Why I Started NFTyTunes, a Web app changing the value model for music

I moved to New Orleans in August of 2019 after 35 years in New York City as a composer, producer and mixer, ostensibly for the major labels. I had my greatest successes crafting pop songs with amazing artists like The Notorious B.I.G., TLC, Mary J. Blige, Usher, Prince, Jay Z and many, many others. It was always my dream to build a studio and start a production company, so in 1997 I built my first studio, Numedia, in the Keith Haring building.

That building also housed Rawkus Records, which produced Talib Kweli, Common, Mos Def, and of course, Kanye. I liked the idea of being close to an independent scene, one that was presenting an alternative to the mass consolidation of the labels into multinational corporations. As the labels were becoming more faceless and corporate, there was a burgeoning of independent labels that were doing 50/50 distribution deals with artists with much more flexible terms than the arcane and imposing multi-year ownership deals the majors were offering.

As the indies were creating more flexible terms for artists, the majors were creating more restrictive 360 deals that gave them an even bigger slice of all the revenue the artists created. Everything was commissioned: touring, sponsorship deals, publishing, TV appearances, you name it. And the artists were becoming increasingly dissatisfied with the deals. Of course, the labels were investing millions of dollars marketing and promoting the artists’ work. So they were, in a sense, gambling on the success of the artists, using all the levers of control vertically integrated media can muster: TV, film, radio, internet, and news agencies. These were all controlled ,in many cases, by one centralized corporation.

I guess it worked, sort of. But all this debt was laid on the artists, who had to pay it back with their 10-12 point deals. Of course, no one ever recouped their debt, so artists never received any royalties. Not ever. During that time, I was a little cog in a big machine helping these artists make their records. I remember thinking, how come these artists are selling millions of records and a lot of them were perpetually broke? I knew something was wrong and that this system was gamed to benefit the labels, managers, attorneys, agents and all the middle men who benefited from this system of exploitation. I have to include myself in this system, as a well-paid producer and mixer for these companies. Big mix fees. First-class hotels and plane flights. I was riding high. At least, for a while. . .

In 2006, my partner and I noticed that our recording work was dropping off. While we were still working, it wasn’t as intense as it had been years prior. We were also all file sharing, using Napster, Limewire, and other decentralized software to share songs with each other. I loved it because I could search rare concert tapes of my favorite artists and also send them to my friends. What we didn’t realize, nor did the labels, was that it was about to come crashing down on all of us. A simple file-sharing protocol created by a high-school kid brought a $50 billion entertainment business to its knees. It wasn’t just the music business, but Hollywood as well.

I loved my neighborhood. Tower Records was three doors down on lower Broadway and I spent thousands of dollars on new music every year. In July of 2006, as I was walking to work from my East Village apartment, I noticed that Tower Records On 4th and Broadway was covered in brown paper and the entire building was for rent (it’s now a Soul Cycle). I thought to myself, that’s odd, I thought business was great. In the months that followed, Virgin Records on Union Square and HMV at 34th would also close. It turned out file sharing was really pervasive. Everyone was doing it, even us. Within a very short time labels were firing large amounts of their staff and not paying their bills. They were hunkering down for a brutal awakening and possibly their own demise. We were owed hundreds of thousands of dollars for long-term work we had done. We couldn’t pay our bills, either. Two months later we were bankrupt and selling our gear at ten cents on the dollar.

Months later, the financial markets would be rocked as the effects of the collateralization of real estate debt caught up with the investment banks and sent the global economy spiraling. In quick succession, the record companies, who had blocked Steve Jobs and iTunes for years, all lined up to lick his boots and offer up their titles for online distribution. That was the first pin to drop. The .99-cents iTunes single. iTunes helped the labels, sort of. They never really hired back all the people who were fired. They became contractors with no salary or benefits. The value of mixers’ work like mine cratered from $4000 or $5000 per mix to $250, $500, $100 a mix.

The industry is still at that point. almost 20 years later. The steady devaluation of artists’ works and engineers’ value continued to decline with the ascendance of the streaming networks like Spotify. Spotify provides a user interface to search and listen to music, and that’s about it. They don’t provide budgets to record, or for tour support, publicity, hotels, or any of the services the labels provided. They take 99.7% of the profit from every transaction with you. And the artist gets, well…nothing, practically speaking.

Enter NftyTunes

I know this was a long, drawn-out intro for a little tech company, but stick with me. This is a good story.

About a year ago, I started noticing the NFT (non-fungible token) emerge with doodles and graphic pictures being auctioned off for 1 ETH (roughly $3000). These were the same pictures that three years ago were being bought on Fiverr for $30. What was happening? Well, my best guess was that all the young idealistic people had invested in crypto years ago when it was cheap, and were now crypto millionaires, and they wanted to buy stuff. Well, what could they buy? Crypto credit cards weren’t quite here. They could buy these cute pictures! All at once, graphic art was being valued at 100x. This has now become the greatest financial craze since tulip bulbs.

As I was observing this I thought to myself, if art is being revalued like this, why not music? And while we’re at it, why is all the art on OpenSea and Foundation silent? In a blast of inspiration I conceived of a new NFT product, the Nftyloop, a fusion of animation with a hip-hop loop. Having spent decades making rap records, I knew a great two-bar loop was gold, and rappers and listeners alike could groove to a great loop for hours. It has a hypnotic quality. I speculated that with such a groovy beat, people might linger on the art a bit longer. I started creating them in Logic Audio and testing the loops on my friends on Instagram. People really liked them.

A couple weeks later, I was in New York working on a mix and my manager and I were having breakfast. I told him about my NftyTunes idea. He said, “I want you to meet this guy Kush I grew up with, he’s helping me with my DAO (decentralized autonomous organization). He’s a Web3 developer and he might be able to help you.” The next day, I met Kush at the studio and pitched him. He loved it. Kush was employee number one and is now the co-founder of NftyTunes. We now have a much bigger crew of developers, graphic artists and web designers.

There are now many friends and associates in this space who share our enthusiasm. One is Scott Page, an award-winning musician and tech evangelist. Like so many people in the Web3 space, Scott immediately got what we were doing and invited us to share his launch at SXSW. Scott and I jammed all night at the Speakeasy in Austin. Many people posted it was the best party at SXSW this year. Who knew that jamming over video loops could be so fun? There were also quite a few venture capitalists at the party who shared our enthusiasm. The next day, with the company being all of three days old, we got two offers for funding.

What we are building is nothing less than a completely new architecture for art, and a new economic mechanism that places the value of the artist at the top of the pyramid.

We are doing 93/7% splits on all transactions. That’s roughly a billion times what Spotify is offering. As our committee grows and our partnerships increase, we are confident the word is going to spread like, well, a virus. If that’s the case, we are happy to infect the word with goodwill and respect for all artists. Join our movement!