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HitPiece is one of Trapital’s sponsors this quarter, and I wanted to have Rory on to discuss the company’s initial launch. It didn’t go well, but the company has since relaunched and now works with Rick Ross, ATL Jacob, and more. We talk about what went wrong, what HitPiece has done to improve, how they plan to rebuild trust, and bigger trends in the industry.
How HitPiece rebounded and relaunched
Rory Felton has spent most of his past two decades in music being pro-artist. He developed talent and sold millions of records under his Militia Group label that he co-founded and eventually sold to Sony. In the early days of social media, Rory worked with Top 40 artists and majors to monetize on these new platforms. That’s why it was ironic that Rory was recently criticized for being anti-artist.
Rory founded HitPiece two years ago. HitPiece is an NFT marketplace focused solely on music collections. While in beta earlier this year, unauthorized NFTs from big-name artists became available for purchase on HitPiece. HitPiece was hit with widespread backlash from artists, the RIAA, and many others for copyright infringement. The company quickly went dark while the team recalibrated its business.
Months later, HitPiece has now re-launched. This time with strictly-authenticated collections on-site from rising artists like ATL Jacob, Pyrex Whippa, and proven commodities such as Rick Ross. A metaverse add-on is also in the works to virtually display purchased NFTs. In many ways, the industry-wide blowback changed both Rory and HitPiece. The company’s intent has stayed consistent from the get-go: to make NFTs easy for both artists and fans.
Earning back trust
HitPiece’s failed beta brought Rory and his team back to the drawing board. Not only was the idea of a complete rebrand kicked around, but the group even brought up whether it was worth continuing the business altogether. In the end, the group’s decision made itself.
“It’s not in our nature to hide or run away. We think web3 is still a huge game-changer for both developing and established artists.”
Rory re-built trust in HitPiece by explaining what went wrong to artists and music executives — many of which expressed optimism in prior conversations before the beta release. But it’s not just negative sentiment around HitPiece that Rory is up against inside the industry, but also the perception of NFTs at large.
“There’s artists that just don’t want to have anything to do with the NFT space. In general, there’s still a lot of misunderstanding around web3 and what it can enable.”
Rory’s pitch to web3 skeptics is simple: the new technology enables what already existed inside the industry and that’s fan clubs or VIP experiences. The only difference is blockchain allows for a deeper artist-fan relationship and increased ownership for both sides.
Co-existing with the industry, not replacing it
Arguably, some of the hesitation inside the music industry to NFTs is the narrative being pushed by many web3 founders and enthusiasts: The narrative that blockchain will completely upend the supposed antiquated and non-artist friendly system that exists today.
Rory isn’t that dogmatic. Having spent his career inside the industry, he disagrees with how many web3 founders characterize music execs as being anti-artists. What Rory is trying to do with HitPiece is add a new layer to what already exists.
“Web3 is not about being in web3 only and forgetting about the rest of the industry. It’s not about releasing your content and music as only NFTs and not streaming, going on tour, syncing your music to films and TV, or doing brand partnerships. It’s just one part of the bigger puzzle of connecting with fans and bigger audiences.”
This is the reason why all partnerships HitPiece does with artists are non-exclusive. That includes an upcoming drop with fast-rising producer ATL Jacob. Many pieces of that drop will include real-life experiences, such as studio sessions with ATL Jacob himself.
Rory is quick to point out that a fan-artist experience like that would be infinitely harder to pull off without web3. There would be too many gatekeepers to bypass before an experience like that could ever happen, and that’s ultimately the value-add web3 brings.
“Web3 increases leverage for artists if they embrace it and engage their community.”
The best time to be an artist
Rory’s intro into the music business came in the late ’90s as a 16-year-old. Naturally, his big focus at the time was helping sell records for local artists and bands. This continued into the 2000s with his own co-founded label, The Militia Group.
While he did cut his teeth in the CD era, he doesn’t yearn for the past. He believes that we’re now in a golden age of music, particularly for artists.
“It is the best time in human history to be a music artist. It was so hard in the ‘90s and early 2000s to stand out.”
Rory believes music has been re-valued in the streaming era and that web3 is the next natural progression. He already knows of artists that have earned more from NFT drops than months of streaming by catering to their super fans.
“This concept of 1,000 true fans is truer than ever. An artist doesn’t need to be a pop star to make a living. They just need to cater to a niche of dedicated fans that love what they’re doing.”
Listen to our full conversation on the Trapital podcast:
0:50 Rory’s two decades in the industry pre-HitPiece
4:12 “Best time in human history to be an artist”
7:10 What went wrong with HitPiece’s beta release
12:23 Re-gaining industry trust after the backlash
15:42 Did HitPiece consider rebranding?
18:39 How HitPiece built a collection with rising star ATL Jacob
21:57 Web3 co-existing with industry, not replacing it
27:53 Building out a music-centric metaverse
30:54 A virtual display experience is what’s missing from NFTs right now
33:07 How HitPiece will compete against Facebook, Opensea, and other big players
38:26 Types of NFT collections on HitPiece
40:22 How to win the music industry in 2022 and onward
45:28 HitPiece plans for 2023
[00:00:00] Rory Felton: We think this space is for everyone. And we think that the smallest artists on the planet can actually benefit from Web 3.0 in a way that maybe streaming isn’t changing the game for them right now. For instance, we’ve worked with baby developing artists that are making more money from Web 3.0 in one launch of an NFT collection than they would over two to three months from streaming. In general, we all think music’s the coolest thing in the world. And so we want to revalue it in a way that maybe NFTs allow us to that technology hasn’t enabled in the past.
