The trigger: a new technology or a shift in the digital landscape. Aspiring founders are searching for a good use case to leverage that development and turn to something they’re passionate about. Music. With a vague understanding of the music business, they proudly announce their plan that will totally disrupt the industry.
People who’ve spent a decade in music have likely seen a dozen of companies promising to disrupt come and go. Disruption doesn’t sell. Solving problems does. The most common misunderstanding seems to stem from a fallacy around intermediaries and that disintermediation always improves things. The oversimplified view is that everything besides the artist & fan is ‘extra’ and both would profit if it can be successfully disrupted.
The reality is that things don’t function as an artist-management-label-distributor-DSP-fan chain. Music doesn’t always travel through it like that. Value doesn’t always travel through that chain. Instead there’s a whole network of connections where various types of value are exchanged, connected and created. In most cases it’s not linear; it’s a network.
The above may seem obvious, but this misunderstanding occurs time and time again. It leads founders to present themselves in an adversarial way to parts of the industry that actually should be their customer. If you can do X better than how a label is currently doing that, then that label might be happy to pay you for it. Artists & their management have a ton of things to do, so in many cases they’re happy to let labels or label services companies take care of some of it.
Don’t get me wrong: there are plenty of inefficiencies and practices of exploitation in the music industry that need to be disrupted. These may occur anywhere in the ecosystem (which also includes other parties like everything related to live, merch, PROs, etc) or in the connections between players. They typically don’t apply to an entire domain, e.g. ‘all labels’ or ‘all booking agencies’. Even when they do, like in the case of inefficiencies or friction, there may be other aspects of those businesses that would not benefit from complete disruption.
What I’m saying is do your research. Create a map of the industry’s domain you’re interested in and also map out everything adjacent to it, because there will be unforeseen connections. Understand how companies collaborate, what goals they’re trying to achieve, how they add value, and where frictions may occur. Read Don Passman‘s All You Need to Know About the Music Business. Speak with people to understand whether your research is based on current-day practices, because it definitely happens that people launch companies with assumptions based on early 2000s practices.
Music is complex. Part of it unnecessarily, but there’s a reason why things are structured this way. Figure out those reasons. Learn how others leverage those reasons to pioneer new businesses. Identify the trends. Understand the complexity to avoid endless pivots and repositioning. Music is in need of innovation – do it through partnership.
Deepfakes, infinite albums, generative NFTs – creative pioneers are rapidly pushing technology-enabled concepts into the center of web culture. Whereas just a few years ago, it was hard to get people to care about non-static media, it’s now grabbing people’s attention and their (crypto) currency.
Problem-solving
The Infinite Album gives video game streamers a way to soundtrack their streams without risk of takedowns. The AI creates soundscapes that react to your gameplay and even lets Twitch viewers use commands in the chat in order to influence the soundtrack. The music industry as a whole has been unable to form a global approach that makes it easy for gamers to understand what music they can play on-stream. This situation has given room for new entrants, some very tech-driven, to solve a clear problem.
https://www.youtube.com/watch?v=-0KCZlvNVKw
Another example I’ve mentioned here before over the years is Endel, which provides ‘personalized soundscapes’ that help the listener focus, relax or sleep. They’ve essentially taken a common use case for music and have built a product that doesn’t neatly fit within the common formats of the music industry: a mental health app with adaptive soundscapes. Their artist collaborations include techno pioneer Plastikman (Richie Hawtin) and Grimes.
World-building
One of the most ambitious projects to recently launch is Holly Herndon‘s ‘Holly+‘. The singer, musician and frequent AI-collaborator has created a deepfake version of herself which people can then collaborate with. Another way of putting it is that Holly, through her collaboration with Never Before Heard Sounds, has created an instrument that is based on herself. She will set up a Decentralised Autonomous Organisation (DAO) to govern her likeness and is creating an NFT auction house using the Zora protocol to sell approved artworks. She describes:
“The Holly+ model creates a virtuous cycle. I release tools to allow for the creative usage of my likeness, the best artworks and license opportunities are approved by DAO members, profit from those works will be shared amongst artists using the tools, DAO members, and a treasury to fund further development of the tools.”
Other recent examples include a new release by Agoria & Ela Minus on Bronze Player, a tool that lets artists create music that recomposes itself infinitely, which in a way makes recorded music feel more like performed music in that you won’t be able to experience it exactly the same way twice. A linear version of the song was also released (embedded below).
