It’s not that things have gone quiet around blockchain. Itâs just that things were really loud when it was being touted as a silver bullet to all of the music industry’s productivity.
Meanwhile the technology is reaching its plateau of productivity, so let’s take a quick look at whatâs bubbling up among the initiatives leveraging blockchain technology in the music space right now.
(If you need a primer on blockchain, read my 2016 piece “The Music Industry Isn’t Ready For Blockchain” in which I shared my skepticism about the silver bullet way of thinking at the time)
The following is not intended to be a complete overview â if youâre doing something in this space, feel free to put yourself on my radar by pinging me on Twitter.
Music rights
Ownership of songs can famously be complex. One of the startups trying to solve the problems around this is Verifi Media(formerly Dot Blockchain). This year the company partnered with music distributor FUGA to let its users register their (meta)data on a blockchain that tracks changes to proprietary data. Then, Verifi partnered with rights management platform Unison Rights bringing together rights metadata on the work and recording level.
The promise of the use of blockchain in this space is that changes to data can be made real-time and transparently, which also creates benefits for faster and more accurate reporting and payments.
Cryptocurrency
Facebookâs long-awaited âstablecoinâ Diem (formerly known as Libra) could launch as early as January. One of the Diem associationâs members is Spotify, which has long shown interest in the space. Theyâre furthering their commitment now and are looking to hire someone to their payments strategy & innovation team that is specifically focused on digital assets such as the blockchain-based Diem.
Rapper Lil Yachty is the most recent star to launch their own cryptocurrency, called âYachtyCoinâ. The token will allow fans to earn perks similar to things you might see in Patreon tiers or Kickstarter rewards. How exactly is still unclear. The token is powered by Fyooz, a platform that encourages creators to âbecome a tokenâ.
Decentralization
In the case of Audius, a blockchain-based streaming platform Iâve written about (a lot) recently, blockchain is used to distribute value more directly between participants of the platform (e.g. artists and listeners). Their tokens also allow users to participate in the governance of the platform â creating a more decentralized approach to platform-development than the status quo of streaming â akin to common practices in open source software.
Marketplaces & Non-fungible tokens
Through tokenizing the trade of goods, market places such as Foundation and Zora (the latter of which recently raised $2M) allow creators to participate in the secondary market of limited-edition goods. The latter launched a token with musician RAC, which is built on Ethereum (a popular blockchain for cryptocurrencies) and is rewarded to his âmost loyal fansâ. Holders of the token, which can only be earned and not bought, will have exclusive early access to new merch released through Zora by RAC (whoâs also an investor in Zora).
Whether physical or digital, so-called non-fungible tokens (NFTs) are used to prove the authenticity of goods and are already leading to sales of digital art for $100k. It could create an interesting avenue for digital scarcity and what 2020 was for livestreaming in music, 2021 could be for NFTs for high profile artists. New startups keep popping up, like Catalog where artists can sell single-edition music recordings and make money off of the secondary trades.
Up until now, these types of experiences would mostly appeal to collectors and superfans due to the associated price tags, but itâs interesting to think about what applications could be for more accessible types of digital scarcity (e.g. creating a song that can only be heard once and then must be sold on through a bidding mechanism).
As music professionals had to figure out models of digital scarcity and unique virtual experiences as a response to the pandemic, those insights can now be used to explore completely new avenues, some of which may be blockchain-based.
Special nod to Music Ally and Cherie Hu whose writing provide an accessible overview of the space.
Last week I wrote about blockchain-based streaming platform Audius in this newsletter. I criticized the strategy of ‘becoming the anti-SoundCloud’ and its plans for dealing with takedowns while recognizing the exciting potential of a more complex music economy. The next day Holly Herndon and Mat Dryhurst released a new Interdependence podcast episode where they go in conversation with the Audius founders. It made me completely change my mind about the platform.
Don’t be too quick to dismiss Audius: separating the content & functionality layer is one of the keys to unlocking a new music economy.
