Obie Fernandez on connecting artists and fans through RCRDSHP

0:01i'm ashton addison from block west capital for investmentpitch media and the crypto coin show and today on blockchain interviews we have obi fernandez founder and ceo of record shop obi welcome to the show and thank you for taking the time hey thanks dustin you're very welcome let's dive into the world of blockchain and music uh i feel like graphics and digital apes have stolen

0:24the spotlight for nfts and a lot of people don't fully understand the amazing benefits of tokenization and blockchain technology for artists and music on the music side but it really is growing exponentially right now as well i would love for you to kick off our conversation with just a little bit about record shop what your team is working on what is the vision and then

0:45we'll dive into the details yeah sure uh record shop has been around um as a company for about a year got started in march of last year and we launched in in august it's um it could be roughly categorized as a music nft marketplace we de-emphasize the nft part a little bit because it's not uh you know super great reputation with music fans and and you know kind of

1:12certain segments of population that we're after um but but generally speaking yeah we we do uh provide what are termed uh digital collectibles or music collectibles is basically little multimedia bundles that have protected content so you could you know if you're looking to buy one you could sample the music that's inside you can see the front of it uh and the back but

1:35if you buy it they open up and they have videos inside they have artwork they have uh exclusive music remixes sample packs uh you name it it's kind of up to the artist um in terms of the problem that we're trying to solve like basically why do we exist we feel that there's a really good opportunity for for nfts uh to power the next format of music you know the the idea being that

2:03we've gone through a cycle where there's been a great bundling if you will of music content into major platforms like spotify youtube google et cetera and while that's been really really convenient for all of us as consumers in terms of be able to get all the music we can we can listen to uh you know at a flat monthly price or even for free on youtube for instance

2:28um the reality on the ground is that for for working musicians um amongst who i counted myself as of over a year ago before i started record shop it was kind of disastrous in terms of our earning potential the the gross merchandise value of the entire music industry overall not only declined precipitously since you know the the 80s and 90s when it was

2:53kind of at its peak uh it also got extremely concentrated at the top more than ever before uh and that has to do with the dynamics of the kinds of deals that the major labels cut with spotify by which they partly own and you know youtube and etc and you know as myself as as record shop we actually don't have anything against major labels we don't have anything

3:19necessarily against digital streaming platforms it's just that working artists need something more right like like we we need better mechanisms for monetizing our fan base and you know for for engaging with them and it just so happens that a lot of the uh the principles of web 3 web 3's developing techniques and technologies and platforms for bringing people together around shared

3:46ownership of stuff that they like or that they want to participate on on a on a project basis seems to be pretty compatible with the kind of relationships that artists have with their patrons and super fans so loosely speaking there's a lot there's there's a lot of depth in the rabbit hole but record shop is basically a platform where as an artist i can create collectibles i

4:09can market them and distribute it to my fans and then i can connect with those fans in ways that go just beyond them buying a piece of merch or a piece of music great thank you for all the information obi and now looking at you know the major music applications and streaming platforms like spotify youtube it's so convenient and usable for a lot of people to get access to a lot of music

4:35at the same time and you know with these nft and blockchain platforms there's either technical barriers to entry um and or you know other steps that you need to do to get your music up there and to buy music using nfts or using cryptocurrency all these extra steps do you see a path forward where blockchain technology nft platforms like this will become

5:01as easy and usable as the mainstream platforms to you know become the go-to place for music yeah but that's a great question i mean and we we have a five to ten year plan whereas we we expand genres at record shop because right now we're kind of predominantly focused on electronic music and we gradually increa you know improve our app so that it's better for passive

5:29music consumption but it's important to make a distinction between passive music consumption and ac let's let's call it active music consumption but for the moment i'll talk about passive music consumption because what addresses the point that you're asking your question which is that millions of people incorporate music into their everyday life while they're driving

