SweetTalk Video #5: Imogen Heap w/ Vinay & Scott on Creative Passports in a Digital Future

Grammy-winning music artist, composer and producer talks in London with our blockchain experts about fairer rights and royalties for all

Imogen Heap is known as a brilliant music artist and producer, but she also has a mind for changing the way the music business works. Blockchain may hold the answer to ensuring a fairer deal for all parties involved in creative endeavors. Joining blockchain experts Vinay Gupta and Scott Nelson (a Sweetbridge advisor and Sweetbridge CEO, respectively) this show explores the intersection of art, contracts, audiences and cryptocurrency in a rapidly advancing space.

This concludes our first London series of SweetTalk episodes, and what a pleasure it was to capture so many great conversations like this one with Imogen, and take the time for deep thought in this series. But we’re not stopping here. Look for podcast versions of each of these sessions, plus several more new audio interviews in the SweetTalk podcast series. More media is on the way!

Podcast edition of Episode 5:

https://soundcloud.com/sweetbridge/sweettalk-ep05-imogen-heap-w-vinay-scott-creative-passports-in-a-digital-economy

Read onward for a full transcript of this video below.

Complete text transcript of the talk:

Vinay: Scott, Imogen, I wanted to introduce you guys to talk about some of the more complex issues around how blockchains interact with existing ecosystems. Scott, you’re coming from supply chain. Imogen, do you want to talk a little bit about Mycelia and the music industry?

Imogen: In the music industry, we have creatives and we have music industry, the people who make the money out of the work that the creatives do. In the past, it was quite simple. We had radio and we had records. We had people go and do gigs. It was all very kind of physical. Over a hundred plus years, it’s become much, much more complex in the digital world where the song and the people who made that song and the connection between that, and how they get paid is very different. It’s never maybe actually been fair right from the beginning. This is what’s exciting about this revolution is that now is a time that we can really rethink entirely the ecosystem of the music industry.

When I heard about blockchain two and a half years ago, I met this man [Vinay]. I became really inspired about how it can become the catalyst. It has already become the catalyst to have those conversations to think about transparency, to think about fair renumeration, fair acknowledgement for all the people involved and bring together the industry with an open data base of songs and for creatives too, and how they link together so we can flourish and build a really sustainable and flourishing ecosystem for the music industry.

Scott: You know what’s exciting for me about this Imogen, is that the same problems exist in a ton of other industries, but they have not had … They’ve not gotten as out of balance as they have in the music and the other creative spaces. There’s an opportunity to use the creative space, what you’re doing to blaze a new trail that will actually not just affect the music industry, or the other creative spaces, video, print media, other things, but will actually go into general commerce because we’re looking at an opportunity for us to track people’s contributions.

For the first time, we can actually identify so-and-so contributed this in this situation and that generated this economic value. Therefore, they’re due this economic reward. They’re due this recognition. That has never existed before. This is a major, major change.

Imogen: It’s true. That’s what’s got me so excited. I can see there is in the not-so-distant future, it can become something which is really flowing. It’s become progressively more and more frictional, frictionful. What’s the correct word?

Vinay: Full of friction.

Imogen: Full of friction. Over the years, it’s become progressively more and more full of friction that we become less and less aware of where and how our songs relate and work and connect with our fans.

Also, there’s so many other opportunities with business that didn’t exist before the digital world, the digital ecosystem that we don’t have mechanisms for that and how to extract that goodness out of for instance, how do we collaborate easily? How do people remix things? How do we ease that flow of collaboration and creativity and having systems and data intact and connect and reach us back into earlier time of creation of music so that we can acknowledge everyone and really just enable people to do what they want to do. That’s the success of YouTube which is not … In many ways as we say, it’s for the music industry because it’s a very tiny amount that artists get if any, but it has incredible reach. It can’t be dismissed. It’s incredible and has done great things for my career and many, many musicians around the world.

That’s because people want to react. They want to create. They want to make things. They want to put this wedding video with this music or this cat video or this beautiful dance piece over here. If we don’t have a way to easily get the usage for that song, we either don’t seek out where it comes from because there is no data base to find out, or we just do it anyway and the video gets taken down and so much time is wasted. Really ultimately, creatives want people to collaborate with their work. I think to have those licenses, that understanding in place at the core of the song is going to be fantastic for music to be able to grow.

Scott: It’s not going to just fix music. This is the great thing is that music can lead a way into the future for collaboration in a fair basis. The thing that’s so amazing about the creative space is that people put things out there because they desperately, as you said, want them to be collaborated around, want other people to know what they’re doing, want to have people see what it is, but then there isn’t this effective mechanism for them to basically monetize that or for the community to recognize who has the ownership rights of this?

These problems occur all over the place. They occur in technology. They occur in science. They occur in engineering. They occur in almost every major area where there is some kind of creative activity that we’re doing.

Vinay: There’s this huge gap between the informal and the formal where the collaborations start in a very informal way. Then they kind of falling off a cliff where it suddenly becomes a signed contract and everything is professionalized. There’s a huge opportunity I think for technology to smooth out that gradient where things become gradually more formalized as people work together, credit is assigned.

There’s a video games project in the UK where they’re trying to take those informs, early stage alliances and document them so that when you’re defining equity in the Final Games project, you have that kind of framework to begin with. The idea that the technology kind help weave things together, not just document the final form of the deal, I think that’s really interesting.

Scott: What’s the idea that you can … Somebody like yourself with your project and what you’re trying to do can galvanize a model that you can explore and experiment with and refine, they can be used not just in the creative space, but they can grow on to being used in all these other spaces where you have creative arts as a backing of whatever it is.

Vinay: Do you want to talk at all about the passport? I think that would be a nice concrete way of looking at what Imogen is building. Then we can work out from there into questions like how do you design a token for that kind of space.

Imogen: I did want to just add when you’re talking about that gap, maybe it’s not necessary to talk about it, part of the challenge is also because artists have been so reliant upon organizations or societies to make, or record labels to make those contracts happen, there’s been this … It becomes now that actually a lot of artists don’t care. They don’t want to touch the contractual side of things because it’s become so distant from them. I think that just as much as the technology is now enabling us to think about from the moment of creation until the moment of interaction with a fan or anyone or a movie director or however that music happens, it’s for the artist to start to take back the reigns and be … I don’t know if this is a good word, just grown up about it and have those conversations about who owns what at what stage rather than leave it to the organizations to do that when they weren’t in the room.

It also comes with ourselves empowering ourselves, being grown up about that conversation in the creative space and taking ownership of that rather than leaving it to other people to then try to unpick what actually happened. There will need to be that learning process.

Scott: What is your thought around how that should happen?

Imogen: I think a lot of people are … When they talk about block chain, they say, “Oh it’s very, very complicated.” They kind of say, “No, it’s too complicated. No artist is ever going to do that. What you’re talking about is never going to happen.” Artists don’t want to take responsibility. They don’t want to fill out these things.

That’s our world right now is yes, it is clunky. Yes, we don’t have the nice technology. We don’t have the nice web spaces to fill in this data and enable … in the future you imagine where it’s very seamless. It’s frictionless. It’s easy. It’s unseen. This is where we need to get to that point. Obviously we have a way to go, but that’s what Mycelia wants to do is help us make that a much smoother transition so that the artists aren’t having to think about all that gubbins, that awesome technical stuff that’s going to happen.

If we don’t, as creatives, because Mycelia is creative led for creatives. If we don’t come into this conversation now, it’s likely that we might recreate problems of the past in the eyes of the organizations again just with blockchain.

Scott: Yes, you’re so right. That’s such a common error whenever there is a sea change. You have an opportunity to reengineer it from scratch, but what people first do is they take the existing broken system and they basically try to make it more efficient incrementally.

Vinay: That’s exactly where we are now. The basic legal structures in the music industry haven’t really changed in 100 years. They’ve computerized in that period, but without any fundamental shifts in the business models.

Imogen: Talking about creative passports then, it’s become in the last couple of … Two and a half years thinking about this, they become aware of the different block chain music initiatives coming up and springing up and seeing that the organizations like the collection societies and the labels and the publishers are having a way to kind of input data into future databases that might come up. There’s no body to represent collectively artists. That leaves us very un-empowered.

This opportunity is now for us to what we call creative passports is to give each artist, a musician, a creative passport as we call it. We can be the connective tissue for our very fragmented industry because none of our industry sectors talk to each other. They don’t have a shared database which is a problem from the services when they want to pay fairly and correctly to the right people. They have to go through this very long winded Spotify send PRS information and then say, “Here’s all the songs that we’ve played for the last month.” Then the PRS go, “Okay, we’ll just find the ones that we need to collect money from and we’ll send it back to Spotify.” Then Spotify will send us back money. Then they’ll send the money to the musicians, to the writers.

It just seems if we had a shared database, then that would just need to happen once rather than three times. We’d already save that amount of man hours.

The creative passports is really a way for us to lasso ourselves in this digital world, just as you’re talking to the oracle of Imogen Heap: musician, composer, producer; there’s no version of me online that is the definitive me. There’s my website, but it’s an artistic website. It’s not very helping the industry at large to be able to know who’s representing me or who to go if they want to license a song or who to go to if you’re a film director and you’re going, “Oh Shazam. I want to know what this song is I’m listening to in this café. This is a song I want for my film.” It might take you to iTunes at the time, but it doesn’t give you any further information about who the artists are, where to get permission for that song. That can take sometimes months to get permission to do and that’s months and hundreds of hours and thousands of pounds of people’s time that could be saved in an instant if there was an open database for this connecting to the creatives who are involved in that work.

Maybe it was just the saxophone player that you really wanted to get in touch with or maybe it was the lyricist that you really liked, but you didn’t really like the production. Again, this data isn’t out there. In having these creative passports, I have many hats as an artists. Brian, you know has many hats. Annie Lennox has different hats. We all have different interests. How can we share that data so it’s useful to services? Maybe a brand might want to find an artist for their next electric car that they’re building. Maybe Tesla wants to find somebody to make some new music for their new car. They might find 1000 different creative passports who specifically mention Tesla. They might also discover that, “Those people can make a song in a couple of weeks for this amount of money. Let’s go for them and open up the marketplace.”

Music industry is always talked about in terms of streaming, streaming, streaming, that’s all there is. Streaming and live. That’ not the reality. The reality is there are tons more ways and money. There’s 88 different streams of money that you can get as a-

Scott: 88?

Imogen: 88 different streams apparently.

Vinay: All of those handled with different payment mechanisms through different legal structures through different representation with different legal constructs. You can imagine with that diversity of possible income streams, without some underlying technical layer to tie all of that together, the paperwork becomes enormous.

Scott: Plus a lot of errors have to be being made.

Vinay: All the way through.

Scott: All these gaps in data mean that people get cut out of things that they should rightly be able to participate in purely because it takes so much effort to find it. It’s not worth it. Who’s going to basically make a claim or how do I defend it? All this has to be problems that have come up from a legacy environment and was based on a much different world where everybody was basically doing this in a small community that new one another.

Vinay: This is just on the payment side. That’s once people make a decision about what they want. Then on the discovery side, the whole thing is like that all over again. Just as much complex. You do just as much interweaving, just as hard a time finding things. It’s really a complicated industry.

Imogen: It doesn’t need to be that complicated. That’s the exciting thing is that there’s so much space for positive change and to really be able to just simply to share database of songs and creatives is going to free up so much cash in the industry which could mean that … One of the main problems I suppose for artists who want to make a record is they need cash. They need a bit of cash to give them a bit of time away from that job they might want to do to make the first record.

The only people who are going to invest in you are record labels. They’re the only people because they know where the cash is. They take a large percentage of money of that risk.

Scott: How much?

Imogen: 80%. 82%. 60 years ago, a friend of mine Rupert Hine he signed the first record deal that gave him 1%. The first artist in the world to get 1% of his record. We’re still a long way away from that. The reason is it is hard to market. It costs money. We need to make sure we keep in touch with all of these different services. We’ll do that for you for 80%. We’ll give you some money. It’s a big price to pay. The difficulty is the artist never really knows how or when it’s going to recoup. 90% of artists don’t recoup. You don’t really understand the value chain.

Scott: You have no idea of auditing and I’m sure you have no idea of actually where you stand. Is that right?

Imogen: Exactly. If it was transparent and we did see this value chain a lot clearer, that would mean that the record labels wouldn’t have to be the only people to put in money and it would mean that anyone, fans included could put in a bit of cash and they could see when and where they might make their investment back, because there is nobody else that would basically touch us with a broad pole. They just don’t know where the money is like we do.

Scott: Let me ask you, our idea of creating at Sweetbridge of creating ecosystems that are around industries such as music that have people who are trying to basically provide market channels that are compensated by the effort that they produce, not based on this idea that I get to have 80%, but I get a piece of the action if I actually make something happen. If I don’t make something happen, I get nothing. How would something like that fit into the music industry?

Imogen: That really excites me because they, for 20 years, I’ve been kind of progressively more and more aware of how amazing my fan base are, of how many talents they have, all different skills from design to promotion to flyering to designing a font for me or whatever it might be. I’ve tapped into that over the years. I’ve paid them over the years. Musicians, tons and tons of people, fans who play instruments.

That kind of idea of being able to go, “If you do X and you achieve that, then here’s a piece of the pie.” That would be awesome. That would mean that you didn’t have to just … If you didn’t want to sign a big deal away for the privilege of having such a big label to push your music in various places, but you could go much more grassroots of which the large proportion of music that is released is grassroots. It’s people that we haven’t heard of. That’s what’s the new growth.

Then the 1% that we have heard of is doing very well thank you. That’s a very different commercial space. There’s this whole other space which currently isn’t able to make a living because it’s such tiny, tiny amounts from streaming. Also a lot of people are kind of feeling, “What’s the point putting something out and doing things the right way or signing up to a collection society when really there’s no money in that anyway?”

If we can change that perception, then we can really-

Scott: Someone like yourself, I imagine, just because of who you are actually is interested in trying to help other artists find a way to basically engage and be successful too, right?

Imogen: Mm-hmm (affirmative)

Scott: In the existing system, is there any way for you to actually act as a distribution channel or market maker for the music industry?

Imogen: I suppose … This is another reason for the creative passports actually. Every time that I mention somebody that I like, I can direct them to a song or direct them to a gig that I might be going to or direct them to some kids show if you’re a musician, you want to go see a band and you’ve got a three year old. That’s my world. Each musician … Everybody has their own world and their own … You must go and see … Recommendations. That in a way is a distribution channel in terms of how do they connect? Where was I going with that? I was trying to say that the artists can be beacons for other artists.

Scott: Yes, that’s what I imagine.

Imogen: Yeah, so these creative passports can enable us to be that beacon. This is this brilliant pianist that I saw the other day in Kings Cross Station. Here’s this brilliant promoter that I’ve worked with in the past. You would be able to see all the people that empower you, be able to see equally all the services that empower you. I imagine all the creative passports having visibility seeing the services that you use. When you come up and you have your creative passports, you would sign up as a musician. You’d type in all your skill set. You’d lasso in all the songs that you’ve been a part of and be acknowledged for doing that. You would also add data of charities that you’re aligned with or just simply artists that inspire you.

At the moment if you go onto something like iTunes, it says “Image and heap is influenced by.” I’m not influenced by those people. I respect them, but I’m not in any way influenced by them. I find that really frustrating that people can just put words in your mouth because there is no oracle. There is no standardized space to find out what the truth is. Until we empower ourselves by having that possibility to verify information and just be able to feed out even just the correct biography or your correct tour dates and have a place for business to business mainly. That’s what these creative passports are for, but they would reach out to the fan by way of the services that connect their creative passports.

It’s hopefully … There are many good people working in labels and many good people working in collection societies. I don’t think any of them would argue with any of this. The problems that are, is that we don’t have shared database. We don’t have open data. We see data which should be … I don’t think people should be getting money from data which is like, “This person played this.” It’s a song that said this belongs to us.

Scott: Isn’t the problem more than just database though? It’s also that there isn’t a kind of public accounting. There has to be an acknowledge of how much revenue was generated by that? Did the proper percentages go to the people that are supposed to be paid by that as well?

That’s the beauty of the block chain is that it is both a database and an accounting system. It’s a distributed ledge which makes it natural for basically doing this.

Vinay: It’s a very good fit. What you have is an industry where you’ve got lots and lots and lots of separate little business units that all have one part of the pie. Often the business models are 120 year old statutory bodies. When you come to modernizing that stuff, if you’re going to do it a link at a time piecemeal, it would take centuries. The idea that you could just lay down a backbone and the existing businesses could clip into it and then continue doing what they were doing seems very credible.

The trick is how do we get over the hump of actually beginning to build that structure out in a way that then provides value to everybody that clips into it as they go. If it isn’t valuable for each entity as they join, you end up building it, but then they don’t come.

Scott: That’s the power of liquidity. You mix liquidity with brand. You give people an opportunity to access money that they need from either the work that they’ve done, or for the things that they want to do.

Vinay: What does liquidity mean in this context? For a working musician, what is liquidity?

Scott: It means money.

Vinay: Well that was easy.

Scott: That’s what it means.

Vinay: Tell me more about the money.

Scott: This whole industry, not the music industry, but the block chain industry is going to create something which we haven’t seen and we haven’t really valued yet which is the ability to create economic systems that you can apply to ecosystems like music that actually change the economics of the environment in a way that allows you to redirect money, rewards, recognition and other things to parties differently than the existing system.

Sweetbridge’s ability to generate liquidity from assets for example is a simple example of that, but also our ability to do that in a settlement process. A settlement process is just how two parties conduct trade.

Vinay: That’s the getting paid part.

Scott: That’s the getting paid part. As soon as you start recording payments and their expenses in a publicly auditable way, you get the ability to actually start verifying and extending things with things like your passport, your creative passport. You can now actually say, “I got this income from this, piece of music that got used I this movie.” How is that supposed to be distributed based on what are the agreements that basically stand in place. Then when that gets distributed to people, there may then be, “How is that supposed to be distributed?”

Vinay: Absolutely.

Scott: This can just follow down the lead.

Vinay: In music, they call this the splits. In putting the splits into the block chain was one of the earliest Mycelia task projects with Ujo, right?

Imogen: Yup.

Vinay: There was a single … is it Tiny Human?

Imogen: Yeah.

Vinay: Where they did a test with Ujomusic, put all the splits online, and actually took the payments and moved the whole thing out that way and it worked for one piece of music, but the isolated prototype versus the kind of fabric, this is the jump.

Scott: This is the jump. That’s where the kinds of things we’re trying to bring in terms of providing general purpose rails for investment, general purpose rails for creating liquidity. When you have an income stream from a piece of intellectual property, you can actually borrow from that. You can actually turn that into something and you can do that in our platform for free. You can actually create liquidity. That allows people like yourself to not only be people that can provide abilities to other artists by giving them brand recognition and what not. You can actually use your distribution your network, your things to find people that you want to see backed and actually back them in ways that don’t require you to generate any liquidity.

This creates a music led, industry led kind of investment activity that can occur that doesn’t require outside forces that are the money people who have different agendas, might not understand things, might not have the proper interests to make these things happen.

Vinay: What do you think about the potential for things like fan financing?

Scott: I think it’s huge.

Vinay: If you’re going to do something like a tour, ideally you might want to do something like pre-sell the tickets for the tour or assess the demand in an area. We’ve talked about this all the way down that rabbit hole.

Scott: I think the whole idea of crowd funding and the ability to kind of make that something which is easy to implement, easily trackable, and allow it to be something where your fans can actually be the mechanism of support and where the community benefits economically from that, where there’s actually an ability for apprehension to occur so that people can pick the artist they think are the ones that are going to be doing something.

Today, for example, if you have a venue with an artist showing up and it gets booked out, there’s this secondary market that starts to emerge that allows for-

Vinay: That’s a polite word for it.

Scott: I’m just trying to be polite.

Imogen: Often that’s before the primary market.

Scott: Exactly. The blockchain also offers solutions for problems like this where you could actually continue to retain ownership and allow a secondary market to exist, but where you would actually participate in the benefit of it, and so would your fans. The very fact that fans invested in an essence the upcoming tour, the upcoming show actually creates an opportunity for there to be a participation. If they decide they’re not going to go and somebody else is, they can participate in that, but you can participate in the increase of the value of that as well which they can drive back into the network. All these things are kind of possible today that weren’t possible before.

Vinay: Absolutely. The hard part is getting over the hump to get these things moving. You have an industry which is quite set it its ways. Mycelia existed as a project kind of at a thought leadership position of this is how the future could look, but is not moving into the phase of actually making the future happen. That involves raising finance, building technology, connecting people in these kind of networks, moving the thing forward.

We’ve had a bunch of discussions about how would you get something from zero to one on that kind of lift. Let’s see if I can get the technical about right. The first step is this idea of a creative passport which is a block chain based ID that pulls together all the payment end point information for all the different identities the artist has across all these different streams of activity coupled with all the data about the discography about who performed on what, potentially about what the splits are for some things. That’s a kind of starting point. This is your bedrock.

Then the question is how to plug this into everything else. If you had something that would demonstrate revenue stream from a piece of music, how does that become accessible through something like Sweetbridge or something that can be borrowed against? The actual technical business of building those connectors happens very soon after the passport is set up because it’s the thing you can do with the passport. Here you’ve got your block chain music services which are selling music. The payment is coming through a channel. Here’s the kind of streams of payments. How does that stuff get done? Is that as simple as the legal paperwork gets done and then somebody builds a costing model? Just on a practical level, what does it look like?

Scott: Why use a costing model?

Vinay: I don’t know, you’re the expert.

Scott: Costing models are interest because they’re historic. What is much more interesting and maybe potentially far fairer is not a cost model but a sharing model. In a sharing model, you would take the actual assets that get contributed to the costs and expenses, that getting contributed to making something commercial happen. I spend five pounds doing this, you spend five pounds. We’ve got ten pounds invested.

A creative person like yourself contributes your brand, contributes your art, contributes other things. Let’s say we value that through some kind of mechanism of exchange. Let’s say that’s ten pounds. We all have 20 pounds in the pot. Now let’s say that commercially produced 100 pounds. You could just simply divide it and divide it equitably, or you could say, “Look, creative is going to get a certain percentage and all the creative people, they get that piece. The folks that invest some kind of capital, they get equally divided in this way.”

The benefit of that kind of structure is you don’t need pre done agreements. You don’t need to negotiate. What you could actually allow is the fan base, the industry, everybody can just start using your intellectual property and you already know what you’re going to get from it.

Vinay: That’s really interesting.

Scott: That doesn’t just apply to the music industry.

Vinay: So you don’t build the complex contracts first.

Scott: You don’t need the complex contracts.

Vinay: That’s fascinating.

Scott: That is power because you don’t want to be doing all this contract negotiation stuff. It’s not in your nature and it’s a waste of time. Yet the more you want to try to control things, that’s kind of the model we’ve had. If you can create pre-done ways in which you allow your stuff to be used by anyone for any purpose, with maybe just a permission which could be as simple as getting an email which you respond to with a click, or a QRC code that you take a picture of.

Vinay: It’s ultra-lightweight collaboration infrastructure.

Scott: All light weight collaboration infrastructure. This is exactly the problem we’re trying to solve in commerce which is like I said in the beginning, very similar to your problem. The difference is the music industry has been dare I say abused more and has taken more risk on itself. The artists are the ones who are the least likely to be compensated correctly or attributed to what they’re doing. The rest of us, we probably get paid in a salary or something, so that’s okay. We at least got something for it. We didn’t get nothing. But everyone has this problem that is a person who creates IP.

If I’m a computer programmer, if I’m a scientist, if I’m anybody who’s creating stuff, it doesn’t matter what it is. I have the same problem.

Vinay: One of the things-

Scott: The same solutions you’re trying to put in place here and the model you’re creating is the ecosystem kind of incubation idea that allows for that model to be actually tried out in a new structure. As it works there, it can be extended to work in other things too.

Vinay: It sounds like we all have the same basic direction of travel. The tricky part with all of these things is always the practicalities of getting it built. The block chain provides this very nice way of managing names basis, right? Here’s a list of artists. Here’s a list of albums, here’s a list of people that participated. This is kind of the passporting set of functions.