Protocol or platform, not service
Audius should be thought of as a decentralized platform rather than as a startup or streaming service. While there is a team behind the project, it seems they mostly work to bring into existence the components outlined in their whitepaper (PDF). These aspects are open-sourced and governed by the user community of the protocol.
While a service’s success is dependent on whatever interface is slapped on to the technical infrastructure, a protocol is less dependent on any one interface. For example, a company poorly redesigning an email client isn’t going to kill email, but it may kill the app or the company behind it. The most exciting aspect of Audius is not the current interface; it’s that they’re trying to create a protocol for digital music that could have any number of interfaces plug into it.
Clipped from the Audius whitepaper linked above.
One of the most important elements of that protocol is a concept I was previously very skeptical about.
Artist-determined stream pricing
Audius wants to let artists set a per-stream rate for their tracks, so if someone wants $1 / stream, they could do so. If they want something close to whatever are the current average Spotify or Apple rates, that’s possible too.
Why I was skeptical about per-stream rates is that it creates a form of metered streaming: load up your wallet and watch the currency tick away as you listen to music. If you’re creating a SoundCloud lookalike (or: âlike Soundcloud, but betterâ) to fit into the current landscape of streaming services, then metered streaming is a constraint that will inevitably scare users off. It won’t just scare people off in the sense that they won’t want to load up their wallet if they don’t know what they’re going to listen to yet, but more importantly it will have people make economical decisions about established micro-behaviours around music listening. I think in the end, that would be stressful and exhausting and users would stop coming back. However Iâve come to realize I’m wrong about this.
Differently priced music does not have to live in the same streaming interface. Lower-priced music might be what fuels background-listening type radio apps. Higher-priced music may be at the center of interfaces that connect you to new releases by your favourite artists. There are some pieces of classical music that I listen to maybe once a year, that I value more than some music that I listen to weekly. Per-stream pricing could help make up for the fact that that classical piece gets only 1 yearly stream from me versus 52 streams for a random track â whose creator I don’t even know â in a playlist I use to focus on writing.
What Mat and Holly communicate very well in their podcast with Audius is that ‘music’ is not one thing, yet the online landscape doesn’t reflect that fact well. To some degree, the compensation model embedded in the licenses dictates a lot of the user experience. In the past I’ve led teams at two music streaming services wanting to do things differently and while you can go quite a long way, in the end you have to exist in a landscape dictated by just one economic game: maximization of streams.
A change to that landscape would be refreshing and a welcome way to generate more revenue streams.
Content / interface-layer challenges
There is still a whole range of challenges to deal with in such a system. Who sets the per-stream price for example? Is it whoever has the highest degree of ownership of the sound recording? What if they change the price while itâs live and because of that the track is no longer playable through certain interfaces? Or if it all lives in the same interface: do you interrupt playback to give people a warning before an expensive track starts playing? What if their phone is in their pocket? These are just some of the design problems developers would have to think about in a decentralized system with such principles.
Itâs possible that the decentralization of the functionality layer doesnât go as far as I imagine. In any case, Audius or the apps using the protocol will have to deal with the existing national and international copyright regimes which inevitably dictate some of the economics.
In the end, itâs not about Audius versus SoundCloud; itâs about creating a new layer for music streaming. Imagining music streaming as a protocol, rather than a competitive space of services, is refreshing though. It allows for a rethink of the principles underpinning the digital music landscape without going through the arduous mental exercise of imagining small iterative improvements to solve streamingâs flaws.
Recently blockchain-based music streaming service Audiusdistributed tokens to 10,000 of its top users, giving them ownership of the platform and rights to vote on its future plus make changes to its structure.
While its advisory board â which includes Twitch co-founder Justin Kan and EA Games co-founder Bing Gordon â is impressive (though all-male), I have my reservations about the platform. Iâll explain why in a moment.
Despite my reservations, I do believe Audius is on to something. When it distributed the tokens, they didnât all go to artists, but also fans. Music is in desperate need for a digital economy more complex than one-directionally spreading out subscription fees over stream counts.