One NFT platform I’m keeping a close eye on is Async, which sells art NFTs in layers, allowing the creator to set rules for the manipulation of the art and the buyers to reconfigure the work. After starting with visual arts, it launched Async Music:
“This is music with the ability to change its composition. It may sound different each time you come back to listen. This is achieved by breaking down a song into separate layers called Stems. Each Stem has multiple Variants for its new owner to choose from. In this way, a single Async Music track contains many unique combinations of sounds.”
Water & Music, run by Cherie Hu, estimates that Async has grossed about $650K in revenue from music NFT sales in May & June of this year, taking the third place in terms of music NFT marketplaces by revenue size.
Status-shaping
Possibly the largest non-static art projects, by revenue share, are NFT collectible avatars such as CryptoPunks and Bored Ape Yacht Club. These avatars are generated from variables like hair & skin colour, accessories and other types of character customization, leading to sets of 10,000 unique avatars. These collectibles are then sold as NFTs. Particularly CryptoPunks are highly valued due to them being minted before last year’s NFT explosion and thus being a status symbol in the budding Web3, often selling for tens of thousands of dollars. There are even cases of people paying over a hundred thousand dollars, like Jay-Z for CryptoPunk #6095.
A tipping point?
I believe that music’s future is non-static. It gained a default characteristic of linearity in the age of the recording, meaning: a song will sound the same every time you hear it. That’s a very recent trait for music to have by default. Now with powerful connected devices and a new generation of DAWs, we’re seeing this temporary reality of the recording age unravel and become optional rather than a default.
If you’re an artist, this unraveling means greater freedom in how you approach music as an art; it can be interactive, adaptive, generative, dynamic, augmentative, 3D, etc. If you’re more interested in the business side, you may find that you can take a page or two from the gaming industry’s book and make more money by charging for features rather than the content itself. Sell features, not songs.
Setting up a Decentralized Autonomous Organisation (DAO) is a clunky affair when compared to more centralized variants. But maybe that’s the point?
I was recently asked when DAOs will feel more like installing an app and there are definitely accessibility hurdles to be overcome for these organisations to become a common phenomenon in music. Here’s my thoughts.
Firstly, I do think we’ll see DAOs become mainstream, but not until some of the least user-friendly aspects are resolved. Setting up wallets, gas costs and treating mobile as an afterthought are 3 points of friction that come to mind. I’ll dive into them here.
Secondly, the point of a DAO is to organise as a group on your own terms, using your own tools, and participating in the value you generate together. Part of that value may be represented as shares in the project (in the form of tokens) and part of it may be cash (in the form of cryptocurrency). That’s complex and usually requires all sorts of documents, contracts and perhaps even notaries. So in that sense, the expectation to make DAOs as simple as installing an app is unrealistic, but further maturing of tooling will definitely make things easier.
Wallets
In order to participate in DAOs you’ll need a ‘wallet’. I recently recorded a 10 minute how-to, that actually turned out to be 30 minutes long, which highlights some of the complexity well.
This wallet allows you to participate on the blockchain utilized by the DAO. It lets you make transactions, interact with smart contracts, send and receive tokens (incl. NFTs), as well as cryptocurrency. It also functions like a single sign-on that you can use to interact with blockchain-based tools, platforms, and communities.
There’s a way around the wallet requirement: you could do things ‘off-chain’ for people without a wallet, which means the organisation centrally records transactions & what people are owed without writing it to a blockchain. Whoever has a wallet can move all their assets ‘on-chain’. Many tools, like Collab.land, already do this by recording your tokens alongside a user ID such as your Discord account until you withdraw them to a wallet that has a blockchain address.
🔮 I expect Facebook to eventually integrate wallets into their offering. This means that people would be able to open a wallet on the social network and be able to use Facebook’s one-click login on web3 platforms too. This will remove a lot of friction from the space (although I really don’t think you should be using Facebook).
🔮 I also expect banks and financial tools like PayPal & Cash App to eventually have wallets for Ethereum & other popular blockchains. They’re already doing Bitcoin.
Gas costs
Shortly after I published my video about how to set up a cryptowallet, the transaction fees (gas costs) on the Ethereum network climbed to around $50. That means that even if you’re trying to perform something that’s free of charge, you may still have to pay $50.
Gas costs have recently been a lot lower, but no matter the sum, it will take education to explain to people why certain interactions require money on an internet where everything has always felt like free. It depends who I’m explaining it to, but I tend to explain that instead of selling your data to advertisers in exchange for a service, you pay the network directly to process your transaction and host all the data. But how does a musician explain this to their fans?
Here, too, doing certain things ‘off-chain’ can help cut costs, but decentralization gets sacrificed.