5:51while they're at the gym uh you know just background music while they're cooking or or whatever that that kind of passive music consumption which years ago would have been through fm radio before they were streaming and you know stuff like that like we don't aim to displace that and and we shouldn't right like like there's a there's a place for that in

6:13people's lives but but the problem is that as passive music consumption becomes the norm and active music consumption which is like i sat i bought a cd and i sat down to listen to it because i liked that artist like that's going away right like like first of all the cd thing went away years ago but like eating young people you know are very distracted by their

6:36phone by by video games so on and so forth so active music consumption is not as much of a cultural phenomenon in developing uh in developed countries as it used to be and and unfortunately that's the detriment of the people that make the music you know to the point where they become anonymous and just the cog in the machine of these big platforms and and what we're looking to do is to

7:01to combine the community aspects and the ownership aspects of web3 and nfts in order to create a compelling active music consumption experience if you will i'm using language that i wouldn't use with an ordinary music consumer like you know to an ordinary music consumer this is just more fun a way to connect with with your favorite artists and so on and

7:24so forth will some subset of people that are really bought into ownership and community of web 3 and you know being part of the next format in music and things like that then use that as their primary means of you know passively consuming music yes absolutely and i think millions of people will will do that eventually because we already see it with our

7:51community right now like we we have a record shop app and we have i i think it's probably safe to say thousands of hours at this point because there's mixes and things like that so so there's enough music not quite enough but there's enough music you know for the really really hardcore fans to just use it as their main music listening experience um it just takes a while to get there

8:15right like you know over the course of the next couple years we'll start incorporating uh some industry standards so that music can flow in more naturally things like that um so yeah i do i'm optimistic about that right like it's um between what we're doing and what other platforms are doing in the space i think it will become more and more commonplace

8:36um plus you get a lot more enjoyment this really you know it's kind of like at the crux of what we're doing is you know the more the more investment and the more effort you put into something the more you enjoy it typically speaking right so um it's a well-known phenomenon it's a it's a human quirk psychological perk if you will you know um music is so subjective

9:03that you know like like we saw when we first started dropping packs and it was more of a novelty like people would write us all the time and be like uh like one girl uh that wrote us and said you know i just opened my genesis pack and i spent 45 minutes listening to every single piece of music that was in here and it felt like christmas morning and i was opening up new cds

9:25you know um and and i was like oh cool because it took me back to my own experience opening cds when i when i was a kid and you know they say when your teenager you know music is the most impactful you know in your life or whatever and i think there's an element of truth to that but i think there's also an element of truth that you get what you pay for

9:47right like and to the extent that when i don't know how old you are ashton but you know presumably you bought music at some point when you when you were much younger and you know you know that like that was usually a considerable part of our disposable income so we valued it right whereas nowadays you know since kids and everyone really is not really spending

10:10any money on music anymore they don't value it you know the flip side of that is we get some pushback from people going i don't want to pay for money and that that you know is part of what turns it into a little bit of an uphill challenge to get you know millions of people uh on board anytime soon i think definitely yeah great story there as well obi and yeah you're right i feel

10:32like um the the more time that you put into it the more time you care you know i i actually having to go to the music store and like drive there and then buy the cd and bring it home and play it you put a lot more it's a lot more impactful when you actually listen to the music as opposed to just opening the spotify app and hitting shuffle and not really

10:50caring who the artist even is there's music in the background great record numbers of people lately are buying uh vinyl you know they're buying vinyl records and um more than they have in decades and and to us to me when i was starting out i'm also a vinyl collector but to me when i was starting out i used that as evidence for why record shop could work

11:15because uh vinyl is essentially a token of fandom right you don't have to buy it there's no there's hardly an inherent advantage right like most of the record number of people buying vinyl lately do not have like hi-fi systems with audio file quality turntables and things like that so to them it's actually a worse experience to listen to music on vinyl than most any

11:39other format and a lot of people that i know that buy vinyl don't even have turntables i mean that's even me i sold my turntables when i moved from atlanta in 2017 and i haven't had them since i still occasionally buy vinyl even though i can't listen to it it's a token of fandom right it's like a way to express my personality like what i'm about you