The âanti-SoundCloudâ
From the beginning, Audius set itself up as âlike SoundCloud, but not SoundCloud.â Thereâs a real difficulty in positioning yourself that way. SoundCloud is a company with more than half a billion USD in funding to date. It has relations with most of the music business, technical integrations with all kinds of hardware & software, and has spent over a decade building up its community, team and infrastructure.
The standards for music streaming are incredibly high now compared to the landscape that the current incumbents started out in. While I definitely think SoundCloud and other music streaming services of that generation are leaving space for newcomers to claim, I think itâs important to focus on what in particular a newcomer can do better and excel in that. In terms of doing a particular thing better, Iâd argue Instagram has become the anti-SoundCloud.
How do you deliver a good user experience and an audience to people? How do you get them to regularly visit your app / platform? How do you grow beyond the front of the adoption curve? All of these have answers, but how do you do that better than others? Setting yourself up as a one-size-fits-all service creates expectations you canât fulfill.
Takedown issues
On to a more complicated matter. Audius, as a decentralized service, will pass takedown requests on to uploaders who will have to take action. If it canât be resolved, it moves to an arbitration committee made up of Audius users:
âThat group can vote on whether a track legally should be removed or its revenue reattributed, and both plaintiffs and committee members must put up a small financial stake theyâll lose if their claim is frivolous or they make erroneous decisions.â
I appreciate the idealism in letting its community resolve these issues. The financial stake part also makes sense, assuming the party issuing is on the platform, but it also reads like the type of maximalist thought usually associated with blockchain or âdisruptive startupâ culture. It assumes as a newcomer it can set a new status quo that everyone will have to interact with â even people who are not on the platform. In actuality, as a newcomer youâre an outlier and the type of strategy you have to employ is growth, so you can actually become the status quo.
What does not help growth is artists finding parts of their catalogue on the platform without uploading it themselves and then going through a tedious and risky process to right the wrong.
A more complex economy
Another company I had similar reservations about in terms of being able to stand out as a compelling streaming platform is Resonate, a community-owned cooperative. However what excites me about Audius and Resonate are their visions for a different music streaming economy. In particular, giving fans and artists equal participation in that economy.
Money in streaming flows in one direction and thatâs away from fans. It feels like thatâs the point, but itâs also a limitation. Thereâs a reductionist vision that music services are solely about listening to music. Yet what could be created by incentivizing platform participation? What if the $10/month subscription fee was more like an entrance ticket or season pass and thereâs additional, optional value exchange happening on the platform, much like in video games?
Some users wouldnât be able to afford a fee higher than that $10. As a matter of fact, I know music fans who only stream from free services. By participating in the platformâs economy they could still unlock perks theyâre after. They could do so by creating value on the platform, e.g. by building experiences, creating fan art and other value for communities, or by participating in platform improvements like the cleaning of metadata or, I suppose, DMCA takedown arbitration.
This type of thing has been happening in games for years. A current prominent example being Roblox (est. 2004), which recently saw Lil Nas X perform in-game.
The starting point isnât the economy though â itâs to envision what you want players to be able to do in the world created for them. From engagement flow the opportunities to shape an economy (another reason why Iâm skeptical of consumer-facing startups whose value propositions focus on the economy more than the user experience). In order to create robust digital economies around music, the likely question to figure out is how to create a compelling platform for fan culture at large.
The year is 2023. After intensive lobbying, the governments of the US, the EU, and Britain have decreed changes to the way music streaming services pay out artists. Instead of pooling all of users’ revenue together and distributing it pro-rata based on the number of streams, the money will now be divided based on listening-share per user. That means, if a listener’s playback is composed for 50% of one artistâs music, that artist will get 50% of the revenue that specific user generated.
With new economics, the game changes – and so does the way we measure success.
Why user-centric is a paradigm shift beyond the economics
A common argument against the user-centric model is that it doesn’t necessarily bring more money in, would be costly to transition to, and might not end up in radically different sums at the bottom of royalty statements. The problem with the studies that these arguments are based on is that the studies took data generated by the current status quo of streaming and ran it through a new system. A different system means different incentives and would have led to a different data set.