[00:00:40] Dan Runcie: Hey, welcome to The Trapital podcast. I’m your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more, who are taking hip-hop culture to the next level.
[00:00:60] Dan Runcie: Today’s guest is Rory Felton. He is the co-founder and CEO of HitPiece, a company that’s bringing artists and fans together through NFTs in real life experiences, metaverse experiences and more. HitPiece is one of our sponsors this quarter for Trapital, and I wanted to have this conversation because Rory and HitPiece have had a very interesting past couple of months. Back in February, they launched a platform, but there was a ton of controversy surrounding it because a lot of artists had their music and their NFTs for sale on the platform without their consent, and understandably so, it created a bunch of frustration and news around some of the consent around NFTs, some of the perception around the space overall and how that impacted Rory and the team. So in this conversation, we talked about it. We talked about how that happened, why it happened, and what Roy and the team are doing now moving forward for that not to happen in the future. And then we talked about what does HitPiece look like now moving forward, what are the opportunities more broadly for Web 3.0 companies in music, what are some of the challenges, what are some of the artists that they’re working with now, like ATL Jacob, who just signed with Republic Records. So we talked about that, and Rory has a ton of experience in the music industry, even before HitPiece. So we talked about how that shapes his current strategy and what he thinks successful look like, not just for HitPiece, but for the overall industry moving forward. Great conversation and tons of insights, and especially for a lot of the founders that have built stuff messed up and want to hear what it’s like to keep things going. This is a good one to listen to. Here’s my chat with Rory.
[00:02:39] Dan Runcie: All right. Today we are joined by Rory Felton, who is the co-founder and CEO of HitPiece. But before we talk about HitPiece or anything like that, I know you’ve worked in music for a number of years and you’ve had a few different hats in this industry. What attracted you to the space early on?
[00:02:58] Rory Felton: Oh, man. So when I was 15, I started playing music and I learned pretty quickly that I really couldn’t write songs very well. So when I was 16, I started putting on local shows for artists booking regional acts, and that naturally turned into putting out records for artists. And in the nineties, we were manufacturing CDs, so I actually learned the process of printing, shipping it to a factory, calling distributors, trying to get them to ship out our CDs to retailers. And that’s how I started. In 2000, I moved out to LA to go to school at SC, was a little bored and started another record label. Our first few records did quite well. I think our first record almost went gold, and so that created enough revenue to really fund the company and grow that record label. And for the next 10 years, we ended up selling millions of records. I developed dozens of artists, felt really proud of what we accomplished. Sony Music later invested in the company and later acquired the major artists that I worked And I took a breather for a moment because working with artists can be a lot of work and can be emotional and and challenging in so many ways, but also fun and exciting. And I ended up finding a real passion for the technology side of the music industry. I really wanted to have sort of a macro impact on the industry in helping artists create new technologies to connect with their fan base, develop new business models. And I saw, sort of saw the old record company structure or record deal structure is sort of a little bit antiquated, and there are so many technologies here that could allow artists to directly connect with their fans and connect and create new and unique revenue streams. And so I spent several years in the early 2010s helping top 40 artists sell music and merchandise in stream on social media like Gaga, Green Day, Snoop Dog, Tim McGraw, A$AP Rocky, all the major labels. And I did a couple years overseas on a volunteer trip and then came back to the music space really on artist management initially, but also in blockchain. I bought Bitcoin in 2014 and was always really curious about blockchain’s application to the music space. And in 2018 I co-wrote a white paper on digital collectibles for artists and could not get anyone’s attention back then on this space and the idea of fans buying digital merchandise from artists and connecting with them and the idea of an artist creating a layer of community ownership and what they were doing. And then obviously fast forward a couple of years, the NFT space, that specific protocol has really taken off four creatives and four artists. And I decided to jump in full time to apply this innovation to the music industry ’cause I saw so many opportunities for artists to take advantage of it.
[00:05:43] Dan Runcie: That makes sense. And one thing there before we get to the HitPiece part of it where you are today, selling your record label and everything there to Sony, what is it like watching the current movement now with other record labels being bought up by other record labels, especially the majors or just some of the catalog purchases there? Because I’m sure you did this in a very different market than what we’re seeing now.
[00:06:07] Rory Felton: Yeah, so a lot of people don’t remember this, but in 2006 to like 2011, it was really hairy for the record industry. There were a lot of unknowns. Downloading was here, digital like iTunes and its competitors, however, streaming as a paid streaming format really hadn’t taken off or really been fully established. And so you had these massive problems still with file sharing and people just assuming music was free, right? And just downloading it without paying for it from all sorts of websites. And so there was this moment, an era where like, gosh, golly, we don’t know if these major labels are really going to figure it out. And kudos to them, they struck some really savvy deals and made streaming something that really, really worked. So today’s era has been amazing. I get really excited for artists that are able to have huge liquidity opportunities if they’ve built a catalog over their lifetime. And then also I get really excited just as more opportunities to finance your career than there ever have been. You can now borrow against your catalog. You can borrow against your master rights or publishing rights to fund something you want to do moving forward. You could never do that 10 or 15 years ago. So you have players like that in this space. You have distributors in this space, almost playing like record labels and advancing monies to artists, but allowing artists to keep their masters. And then you have record labels sort of playing as distributors. And so you have all these middle men kind of playing as different roles. And I think it’s great ’cause artists have more opportunity now than they’ve ever been. I’ve been saying this for a few years. It is the best time in human history to be a music artist. It was so hard in the nineties and so hard in the early 2000s to stand out, and now even though we are in some economic challenges right now, and just the macro economy, it’s still really the best time in human history to be a music artist.