11:59know the music i love and and i think that there's a direct mapping to to digital collectibles that are backed by nfts uh you know in that realm definitely and i completely agree obi and you know i feel the same way you know i i want to support the artists you know when i'm at the concert i'm like i just want to go up there and just give them money for their work you know

12:20because i feel like there's so many middlemen in the way uh that like i try to give them 20 and they receive two dollars after everyone takes their cut um and you know and so with that you know i feel like record shop is is a great solution for that to be able to not just you know be able to reward them but to connect with them as well and to to receive their their content and and

12:42you know not just songs but all of the other kind of uh different collectibles albums that you mentioned as well super cool i'm really excited to have more artists moving into this kind of technology and we talked about like the long-term vision you know how how does this expand but let's narrow it down to more of the short term now you know within this year

13:03maybe you can talk about you know what is the plan for record shop to continue to grow um if there's anything coming out and and how are you going to achieve that yeah the most exciting thing on our roadmap um to me personally right right now is the incorporation of sound token that's our fungible token um also on flow blockchain um along with our nfts

13:27and sound token has been part of the vision from the beginning but it was a little too complicated a little too much for us to swallow as a startup team but we now finally have the resources and the timing to to get it right and is essentially what what it is is is is a fungible token that acts as the material cost for an nft so to speak metaphorically it's the

13:52the vinyl that goes into the vinyl record okay so so sound token just like the raw plastic that goes into a vinyl record is not supposed to be interesting to fans it's not even supposed to be something they really they really think about but as an artist it provides a raw material cost and raw material costs and minting costs i feel are kind of underrated

14:17in some crypto circles uh because without them uh as you see on platforms that offer free minting you get an explosion of bad actors uh you know subpar quality materials so on and so forth because there's no cost right so it's like this uses kind of a maxim if it didn't cost anything to produce is probably garbage right like why would you want to invest in it

14:43and and there's a certain amount of truth to that i mean you can you can definitely take it too far and make it exclusionary which we don't want to do but we want to what we do want to do is strike a balance and form an economy where incentives are aligned towards quality over quantity right now incentives in music are totally aligned towards quantity

15:07so because of the algorithms and algorithms are totally [ __ ] evil when it comes sorry i don't know if i can curse on your show but but when it comes to when it comes to music algorithms are are the worst right like the optimize is for shorter and shorter songs shorter attention spans and it's it's an ever in you know uh speeding up treadmill you have to

15:31constantly put out content which of course leads to worse quality as well what we're hoping to do is that essentially there's a whole cycle where if it costs you sound we'll provide the sound token up up front right so like we'll we'll look on a case-by-case basis of of like let's say established charts coming in and then we'll give them an allocation

15:54of sound token and um quite a bit of our tokenomics allocation is for that reason right so like if you come you want to mint on on record shops sure here you go we'll we'll give you some soundtoken to use for that purpose every one of the collectibles minted on record shop is backed by a certain amount of sound token and then that sound token goes bundled in with the nft

16:15into the economy and a lot of gets locked up so the entire model ends up being deflationary but some of it doesn't get locked up in the sense that the players if they don't like that collectible as opposed to reef getting a refund or sending it back or trying to sell it which quite often excuse me leads to a just just an oversell you know oversold uh situation on the market and

16:38undercutting and things like that they can burn it and when they burn it then they liberate that sound token for their own account and they they can they can hold it or they can use it for different purposes on the platform buying stuff including investing in new artists that are coming in so in some cases some artists will come up and we'll go we don't know who you are or you only have

16:58a thousand followers or whatever we're not sure we want to give you sound token but if you can convince the community to give you sound token then you're good to go right and that's how we start bringing ownership into the equation right so like those new entrants into the community will have to engage with the community which if they can't do that they're not going