More importantly, it changes the overall game as Spotify’s then-chief economist Will Page pointed out in 2018:
âUnder âpro rata,â an artist is less concerned with diversity and will simply prefer the platform whose users stream their music most. Under âuser-centric,â artists prefer streaming platforms where their listeners exhibit less diversity in taste.â
The game in user-centric streaming is to make sure your listeners spend as much time on you as possible. As an artist, you want to make sure theyâre a) paying for a subscription, and b) listening to you primarily. What you donât care about is their exact number of listens.
A familiar metric will stay just as important: your number of monthly listeners. What will become more important, is a new metric: average listening-share per user (ALPU).
ALPU: average listening-share per user
Fast-forward to imaginary 2023 again. Music marketeers are obsessed with ALPU, which they can monitor in the dashboards of popular streaming services. Some of the tactics they use to increase ALPU are:
Getting fans to turn disable Autoplay features on streaming services, since itâs better if playback stops rather than moves on to another artist.
Prioritizing profile-focused platforms over catalogue & discovery-focused platforms. While getting discovered is still important, the money is made when you get people to stream on high-ALPU platforms.
Move fast on new platforms, since being first on a new service is a massive advantage for ALPU due to the fact that thereâs not much else to stream yet.
It would slowly lead to a landscape that looks more like that of newsletters and Patreon communities in the sense that theyâre isolated and thereâs not much discovery between them. As a matter of fact, Patreon stated theyâre not a discovery platform up until a recent funding round. Their now-deleted blog post was cached by the Wayback Machine and can still be read. In it, their then-SVP Product Wyatt Jenkins said:
âBecause weâre not focused on discovery, weâre not constantly trying to recommend new creators to your fans. It takes time to build an audience, for a fan to become passionate enough about you as a creator to become a paying patron. We respect that relationship. Weâre not here to market other creators to your patrons.â
While a user-centric payments landscape doesnât exist yet for music steaming, itâs useful to think about what it would look like. While I think something healthy can flourish from such a landscape, itâs not a cure-all for todayâs most important problems. For example, a shift to user-centric is among the demands in the Justice at Spotify campaign by the Union of Musicians and Allied Workers, because they claim that pro-rata âputs artists in competition with each other.â I suspect a user-centric economy would make that competition much more fierce.
Finally, ALPU already makes for a useful thought experiment at present. Before you get to revenue, you have to garner attention. Whatâs your attention share of your most dedicated fans? How do you stay top of mind and have fans checking in on you, so you can get your latest music, merch, or livestream tickets under the eyes and into their shopping carts? Shifting to user-centric would mean the streaming landscape is more closely aligned with the same metrics used to build dedicated fan bases.
Live Nation‘s head Michael Rapino has called the plans of ex-WME music chief Marc Geiger to acquire 51% stakes in struggling venues a “fire sale“.
The background
Geiger recently announced a $75m fund to create a “partnership plan” called SaveLive. It will see the fund buying up stakes of at least 51% and âbackstop all these clubsâ. This received very mixed reactions, partly due to the altruistic-sounding name, despite there obviously being more to it than that. The New York Times sees potential:
“As SaveLive partners, Geiger said, they would gain economies of scale as well as access to favourable deals for ticketing or sponsorship â suggesting that SaveLive would, to some degree, resemble a mom-and-pop version of Live Nation or AEG.”
Why the shade from Rapino?
For most of this year, I’ve been concerned about the ability of venues to maintain their independence beyond the pandemic. Then back in August, paired with their Q2 financial results, Live Nation announced their intention to expand:
“We believe that over the next 24 months thereâll be ongoing opportunities for us to expand our global footprints in foreign and international markets that weâve have been looking to get into and build some businesses around.”
How they’ll get into those markets is unclear, but the company has a history of expansion through acquisitions. It also bears keeping in mind that the above statement came at the end of the same quarter that saw Saudi Arabia’s Public Investment Fund acquire a $500M stake in Live Nation.