[00:07:59] Dan Runcie: Yeah, I think that’s generally where I land with this too. I know that there’s a lot of people that have a bit of the nostalgia and yearning for being able to sell CDs and being able to make the money off of CDs, but it was still a market that had tons of gatekeepers. And even without Napster, I still think that there would be a lot of challenges ’cause there were a bunch of CD sales that were of bad catalog that weren’t exactly of new things, but we could go all day talking about that. But it was a fascinating time for sure. But fast forwarding a few years though, with HitPiece, of course you have the idea and you see the opportunity to be able to make it easier for artists to monetize and take advantage of what’s here. And I know that earlier this year, the launch day didn’t go the way that you had wanted it to. And there was a lot of press and some negative things written about just the intent and where you all were trying to go. And I know that there are also a few artists too, whether it’s like Jack Antonoff and a few others that had some complaints about how it went down and after reading a few of those, I definitely saw some of the responses and from your perspective as well, but I never really got a good, clear sense for what was the . Intent and what would this have looked like if the launch had went as well as it could have, so it’d be great to hear a little bit about that, because I feel that’s the part that was a little bit missing in some of the discussions about what had happened.
[00:09:19] Rory Felton: Yeah. So first and foremost, I really believe in innovation, and I really believe in enriching artists, and artists being able to control their music and what they’re doing. And so we were looking at this space and thinking about like, man, if I put on my music fan hat, what’s the ideal experience I want as a music fan? What would I love to have more than anything? And platforms like Spotify and Apple Music has sort of trained us to feel like everything could be in one place. And so we put together this idea to create an experiment where we tried to show artists and labels and rights holders, hey, this is what the future could look like. Here’s sort of this private game experience that we think would be really fun to onboard a huge number of people into this space very quickly and create a massive revenue stream for artists and rights holders. And where we really messed up is we failed to put the proper guardrails around it to where too much of it was public too fast. And that was something that we definitely messed up with. We were having active discussions with hundreds of artists, managers, major record companies. We had showed them what we’re doing. Hey, what do you think of this experience we’re creating? And all the feedback that we received was highly positive. Everyone was really excited about this potential future for a platform that could turn on a whole new revenue stream for them without a lot of work. One thing I’ve experienced as a manager and a record company founder is that artists are so busy. They’re in the studio making music all the time. They have to go on tour, they have to make content for social media all the time right now. They’re so busy doing all these things you don’t want to add just another thing to their plate. And so we’ve always tried to make it, what’s the easiest way for them to onboard into a new space without having to create a huge amount of work for them? So that was our intent. Clearly, we failed to have the proper guard rails around it. And we took down the beta after a few weeks. And there were obviously some artists that expressed some frustration with it. And since then, we’ve had conversations with hundreds of artists and labels and managers and industry leaders, sharing with them how we feel about this space, what we think is coming, and the overall sediment has been really about excitement and enthusiasm. about what’s coming in this space and the opportunities that are being created for artists and rights holders in this space.
[00:11:39] Dan Runcie: Got it. So if I’m understanding correctly, it’s like you were trying to show, okay, this is what it could look like. Let’s give you an example of what this could look like. Like, if your Taylor Swift, like this is a type of revenue stream that you could unlock, but the presentation of it was more so, hey, here’s where you can buy Taylor Swift’s, you know, access to her likeness or access to her music. And you were trying to more so show a demo as opposed to an actual marketplace. Do I have that right?
[00:12:07] Rory Felton: Yeah, it was definitely a live demo. There was no music used on the website. As a music rights holder myself, as someone that’s worked with artists for decades, we would never utilize music in a way that was infringing on their rights or unapproved in any way. And that’s something that I think really got lost in the storm of it all is the fact that there was no music on the website. We had some marketing language on the website, and again, we’ve looked at this as a beta experiment for a small audience. It was by no means built or intended to be exposed to the world at large. But we did have some language on the website that was not fully fleshed out at the time, again, like many beta experiments are.
[00:12:49] Dan Runcie: So was part of it also as well that the beta was meant to be a bit of a closed opportunity, but then it leaked, or then it got out?
[00:12:58] Rory Felton: It was public and that was an error on our end. You know, we failed to have the guardrails built around to cut off certain sections or functions of the website that shouldn’t have been made public.
[00:13:08] Dan Runcie: Got it. Okay. So since then, how has it been having a lot of these conversations? ’cause obviously you were able to drum up a bunch of support leading up to February and you still had plenty of connections now with artists that we’ll get into soon. But what was it like having those conversations, whether it’s with labels or others where you’re trying to communicate not just what happened but also build up a bit of trust given the impact?
