The Future of Investing in Web3 Music with Brett Shear
Wallace Morgan
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NOISE DAO
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January 17th, 2023

Brett Shear, aka BlockchainBrett, knew early on that he wasn’t meant for a traditional 9-5 path. While studying accounting in undergrad, he quickly identified discontent with the average business track and began searching for big ideas to spark his imagination. Inspired by his older brother Myles Shear, who manages EDM artist Kygo, Brett searched for a passion of his own eventually leading him to web3.

While in the process of building an app during his first year of grad school at Fordham in 2016, Brett heard rumblings about Ethereum. Intrigued, he attended an ETH Meet Up at the ConsenSys office in Brooklyn where he met the company’s founders and other like-minded thinkers. Brett was blown away—he’d found an edge. “This is the coolest place in the world innovating on the most exciting tech that exists,” Brett remembers thinking. “The future of apps are on here, and I completely just threw my app out because if the app’s not on the blockchain, it’s a waste of time."

Brett proceeded to invest the vast majority of his money in ETH, including all stocks he had at the time and half of his Bar Mitzvah money. He then started the Blockchain Club at Fordham and landed a job at ConsenSys shortly thereafter where he began building accounting-focused, blockchain-based software. He learned product, business development, and customer support and traveled to blockchain weeks around the world including spending a month in Asia at various conferences. Taking a user-first approach, he kept a pulse on every product he could find eventually leading him to SuperRare in 2018. “The most exciting thing I came across was crypto art,” says Brett. Primarily ERC-721 tokens at the time, he started collecting crypto art immediately. “I just got obsessed with it. I was checking it every single day, all the time for hours. They had an activity feed so I'd see if anything got bought. And crypto art at the time–this might have been June or July 2018–was like $40 for the most expensive piece of crypto art. I remember spending $25 on a piece being like, ‘Am I insane?’”

He quickly became one of the top collectors in what he calls the “second wave”–which, at the time, meant spending between $300-$400 on tokens from digital artists like xCopy, Coldie, and Hackatao (the floor on early pieces from these artists now range between $250,000-$2,000,000).

“The coolest thing about me, I thought, was buying crypto art.” Brett relentlessly shared his new passion with anyone who would listen and kept investing through the bear markets even when SuperRare and other crypto platforms were on the brink in 2019. “Most people move towards the negative side, but I like to lean towards the positive potential,” says Brett. He then bought land in Crypto Voxels–the first live virtual world–and built a gallery to display his collection. The more he collected, the more bullish he became. His investment philosophy: “If NFTs are denominated in ETH, I will not only get the appreciation of ETH, but I will also get the multiple appreciation of the NFT.”

Brett came across Music NFTs via Catalog and ZORA in 2021 and immediately began collecting. When 3LAU’s $11 million sale caught the attention of the music industry in March of 2021, Brett was positioned and willing to advise. He helped Kygo and The Weeknd orchestrate genesis drops on NiftyGateway and eventually partnered with his brother Myles, and Kygo, at their company Palm Tree Crew Holdings to launch and manage PTC Crypto–an early stage venture fund investing in the Crypto Creator Economy.

Brett has been instrumental as a collector and advisor to countless artists in the space, namely Daniel Allan, and has invested via PTC Crypto in a dozen content-focused crypto apps such as Sound, Arpeggi, and Bonfire. “I'm not an expert in any field of content, really. I'm a crypto guy, looking at what exists today and trying to think how to improve it. That's my intention,” says Brett. For NOISE, Brett advises on the Sound committee where he has helped the DAO collect hundreds of NFTs from artists such as Reo Cragun, Mija, Heno., Dot, and Grady.

Brett also co-hosts his annual Music NFT Movement with Cooper Turley, an NFT event that has featured live performances by Daniel Allan, Reo Cragun, LATASHÁ, Matthew Chaim, members of CHAOS, and vérité, among others. By way of his web3 journey, Brett has arrived at an overarching thesis: “Crypto is laying down the foundation for the future of the Creator Economy,” and NFTs are leading the way.

As the web3 music landscape develops at a rapid pace and boasts a growing number of success stories, Brett and investors groups like NOISE contemplate scalability. “I think there's no limitation. The same way Spotify monthly listeners are millions of people, I think we can scale to millions of collectors for an artist. How do we get to that point?”