The differentiator between Geigerâs SaveLive and Live Nation seems to be the geographical focus. Rapino opines that US independent venues won’t sell cheaply, because “thereâs a lot of capital out there.“
What’s the take-away?
It’s a waste of time trying to figure out who’s right or wrong in these types of debates, because that’s not why the actors of the debates participate in them. What’s valuable about it is that you can spot intentions and see headlines that clearly point towards trends.
To me, the takeaway here is: independent music is at risk of becoming less independent. Thatâs always so, but more so now. Prominent music business veterans can raise funds of tens of millions of dollars and incumbents have all but announced their intention to spend cash to expand.
It may be worth checking in on your local music venue organisations and seeing what forms of support they can use. Each territory has their own unique challenges, economically and politically, so itâs a global plight with a local character.
An exclusive preview of a Minecraft venue based on a closed down Berlin night club called Griessmuehle. A look at the user experience behind virtual club design.
Early on in the lockdown I threw a few virtual raves, but decided theyâre not for me. Simply put: I thought theyâre not engaging enough to compete with all the other things I could be doing. I hear you: they have an important role. I agree with that, but I think they typically do poorly in terms of fulfilling that role.
4 key roles for virtual raves:
A place for a scene to connect.
A place to discover new music & talent.
A place to for artist-fan connection.
A place for entertainment.
With very few exceptions, I feel these roles are fulfilled better in other places. Scenes connect on Instagram and to a lesser extent Soundcloud nowadays. These platforms are also excellent ways to discover new underground music, bootlegs, and remixes that you wonât find on Spotify or other large streaming services.
As for entertainment⌠There are productions with dozens of millions of dollars in funding at our fingertips through video streaming platforms, television, video games, etc. And personally I enjoy the latter, because I can play games (with friends) while listening to new music. When itâs actually convenient for me.
Itâs like virtual raves are fun and engaging for the organizers and performers, but much less so for the audiences.
So if you know me from a nightlife context: thatâs why youâre not seeing me at many livestreams and virtual raves. But last weekâs look at a new Minecraft club has made me changed my mind.
Inside LiveJar, a virtual club based on a closed real-life venue
The Minecraft venue is based on Griessmuehle. Which was easier to get into than Berghain, but that difficulty is now inversed. Berghain now functions as an art gallery due to the pandemic, so if you have a ticket, youâre in. However Griessmuehle was forced from the location that the Minecraft venue is based on – youâll never be able to enter it again. So no matter how well we tackle the damage done to nightlife by extended shutdowns, the reality of real estate development will continue to have an impact on nightlife.
Last week (Sept 30), LiveJar had a beta run to test the server and collect feedback. What follows is a rundown of the experience. Iâll do my best not to give too much away, because I think theyâve captured an important element of good nightlife venues well: photos, videos and stories wonât do it justice – you have to go experience it for yourself.
When you join the server youâre spawned outside Griessmuehle (or LiveJar). As you walk up to the door youâll see a large and rather unfriendly looking bouncer. Youâre also greeted by the ambient sound familiar to anyone whoâs ever queued outside a club: muffled techno beats. Sitting comfortably at home for half a year, Iâd actually forgotten about that rush just before entering. A mix of anxiety and enthusiasm. I had not realized how much Iâve missed it.
They run the audio through a plug-in called OpenAudioMc, which allows Minecraft server admins to map music to certain areas. When joining the servers as a listener, the plug-in runs in a browser window you keep open in the background. As you move through the map, the music will play through the browser and will change when you switch rooms.
Entering the venue was particularly exciting, because of the familiarity of the layout and how well the team captured certain details. Most importantly, it was fun to just wander around and see whatâs going on in familiar places, less familiar places that I actually never spent much time in, and unfamiliar places that the artists added, like extra rooms and floors and certain objects.
A good club will draw you in and make you forget about the world outside. It puts you in a place where time is frozen. A place where you can experience, explore, and interact. I think I spent a good hour exploring the map and I still donât feel like Iâve seen everything. Since it was a beta, there were not many people around, so it was a bit like showing up at a party way too early. And a rave is not a rave without ravers. Minecraft allows people to customize their avatars, so Iâm looking forward to seeing all these areas populated with people in creative costumes.
