>> Announcer: Live from San Juan, Puerto Rico, it's the Cube, covering blockchain unbound. Brought to you by Blockchain Industries. (upbeat Cuban music) >> Hello there, and welcome back to our exclusive coverage. This is the Cube's coverage in Puerto Rico for Blockchain Unbound. We start week of variety of activities here on the island around blockchain, cryptocurrency, the decentralized internet, the future of work, the future of play, the future of society, all here, happening. My next guest is an entrepreneur. Steve Steward is the CEO and co-founder of that's V-E-Z-T. Really changing the game around music, relationship to fans, and using blockchain and tokens to enable that. Welcome to The Cube. >> Thank you so much John, it's great to be here. >> Thanks for coming on, so first talk a little bit about what your value proposition, what you guys are doing. Obviously, people who ever downloaded iTunes, and then said, "This sucks, let's go to Spotify." Now are going, "Hey, I'm on Instagram. "I have access to my artist directly." The internet is a response vehicle; one on one. Tell them about your opportunity. >> There's two value props. One for the consumer, right? So, if you're an artist fan, and you love a song. You love an artist. You want to be involved with that artist on a one to one basis, there's no way to do that right now. You can follow somebody on Twitter, you can like their YouTube, that doesn't connect you with them. Our platform let's you buy in, and by buy in I mean ownership. You own a piece of the IP with that artist in their song, so it's on a song by song basis. But if Ariana Grande's my favorite artist, I want to buy a little slice of her song for $10 or $100, I now have the opportunity to put that out there, and I can share in that royalty stream with her. And she and I will connect on a level. If she wants to take my information and send other things to me like concert tickets or backstage passes, that's possible now. So the value prop for the fan, is connection with the artist and ability to say, "I own a piece of that royalty stream. "I own a piece of that song." And on the artist side the value prop is, "I now get to actually share directly with my fans, "build that community directly. "There's no gate keeper like a label "or publishing company in the middle, "and I have the ability to reach out "and monetize directly based on demand and merit. "Then take that and do whatever I want "and build up my brand." >> So this is a great example where artists that have direct relationships, might be undervalued. Also, in a way there doing their own mini ICO, so to speak, with their fans by sharing in the future value of the success with the people that got 'em there. >> They are, we call it an ISO, Initial Song Offering. So just like a ticket on sale, it allows an artist to pick a time and date and say, "At noon on Thursday, I'm putting out 5% of my song "to raise $10,000." They pick the pricing, they pick the amount they want to put up, we admin the actual royalty stream for those people that put money into it, and the artist keeps the rest of it. >> I've seen a lot of pitches, I've seen a lot of stuff online, "Oh yeah, we're going to revolutionize "the new music industry, were going to use tokens." I've seen I feel pitches, but again, if you look at the smart money investors, they're looking at deals and saying, "Is there a network effect? "Is there a protocol of some sort in there?" Obviously you've identified a relationship that has tokenization or token economics built into the business model. Take a minute to explain that key tokenization. Why you're business is set for token economics? Why you, over someone else? >> So my backgrounds in the music business, I used to manage a band called Stone Temple Pilots for 20 years. Actually for 10 years, from 1990 to 2000. I had 20 other artist in that meantime. I understand the pain points from an artists perspective. I also know where the value is in the industry. It's in the publishing. Most of these entertainment businesses, the IP is where the real value is. Film, books, T.V., music, it's all in the underlying content. Not the distribution, not how many times I've downloaded it, but the actual ownership of the content. What we want to do, is put that in a basis so the artist can now take that on a fractional basis. We can use a tokenized product to let the fans buy in. The blockchain helps us track those rights, keep them secure, make them transparent, and allow the ownership to be shared between thousands or hundreds of thousands of people. >> And this also helps build community. I want to get your thoughts on something. I held a panel on Sundance this year, Sundance Film Festival, called The New Creative. What you're seeing emerging is a new artist. The new artists are digital native, their fan base is direct. Things we just talked about. But they're undervalued, because the gatekeepers, either the studios and or labels in your instance, are controlling distribution and they're also controlling the activities. So we all know what Apple's done with some of their artists, and artists have to go on the road and do all this work. Well digital changes all that, so from your perspective as a industry guru in music, how has digital changed that dynamic? And talk about this new artist breed, this new young upcoming digital generation of artists. >> There's two things. First, internet really hasn't delivered what it said it was going to the music community, right? When you had Napster come out, it's great for the fan base. The artist and the creators actually lost out. Music got valued from here to here. It went almost to zero. People were sharing files for free, so at some point we thought-- >> Regulatory tried to solve that legal-- >> Tried and tried, but once you build a generation on free, it's hard to change that. On the fan side it was great. There was a lot more distribution. On the artist and creator side, it wasn't so great. What we're trying to do is bring value back to that. We're going to use