Late last year we released a feature highlighting the fact that the music industry is broken and asked some of our most highly-respected peers how we can fix it. The responses included building communities and meaningful relationships between artists and fans, getting back to the music, breaking the norms, embracing new technology, and properly valuing creative work and the creators behind it. We all know that we need to see a change in the music industry, Catalog is working to make that happen by fusing together many of the aforementioned focus areas. Catalog is an NFT (Non-fungible token) marketplace built specifically for the music industry. With the goal of reclaiming music ownership for artists they’re using cutting-edge technology to redefine how music is valued, bought, and sold.
NFTs have taken the world by storm in the past several months snatching headlines and generating millions of dollars for artists around the world. The medium presents a new way for artists to sell unique art to fans, collectors, and even speculators. In a time where the music industry has been financially crippled by the pandemic, NFTs have already generated $60.2 million in the industry, with $55.7M coming in the past two months. With numbers like that, artists and fans alike are seeing NFTs as a potential paradigm shift.
Launched in early March, Catalog’s timing could not be more perfect. While there are many NFT marketplaces, Catalog is the first platform with the sole purpose of creating, discovering, experiencing, and exchanging audio NFTs. Within 24 hours of their launch, they had already locked in $100,000 in bids. In less than two months they’ve launched NFTs with a wide array of top-tier artists including Eprom, Richie Hawtin, oshi, SALVA, Boys Noize, Laxcity, and more. With over $170k+ in sales to date, the platform has already helped artists generate the equivalent of 43 million streams on Spotify. The future of Catalog is bright so we caught up with their founders to discuss their vision, dive deep into NFTs and their long-term potential, understand what makes their platform special, why someone would want to own digital art, and the environmental criticisms the new technology has faced. If you’re interested in understanding the future, this is a must-read.
We’ve heard this broken record on repeat for too long, and set out with a new approach for owning, distributing, and archiving music.
Why does Catalog need to exist?
For over a decade we’ve watched the same irrevocable problems continue to plague the music industry – from convoluted ownership structures to a broken and unsustainable streaming ecosystem. We need disruptive new models that give artists more autonomy, control, and earnings in distributing their work. We’ve heard this broken record on repeat for too long, and set out with a new approach for owning, distributing, and archiving music.
What benefits does Catalog offer to artists that are currently unavailable on other platforms?
Nearly all NFT marketplaces support a wide array of media formats, but music demands its own space. Catalog is currently the only platform with the sole purpose of creating, discovering, experiencing and exchanging audio NFTs. Artists collect 100% of their sales – Catalog takes nothing.
Artists decide their own creator fees and can set a buy it now price, allowing them to decide the value of their work. Fans can bid in any ERC20 (Ethereum based) cryptocurrency (e.g. $AUDIO or $USDC) and offer a “slice” alongside their bids. Artists may choose to accept any bid at any time; they could choose a smaller bid from another artist or group of fans over a rich crypto whale. This gives them a chance to consider not just immediate gains but the reputational value of a buyer.
Lastly, Catalog records are truly platformless. Unlike other NFT marketplaces where the bidbook is centralized to the platform, the market for a Catalog record is baked into the NFT itself. This EPROM record can be bid on on Zora, and experienced on other platforms that want to surface our NFTs. If Catalog had to shut our doors, these records will live on in perpetuity and capture value beyond our own lifetimes.
It’s effectively an automated royalty payment set by the artist that scales with the popularity of their art. The fee is baked into the NFT – even if Catalog closes our doors the creator share can still be honored, enabling artists to forever capture the value around their work.
I understand that artists can get paid in perpetuity on the sales on Catalog. Can you explain how this works?
When pressing a record, artists set a percentage that they will receive every time that record is resold. Artists keep 100% of their first sale and are paid out whenever a bid is accepted on any platform (not just Catalog). It’s effectively an automated royalty payment set by the artist that scales with the popularity of their art. The fee is baked into the NFT – even if Catalog closes our doors the creator share can still be honored, enabling artists to forever capture the value around their work.
It’s tough to overstate the value of owning a piece of culture. There’s the intrinsic value of having something you love, like a vinyl. There’s social value in signaling your taste with a provable record of ownership and altruistic value in putting real money into an artist’s wallet.
The benefits for artists are clear but why would the average person want to own a song on Catalog? Aside from the bragging rights of ownership, what other benefits does ownership provide?
It’s tough to overstate the value of owning a piece of culture. There’s the intrinsic value of having something you love, like a vinyl. There’s social value in signaling your taste with a provable record of ownership and altruistic value in putting real money into an artist’s wallet. It even allows you to bet on an artists success and share in their upside. Imagine if you could’ve invested in your SoundCloud likes.
Besides being a priceless collectors item, buying a record on Catalog is the biggest cosign another artist can give, the most immediate patronage a fan can offer, and a key to anything the creator (or anyone else) might provide for its holder. They’re programmable, composable containers; a blank canvas for anything the artist wants it to represent. It can be a key that unlocks backstage passes, access to a private Discord channel, exclusive merch, stems to the song, or even publishing rights and royalties. Owning a Catalog record is having your name permanently engraved on a piece of culture, of which the benefits are only starting to be realized.
To be clear you don’t actually own the master or any of the rights to the song outside of the platform, right?
By default, this is correct. However an artist may choose to ascribe these rights to their records should they choose to. Musicians like Vérité and Jacques Greene have experimented in this regard, and long term Catalog may enable this natively.
We accept that the Mona Lisa in the Louvre is the da Vinci classic because… the museum is fancy and a historian says so. Now, we can know with complete certainty, which upends the way we’re used to thinking about the value of music in a streaming economy, and digital art period.
For those unfamiliar can you break down what exactly an NFT is and what makes it special?
You know how memorabilia — a signed Picasso, a dress from Breakfast at Tiffany’s — would come with a certificate of authenticity? A piece of paper validating the thing in question as legit? That’s all an NFT really is, but more secure and dynamic than parchment. On the old internet, this wasn’t possible. We can now certify an authenticated ‘true original’ of a digital work, as well as its ownership.
An NFT (non-fungible token) is a provably unique container that can point to/represent anything. It can’t be removed or corrupted or copied. Like a passport that never expires, or a paper trail that can’t disappear in the annals of some Swiss bank, NFTs publicly log the history of a file — who made it, who’s owned it, who earns what every time it’s sold or traded, etc. We accept that the Mona Lisa in the Louvre is the da Vinci classic because… the museum is fancy and a historian says so. Now, we can know with complete certainty, which upends the way we’re used to thinking about the value of music in a streaming economy, and digital art period.
If you want to go a layer deeper, think of an NFT as a set of rules that govern how the rest of us can engage with the work of art it’s linked to. For instance, our friends at Audius have spoken about programming an NFT so that a listener could only play its tethered song at a certain altitude, if that’s the sort of experience the artist wants to curate. We try to keep things simple, but the ability to both authenticate and evolve the functionality of digital art is a major breakthrough with no real limits.
If you’re still curious, I highly recommend this article.
With each passing year, the number of digital natives grows, and the number of people who believe art-on-canvas is intrinsically greater than art-on-screen diminishes.
There’s been a lot of hype around NFT art as of late with headlining grabbing examples like Beeple making $69 million off one NFT, and producer 3LAU’s NFT collection selling for $11.6 million. Are NFTs and digital art the future or just a hot trend at the moment?
NFTs might feel new, but the ethos behind them (valuing nonphysical stuff) isn’t. We’re more than a decade removed from Facebook users paying hundreds of dollars to have the best-looking FarmVille lot. Celebrity selfies mean more than inked signatures. With each passing year, the number of digital natives grows, and the number of people who believe art-on-canvas is intrinsically greater than art-on-screen diminishes.
Digital art and NFTs will continue to command respect, store value, and inspire web3 products like Catalog. We’re still in the early days, and exorbitant bids might stabilize a bit as these assets, along with cryptocurrencies, transition from fringe to standard. The symbiotic nature of NFTs also means value is not solely a function of the demand for the thing itself, but also the development of other applications that that thing can interact with. The owner of a Catalog record might one day use it to unlock access to an artist’s private Discord, alter the gameplay of an RPG, soundtrack a VR festival, or split the asset into 1,000 fractions to gift or sell to others.
What makes an NFT valuable?
With physical art (e.g. the Mona Lisa), there is an original that has cultural value. The millions of pictures, replicas, & “remixes” of the Mona Lisa don’t detract value from the original hanging in the Louvre; quite the opposite. NFTs enable artists to create the digital “original” version of their work by permanently imbuing it into the fabric of the internet. The more an NFT is shared and experienced, the more value is indirectly driven back to it. NFTs also derive value from the cultural significance of their creators, as well as the programmable add-ons enabled by holding them.
Now anybody can own a piece of art, music, culture, or information directly from a creator. Provably original, digitally scarce, universally accessible, and individually ownable media. This is the fundamental shift that makes the format valuable and revolutionizes how we own information on the internet.
Ethereum is inefficient, but its inefficiencies are temporary…
There’s also been some pretty vocal criticism around the environmental cost and impact of NFTs. Do you feel it’s justified? How can NFT platforms build a more sustainable future?
They’re both valid and misguided. Decades of deceit, failure, and bad faith politics at the state and multinational corporate level are already having catastrophic effects on the environment. We’re in an uphill battle to put it lightly, which understandably leads to anger pointed at any new technology or project that’s emitting excess carbon dioxide. Since crypto is like a boogieman to many, this backlash had some extra edge.
Ethereum is inefficient, but its inefficiencies are temporary. There are a growing number of layer two (L2) scaling solutions that many NFT marketplaces are moving towards which will further offset the carbon footprint of using the technology. The Ethereum community is hellbent on transitioning the network to Proof of Stake (PoS), a method of verifying transactions that all but eliminates the energy issue. Ethereum is responsible for a tiny fraction of global emissions, and NFTs are responsible for a tiny fraction of that tiny fraction. Now ask yourself where the U.S. dollar derives its value, and what the emissions implications are. Much of it stems from historic and ongoing military operations. An entire economic system enabled by slavery and genocide. A century of oil exploitation. Is criticizing struggling musicians for experimenting with this empowering technology a productive way curb our carbon footprint?
We’re working with verified offset programs to cover all Catalog records and then some, but we’re also keeping the bigger picture in mind. We want to participate in an economic system that actually has a chance of breaking away from harm caused.
We’re here to restore and safeguard the value of music, and our monetization strategy will be in support of that mission.
How does Catalog intend to make money as a business?
In the short term, Catalog can take a small promotional fee for curating organized drops (e.g. compilations, collabs with labels/collectives, etc.). In the long term there’s lots of possibilities for monetization, including Catalog retaining 1% ownership of all records. As we move towards a community owned network, any method for generating income will be one that benefits everyone. New ideas can be proposed and voted on by the community. We as the founding team will keep a small share of equity in the network as compensation for bootstrapping it. We’re here to restore and safeguard the value of music, and our monetization strategy will be in support of that mission.
What other areas of expansion or ideas do you have for the future?
We’ll be implementing reserve auctions as well as building new discovery, curation, and listening experiences. We’re garnering a strong community of incredible artists and music lovers by creating an artist-first, sustainable platform that lets music spread its wings outside the confines of a mega-corp DSP environment. All the while building what we need to move Catalog towards becoming collectively owned.