This episode was previously published on the Profitable Musician Show.

Mark Miller from Labelcoin is going to talk about his journey and how he got started in this cool new venture. Mark was an indie artist.

His background

When he was fourteen, he heard somebody on the radio and thought it would be fun to do that. He started learning about how to record his own stuff and other things. He felt he was not a good singer and was not confident. At first, he studied Electrical Engineering in college. However, he felt a strong divine intervention telling him that music is where he is supposed to be. He then went to study music school in Indiana.

He was going to study guitar, but he was told the school needed more male vocalists so he was encouraged to audition. He got into pre-music. Basically, that means you have a year to improve and they will let you stay. Otherwise, they will kick you out. Mark improved enough to stay, and that was how he learned. After 2005, he started playing in house shows.

He recorded his first album in Nashville and went on for about five years. During that time, he got to be an artist in residence in Japan for a year and he met his wife. In 2010, on their honeymoon, his wife told him that she wanted to quit her job and join him in music. He thought it was awesome and that they needed a new business plan.

They became the duo, So Long Solo. They discovered the college market, jumped into that space and learned how to do it well. By the end of their touring career in 2015, they were touring 8 to 10 months a year. They were able to buy a house in Nashville, have savings, and record their albums. They made $80, 000 net income which he and his wife split between themselves.

In 2016, they started Brave Enough Entertainment, representing artists with much higher ceilings who were way more talented. As they were booking them and doing artist development for artists with hundreds of thousands of followers or even into the millions, it was stunning to see that these artists had the same challenges. They still had second jobs and had to find ways to make ends meet. They also struggled to find and build their team. That brought them to what they are doing now with Labelcoin.

In 2019, their artist agency was the College Booking Agency of the Year. In 2020 when COVID hit, all shows were canceled and things were not looking well. He met with a co-founder, Chad Peterson, who was a former Wall Street guy, an investment banker and a VC investor. He brought the idea of securitizing music. Mark then thought about marrying it with blockchain technology. They will focus on a 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 Mark and his team started what is now Labelcoin which they’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.

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.

In 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 they are implementing that into the second phase, in the first phase, they 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 Labelcoin does is to have a song valuation formula that goes with a lot of what’s happening now with song catalog sales.

Artists earn every time someone sells their music. It continues to pay the artists forward. With Labelcoin, they have 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.

Initially, there are going to be people that maybe 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.

Curators

Just like how music is curated in the Women of Substance Music Podcast, Labelcoin also has Curated Collections. which are basically song mutual funds. As a song picker and curator, you would be able to choose. When you curate a song and find it amazing, you can invest in it. 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.

Partnering with distributors

They also partner with distributors so artists can go through their regular distributor as long as they have splits enabled or ones that can partner with them. CD Baby, DistroKid, or different places like that are great. It’s simple to do that. Labelcoin is tying into their normal workflow. It’s pretty seamless. Now, with distributors they are specifically doing a split. They have to confirm that the artist owns the rights to the song. If the artist is selling 10% of the song on Labelcoin, then they 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 Labelcoin is going to distribute to all the rights holders. If nobody buys it, they keep paying artists all the royalties for any unsold notes. It’s never gone until it’s sold. It covers everything that the distributors are collecting to be sold.

Some charges and fees

Labelcoin tries to keep its share as small as possible. They get 2% of the listing. When people are buying the songs and sharing the 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.

What artists can sell

It has not been finalized but artists can sell somewhere around $2,500 worth. 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 the artists still maintain full control of their careers, their future, and not signing away the next five albums or their life and hoping it works out.

They can also sell back catalogs aside from new releases.

How to get started with Labelcoin

Artists can go to Labelcoin.io. It’s free. 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. You can also check @Labelcoin on their socials.

In their second phase in 2023, Labelcoin is working on an aggregated NFT marketplace. Wherever the interviews are hosted, whether they are on OpenSea, Sound.xyz, or some other space, artists can have those integrated into one spot and other artist profiles where their fans can find them. They will also have NFT minting on our platform at that point as well.

Labelcoin 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.

Links mentioned in this episode: