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12/14/2022
Article
Labelcoin Channels Finance and Fandom to End Artistic Poverty

Artists can make consistent, sustainable income by selling portions of their streaming royalties to retail investors with Labelcoin, a new app launching in March 2023 at the SXSW conference in Austin, TX.

Nashville-founded Labelcoin helps music fans support their favorite music through investment, or discover and invest in the next big song by an up-and-coming artist. Labelcoin is a transparent, secure marketplace for the exchange of digital royalties, called Notes – built on a slew of data to help fans understand their investment, and artists understand their market.

"The music industry is lacking transparency," says Labelcoin CEO & Co-founder Mark Miller. "With our platform, investors can immediately see royalties coming in and total earnings from all their investments, taking the heavy lifting off of the backs of artists and labels. They can track royalty payouts and microtransactions with little effort."

Miller knows the importance of this firsthand from his years as an artist, producer, and engineer, as well as Founder and President of Brave Enough Entertainment, a booking and talent agency based out of Nashville, TN. He and his wife created indie/pop duo So Long Solo, and found themselves always on the road, as touring was their main source of revenue. They learned what the journey is like for an artist, how artists have to be good at management, sales, accounting, and marketing, in addition to their music. They also learned just how expensive and time consuming it is to make a living on the road.

All this led Miller to found Labelcoin with co-founder Chad Petterson in 2021. Petterson is a former Wall Street investment banker, venture capital investor, passionate music supporter, and founder of Nashville's music non-profit Hope-20.

"We're helping artists bring 10+ years of income forward to create a sustainable income, and giving them new ways to get their fans engaged," adds Miller. "Labelcoin as a whole is a great bridge for people not familiar with crypto, people won't even really recognize that they're interacting with Blockchain technology. We make it that simple for anyone to invest in music."

This is done by selling portions of a song's streaming royalties, paid by services like Spotify and Apple Music, on Labelcoin's Song Exchange marketplace, where fans can invest in songs individually, or through Curated Collections (Song Mutual Funds). An artist's career and income can fluctuate with touring or song popularity, and Labelcoin gives artists the potential to create consistent and sustainable income based not only on a one-time catalogue sale, but with passive residual income as well.

"Labelcoin offers artists a brand new revenue stream directly from their fans," says Ari Herstand, author of How To Make It in the New Music Business. "Unlike crowdfunding, where fan fatigue is common, this new funding model engages the fan in a meaningful way while allowing them to participate in the success of their favorite songs and artists."

Labelcoin will create a paradigm shift in the way artists crowdsource. Instead of asking family members or friends for a loan or a donation, they can ask for an investment, with hope for a positive return for both the artist and investor. There's a different feeling associated with asking someone for a gift versus an investment with more buy-in and support of the artist.

Labelcoin Song Exchange

The Labelcoin Song Exchange is an open stock marketplace where artists sell their music, and investors can buy and sell portions of digital streaming rights to songs, to become Songholders. Royalties for the rights are received by Labelcoin and distributed immediately to holders through the blockchain, according to their percentage share of a song and length of ownership since the last payout.

- Artists have complete control over what royalty rights, % of rights are up for sale, and price of each note they're placing on the Song Exchange.

- Investors buy in at a set price, the Initial Note Offering, then the market can fluctuate based on demand.

- Labelcoin provides an estimate on the value of the song, which constantly updates as an artist grows in popularity, or sees a slow in their streams or engagement.

- Artists receive 97% of the Initial Note Offering they set at a song's initial point of sale.

- Artists also earn a passive residual income of 40% from every transaction fee that occurs when investors buy or sell their song rights.

Curated Collections Mutual Funds

Curated Collections are essentially mutual funds for songs, which can be curated by a label, music blogger, venue, or any music lover. Curators choose an assortment of songs to be part of their mutual fund collection – songs that are already part of the Song Exchange.

- This is a great option for music fans who don't necessarily need to be in control of or make decisions on their own investments, but choose to let someone they trust do it for them and watch as songs in the collection are influenced by changes in the market.

- Investors will likely discover and support new songs and artists, outside of their typical listening niche.

- Investors can sell at any time, at market price. Curators receive 5% of royalties.

In all Labelcoin ventures, artists retain full ownership over their career and career choices. Fans earn dividends from their song shares, as a song performs well on streaming or other digital content services, but don't own any master rights or have any legal control in the artist's career. Artists can also pull their songs off at any time, for any reason. They can either buy their digital royalties back at market value, or perform a forced buyback at 3X the Initial Note Offer or current market value (whichever is higher).

"One of the challenging parts of being independent is figuring out how to fund a record, a video, or a tour," says singer, songwriter, and producer Megan Davies, who joined the Labelcoin Artist Advisory Council last year. "All the time, artists enter into less than favorable contracts with labels in order to have access to funding. There's still a lot of great reasons to be with a label. And a lot of great reasons to be independent. But Labelcoin makes it easier for an artist to choose what's best for them and their career, moving forward."

Megan Davies joins other founding artists who will make select songs investable on Labelcoin at launch.

Fans come for the artists they know, and stay to discover more songs. With a native buy-in, Labelcoin is a great bridge for people not familiar with crypto or web3, as an external wallet and prior knowledge are not needed to be successful on the platform. All values will appear in the user's own native currency, with normal payment methods.

Every song is registered with the SEC (under Reg A), and compliant with all regulations and current laws.