🔮 Ethereum’s transition to Proof of Stake will help a lot. I also expect ecosystems around other blockchains like Tezos and Flow to mature, which have both found their own ways to keep gas costs low.
Mobile as an afterthought
Mobile phones are the world’s most important personal computer. For most people around the world, they’re the only real personal computer they have access to; that’s just theirs and doesn’t have to be shared.
Unfortunately, many web3 projects highly prioritize the desktop experience. It’s understandable why: that’s the environment in which builders are creating, so especially in this early stage it’s hard to expect everything to be perfect on mobile phones. There’s a thin line between afterthought and neglect however and if we’re serious about onboarding people to web3, we have to do a lot better on mobile.
🔮 The size of the opportunity of making the web3 accessible to the mainstream will drive organisations to prioritize mobile. Currently, a lot of the pieces are still being put in place, but I expect a period of growth to follow especially once some of the other clunky aspects mentioned in this article get ironed out. That’s when the web3 goes mobile.
What does it mean for music?
My guess is we’re about 1.5 to 2 years away from things like NFTs and DAOs going mainstream. The biggest obstacle is user-friendliness. DAOs don’t have to be as easy to install as an app, but right now it will be hard for artists to onboard their audience to a fanbase DAO. While artists with ‘crypto native’ fanbases may be able to gain traction with a DAO, the barriers will remain high for most other artists. What those artists could do is tap into creator economy trends and tooling in order to set up the foundation of their community in a more centralized way and then extend it with web3 aspects that may not appeal to everyone straight away. The same goes for event organisers.
In order to get more of you actively participating, this post goes into something more practical: setting up a wallet & acquiring an NFT. I’ve set it up as a video:
A step-by-step guide on:
How to set up a cryptowallet using Metamask
Adding cryptocurrency to your wallet using Coinbase
Buying your first NFT on ENS
Monitoring transactions on Etherscan
Giving your wallet a nice address like basgras.eth or musicxblockchain.eth
I spent about $50 on gas fees and .eth addresses in order to create this video. This is why I have a Patreon community for MUSIC x whose contributions help me cover the costs associated with running the sites & newsletter. Thank you! 🖤
This is a place for music and the new internet to crash into each other.
5 weeks later, 13 strangers had made roughly $34,000 USD through their creative collaboration which they sold as NFTs.
I watched from the sidelines excited to see artists find new ways to collaborate, be onboarded to Web3 tools, terminology, and mindset, and make money along the way. This was exactly the mentality I was referring to in my piece Thinking small: a meditation on scale vs success for artists which encouraged musicians to consider options beyond the rat race of streaming, charts, playlist pitching, and constant touring.
Now, the second season of Songcamp has kicked off and I’m glad to be able to help out the music teams in a strategic capacity. Season 2 is called Songcamp Elektra.
Steep learning curves
Once you have some basic experience with web3, many interactions become fairly easy. You’ve bought some cryptocurrency, transferred it to your wallet, acquired some tokens, maybe bought an NFT, registered your name on ENS (also an NFT, by the way), and joined a DAO where you vote on community proposals. From here on out you’re fairly familiar with some of the topics, they become easier to research, and every next step is less daunting than the previous one. It makes it easy to forget about the steep barriers to entry.
There are two barriers to entering the space: one is tech literacy and the other is economical. As I was onboarding a friend the other day, so they could register their ENS domain, I was actually shocked how much work getting set up was. I spread that out over months, but doing it all in one go was a lot.
We went through:
The Metamask sign up process, which is unconventional for many web users, since it requires people to securely store a phrase they need in order to access their wallet. That comes on top of a password. This practice is more common in banking than in most web services – very logical once you’re onboarded, but perhaps less so if you’re ‘just signing up for a thing’.
An issue adding funds to the wallet, since Metamask’s partner that allows you to buy ETH (Wyre) seemed incompatible with their bank. Maybe it was another issue, but in any case: repeated errors.
Registering at Coinbase to acquire ETH. Coinbase requires ID verification, so you have to upload a photo and wait for review. (if you have tips for easier methods, let me know)
Me sending them ETH instead.
Being quoted a price on ENS and then having to pay ‘gas fees’ on top.
When registering their name on ENS: needing to wait for minutes in order for the transactions to clear. This can make people who are used to a fast web, and fast URL registration, quite nervous.
This is tough and requires a serious commitment from people. Suddenly, the streamlined UX landscape of the internet breaks down and things get clunky. For most people, that’s daunting, which is why I wrote a piece clarifying all these terms recently for my newsletter.
What I like about Songcamp is that it helps onboard people. It is really helpful to do these things as a group and to have a trusted group of peers you’re collaborating with in case you run into trouble or have questions.
