Dequency has been making waves since launching last year. Web3’s flagship sync-licensing marketplace conducted the first ever music licence onchain and is leveraging web3 tools to build a better licensing system. Clovis McEvoy speaks to founder and CEO, Keatly Haldeman, about why he made the transition from web2, how to fix royalty payments, and crowdsourcing musical taste.
Media needs music. From cinema screens to advertisements, video without audio rings hollow. The $3 billion business of curating high-quality tunes and navigating the legal steps to pair them with the perfect media is known as sync licensing – and Keatly Haldeman is a master at it.
At Riptide Music Group, where he spent 8 years as CEO, he helped build a one-stop-shop for customers looking to licence music, combining a publishing company, record label, and sync-specialist into one streamlined service. Given the company’s success, it came as a surprise to many when Keatly departed in early 2022 to throw his energy into Dequency, to create a decentralised sync licensing marketplace that could fix the problems inherent with the industry in web2.
However, Keatly’s move didn’t come out of the blue. He had been paying attention to web3 since 2017, though he did not yet fully appreciate the scope of web3’s relevance at the time. “I didn't understand crypto,” Keatly admits. “I hadn't taken the time to really learn about it – and I'm glad I hadn’t, because it was way too early, and we would have failed.”
“The royalty system is broken.”
— Keatly Haldeman
As the web3 industry grew, those 2017 conversations were still in the back of Keatly’s mind. “It always stuck with me. When I connected the dots – the idea of removing the middleman with smart contracts and bringing that to sync licensing – that's when the clouds parted.”
Alongside fellow industry experts Mark Ross and Professor George Howard, who had been one of the early advocates “waving the flag for sync licensing on the blockchain”, Keatly founded Dequency in 2021, originally planning to play a hands-off role at the company. “I had no intention of leaving Riptide,” he says. “I was thinking ‘I'm going to help build this thing, we'll hire an executive team to run it, and I’ll just stay on as an advisor’.”
However, momentum at the fledgling company quickly grew. After they received an offer from Borderless Capital, the respected web3 venture capital firm, to lead their fundraising round – contingent on Keatly leading Dequency as CEO – he was faced with a binary choice: stick with the traditional music industry or jump with both feet into web3. The offer of a six-figure grant from Algorand itself only added to the dilemma.
He recalls how George had been saying “this is important, we need to get this done” for years. Ultimately, Keatly understood what George had been talking about, and opted to follow the action: “I've been in the traditional music industry for the last 20 years and the ideas that are happening in web3 are the most interesting that I’ve seen in my entire life,” he says, emphatically. “The thought that I could take my experience, my passion for music, and my contacts to this new technology… that was really exciting.”
Those new ideas are easy to spot: blockchain and smart contracts are an entrepreneur's dream when multi-stakeholder contracts and financial flows are involved. In traditional music, royalty payments are notoriously inefficient, with hundreds of millions in earned income never reaching artists due to incomplete or inaccurate data. “The royalty system is broken,” Keatly summarises. “The data is terrible – there's no central database; it takes nine months to receive your money; and it can take two or three years to get paid from foreign sources. It's just a nightmare.”
For independent artists, the prospect of not getting paid for months can be financially crippling. Dequency is built to fix that problem. On their web3 platform, which the company has raised $4.5m to build, once a media creator has found a song they want to use, they simply mint a licence using the platform’s SmartSync contract and the artist, or rights holder, instantly receives payment.
“Blockchain can theoretically do away with the current system,” says Keatly. “Every song is represented as a smart contract, which can have rights information, royalty splits, and payment structures embedded in.”
“I've been in the traditional music industry for the last 20 years and the ideas that are happening in web3 are the most interesting that I’ve seen in my entire life.”
— Keatly Haldeman
Of course, the legal aspects of music copyright are, and will remain, a complicated field. Dequency is moving cautiously to ensure that any new features are fit for purpose immediately after they launch: the platform today only supports single rights holders, for example, though introducing split royalties is a key target.
Similarly, Dequency currently handles only licences for web3 media such as NFTs and metaverse performances. But their long-term vision is to integrate traditional and web2 licensing into their ecosystem, with web3 serving as the underlying technology, rather than the competitive niche.
“Blockchain can theoretically do away with the current system.”
— Keatly Haldeman
Dequency has also introduced a series of artist-focused features that radically depart from the traditional licensing model. Many web2 licensing companies act as centralised gatekeepers between artists and those looking to purchase music rights: setting the price of the song’s licence, taking commissions of up to 50%, and retaining ‘approval rights’ over who can licence a song and how it can be used.
An open marketplace, Dequency plans to be completely different. Artists on Dequency have the ability to set the license value for their music however they see fit. When someone wants to licence a song, they submit a request, and the artist has the final say on when and how their music is used.
This may sound like a small improvement, but the ability of artists to ensure that their work is only being used in projects that align with their personal values is a huge step forward in empowering independent creators. And with the structural freedom that web3 offers artists, who no longer rely on middlemen to distribute their work, there is reason to expect that use of these features will proliferate, rather than gather dust.
But before even getting to monetisation, the curatorial role of the licensing business plays a major role in which artists succeed and which are locked out of the industry. Curation is how customers know that the music database they are accessing has high quality melodies, but it fosters centralised curation – with a handful of people deciding what is and isn’t ‘good’.
Dequency’s alternative is to access – and reward – the taste of their users, by re-imagining the core function of sync licensing as a community experience: curating a world-class music catalogue. Slated on Dequency the roadmap as ‘Proof of Taste’, ‘Tastemakers’ can earn tokens when their curated playlists get played, when artists appreciate their feedback, and by weeding out copyright infringement. Users can also stake these tokens in songs that they think will be licensed, whilst composers can share a percentage of licensing fees with the tastemakers who backed them.
In this way, Tastemakers will have the option to monetise their taste by getting a slice of the royalty payments flowing through the platform, and build their reputation too. “Next time someone challenges your taste in music – you can show them your stats,” laughs Keatly. Of course, those stats serve as a key benefit for curation too, providing the mechanism through which customers can find the best music for them, whilst opening up the curatorial process to anyone online.
“We want to push the envelope.”
— Keatly Haldeman
Long term, Keatly says he wants to see Dequency offering unique tech solutions that plug music into the web3 media space, providing easy access to a growing catalogue of metaverse-ready tunes. “If you look at something like NBA Top Shot,” he explains, “They're silent! They have these basketball moments but there's no music. We're saying ‘do you want to add music to this?”
These goals place a premium on innovation, culture, and moving music forward. “You know, the money is secondary to doing really cool stuff,” he says. “I want to look back at this journey and think ‘that was cool, that was interesting, that changed things.’ Ultimately, we want to push the envelope; that’s what is driving us.”
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