Brett theorizes that artist social tokens could provide a potential avenue for growth. “At what point is the price of an NFT kind of high? You want to give access to a larger scale of people. In which case, it might make sense to do the equivalent to an artist IPO. Social tokens are kind of interchangeable with that.”

Currently, the web3 music ecosystem is taking a two-pronged approach to scaling investment opportunities. Artists have been increasing edition size for NFT drops and there’s a trend towards setting up equity structures where investors can invest directly as if the artist were a business. “What's starting to happen is a middle ground between an artist setting up an entity as a company, and we can invest in it like in a traditional VC model. On the web3 side, an artist is likely to release NFTs and maybe down the line create a social token which can convert into equity,” says Brett. “Invest in an artist who makes a token, and you will get their token too. These artists are very NFT-focused, so it's happening because people who are used to buying NFTs are ready to invest more, on a bigger scale.”

Brett’s advice to artists?

Be patient. Building equity in the form of a social token needs to be backed by assets and exposure. “You want to release a token that doesn’t dilute the quality of your work and is backed by a wide set of exposure to your art. That gives people a lower price point to participate.”

Social tokens could then be given back to investors retroactively or bought like public shares by collectors. “Artists will release their token, reward it back to people, and use that as their kind of ecosystem currency for governance around a treasury backed by their assets to grow and create earning opportunities for new people at a lower denomination. It’s something that people can buy without having to fork up for a certain NFT.”

In the ideal scenario, tokens create additional earning opportunities for artists, investors, and collectors. “Essentially, equity would even convert. If you invest in the artist from an equity standpoint then it would convert into those tokens long-term anyways. That's where the value is going to settle at.”

In the meantime, Brett’s strategy is to focus funds on purchasing NFTs. “The best move is to get as much ownership as possible buying NFTs,” says Brett. “I like buying music NFTs even more than investing equity into artists, because I believe there's more direct value from that later stage of getting to the scaling point.” His one caveat: the limitation of how many NFTs a collector can buy at once could be a good reason to take an investment route. “Equity can be a way to deploy more dollars at a time, because you can write a bigger check in a fundraising round. But the conversion to value is going to be lower than buying NFTs directly.”

The bigger picture for Brett remains the Crypto Creator Economy’s overall potential. “When I look at the grand picture, I think each vertical of content has the opportunity to be the size of the gaming industry,” says Brett. “I think we're not even really estimating how big owning content online can be.”

As digital art and music lead the way, Brett is confident in the gradual progression of crypto’s adoption in the creator economy and the “inevitable” trickle down to various verticals and industries. “It just cascades. It’s not just music, it's everything else too,” says Brett. “It starts by working for niches. And then the fact that it’s working for that niche is powerful enough for more people to try it adjacent to that niche. It's a snowball…It took two, maybe three years, for there to be a success story in crypto art that resonated enough for the next digital artist to focus on it.”

Having had a front row seat from the beginning of crypto art to now, Brett has seen tangible results. “Art Blocks alone has a billion dollar market cap. Not to mention, xCopy and Beeple and all these independent artists. Billions of dollars were created in like four years, which is insane. I think all these other categories are just in earlier parts of their cycle.”

Ultimately, Brett’s continued enthusiasm and love for the space comes from his convicted belief in the crypto business model. “Valuing the music directly is the business model and that will disrupt so many things. The system is better. There's ownership, and there's direct monetization, and those core values win—it’s inevitable."

As a collector, Brett remembers feeling the same initial hesitancy when jumping from art NFTs to music NFTs. Now adding writing NFTs to his collection, he knows it’s just a natural part of the progression. “It felt weird going from art to music. But now, a year and a half later, music has cascaded to this point, and it feels even less weird to go from music to writing, and then writing will continue to grow. It's only growing,” says Brett. “People aren't coming in and saying, ‘Oh, this sucks. I'm leaving,’ right? They are saying, ‘Oh, this is sick for all these reasons. I'm going to keep focusing on this.”

****

Article by Wallace Morgan for “High Frequency,” NOISE’s weekly newsletter. Subscribe for more.

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