digital in a way that lets people share what they believe in, without these gatekeepers like you said; fully demand based. If I'm the small artist who plays banjo in Kentucky, but I've got a 100,000 fans who really love me, and they can show that by buying in, forget the labels. Forget the publishers. Forget the brands. I now have a direct connection. I'm earning a living directly from my fan base, which is how it should be. >> Kind of like we do open source content. We were talking about our business, you are enabling people to self-identify with the artist, letting the artist be open to that, make that handshake or if you will, digital handshake, and have a relationship beyond just being a fan. >> Most of the labels, in fact all the labels: Spotify, YouTube, Pandora. None of those platforms let the artist share directly with the consumer, right? If I say, "Look, I've got 20,000 streams today, "can you tell me who they were, no. "Can you show me where the downloads are, no." Why aren't they letting those people connect. The artist has a natural connection with their fans. >> That's because the tech platforms are optimized for a different business model. Look at Facebook, they're living in their own problem. Their success is almost killing them. They have this centralized data optimization for the wrong incentive. They're optimizing data for advertising, not user experience. In this case, you're saying, "Hey, lets use the infrastructure and crypto "to optimize the fan relationship and expand it." >> The reason artists get on stage, the reason they write a song, is to connect with people, right? We've disembodied that connection to the point where they're out there in the ether and the fans are over here. They're like, "How do we get together?" If we can bring that back, there's a very powerful connection there that we can take advantage of and let people actually make money from their craft. >> Well Steve, great to have you on The Cube because one, you have domain expertise, you're business model solid, and we've been saying yesterday and on The Cube that it's a reverse of the old stack model. The top of the stack is the business model. You nail the business model, the underlying plumbing will sort itself out. With that in mind, how are you guys looking at the plumbing? What are you doing here in Puerto Rico? Are you raising money? Are you doing an ICO? Take a little bit to explain your relationship to the plumbing under the hood, in the blockchain, crypto world. And then what you guys are doing here in Puerto Rico. >> We started building our platform the traditional way. We took traditional VC funding about a year ago. As we were building the platform, we understood the importance of a blockchain, some type of decentralized ledger that allows people to look transparently under the ownership stack. As we were building that, one of our engineers said, "hey, have you guys heard of an ICO?" we had no idea what this was. It was about a year ago. Got educated very quickly, dove deep on it, and realized there's an opportunity, not really for the fact that it's crypto, but to actually capitalize the company in a meaningful way. We want to scale this very quickly. We've got strategic partners in Asia, other parts of the world, that we need to grow very quickly into. We realized it was an opportunity to have. We did a raise close of December 1st; oron exchanges. >> An equity raise or a token raise? >> The token raise. We did a U.S. based PPM SAFT. >> So a security token. >> It's a utility token, but we followed a process that our legal advisors advised us. In the U.S., keep it as a PPM SAFT. If it's offshore, it's offshore. >> So accredited investors? >> Accredited investors only, small cap, try to keep it reasonable, because we don't need 100 billion dollars to build this platform right now. We're looking to get this in a traditional business sense, so we're building a real platform with a real team. We took advantage of that. We got listed on an exchange January 12th. At this point, we're head down in product. We're looking to launch this in 45 days at Coachella. We had an event two nights ago at South by Southwest. We came up here from Austin, so we're going back to California tomorrow. >> John: You're on a plane. >> Yeah, we're on a roadshow. We've got artist brand partners now. We're signing people, two or three artists a week that come in. We've got publishing catalogs that are coming on board realizing that there's a B to be played, because publishers only monetize the top two or 3% of their catalogs. The other 98% get no love. If they can put that on a retail platform like us, and allow consumers to buy directly into it, it's a whole windfall for them. >> Everyone's a media company these days. We've been saying it, and that's the new media model. You got a great formula, good luck. We'd love to keep in touch. >> Absolutely. >> What are you guys looking to do next six months as you get the product out the door? Ecosystem, you got to recruit more artists? What's the plan? >> My goal is 100,000 songs in the platform by the end of summer. Like I said, we're doing a lot of brand activations at music festivals. We see people, you know, exponential growth. Each song comes with an artist fan base. This builds into it. We're also supporting producers, co-writers, performers, the other guys that aren't on the stage. We realize this platforms for them, because the own live ownership in these songs, but have never had a way to monetize it. We're growing this very quickly. >> Steve Steward, CEO/co-founder of that's V-E-Z-T. Check 'em out. If you like music, this is a great way to actually take part in being a fan and owner of the actual property; great business model. We'll keep in touch. Thanks for sharing on The Cube. More live coverage here on The Cube, bringing you all the action, and extracting the signal from the noise. I'm John Furrier, thanks for watching. We'll be right back with more coverage after this break. >> Thanks guys, thanks John. (electronic instrumental music)