Then there’s this very hard problem of hundreds of thousands or tens of millions of legacy contracts on paper which apply to all of the old payment structures that have been made. This sounds very similar to what experience you have of taking these enormous amounts of supply chain contracts and building digital representations of them. A painful process, but not a process that’s impossible.

There’s one branch of activity that could be digitizing the existing payment information and then making it more easy to get the payments through. There’s another branch of new payment structures that could be created for the new contracts are signed, and then the digital representation is built right into them. That seems like incremental steps. Lots and lots and lots of music startups that want to participate that could be plugged in onto this backbone through the passporting. That sounds fairly straight forward. Can you see any basic gotchas in that strategy or does that sound like a reasonable way for Mycelia to proceed a step at a time down those tracks?

Scott: I think it’s a very reasonable way to proceed, but I think there’s one thing you have to have in order to make this stuff work. That is you have to have an initial conjecture in a capital. You need an initial mechanism to basically provide the funding for the software development, for the thought leadership, and really in this kind of stuff the really important thing is designing the economic system which is not something we’ve had to think about in any kind of technology space we’ve worked in the past, but we are rewriting the way the economics systems work. If we get that wrong, that will create destabilization and bad ways of people gaining systems. If we get it right, it creates a mechanism that generations an adoption curve where people just want it to work. In the best situation, you get one beggar telling another beggar where to find food. That is absolutely the ultimate ecosystem network growth kind of thing that you can create.

We’re trying to create a set of standard rails for projects like yours to not have to worry about all the legal stuff, not have to worry about all the complicated ecosystem design characteristics, the economic design structure and other things to be able to bring these things to a point where you can get crowd funding on a standard platform and that has a set of pre-built mechanics that you can just snap into.

Imogen: Sounds wonderful.

Scott: We hope so.

Imogen: That’s what I need.

Scott: Hopefully.

Vinay: That sounds like the beginning of the work rather than the end of it.

Scott: Yeah, it is.

Vinay: Splendid.

Imogen: I just wanted … As we were talking about legacy contracts, it just kind of occurred to me. I don’t know if it’s something for camera, but part of the work that the featured artist coalition is doing which is the organization that I represent. I’m the artist in residence, creative executive officer. I’m basically helping the CEO be the artist in the room. They’re in discussions with UK music who are the board of the UK music industry. I’m often the only artist in the room as they all talk about our future. Sometimes just having an artist in the room makes such a huge difference in how people talk.

One of our goals is to try to create an alliance between the labels and the artist that they will agree to rethinking the legacy contracts. It kind of seems to me like rather than trying to put it into existing language or existing structures and kind of go, “Digital is kind of this, but it’s also like this.” Whether it’s like … Is it a radio play? Is it lean back or lean in? They try to talk terminologies that people use. When it comes to block chain, this is something completely different. This is a completely different thing that has never happened before.

In the music industry, we need to acknowledge that we shouldn’t be using old terminologies and try to crowbar it into this feature. Could it just simply be that instead of as I was thinking taking my existing contracts and trying to smart contractize them, how can I take that Sony contract and that Warner contract and just make it into a smart contract in terms of the different licensing and deals that people would do and put that as the core song layer?

Instead, … We can’t do that for every single legacy artist in the world.

Vinay: No.

Imogen: We need to be rethinking a new standard.

Vinay: Yes.

Imogen: Because there is so much time saving and money and just so many man hours that will be millions and millions of man hours saved by having this automated, it seems that maybe it might even come down to government level to go, “Do you know what? In the UK, this system is available. You have this problem with legacy work.” Maybe it’s an implementation that has to happen at the government level. The exciting thing in a way of —

Scott: Can I give you an alternate vision, though I think that’s possible-

Imogen: Yes, please.

Scott: The problem is that only fixes it here.

Imogen: Yes, that’s true.

Scott: You’re dealing with a problem that exists all over the world. There is a possibility and it would be great fun to work on to do this commercially meaning give people a reason in the existing world to do a contract swap meaning I’m willing to eliminate and get rid of this contract for this new agreement because it’s actually better for me.

Vinay: Right.

Scott: If we can design the economics of that … That’s why I say this is all about the economics and the block chain. The thing that’s so powerful in the block chain is that we can now actually design in commercial enterprises and creative enterprises and governmental enterprises micro-economic systems that have a set of built-in laws that aren’t enforced by any outside party.

