What happens when the founders of Patreon and Reddit talk with the guy who played The Joker? They end up discussing whether new tech can revolutionise artists’ financial lives and put an end to greedy record labels. And yes, that involves tapping into the non-fungible tokens (NFT) craze.
Patreon is a platform enabling creators to receive payments and financial support from fans. The startup, launched in 2013, achieved a $4bn valuation in early April on the back of a $155m funding round. Patreon takes a 5% to 12% cut of creators’ monthly income and also takes a payment processing fee. The Patreon founders said that the investment would enable it to better help creators connect with fans. The unicorn is not profitable yet.
The co-founders of Patreon Jack Conte and Sam Yam spoke with Alexis Ohanian, who is the co-founder of Reddit and a Patreon investor, and the musician/thespian Jared Leto on audio-based social media platform Clubhouse on Wednesday. The American Psycho actor has made over 50 early-stage investments, including into Uber, Airbnb, Robinhood and Reddit.
Unsurprisingly, one of the topics discussed was if platforms like Patreon will enable artists to get a better deal for their craft. Leto not only believed this was the case, but said it was about time.
Whilst audibly munching on his lunch, Leto said artists have long been dealt a bad hand. The singer remembered one key moment when his band 30 Seconds to Mars first became successful.
“We finally had this kind of breakthrough success and then we found out that not only were we never going to be paid a penny, and this is after a decade of work, but that we were millions of dollars in debt,” he said.
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To the Suicide Squad and Dallas Buyers Club actor, the story highlighted how artists kept getting the short end of the stick whilst record labels raked in the money. He said no entrepreneurs would ever be comfortable with an investor injecting $1m into a startup, only to take a 90% cut of the company. But Leto believed the music industry has worked like this for decades.
Conte suggested that tech solutions have provided musicians with alternatives to traditional labels. He said that labels used to be great because they provided financial muscle, marketing and distribution.
“But all of these are solved problems now, and they’re all available à la carte,” the Patreon CEO said.
Yam agreed, saying there’s a “definite power shift” happening thanks to artists being able to leverage immense power through digital platforms and their own following. As an example, he noted how Taylor Swift has rerecorded her second album Fearless to skirt an ownership feud with her old label and then got her fans to stream the new version instead of the old one.
“The shift is happening where artists themselves now command their fan bases in ways that were difficult in the past,” Yam said.
He was also convinced that NFTs could give artists an additional power boost.
“NFTs are creating the sense of scarcity again and that’s where people are sort of seeing real value and real uniqueness,” Yam argued. “And it’s interesting to see how there are a lot of artists now trying to leverage that and create this sense of ‘there’s only one of these.’ And that’s why it’s so important.”
Ohanian agreed that the technology had potential, but believed that the current NFT bubble – where things like the original tweet, digital houses and art are sold for millions of dollars – will have to burst first.
“The cash grab of 99% of these just being like, ‘Hey, I’ve got an NFT, give me money’ will not be enduring,” he said. “And at some point, there will be some correction. That bubble will pop.”
Ohanian believed that, once the correction has happened, NFTs will enable talented artists with a community behind them to make money through their art.
A version of this argument circulated when payment platform Square bought music streaming startup TIDAL in March. Given Square CEO Jack Dorsey’s enthusiasm for cryptocurrencies, people speculated that Square would incorporate NFTs to help artists get paid on TIDAL. No such announcement has been made so far.