YouTube, and all of that, does it cover that as well?

It does. Everything that the distributors are collecting can be sold.

I want artists to understand what this is, how it would benefit them, and how it works. Sometimes it’s like, “That sounds cool,” but number one, it’s a little scary when you don’t understand all the moving parts. It feels like you are signing away part of your rights whatever you decide to choose your percentage to Labelcoin but you are like, “I don’t know if someone is going to buy it.” I’m glad that you still continue to pay them. I’m assuming you take a small percentage.

We do. We get 2% of that listing. We are trying to keep it as small as possible. Every time people are buying the songs and share these notes, there’s a small transaction fee. It’s around $0.40 in our model but we get 40% of that fee, and then we give artists 40% of that fee. Ten percent goes to distributors, and then 10% more goes into our Song Discovery Fund into that that we mentioned earlier.

What is the smallest percentage that they can sell? What is the smallest amount? Can someone have made nothing on this song yet and still sell it?

You certainly could. We haven’t totally finalized that number yet. We are thinking it’s probably maybe somewhere around $2,500 worth. I had never released an album right before 2005 but I had people who heard me play or my friends and my family who were like, “I want to support that song.” They gave me money to do it. A lot of us do it now on Kickstarter. There are always going to be people who will be like, “I will support that.”

As long as the song is good, as long as the artist has quality or at least people like them that they will be able to sell. It gives them a mechanism, so instead of begging for cash, instead of what we call fan handling, you are giving people a chance to invest and make their money back and say, “I believe in you.” That’s a totally different feeling for artists to not have to be begging but to be like, “You get to buy into what I’m doing,” while I still maintain full control of my career, my future, and not signing away the next five albums or my life and hoping it works out.

That’s so empowering for the artist instead of these artists doing these GoFundMe things and I’m like, “You are not going to excite people with this, ‘I’m a starving artist. Please support me. I can’t pay my bills,’ Angle.” This is a so much more empowered angle.

That was the goal, and that’s how we feel it can help end artistic poverty.

Does it have to be a new release or can you go back and sell previous releases?

You're going to see more traction if you're releasing new music. But with Labelcoin, you can even use your back catalogs. Click To Tweet

You can. Back catalogs are great. We love for people to bring on their back catalogs. Yes, please.

I’m even eligible. I’m not releasing new music anytime soon but I do have a back catalog. That’s an interesting idea.

You are going to see the most traction as an artist if you are continuing to release because that’s what tends to keep the spins coming in and the interest but there are still lots of opportunities for every artist.

If an artist is reading all this and they are like, “This is interesting.” What’s the process like for them to get started?

We have been developing for a year. We are on target to release at the end of 2022. They can go to Labelcoin.io. They can sign up there and join our founding artist circle. For the people that join now, you are getting to help fine-tune some of the features, and give feedback on the app itself on different options, and then you will get early access as well.

It is a little bit tiered based on following in what’s happening with the artists like how much they are touring and things like that but we will be an open platform that everyone will be able to use. By signing up, they will get in early. They will be some of the first, and those are also the people that we are putting our marketing money behind to help push this. Our whole plan is to make their songs successful. If we make your song successful, then we know that we are going to be successful, so we are trying to elevate the artist.

Does it cost the artists money to sign up?

It does not. It’s Labelcoin.io. In our socials, it’s @Labelcoin all over the place. We would love to connect, stay in touch, and brings more artists on board.

Is there anything we haven’t covered that you think artists need to know about what you guys do, your mission, your plans for the future, and where you see the artist economy going?

Especially, for artists, they have been able to embrace the new technology and jump into NFTs and into the music Web3 space. I want them to know that it’s not necessarily exclusive, one or the other, in that sense. In our second phase in 2023, we are working on an aggregated NFT marketplace. Wherever the interviews are hosted, whether they are on OpenSea, Sound.xyz, or some other space, they can have those integrated into one spot and other artist profiles where their fans can find them. We will also have NFT minting on our platform at that point as well.