[00:13:33] Rory Felton: Yeah. What we found is that, well, having been in this industry for two decades, I have a huge number of relationships from, you know, the tops of the major record companies, major publishers to many, many, many managers of both developing artists and some of the biggest artists in the world. And they know me, right, so they knew my heart, they knew where I was coming from, and I just was able to be honest with them, and say, look, we moved a little too fast here. We built this product a little too fast without fully flushing out where we should put certain guardrails in place, and the response was, hey, look, we get it, no problem. We’re looking for solutions in this space. We need easy ways to launch collections to audiences that might want to be interested in this. And right now everything on the market feels a little too complicated, right? NFTs and Web 3.0, it feels nerdy and it feels complex. And I think a lot of the early people in this space may have made it that way on purpose so that there feels like there’s a level of like seniority or gatekeeping to it. And we’ve approached this and been like, no, this is actually pretty simple. This is actually making what has existed in the world of music already, such as VIP experiences, and fan clubs, and even, like, DRM music, and it’s creating it on a layer of new technology that actually gives more ownership to fans and actually deepens relationships between artists and fans. And so that response has been really exciting and I think that’s what’s contributed to us being able to onboard the large volume of artists that we have onboarded so far and continue to have exciting conversations every single day with folks across this space.
[00:15:14] Dan Runcie: Have there been any lingering impacts since then? Like, obviously there’s the initial response and things have happened. But since you’ve relaunched. And it does seem like, as you mentioned, you still are stable of artists and there are a bunch of folks that you’re working with but are there any lingering impacts from what had happened?
[00:15:30] Rory Felton: I would say there’s probably still some artists that just don’t want to have anything to do with the NFT space. I think that in general, there’s still a lot of misunderstanding around what Web 3.0 is and what it can enable, and there seems to, generally speaking, a level of negative sentiment towards NFTs in some categories of the music industry. But that seems to be sort of a blanket feeling or sentiment towards NFTs, not necessarily what we’re doing.
[00:15:58] Dan Runcie: Yeah, I’ve heard that from, was just talking to a few people about this earlier this week, and we’ve heard it as well, just the polarizing nature of it that’s bigger than HitPiece. And I think it’s something for a lot of companies to navigate, but it’s not necessarily at one company itself. But, I guess, leading up to the relaunch recently, were there any talks at all about rebranding or anything like that? ‘Cause obviously I know that staying with the name is also a statement in itself.
[00:16:22] Rory Felton: Yeah, clearly, we thought about every sort of path we could take. You know, we even thought like, do we want to do this? Like, is this worth the battle, right? And what we decided at the end of the day was, look, some folks thought we were doing something we were not doing at all. Our intent was completely misconstrued, and we felt like if we were to shut it all down and say, you know, good night. It’s almost like the people that were creating this narrative would’ve won or that narrative would’ve become true, right? In our hearts, in our feeling, and everyone at the company that’s at the company that was experienced all that, we all felt together, like, look, this isn’t what we are doing. This isn’t what we’re all about. Like, we should stick with it and see this through because we felt like the brand was now very well known for better or worse, and it’s up to us to sort of, to see it through and show to the world that, no, this isn’t what we were trying to do. We’re actually making something amazing, we think, for artists and so far, in the collections that we’ve launched has done really well for the artists that we’ve worked with. So that’s what led to our decision to stick with the brand and keep going. We could have posited to a whole other brand, but everyone would just say, oh, those are the same folks that did this. So what would be the point of that? Because it’s still me. Unlike a lot of people in this space, I’ve never been anonymous, right? I’ve always been completely public with who I am. HitPiece was on my LinkedIn, on my branding since early last year. I didn’t hide from any of this. I engaged with anyone that wanted to have a conversation and still will. So it’s not in our nature to hide or to run away. We think that Web 3.0 is still a huge game changer for both developing and establishing artists, and we want to provide incredible solutions for artists.
[00:18:10] Dan Runcie: And what was the hardest part for you personally during all of this, as the founder, as the leader of the organization, but also as a human being dealing with the fallout and just trying to keep things moving?
[00:18:22] Rory Felton: Oh gosh. I think for a little bit, like, you know, personally I’m a father. I’m a husband, and so for me, it’s just not letting what some people in social media or in the media might say about me impact who I know I am and who I am to my family. First and foremost, that’s always most important to me. So that was probably the biggest challenge and, you know, clearly, it’s not something that we wanted to happen, but we’re really excited and bullish on the future right now.
[00:18:48] Dan Runcie: For sure. And I think you have a lot of reasons, too. One of the artists that you have, ATL Jacob recently signed a deal with Republic Records. And I think he’s someone who’s definitely been rising quite a bit, and I assume that’s a partnership that you are able to land in the most recent months. So what did that look like and what has it been like working alongside someone like him and then seeing the growth continue?
[00:19:12] Rory Felton: Yeah, Jacob was amazing. We are so blessed to really have just the perfect time to connect and meet him and hear about what he thought about this space, and what he wanted to do, and had that sort of build a collection together that really made sense for his brand and offer value to his super fans that really you can’t get any other way. And so that’s what we’re really excited about. We, of course, knew he was in conversations with major labels at the time and knew something would happen in that space. We just feel honored and privileged that we get to be his partner for Web 3.0 because he’s clearly an incredible talent that’s had huge success on the producing side in the last couple of years, and I think we’re going to see him break out as an artist over the next year and reach completely new milestones as well in his career.
