Grady’s Good Karma: A crypto-backed record label

“If you were the artist, what would you want?”

Grady Lee, dressed in his favorite olive-green corduroy jacket, a sleeveless white undershirt, brown slacks, and a pair of classic white Converse sneakers gave me some food for thought as we sat outside a bustling coffee shop in Culver City, Los Angeles.

An indie-pop musician better known by just his first name, Grady, 28, believes that deals offered by major record labels severely undervalue artists.

“The deals that artists get are so unfair,” Grady said. “They make the artist surrender their rights in ways that I don’t think any artist should have to.”

That’s why Grady decided to create his own record label, Good Karma Records, in 2021.

With Good Karma, Grady aims to remove power structures, create a close-knit community, and help artists grow through cryptocurrency and blockchain technology. Fans who listen to the artists’ music and attend their concerts become the investors, not the executives at traditional record labels.

“I’ve been in enough situations where I’d seen really dirty paperwork and just wanted something that was simpler and more conducive to serving the artists instead of them kinda just being slaves to a label,” Grady said.

Good Karma Records was founded as a decentralized autonomous organization (DAO). Essentially, DAOs are groups of people who work towards a shared goal without a central authority.

The goal of Good Karma Records? “Help the good guys win,” Grady said.

Like any other record label, decisions must be made on who to sign, what venues to play, what the deals look like and how much budget to allocate to certain things.

“What we’ve done is take the vertical model and just toppled it over and turned it into a horizontal model,” Grady said as he leaned back in his seat. “Instead of a few people at the top making decisions, anyone that has equity in the label now has governance over who we sign, what the label evolves into and where we put our money.”

Grady and his partners seized the opportunity to create their revolutionary democratic record label at a time when the idea of web3 (the third era of the World Wide Web) began to boom. Web3 is all about decentralization based on blockchain and token-based economies involving cryptocurrency and NFTs.

But what do these words mean, exactly, and how does it all play into Good Karma’s unique operations?

Cryptocurrency is digital, encrypted money that operates through a decentralized network rather than a centralized authority, like a government or bank. That decentralized network is called blockchain, which is a public database that records crypto transactions (essentially, a ledger). DAOs, including Good Karma, also run on blockchain, which serves to transparently record the group’s operations.

Most people currently treat crypto as an asset to invest in, but it can be used to make purchases, including NFTs (non-fungible tokens). NFTs are digital assets that represent digital files, like photos, videos, and music. They’re backed by the Ethereum blockchain, with ETH as the cryptocurrency.

At Good Karma, buying artists’ music NFTs is one of the ways members can support their favorite artists and invest in their careers. The value of NFTs for musicians is that they can be sold directly to consumers, allowing artists to keep more of the profits by removing the middlemen (like agents, lawyers, and distributors).

For the fans, it’s all about collecting music and supporting their favorite artists. Unlike crypto, which is fungible (meaning the units are equal in value and can be traded for one another), each NFT has a digital signature, providing proof of ownership and making them “non-fungible” (meaning they are not equal in value and cannot be traded for one another). Thus, the uniqueness of each NFT creates digital scarcity, giving NFTs their value and owners their bragging rights.

“I love the intersection of culture and crypto,” said Cooper Turley, one of Good Karma’s initial startup investors. “I’ve been working in music for 10 years and crypto for five. And so when Grady came to me talking about Good Karma Records, obviously, I had an affinity for music, I knew that Grady had an extremely strong network here in LA—the ability to combine those two things with something like NFTs made perfect sense to me.”

Turley also sees music NFTs as the first form of collecting music for this generation, compared to past iterations like CDs and vinyls.

“I can go buy a collectible version of a song, and in the event the artist does well, I have something that proves that I was early on to their career,” he said.

One of these budding artists is Daz Merchant, who focuses mostly on hip hop progressive tunes. Merchant, whom Grady met in 2020 through a mutual friend, is the first and only artist currently signed to Good Karma.

“Within like a week of working with him, I realized he was maybe the most dormant volcano I’d ever seen,” Grady said. “His potential compared to what he was currently doing was the largest disparity of any artist I knew.”

Sporting a trucker hat and his defining round, thick-rimmed sunglasses despite being indoors, Merchant rushed from another meeting to make our Zoom call to share his journey with the label.

“It was that moment you know something is really it and you don’t want to miss it,” Merchant said. “Watching the success of my peers around me really growing in these web3 spaces and connecting to new people and building a strong audience, it’s something that just made sense for me.”

Merchant is following closely in their footsteps. In February, he released his debut single and sold out of 25 NFT editions in 25 seconds, raising 2.5 ETH (equivalent to around $7,000 at the time).

“It was a record that we felt confident in and that we felt was a good representation to intro the relationship with me and the label, to kick start and kick up some noise,” Merchant said.

Merchant is currently working on his debut album and recently played at South by Southwest and Afterparty, an NFT music festival in Las Vegas. He also played at multiple Good Karma showcases, which the record label organizes monthly to give artists the chance to perform for potential investors.

“It’s a lot of moving parts, but things have definitely been cranking along,” he said. “It’s an interesting thing to comprehend—to be able to get people fully invested and interested in what you’re making and what you have going on is just one of the greatest blessings that I can ever ask for.”

As for Grady’s vision for Good Karma, he hopes to see their model become the new norm in the music industry, whether it be Good Karma or another record label DAO leading the way.

“If we’re the catalyst that inspires someone to do it better than we can do, then I’m happy to see it,” Grady smiled. “I just want to see artists winning.”