Being able to tie to different utilities such as, if someone owns 100 notes of my song or of my songs, collectively, then they get minted in an NFT that gives them backstage passes, meet and greets, 20% off merch or whatever that different avenue is. We are also going to NFT concert tickets. In the first phase, we still have some cool features that can help drive touring because we are trying to look at this holistically.

How do we help every single person and entity in the industry but also all the things that artist is challenged with? How can we help them be free to do what they are meant to do and empower them? We have this feature called geo-fencing. It’s like what it sounds. They are able to turn it on and off. If they want to say, “You can only buy these notes at my shows for the first month or whatever that is.” If people want to invest in your songs, they must buy a ticket and be present to get that opportunity. It’s another way to drive ticket sales and drive people to those shows and find you.

I feel like there are so many things that are going to be developing over the next few years that we can’t even know about or can’t fully understand what it’s going to be. When you first approached me with this, your tagline was something like, “Pay artists for their future earnings now,” or something. I was like, “How is that possible?”

TPM 77 | Labelcoin

Labelcoin: You can use the geofencing feature in Labelcoin. You can make it so fans can only buy these notes at your shows. So if people want to invest in your songs, they actually have to buy a ticket and be present.

 

I have a hard time understanding how that could be possible. Some artists that might read that might think, “That’s too good to be true,” and push it to the side like, “I don’t believe that. That’s not real.” How are you going to help artists understand that this is possible and it’s not some pie-in-the-sky thing?

We are already seeing it. We are bringing that model forward to now. We are in a unique position because I have been in the music industry for over twenty years now. Chad, with all his time in the finance industry, defined what is that viable path forward. I could have never done this without Chad. I have no idea how these models and things work.

It’s a marriage of two totally separate industries. The idea of him understanding all the security stuff. I certainly wouldn’t be able to wrap my head around that and how it would work with music.

It’s happening now. People are already giving out of the kindness of their hearts. How much more when they are investing? Patreon has raised over $3.5 billion or something like that, and Kickstarter is over $6 million. It’s somewhere in that neighborhood. People are getting a T-shirt, and maybe a house shows that’s probably not going to happen. I’m sure that everybody here is fulfilling the pledges 100%. I had to make 60 handmade ceramic mugs, and let me tell you, it was a fun summer but I made $3.75 an hour when you break it down. When you are doing a Kickstarter, don’t do handmade ceramic mugs, please. Save yourself.

It’s exciting to me that it puts more of the artist’s career back in their own hands so they can focus more on creating amazing music and being able to get paid for that part of what they do. Artists don’t get paid for the creation of the music most of the time. They get paid for all the things around it, the performing and the merch. Sometimes, they can do Patreon and but that’s usually, “I provide extra things. I do an extra show or an online show with my just Patreons or whatever.” They are not getting paid for just the music anymore and this is a way they can do it.

That’s what we are excited about.

It’s @Labelcoin on all social media. Go connect with them. Check them out. See if this is something that you want to get started. I don’t see why you wouldn’t. There’s no downside, in my opinion, to getting started with Labelcoin, so I would go check it out for all of you guys. Thank you so much, Mark. This has been an interesting conversation and taking the music industry in ways I couldn’t have thought of. I always love when someone comes up with an idea that is, to me, left field but amazing. I see how it can work. Thank you, and thank you for everything you are trying to do for artists.

Thank you so much for having me on. I appreciate it.

 

Important LInks

 

About Mark Miller

TPM 77 | Labelcoin“LabelCoin is a stock exchange for songs where fans can invest allowing artists to get paid now for future earnings. Our aim is to stamp out artistic poverty.”
Guest 1 Bio: Mark Miller is the co-founder and CEO of Labelcoin, a revolutionary song exchange that lets fans invest in the next big song. Mark and his team are ushering in a new era for the music industry by bringing artists’ future revenue forward to the present with this simple mission: stamping out artistic poverty.