'Music is a highly investable asset': TuneGO CEO on NFT boom in music industry

TuneGO Co-Founder and CEO John Kohl joins the Yahoo Finance Live panel to discuss the latest outlook for NFTs in the music business.

Video transcript

- Welcome back to "Yahoo Finance Live." We want to talk about the way musicians can protect themselves, protect that which they create. But also, NFTs. It's all coming together in a platform we want to introduce you to. So let's bring in the co-founder and CEO of TuneGO, John Kohl. And you describe the platform as a way to literally create a vault where an artist can record their splits, rights, and manage the production of a song. All of it.

So before we jump into the NFT part, we talk about crypto and decentralized finance. But it seems what you're providing is the decentralized music industry solution for the independent artist.

JOHN KOHL: Yeah, that's true. And it's the prior to the minting is really where we start that creative journey, if you will. So our entire mission is to simplify the business of music. And it's like you said, it's managing the song, splits the creative rights, the project collaboration, making sure that all of the content assets are secure. The creative rights are protected. And that's all prior to the minting of the NFT. And you know, it's never been a more exciting time to be a part of the music industry. And the NFTs are helping to take that excitement level to a whole-- to an entirely new level.

- Yeah. I want to talk NFTs, but I got to ask you as someone who comes out of the era of high fidelity and 33, you know, the old albums. What is a song split?

JOHN KOHL: It's the equity ownership of a song.

- Gotcha.

JOHN KOHL: It's the simplest way to put it. So, yeah. So it's basically the song splits is what determines how music royalties are paid. And it's actually a billion dollar problem in the music industry. Every single year, there's billions of dollars of in music royalties that go unpaid to the creative community because the collection societies literally do not know where to send those royalties because those songs splits weren't adequately protected. And that's the big problem that TuneGO was originally thought out to solve.

- I hope when we post this that musicians are paying attention because you're offering them a way to get the earnings they deserve. Now, let's talk about NFT because you are partnering with Dapper Labs. Why would NFTs be something a musician would consider creating?

JOHN KOHL: Well, you know, NFTs, they generated $100 million and 2020, $2.5 billion in the first half of 2021, and $3.4 billion in revenue in August alone. In addition to the tremendous income potential that it can offer a music artists, they represent a great way to connect with fans and protect their creative rights on the blockchain. And I really think that's the underlying value. It's the protection of those creative rights. And that engagement with that fan, with their audiences, in addition to the tremendous income potential that's offered into NFTs.

- The language from your organization is that you want to help protect them before they venture down the NFT rabbit hole. What did you mean by that? Because I took that to mean something negative.

JOHN KOHL: Well, now that the NFT market is exploding, if you will, you're already seeing copycats, you're seeing piracy, you're seeing all kinds of issues when it comes to the creative rights. So our solution is designed to ensure that those creative rights are protected, that the contributors to that art are all properly identified and protected prior to the minting of the NFT. So it prevents that potential negative domino effect that can occur if they haven't properly protected their rights before they've minted that NFT onto the blockchain.

- So help me understand, and then potential clients of yours understand. I'm going to use a reference from my youth. Katrina and the Waves, one-hit wonder. If they had put their music in your vault and then issued an NFT for "Walking on Sunshine," someone like me would then come to auction and the winner of the auction would buy the NFT. So they're making money in different ways. The song obviously and the royalties, but the NFT as well, right?

JOHN KOHL: Absolutely. And the great thing is, is the creative rights are still protected by that original artist. Although, where I think the future of the NFTs is going is that part of those creative rights will be offered to buyers and collectors of NFTs. For example, we're going to do our first NFT drop is going to be with Method Man. There's going to be a portion of streaming revenue. Streaming is driving record profits in the music industry. There's going to be a portion of streaming revenue that's going to be offered to that NFT buyer. So now, the buyer gets to participate with the artist and create that relationship that they've never been able to have before.

- What you just described is something when we've had NFT guests on from the art world, there's no connection between the digital art and the NFT. They're separate. You've just described something unique. Can you tell me more about this? Because why, as an artist, would I want to give up some of the royalty and have that go to the NFT holder? It's almost like you're selling a portion of the license.

JOHN KOHL: Well, the sales of music rights is big business right now. The billions of dollars are invested every year into acquiring music rights. A lot of investors are learning that music is a highly investable asset. A lot of people don't realize that a music royalty pays for 70 years beyond the death of the artist. So in many ways, it's like an annuity.

So this is a way to bring your fans in, give them some ownership, increase your engagement with that fan base, and then let them participate in the success of that music. I think it creates a closer relationship between the artist community and the fan base. And then that music still goes to streaming. It still generates royalty on social platforms like YouTube and TikTok. So now, everybody gets to participate in that success. And I think it just helps to bring the fans closer to the creative community.

- But something else you're doing, though, that others don't appear to be doing with NFT is you're creating a tangible asset that can then be traded in a secondary market that you can quantify the value if there's royalties from music. Whereas, with other NFTs, that's the missing component.

JOHN KOHL: Absolutely. Yep. That's where we're pioneering this space. And that's where I have to give credit to meet the man of being a pioneer in this regard as well.

- You know, when you talked about royalties for 70 years after the death of the artist, I was thinking of Katrina and the Waves 70 years from now, their "Walking on Sunshine," they might be doing it with Walkers. But they'll still be getting royalties. And it was a great song, right? Listen. I want to thank you for joining us. Is there any last comment you want to share with us about-- because I know there are musicians who watch who are going to want to get in on this. So what do you want to say to them?

JOHN KOHL: It's the future. It's the future of creative rights. It's a tremendous revenue stream. Go to www.tunegonft.com if you want to learn more.