William Bailey (Bolero): "Web3 has really become a way of changing an industry".

The Big Whale: Behind every project, there are entrepreneurs and a story. What is the story behind Bolero?

William Bailey: This will probably make you laugh, but before I worked in Web3, I worked in artificial intelligence. This was before the success of ChatGPT and the madness that followed! I was creating natural languages for companies, and then there was Covid in 2020.

Because of the containment, some of my friends who worked in music found themselves with no income overnight. They lived almost exclusively from concerts, and not from their musical works.

At that point, like many people, I had a bit of free time and I took advantage of it to dig into the music industry model. Quite quickly, I realised that it was an industry that creates value, a lot of value in fact, but that, as in many other industries, this value is poorly captured and poorly distributed.

What value are you talking about?

I'm talking about artists' music rights, which represent 41.5 billion dollars every year. Not many people know this, but as soon as an artist goes into a studio and produces something, they acquire music rights.

Today, all artists, whether singers, musicians, or others, and also all publishers are sitting on piles of rights linked to the commercial distribution of works. Except that these rights are not available and tradable, so they have virtually no value.

This problem has been identified for decades in the industry. What is your solution?

During confinement, as well as being interested in the music industry, I became interested in blockchain, and I realised that it allows a lot of new "apps" to be created, and particularly in music.

With my co-founder, Arthur, we met in Paris after the first lockdown, and we started working on Bolero in autumn 2020. It was very intense, we spent 4 months in our rooms doing nothing but coding and testing lots of things with blockchain to find the best way to value these music rights.

At the time, it wasn't easy to use blockchain because there were still only Layers 1 like Ethereum, and no layer 2 (second layer protocols). I still remember that using Ethereum cost a fortune. It's only in the last few months that the model has really become interesting.

There are dozens of layer 2s. What blockchain do you use for Bolero?

Today, everything is deployed on Polygon, but we are not committed to them. We are blockchain agnostic. Our aim is to be interoperable, so we're talking to other protocols and will make announcements in due course.

Let's talk about the product itself and what you've developed. How does Bolero work in practical terms?

We've created a platform that allows artists and producers to split the music rights to a single or album in the form of 'Song Shares'. Once we have split these rights in the form of Song Shares, we will embed them in tokens, which will then be sold to investors registered on Bolero.

The advantage for artists is that they get money back thanks to their music rights and for investors it is the possibility of receiving royalties from artists.

Is it really essential to use blockchain to do this?

Using a blockchain, a public one I might add, is obviously useful, and for several reasons.

Firstly, because it allows artists and producers to split up their rights and sell them.

Then, because it allows anyone to invest in music rights with no geographical limits.

Finally, and this is perhaps the most interesting thing about what we have developed, the blockchain allows us to collect royalties from music rights that we own. Bolero collects the royalties in euros and dollars, converts them into USDC (Circle's stablecoin) on Polygon and redistributes all this money automatically to the owners of the Song Shares in their wallets.

How are Song Shares priced on Bolero?

It's not the artist who chooses the price. The artist makes a proposal and we have a team that makes an estimate. We look at past revenues and project them into the future with a rate of inflation and a rate of regression in popularity.

After analysis, we are able to say that the artist's title or catalogue is worth 100 or 150. We never let a right go out in the form of Song Shares without validation by the team.

All these services come at a price. How much does Bolero charge on transactions?

We take a 20% fee when music rights are first sold on the market. After that, it's 1.2% on the secondary market.

That may seem like a lot...

We bring value and liquidity to artists and investors.

How do you manage liquidity on Song Shares?

Today, we have more than 10,000 customers on the platform with around 60 artists and producers. All the shares we put on sale are at very low prices, between €10 and €20. We made this choice because we want users who have 30, 50 or 100 euros to be able to invest too.

For the moment, the market is not yet mature enough, so you sometimes have to wait several hours or even several days to succeed in selling or buying a music right. But the ambition is that over time it will be quicker and quicker to buy and sell Song Shares.

Already more than 10,000 people have bought music rights, but have they become regular investors?

Today, we have 36.9% monthly retention on our users. This means that more than a third of our customers redeem Song Shares on Bolero during the month. And we have about a third doing so every week, so the retention is there.

After that, for us, the challenge is to go even further, because we have users who are very active and are more interested in trading music rights than in earning royalties.

What are you going to do?

We're going to keep some supply on our side and we're going to create bundles on categories, a bit like decentralised ETFs. There will be a French Rap bundle, a Bossa Nova bundle.

We will supply this bundle with rights to which we have access and people will be able to gain exposure to these themes.

Who are Bolero's typical users?

We have two types of user. On the one hand (38%) are those who say they are music fans. They say "when I stream music, I earn money". And on the other side (68%), there are the neo-investors. These are people with savings who want to diversify.

The interesting thing about music is that there is a very stable and predictable cash flow. There's what's known as the growth arc, meaning that you have the first 18 months of a track where there's a peak in consumption and then after that you return to a floor that has an almost infinite duration.

How do you explain this phenomenon?

In the era of streaming, tracks never disappear. They're always in playlists, they're always recommended. There's always the clip that's going to be viewed on Youtube, the music that's going to be played in a TikTok video.

The best example for us is the song "Brothers" by Rilès, which has been on the platform for a year. Song Shares have an income of just over 10% per year even though the song was released 8 years ago. It's not a recent track, but there's a floor in terms of listening and that's what investors come looking for: an asset that's not exposed to the economic climate and has a positive return.

Can all artists come to the platform?

No, it's not open bar, not all artists can come as they wish. There is a selection process. Before listing an artist, we do our due diligence work to make sure there's value.

You raised €2 million in February from several funds and business angels like Sébastien Borget (The Sandbox). What do you think this deal means?

Bolero is in the process of establishing itself on the music scene. Many competing projects have pivoted towards artificial intelligence (Royal in the US for example, editor's note), when they haven't simply closed down (Yadeck for example).

What is your fundraising being used for?

To develop tech and of course to recruit a few people (there are currently 9 people at Bolero), especially tech profiles. We'll soon be announcing a major recruitment, a profile from a major music group.

How do you explain the fact that you've succeeded where many others have broken their teeth?

I think our strength is that we've tested and pivoted a lot to find the most viable long-term value proposition for artists and investors.

We started with retail investors and since the beginning of the year we've had traction on the corporate side. We're talking to banks, funds and family offices that want to position themselves in this kind of asset.

How do you explain this shift from more traditional players?

Web3 has really become a way of changing an industry. Some professionals have understood that it guarantees a liquid, secure market that complies with regulations, so now they're interested in the business side, the value of the asset, market trends, and no longer technological issues.

Why are they turning to you?

We're legitimate on the subject and that we have a growing offering. We have just added 730 new tracks to the 420 already added at the start of the year with the signing of Belgian producer "Le Motif".

The tokenisation of music rights will create a market in which anyone, that is you and me, will be able to buy and sell on the same market as private banks or family offices. It's a pretty incredible change.

Do you think tokenisation will affect all sectors?

In the long term, I'm convinced of it. In the shorter term, I especially think that tokenisation will have an impact on sectors where there is a lot of poorly captured value, like finance, gaming or music.

How do you see Bolero's future in 2-3 years?

Very well (laughs). More seriously, our aim is to become a key player in the music world.

Today, we have a platform for individuals and eventually we're going to have an infrastructure for businesses accessible via API where professionals will be able to access our features without going through the platform. This is the plan that should enable us to be profitable, I hope by 2025.