[00:19:57] Dan Runcie: And what was it like for what he was able to do specifically on HitPiece? ‘Cause I think a lot of people that see artists, they understand what it’s like to be on a major label, but from an economic standpoint, like what they were able to do with a platform like yours, there still is a bit of questions, and this honestly may lead to some of the confusion some artists may have about NFTs, Web 3.0 in general, so obviously you may not be able to share all the details, but, like, what did things look like for him right now with what you’ve all been able to work on and what he’s released, and what that ends up looking like for him?
[00:20:27] Rory Felton: Yeah, so he’s building a beautiful collection of art that’s going to be completely collectible, and those tokens will be connected to incredible in real-life experiences. So some of those tokens can be redeemed for a studio session with ATL Jacob. So rather than, typically in the music industry, right, you have to go through a manager or you have to go through a record company. You have to go through gatekeepers to get to someone on Jacob’s level. Here we’re saying, no, let’s break down all the barriers and say, actually through Web 3.0, you can have an incredible experience, and you could work with, you know, a producer that spends six months at the number one rap producer chart on Billboard. Like, you can actually work with them and make a record together, right? Experiences like that we think are incredible, exclusive merchandising items. And being able to essentially build a really connected VIP club of sorts that will get you access to experiences, to events, to really in- person, one on one time with these artists and producers that people love. You know, this is what I think Web 3.0 is all about. It’s creating experiences that are unparalleled in other parts of the music industry.
[00:21:40] Dan Runcie: So given those experiences, and I think those are definitely things that fans and everything value and things that he could likely build a career standalone on. Is there any particular question or thought about when an artist-producer like him goes in, does a deal with a major label as a bit of it like, oh, well why did you need to do that? Like, you could have continued working here, like, part of the promise is getting more inherent value for the work itself. Was there any tension there at all with him or even with some of the other artists?
[00:22:11] Rory Felton: No, because every artist is different, and every artist gets different types of opportunities. And to me, Web 3.0 is not about being in Web 3.0 only and forgetting about the rest of the industry. It’s not like you release your content or your music only as NFT and you don’t do streaming, right? It’s not like you do that only and you don’t go on tour, or you don’t sync your music to film and TV, or you don’t do brand partnerships. It’s just one part of the bigger puzzle of connecting with fans and connecting with bigger audiences. I think this huge opportunity for artists to connect with fans through Web 3.0 while also doing partnerships on the record side that they want to do that work best for them and their brand. For Jacob specifically, he has a whole record label, Wicked Money Family, that he can do. He can sign new artists, too, and they all can go through this bigger system. That’s not something that not every artist can just do on their own, right, being able to plug into a bigger system is great for him. What it does do is it may limit what type of content an artist can mint as an NFT on their own, such as if you’re in an exclusive recording contract, it may limit or prohibit what specifically you can do with music. But those are always open discussions, and every single recording contract is unique and specific and different, and provide artists and labels with all sorts of different rights.
[00:23:35] Dan Runcie: Got it. So for someone like him, and I guess as well thinking about how you’re building the business, I do feel like your stance essentially is that a company like HitPiece can work, and they don’t necessarily have to be exclusively here. They could work with majors, they could work with others. Do you feel like that mentality is similar to other founders you may talk to in Web 3.0 or with NFTs? Because some of the folks I talk to, there’s a bit more of that dogmatic approach where the purpose of our platform is that you don’t need to do that.
[00:24:08] Rory Felton: Yeah. So first and foremost, every partnership we have with an artist is non-exclusive. They could do a collection with us and go to a collection with anyone else or on their own using their own software at any time. That’s something that I believe in. I believe in, like, we’re not here to be an exclusive partner in any way. So I believe in artist freedom. Artists should have the freedom to do a record deal if they want to. Artists should also have the freedom to say, hey, look, I’m going to stay independent. I’m going to build up a balance sheet of masters and publishing that I own, and I’m going to leverage that in the way that I want to. I think every path is different for each artist and some work for others, and some don’t work for others. And I’ve seen artists stay independent, build balance sheets of masters, and publish they own, and be tremendously successful. They build these multimillion-dollar businesses that they can operate and function like their own business. And then at the same time, that can just build up their leverage for if a major label wants to do a deal with them, they’re saying, hey, look, my business is already doing millions of dollars a year. If you want to be in business with my business, you’ve gotta make it worth my while. To me, it’s about, I think Web 3.0 increases leverage for artists if they embrace it and engage that community. But by no means would I look at it as a dogmatic Web 3.0 anti-record company approach. I don’t think that’s it at all. I think we’re already seeing major labels enter Web 3.0 and allow their artists to try things in Web 3.0 that I think is really exciting. And every conversation I have with major labels and people at those companies is it’s curiosity, it’s intriguing, it’s fun. They are by no means looking at it as a do-or-die or like you said, a dogmatic approach. I come from the music industry. I think maybe some other founders in this space don’t have two decades of music experience, and so they’re wanting to disrupt an industry that they think needs disruption. Whereas I know all these, all my friends that work at labels or at management companies, I mean, they bleed for artists. They put their heart and soul into trying to break new artists, and these are the people you want to be a part of your business, right? You don’t want to just alienate them and cut them off. That being said, historically, some record deals have been a little unfair for the artists, right? And I’m not trying to say that that’s not the case, but I think innovation like Web 3.0 is continuing to increase artist leverage and continuing to give them more options. More options is really what it’s all about.