17:17to succeed on record shop anyway so there's kind of these hurdles that they have to jump but it's it's to their benefit right they're creating that community or they're bringing their fans to record shop to support them they're getting funded you know we'll match the funding that comes forward right but then we'll we'll basically stake them their initial cost

17:40to to get forward along with other players in the ecosystem and then if that artist does well then everyone wins right like they win and the other went now as the sound token goes out into the economy a lot of it gets locked up and we don't want the artist to have to keep buying sound token because that would like negatively impact their profit margin quite a bit

18:01so we what we've set up is stakeholder rewards and essentially it's kind of taken from the defy world it's it's a form of yield that we provide out of uh you know uh from daily uh rewards but it's based on the the holdings of your fans right so your fans can stake in your favor and as they stick in your favor then you get stakeholder rewards back to you as

18:27an artist which means you can mint more stuff and in this way remember at the very beginning of this segment i said fans are as interested in sound token as they are in the raw material that goes into a record and i mean that the reason is that it's it's really just meant to circulate internally right it like provides a way to align incentives in such a way that

18:51successful artists on the platform get sound token back and then they can create more collectibles as they sell those collectibles then they get fiat because because one of the reasons that we're very accessible is that most of our players don't have a wallet they pay in in credit cards and you know so on and so forth so you know the alignments are the

19:14alignment is in such a way that the artists don't have to continuously sell sound token which is of course better for the health of the token itself but the whole thing is crafted and it's like way too much detail to get into here but you know it's crafted in such a way that it stays stable and provides kind of this material cost that that aims towards quality we think it's

19:33super innovative there's really few examples uh i think right now i can think of a couple off at the top of my head but certainly not in music where where you stake in the favor of a third party right as opposed to yourself uh almost at every step along the way we've disincentivized people who are just trying to exploit the platform for their own you mentioned the four scalpers and i

19:58thought that was really insightful i mean i think the problem with a lot of the platforms in this space is that if you look at them objectively they're kind of like built for the scalpers and it's a it's a phenomenon we wanted desperately to avoid because we ourselves are musicians right so like we get it that if scalpers are loving your platform you're leaving way too much

20:20money on the table right that's not an it's not an efficient market um and in this case the money that's being left on the table is not by big corporations it's by the little guys that are just trying to straight you know scrape out a living so um yeah i mean that's down token uh we've we've blogged pretty extensively and are rolling it out in the next few

20:40weeks very cool thank you so much for all this information obi and yeah uh about the next few weeks and for the upcoming drops for people and to learn more about staking and token economy what is the best way for people to get involved with record shop and into the community sure um our most active community is on discord so if you're into discord definitely just go to the site look for

21:06the discord link it's very prominently on the top of recordshop.com uh if you can't remember rcrdshp.com just type in record shops spelled out with vowels and it'll take you to the right place um you know we're also on twitter we do twitter spaces and so on and so forth like our blog is just blog.recordshop.com that's the details about staking and a

21:29lot of other things we do have some pretty big uh drops if anyone's listening to to the podcast and really into electronic music um kind of from many different genres like straight we have strange fruits coming up which is a big big youtube brand that does a lot of like future house and slap house uh sort of uh you know hits popular material and then we have

21:54like one of the most uh serious underground brands called cocoon led by sven bath who's one of the old techno masters and that's coming up in a couple of weeks we also have tool room records which is a very very another very serious brand um very person's coming up in a few weeks you know he's one of the gods of trans music um so we're constantly putting out new you

22:18know great new material um it's really easy to get into we have so many folks who just love music and and who are you know who who are not necessarily don't necessarily identify as electronic music fans although we've turned them into electronic music fans uh you know to a certain degree but they just love the fact that we're working on revolutionizing music and that's cool

22:38too it's like a way for for folks that are into crypto to you know mix their passions to speak definitely thank you so much for taking the time i'll be all the best with this upcoming launch of soundtrack and all of the upcoming drops i will be watching as well and let's follow up in the near future awesome hope to talk to you again soon thank you you