Vinay: You establish the passporting, and then you import the old contracts, then you replace them with-

Scott: You replace them. You do a swap — these are the owners that have passport. They have the existing contract. If the owners of the new contract agree to basically swap for the new one-

Vinay: Everybody cuts their transactional costs and you just to it incrementally a contract at a time.

Scott: Exactly. It’s not just the transactional costs. It would be letting them in on new streams of revenue.

Vinay: Now you’ve got the ability to do things like borrow against an existing revenue stream if it works for the company.

Scott: Exactly, which you couldn’t do before. They can do that. The big parties, they have the same problem. They have to go get capital. They have to go get money. You could take their own self interests.

Vinay: They could roll right along that track.

Scott: Say “Look, instead of having an average weighted cost of capital of 20%, you can have an average weighted cost of capital of nothing. In order to do that, you have to take all those contracts you have with all those artists and basically move them into this.

Vinay: So the driver for modernization is you get liquidity.

Scott: It’s that you can use economics, the powerful power of their own aligned self-interest, their own greed to basically get them to give up a system which is unfair and doesn’t really work very well for them or for anyone else.

Vinay: Sorry.

Imogen: I was going to say, that is going to be a difficult thing to achieve because in some cases, the labels literally own 100% of the recording for life.

Scott: They don’t have the ability to get liquidity from that. They don’t have the ability … I agree with you. They’re not going to basically give up the right they already have, but if they move the transactions-

Vinay: from paper onto the block chain.

Scott: from paper onto the block chain, it creates the center of gravity for the industry to start going there. This is your adoption question.

Vinay: If the industry as a whole is moving towards the block chain because every contract you convert over keeps the same terms, but now gets access to liquidity pools and all kinds of other improvements.

Scott: It doesn’t have to keep the same terms. That’s the point. I worked with large corporations who rewrote contracts all the times between parties where the terms would change, but both parties believed they were getting something better out of the deal.

Vinay: You refined the contract and refined the contract and refined the contract.

Scott: You just create a new deal, a better deal that then motivates them to leave. You can’t fix the sins of the past. Unfortunately we can’t fix the mistakes that we made. We polluted a bunch of rivers because we over exuberant industrialization. It took a long time to clean all that stuff up. We’ve basically harmed a lot of creatives for the work that they’ve done and cut them out of being able to participate in the success that they would have participated in. It’s going to take a long time to clean all that up.

We can actually move things. The beauty of the block chain I think is that now we can think about doing this commercially. That means you can move way faster and on far more global scale than you could if you went going government at a time and had to try to lobby people and try to get them in your corner and do all this stuff. You create an economic incentive for them to do it. Most people will do what’s in their best interest.

Vinay: They can do it a contract at a time.

Scott: A contract at a time.

Vinay: It doesn’t have to be an infrastructure-

Scott: It doesn’t have to be an infrastructure change.

Vinay: You just start with the easy stuff.

Scott: You just start with the easy stuff.

Vinay: You do it in batches.

Scott: That’s it.

Vinay: There must be a standard contract that you’ve used for 12 years or something and you can take all the instances of it. This actually begins to sound really like a doable thing. That’s amazing.

Imogen: So you guys are going to do this, but the bit that I need to do is to try to … The bit that I need to do is try to get to the artists, to the musicians to get them excited about this incredible change of this see saw effect which is going to finally give us that voice, that collective voice to be able to make that big change, to be able to imagine if all the artists signed to X label, said, “This is the way we want to do business from now on.” We did that. We helped them through this creative passports that we helped them have that big voice globally. We’re able to make that change quicker to be able to present those features to the people that have the interest in their work too.

Scott: We need a little of your time to understand the problems from an artist’s point of view.

Imogen: I have lots of time to give.

Scott: With that … Lovely.

Vinay: It sounds like another work trip. Great.

Scott: Thank you. That was all real. I’m serious about my desire to try to help actually make this better.

Imogen: Amazing.

Vinay: Excellent.

Imogen: Great. Thanks.

Vinay: Fantastic.

Scott: Thank you.