[00:26:42] Dan Runcie: Yeah, and I think even the point that you mentioned at the beginning of the conversation, just your stance on streaming itself and what it unlocked for the business, that is a bit more of that holistic perspective as opposed to some others that, you know, I think the belief that music should have inherent value, which it should. I think it’s a bit of that dichotomy, and to be honest, you hear less of that from the record labels with, most of the time, it maybe from some of the founders and folks outside of the industry. But it’s a fascinating time. It’s a fascinating time. And I know that with you, you’re not just thinking about NFTs and things minting for HitPiece, you’re also having a metaverse, you have the Lounge and having that as an opportunity for artists, and I know that’s something that’s continuing developing as well. What does that look like and what does that opportunity look like for artists?
[00:27:34] Rory Felton: Yeah, so one, we realized there’s a small but growing population of people that love to collect music as NFT format. I think of NFT as it applies to audio music as a new format, just like there was vinyl, there was downloads, there was streaming. NFT is sort of a new type of format for music, and there wasn’t really a centralized place to play all your music. There are a couple of apps butting up that allow you to sort of plug into your wallet and play your music collection. We wanted to create a space that allowed a collector to display NFTs that they’re collecting from music artists on the wall, but also put them on a record shelf if they’re music NFTs and allow people, allow them to come in and play their own music, allow other people to come into a fans room and play their music. I’ve seen that a lot of these metaverse spaces that fans are using to share their NFTs are almost like part business card part, like, showing off and bragging to their friends and their community what they own, what they collect. It reminds me a lot as being a teenager of collecting CDs and records that were hard to find from really, really new artists and sort of bragging with your friends that you got to them earlier than they did. And we wanted to sort of mimic this experience in a really cool, beautiful, metaverse space and also be a space that artists could brand and create their own version of, as well as invite their VIP community to be a part of, be it virtual record listening parties or virtual tour kickoffs where they could display or present new music. One functionality we have that artists are taking advantage of is token-gated releases. So they might release regular releases like they always do but put out maybe a limited edition mixtape that is only available to people who buy an NFT to access it. And so you go into the Lounge, our system reads that you have that NFT in your wallet and it unlocks access to music that you wouldn’t otherwise have. That doesn’t just have to be music. It can be all sorts of content. So the idea is you’re rewarding your most engaged community token holders with really cool experiences. We speak with artists that want to create experiences that get updated every single month, so keeps fans coming back to this space that they almost treat like a social media platform or like a website, but the artist gets to control it entirely themselves.
[00:29:58] Dan Runcie: I feel like the fan piece of this is the unique piece of this, and I know that’s a bit of the broader conversations that people have had about the metaverse, but being able to have that type of way to actually physically show what you have, and I think this is a piece that was missing a bit from, I’ll call it the first stage of the NFT boom, right? We saw a lot of people changing their profile picks, but ultimately, how do you create the opportunity for people to have some type of visual that you can see, right? Like, people are buying vinyls right now. People want to be able to have those vinyls visible or no different than buying DVDs or VHS tapes back in the day. Part of it was the medium itself, but you also, it was a statement of who you are. Having some type of collection that can show that I think it’s valuable, plus all of the exclusive perks that they can get from their favorite artist or from their type of experiences. I do think that that is something that a lot of fans would value, assuming that it can be somewhere where the people that they want to see those things also are engaged in.
[00:30:59] Rory Felton: Yeah, we see there’s millions of people around the world that build up massive record collections on their wall. And when you go into their house, it’s often the main feature of their house is their record collection. And oftentimes, that’s tied to a really high-end audio system as well, depending on where you’re at and your lifestyle, right? And we wanted to sort of create that experience for anyone or everyone in the metaverse space. And so that’s what the Lounge is built around, is sort of to cater to that type of collector, if you will. I think we’re still very early in the Web 3.0 NFT space, clearly with where the economy’s at. I think we’re going to start to see some huge growth over the next year or two, but we wanted to build these tools now for people so that when more and more people start to come into this space every month, every quarter, they’re already ready for them to sort of plug into. And in fact, in a certain sense, it provides more utility for all NFTs. So you could buy music NFTs anywhere you want to on the internet and be able to pull them into this Lounge space we’ve created for them to perform, to play, and to share with their friends and their community.
[00:32:05] Dan Runcie: So this leads me to the age-old question I’m sure every venture capitalist asks at some point, how do you compete this against Facebook or Meta and their offering to eventually try to do this similar type of thing? But obviously, you have a more of a specific community. But I do know that with a lot of the different types of metaverse experiences, that type of thought is something that’s likely in the back of the minds for a lot of founders.
[00:32:30] Rory Felton: I think that there’s clearly dozens of metaverse spaces that already exist. We’re not necessarily looking to create an entire universe. We just want to create experiences and artist-branded experiences. And I think potentially we see a future where these artist-branded virtual slash metaverse experiences can be interoperable with a metaverse space that Meta is building or with the other ones that exist right now, such as Sandbox and Decentraland. We, of course, being a blockchain-based company, we believe in decentralization. We think that that’s a value to be recognized and to be held up. And so if we continue to see other metaverse spaces built on the same or similar blockchains, I think we’re going to see them be interoperable in new ways that may currently just not exist yet.
[00:33:22] Dan Runcie: And would the same type of logic apply as well for the marketplace that you all have, given folks like OpenSea or some of the other broader platforms?