Financial barriers
I’m concerned about how hard the web3 can be to participate in if you don’t have much disposable income. The way things work right now, it feels very much like pay-to-play. I’m glad there are projects like The Mint Fund which helps underrepresented creators mint their first NFT by covering their gas fees and offering additional support, however people shouldn’t have to rely on funds in order to be able to meaningfully participate.
The way around is participating in a DAO. You can collectively raise funds and then grant participants tokens, which they can convert to cryptocurrency or fiat in order to accomplish their goals.
Together, we’ll be doing a lot of firsts. I haven’t minted an NFT, I haven’t been part of a split, and as a matter of fact it’s been a while since I could lend support to artists from the very beginning of their creative process until post-release.
Songcamp is about firsts: both on an individual level, a collective level, as well as in a more general sense. The general firsts are that the creative experiments Songcamp is running haven’t been done yet before. As a collective, it’s our first time collaborating and many people inside the collective have never met each other before. On an individual level, this is a first for the aforementioned reasons, but also because there may be web3 firsts like those I mentioned in the intro paragraph of this section.
we are about to flip the switch on 💡 a full-stacked cross-disciplinary media company will appear as if out of thin air 💨 we will build a world, and own that world together 🌏 making art will never feel the same 🎨
Most of all, it’s fun. I started the article with a sum of money to get your attention, but nobody is in this for the money. We have no idea what the outcome will be. Instead, it’s about collaboration, learning, experimenting, creating, socialising, and inspiring.
It’s exciting to be able to participate. I think the time commitment may even be similar to a well-prepared conference keynote about a topic I haven’t spoken about before. But in that same amount of time, I directly help creatives (and myself) with everything I’ve described above.
The most valuable thing we’ll get out of this is that we’ll learn skills, tools, and ways of organising. We’ll develop new perspectives. All of this will compound with previous experience and make it easier to start or participate in any subsequent web3 projects thereafter.
In this article I will attempt to explain some of the more technical aspects in clear terms for people with little to no experience with these topics. I’ll be diving into the steps outlined in a tweet by Jess Sloss of Seed Club, a DAO that builds and invests in communities.
How to bootstrap a DAO:
📥 Drop an NFT or series (on chain revenue) 🎁 Give NFTs to dope ppl (on chain community) 🛫 Launch snapshot + token gated discord (gov. infra) 🪂 Airdrop ERC-20 tokens (governance to the ppl)
There’s a comment section below. If anything is unclear or could be worded better: let me know either with a question or by spelling things out more clearly yourself.
How to bootstrap a DAO
People familiar with English-language startup terminology will be familiar with the term bootstrapping: to start something using nothing but your own funds (or in some cases: zero funds). Continue reading to learn how a DAO might do that.
You can’t have a DAO without a great community. I won’t go into that for this piece, but recommend reading How to grow decentralized communities by pet3rpan (before you click out of this website, consider joining the newsletter, so we can reach you in case you get lost in a rabbit hole ;-)).
📥 Drop an NFT or series (on chain revenue)
I think by now, for many people, non-fungible tokens or NFTs have become synonymous with auctionable digital artworks. This is not incorrect, but it’s a little bit like saying MP3s are music, while actually it’s a technology that has lots of uses in terms of audio encryption. A slightly better way of thinking about NFTs is as collectibles.
Non-fungible tokens allow for tracking ownership, as well as functionality like ‘splits‘ which are commonly used to make sure the original author gets money (in the form of cryptocurrency) every time their NFT is resold. This is done through smart contracts: little computer programs linked to a blockchain database that run whenever certain actions are performed or conditions are met.
Although the most publicised use case is 1 NFT of a unique artwork being sold, there are also countless examples of collectibles where 10 people can buy NFTs that represent identical artworks (e.g. this NFT by musician Sevdaliza). The former case would be described as a 1/1 and the latter as a 10/10 run, like a collectible. A series could be a set of NFTs, like a bunch of 1/1s, multiple 10/10s, or any mix like a 1/1 and a 5/5 drop.
This creates on-chain revenue: value stored on the blockchain that the DAO will use to let the community participate and distribute ownership. That revenue is stored in cryptocurrency.
A recent music-related example of a DAO that funded itself with an NFT sale is Songcamp. With the on-chain revenue, it could afford to cover the fees associated with ‘minting’ (creating) an NFT for the participating artists in its first songwriting batch.
🎁 Give NFTs to dope people (on chain community)
On chain community means that you have a way to track, via blockchain, who are the people in your community. Since tokens like NFTs allow people to see who owns them, it’s an easy way to trace ownership back to a DAO (the link between the DAO and the recipient is forever recorded).