To make sure people move around the map, the makers have hidden drinks around the map like easter eggs. There are 3 types and each of them has its own effect on the player upon consumption. I wonât spoil what they are. There are also bars in the venue, which allows people to attain these drinks in exchange for donations (powered by tebex.io) that the organizers use to cover their costs, pay DJs, and donate to charity.
The venueâs staff have special controls in their inventory, which allows them to play with the lighting and smoke machine in certain rooms.
Some of these effects are intense. Especially if youâre under the influence of one of the virtual beverages. It can be really disorienting. You will definitely walk into a wall at some point. At first this bothered me, but it also echoes the experience of Berlinâs early techno clubs (well-documented in the WE CALL IT TECHNO! documentary on YouTube). Remember being on the way from the dancefloor to the bar (or vice versa) when the smoke machine fills up the room and you just decide to stay where you are for a moment until the smoke clears up? Itâs part of the experience, itâs part of the unknown of these nights that make them so exciting and the admins behind LiveJar have managed to recreate this well.
Currently, the creators of the server are preparing for launch. Theyâre looking for artists and organizers who want to play on their servers and bring their audiences in. You can get in touch with them (kelit, devBowman, gibier_ aka throwawayforlewdstuf) on their Discord server.
Theyâre also looking for additional staff members to help with the scenography and an experienced Minecraft server admin in order to scale the experience to more users.
Better than real life?
I feel virtual events have a chance of doing things that you canât do in real life. Those things are necessary in order to fulfill the criteria outlined in the bullet points at the start of this article. I previously wrote an article about 8 âgenerativesâ that can give virtual events an edge over real life events, so letâs see how LiveJar stacks up:
Magical powers: â . Whether itâs the drinks or falling from high distances and living to tell the tale: youâre definitely something more than human on the server.
Interactivity: â . An important aspect of the interactivity for me was the exploration aspect as well as trying out the various drinks in various places and seeing what would happen. I set a goal to go out to find a drink and come back to the dancefloor, wait for the wildest smoke and light effects, and then take a drink and see what itâs like (woOoAaoahH). I didnât actually consider exploration as part of interactivity when I wrote my original article, but itâs definitely an important element.
Context synergy: đ˛. This box will be ticked as soon as they start populating the server with artists. Certain artists and scenes definitely make sense in the context of Minecraft and / or Griessmuehle.
Artist proximity: đ˛. Even though sets have to be pre-recorded due to technical limitations, the organizers expect the DJs to be present for the rave. Even with a handful of people on the server during the beta, there was a lively chat, so I assume this box will be ticked as soon as they launch.
Fan community or scene networking: đ˛. Similar to the previous bullet point. This actually lends itself really well to it. Especially since the map is large with lots of different areas. Itâs possible to change the server-wide chat into more localized chats (e.g. you only âhearâ people in your area of the map). This makes it possible to have multiple dancefloors and areas with various adjacent scenes hanging out. The admins hadnât set up the server this way during the beta, but mentioned it had been on their minds.
Just one caveat: the requirement to purchase Minecraft could be a barrier to bringing a scene onto the server. Will people who have already purchased a console or mobile version of Minecraft also purchase the PC version?
Global proximity: â . It seemed like most people on the server were French (despite 95% of the conversations happening in English). So yes, definitely a good way to connect scenes across borders and get music fans from various cities into the same room and exposed to each other (an aspect normally reserved for touring DJs and traveling fans).
A role to play for the viewer: â . Like I wrote above: this will be so exciting with more people on there, with customized avatars, bringing increased interactivity and life to the various areas of the map.
FOMO: Fear Of Missing Out: â. You tell me. Do you think youâd attend the launch event?
One more time in case you skipped over it above: you can stay up to date or get in touch with LiveJar by joining their Discord server at https://discord.gg/DXvrx3W.