[00:33:32] Rory Felton: So our big differentiator from a platform like OpenSea is we only allow authenticated artists to mint NFTs in our platform. One of the big challenges I see with some of the secondary-focused NFT marketplaces is that it’s a wild west still. There’s an insane amount of content that infringes on other people’s rights that use all sorts of artists’ name, image, like this audio without any sort of permission, right? And unlike a lot of people in this space or some people in this space, we actually believe in copyright. We think that’s really valuable for artists and artists investors, and we really wanted to make sure that we prevent it as much as possible, people minting content that they didn’t control through our platform. And so when fans or collectors come to HitPiece.com, they can feel assured that everything on our platform is authentic, is real, is coming from the artist that says it’s coming from. And that’s also why we were the first NFT company to integrate with Audible Magic. Audible Magic allows us to scan every single piece of audio file that gets uploaded to HitPiece to be minted as an NFT. And we test that against their massive database of over a hundred million songs to see if that song has been registered previously or as a copyrighted work from a record company or an artist. And we’ve already been able to say, hang on, that song’s copyright. We need to confirm whether this artist actually controls the copyright of this audio file. And so we want to make sure that only the authenticated parties, the owners of works are actually able to mint NFTs of their creative content through HitPiece. So that’s a big difference I see versus like the secondary markets of the world. But we also think ours is a little bit more just music-focused, right? Music NFTs are a little different than PFP projects or artwork NFTs, and so it really requires a different experience than maybe what some of the secondary markets that appeal to every one offer, if that makes sense.
[00:35:31] Dan Runcie: Yeah, that makes sense. And I assume that some of the guardrails there to make sure that things are authenticated, to make sure it has the right copyright and licensing, also tie back to ensuring that what had happened back in February doesn’t happen again. So part of that authentication, I’m sure likely may slow down some of the process, but it is how you ensure that everything that is there and what is transparent and seen is ultimately what you’re trying to actually sell.
[00:35:57] Rory Felton: Yeah. I don’t think an experience that we’ve built, that you can go to HitPiece.com and see right now really exists anywhere else, and we’ve really tried to focus on making, one, authenticated protecting rights holders. And two, just make it super simple and easy for both artists who are new to this space that may not fully understand all the language and this new terminology that’s come around, make it super easy for them to create their own collections and start minting NFTs with their creative content. And then also just make it super easy for music fans, you know, that haven’t purchased an NFT to be able to collect one. I would say that really a small, small number of music fans overall have still entered Web 3.0 or acquired an NFT, be it for free or purchase, and there’s still a huge amount of education that platforms like ourselves need to do and others about how to onboard into this space.
[00:36:52] Dan Runcie: So for you all, specifically, with the folks you have on board before and up to this point, is ATL Jacob, is he the most successful artist or the artist that’s made the most money on the platform so far?
[00:37:04] Rory Felton: So ATL Jacob’s collection has not launched yet. We have launched a variety of collections from artists like Surf, and we have a couple of collections dropping tomorrow. This interview, of course, will be out after this date. From King Midas, who’s a Baltimore artist, and from Pyrex Whippa, who’s a multi-platinum producer slash artist, a part of the 808 Mafia. He’s worked with artists like Future, Juice WRLD, DaBaby. And his collection also involves granting people rights to collaborate with him in the studio. Some actually get a limited-edition skateboard from him. And also some of them actually get a limited edition beat kit from him as well. So there’s all these cool, both digital and in real-life experiences, tied to token ownership, which we believe in.
[00:37:50] Dan Runcie: No, that’s solid.
[00:37:51] Rory Felton: But beyond those, we do have some other, like, multi-platinum slash diamond level music artists, Grammy-nominated artists that we’re looking to announce really, really soon.
[00:38:02] Dan Runcie: Any hints as to who they may be?
[00:38:05] Rory Felton: I’ll just say we have a lot of love for Atlanta.
[00:38:08] Dan Runcie: Okay.
[00:38:08] Rory Felton: Atlanta moves the culture. Atlanta’s, like, where my heart is. I love going to Atlanta. I think everyone in Atlanta is just coming. Being in LA for 20 years, like Atlanta’s so nice. You have that southern hospitality, but you have that hustle and that combination of both. Like, I just love being in Atlanta. I love the vibe of Atlanta.
[00:38:25] Dan Runcie: All right. We’ll definitely look out for that one, for sure. Thinking about the company and hearing how you’re building it, though, it does make me think about this article that you had written a couple of years back. I think it was an article you posted on LinkedIn actually is like, How to Win the Music Industry of 2019-2025, and you’re describing what the type of company would look like and what type of things they need to have in place. And now that we’re a couple of years past that, what are you seeing in the industry now, and is there any specific company that you think is checking all those boxes?