Step 1: create an address for your DAO on a blockchain by setting up a wallet which allows for transactions and storage.
Step 2: create NFTs with that address.
Step 3: send the NFTs to addresses of people you want to add to your community.
Now there is a link between your address and theirs, through the NFT. You can see this happening in the above screenshot, but strip away the interface of the auction house and you get something like this.
Here you can see the transfer of a token from one address to another, here indicated as club.eth, which is the same @club from the Zora auction house screenshot and actually also the Seed Club referred to at the start of this post.
A community or service can let you sign in using your wallet (e.g. Metamask) which is a little bit like the type of ‘Single Sign-On’ you’re used to around the web from Google, Facebook, and Twitter. It can then check your wallet for any NFTs or other tokens (I’ll get into this) and grant you special privileges, ranging from simple access to more advanced features.
I was recently lucky enough to get voted into Mirror, a kind of crypto version of Medium, but way more interesting (thanks for the votes!). To participate in the vote, you have to connect your wallet. If you win, Mirror transfers an access token to your wallet. On Twitter that looks like this:
Attention $WRITE RACE 💨 Round 17 finalists! It's time to check your wallets 🪙
On Etherscan, a tool to read about transactions on the Ethereum blockchain, the above looks like this:
Here you can see 1 address sending 10 tokens to 10 addresses through the execution of 1 smart contract (you can read the code of that contract here). Bonus points if you can figure out which address I hold. 😉
Overwhelming? No worries, the user experience is easier than setting up an internet connection or email in the 90s. In the end you just need a browser extension like Metamask’s to log in to Mirror and when it sees you hold the correct token it presents you this simple interface for creating your account:
To set up the DAOs ‘governance infrastructure’, you can use a tool like Snapshot to let people submit and vote on proposals, plus you create a community for token holders (I’ve described token gating in the previous paragraphs). The latter is commonly done through Discord.
Here’s an example of a proposal for CabinDAO: a community that is creating a cabin residency program for select creators.
Here the community (or DAO) is voting on a linked proposal. It’s essentially deciding to commit a certain amount of funds (15 ETH) and community tokens to the program.
There’s a list of voters – 15 in total. They’re shown as addresses on the Ethereum blockchain and since Jon Gold has registered his name through ENS, I can recognize him and search for him elsewhere. For example, I can see he used his $WRITE token to join Mirror a few months ago. The votes are ranked by the number of community tokens someone holds (the bottom 13 are cut off). I haven’t looked into exactly how CabinDAO has distributed tokens so far, but usually they’re awarded to early community members and rewarded for participation, contribution, or in exchange for things (or cryptocurrency).
🪂 Airdrop ERC-20 tokens (governance to the ppl)
I’ve explained non-fungible tokens already, but haven’t gone into detail about other types of tokens.
ERC-20 is basically the technical standard for token implementation on smart contracts on the Ethereum blockchain. Remember Mirror awarding 10 people with tokens to join their service? It happened in 1 transaction through the execution of a smart contract.
While no two NFTs are alike (and commonly use the ERC-721 standard), ERC-20 tokens are fungible, meaning that they can be interchanged with one another. In simple terms, if I send you 1 $WRITE token mentioned above and you send me 1 $WRITE token, we end up with the same in the end. Trading NFTs would typically leave us with two distinct items.
Through your community’s smart contract, these tokens can give you voting rights or participation rights in a DAO, e.g. access to a Discord server or the ability to vote on proposals on Snapshot or similar.
This is where you might award the buyers of the NFTs with a certain number of tokens created uniquely for your community through aforementioned smart contract, e.g. if it were for my newsletter’s community, I might call them $MUSICX tokens. You’d also give early community members and other supporters some tokens in your community. This incentivises them to get active and start participating in the governance.
This process of distributing tokens among your community is called ‘airdropping’. Now, there’s just one thing remaining:
Use ETH / Tokens to go do cool shit
Like the Friends With Benefits DAO, you could let people buy their way in through exchanging a cryptocurrency (ETH) for tokens ($FWB). This means as a DAO, you have a certain liquidity from token sales. So as a community, you can use tokens to incentivize certain actions (e.g. creating a residence program for artists in a cabin) and you can use ETH to cover certain costs, from renting the cabin, to infrastructure, to perhaps paying a few developers to build your website.
That’s it. All of the above is using the Ethereum blockchain, but there are other blockchains out there that support similar functionality.
Go organise your community and if you’d like to invite me – send me a token at basgras.eth or a tweet @basgras.