[00:39:00] Rory Felton: Oh, man. I think when I wrote that, it was one of those, like late night, man, why doesn’t this company exist? You know, if I had a hundred million dollars, this is what I would do, right? And it’s interesting, I see companies doing bits and pieces of that, and what’s fascinating is like I sometimes forget that I published that article, and I’ve even had, you know, investors and venture capital people reach out, nothing to do with HitPiece. They’re just really curious about what I wrote, and they’re like, this is it. How do we do this? And it’s been fascinating to see that piece impact, if you will. No one’s doing all of that, but I’ll gladly compliment folks that I think are moving in that direction. United Masters and what Steve Stoute built, I think, is incredible. If you would’ve told me several years ago that someone could enter the music distribution space with a similar offering to other platforms out there, I never would’ve thought someone could truly compete. But kudos to him and his team, they’ve completely proved me, and I’ll think a lot of people wrong. They’ve made a huge impact in, again, creating more opportunities for artists who can own their own content and not necessarily feel like they’re stuck to have to do the traditional record deal. I think what they’re doing is pretty amazing. Let’s see, who else? I got to give out props to Downtown Music Holdings group. I think they’re doing a huge amount of innovation in this space, both on the record side, on the distribution side, and on the publishing side. I’m a huge fan of Songtrust and what they built and that offering. I tell every music artist to work with if they do not have a publishing deal, sign up with Songtrust. It’s a super easy admin deal that just creates a great solution that captures money that you just cannot capture any other way. I try to tell every music artist, I’m like, look, if you’re writing your own music, you’re writing your own songs, you’re not going to get all your money that’s due to you, just through your PRO. Artists, unfortunately, they’re so busy, so much going on, they don’t fully understand that. And so it’s, like, the artists that I’ve seen turn on to a platform like Songtrust, they’ve literally turned on five figures plus in revenue in a quarter because that money is just sitting there if they don’t capture it, eventually just goes away, which is really sad. So those are my shout-outs. Those are companies that I think are doing it well. I think with that piece, if I were to critique it now, I think it’s a little too broad. There’s a little too much going on for one company to do. But I’m a big fan of companies that, you know, believe in artistic freedom and innovation and providing more tools and opportunities for artists while also actually creating real success for them.
[00:41:26] Dan Runcie: Yeah. I think what sticks out about those two companies is both the partnerships and the fact that there’s, you know, overall companies that are tying both of them together, right? So United Masters is obviously tied to the work that Stoute had done with or is currently doing with Translation on the ad side. And then that also informs so many of the partnerships and just how he has been able to help think and expand things there. And then Downtown, specifically how they’ve been able to just reorganize a few of the things and then restructure to just understand, okay, what could that stack look like. What could it have to have all of these companies underneath, but in this way that feels practical, but not in this way of, you know, a company trying to check every box that’s the hottest topic right now.
[00:42:12] Rory Felton: Yeah, yeah, absolutely. I think companies are wise to, that are established in at scale. They’re wise to take their time with Web 3.0 versus jump into it head-on per se. And I would encourage everyone to experiment. I think you can experiment in this space and try new things without having to go completely in. And of course, we’re a great solution to experiment with. But there’s clearly a variety of opportunities out there to do things. And quite frankly, no one knows exactly how the NFT innovation’s going to be utilized in a few years from now, right? We have our hunch. We think it’s going to be connected to real-life experiences and real amazing virtual experiences. However, I think there’s all sorts of innovation that maybe hasn’t even been created yet for its application, such as to ticketing and other categories as well.
[00:43:05] Dan Runcie: Yeah, there’s so much more to explore. We’re still in the early innings with this. I’m excited to see what’s next. But before we wrap things up, let’s talk about what’s next for you all. What does 2023 look like? What are the big things on the roadmap?
[00:43:17] Rory Felton: Yeah, so as you mentioned, we’ve been building the Lounge metaverse space to connect artists and fans as well as give fans a great way to display and show off the collections that they own. So that’s going to be launching soon. We clearly have some really amazing collections coming up from some really top-tier artists that we’re excited to announce really soon as well. And then we fully built out now this completely self-service solution for independent artists to come in and start minting NFTs with their content. We haven’t really focused on presenting that or pushing that yet to the independent community at scale. But that’s something that we are looking forward to. We felt that it was best, hey, look, we want to establish that there is interest and demand for this space. That’s why we focused on more established artists, artists with audiences initially, but really we think this space is for everyone. And we think that the smallest artists on the planet can actually benefit from Web 3.0 in a way that maybe streaming isn’t changing the game for them right now. For instance, we’ve worked with baby developing artists that are making more money from Web 3.0 in one launch of an NFT collection than they would over two to three months from streaming. And I think this again goes back to humanity and society sort of revaluing music. In general, we all think music’s the coolest thing in the world. We all think music is the most divine thing that we get to participate in as humans. And so we want to revalue it in a way that maybe NFTs allow us to that technology hasn’t enabled in the past. And I think more than ever this concept of a thousand true fans is truer than ever, right, if an artist doesn’t need to be a pop star to make a living. They really just need to cater to a niche of dedicated fans that love what they’re doing. And NFTs and Web 3.0 really allow that artist to benefit from that type of model more than ever before.
[00:45:08] Dan Runcie: I know. It’s fascinating. It’s an exciting time to see all the developments and what’s going to come down the pipe for you all, what’s going to come down for everyone else. It’s going to be an exciting time. That’s why so many of us are in this industry, right? But before we let you go though, where can people follow along with HitPiece if they want to stay and tap with what you have coming on, or if they want to follow along, where should they go?
[00:45:28] Rory Felton: Yeah, so clearly you can go to HitPiece.com. You can just put in your email if you don’t want to sign up yet and just follow updates from us on our email list. You can find us on Twitter or Instagram @joinHitPiece. You can even follow me on Twitter or Instagram if you’d like, @RoryFelton. Everything’s open and my life is really an open book for everyone.
[00:45:48] Dan Runcie: Awesome. Thanks, Rory. This is great. Thanks for coming on.
[00:45:51] Rory Felton: Thanks, Dan, for your time. We really appreciate it.
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