🔑 Key Takeaways
- Audius empowers users with control over the platform through a fully decentralized network, showcasing blockchain's non-DeFi potential.
- Audius aims to revolutionize the music industry by using blockchain technology to eliminate intermediaries, increase earnings for artists, and provide access to infinite shelf space and distribution capabilities.
- Streaming services bring infinite possibilities for niche music and artist revenue, while traditional labels offer marketing and a chance at superstardom. Honor label deals for a meaningful career in an evolving industry.
- Consider the cost and genre of your music when choosing a business model. Platforms like Audius offer alternatives for cheaper content, while decentralization can bring more trust and opportunity for creators. With costs going down, quality music is proliferating.
- Audius' decentralization incentivizes users to contribute value and control, leading to growth and user governance over the platform's development. Users enjoy platform benefits without even knowing it.
- The Audius network is based on an incentivized model where token provides economic security, access to distribution features and maps directly to governance power. This democratized approach safeguards against the abuse of power by companies and allows community control over core decisions.
- Governance and economic incentives are crucial in preventing abuse and promoting growth in blockchain ecosystems, as seen in Audius' incentivization of creators and push towards decentralization through API ecosystems.
- Decentralized technology allows for more flexible and diverse development, where community-led innovation can thrive beyond a company's limitations. Challenges remain, but tools like Brave and MetaMask offer potential solutions.
- Audius provides a decentralized music ecosystem that emphasizes value around the artist's brand rather than just royalty revenue. It uses multiple blockchains and off-chain node architecture to facilitate community interaction and support artists in earning from shows and merchandise.
- Audius uses off-chain nodes to bridge information between chains for unified API access. Decentralized data modelling enables better user recommendations without compromising privacy.
- Audius' success shows that decentralized music streaming can provide artists with more control over their content and ownership of relationships, appealing to the values of the dance and hip hop communities.
- Audius utilizes tokens for fundraising, with grants from the Audius Foundation and a community treasury governed by token holders. Tokens should be managed like an endowment, and financings in token land are not dilutive. Follow Audius on Twitter for updates.
📝 Podcast Summary
Decentralized music streaming: connecting fans and artists.
Audius is a decentralized music streaming service that allows fans and artists to connect directly with each other. It was founded in 2018 and launched in 2019 using a combination of Ethereum and Solana. Their key differentiator is being fully decentralized, with a network of node operators hosting all content and metadata. The idea for Audius came from seeing SoundCloud's missteps and wanting users to be in control of the decisions around the platform. Initially, they tried to work with Bitcoin but quickly realized it wouldn't work. Audius's success illustrates the potential for real-world, non-DeFi use cases for blockchain technology. It is a community-driven initiative led by Roneil Rumburg, the co-founder and CEO.
Audius: Decentralizing the Music Industry with Blockchain Technology
The economics of the music industry are largely inefficient, with only 12% of the $42 billion generated per year making it to the artist. The industry has undergone significant changes from its early days when making a record was expensive, and physical distribution networks and retail stores were necessary. The Internet has completely upended these traditional dynamics, providing infinite shelf space and distribution capabilities at almost zero marginal cost. Audius seeks to use blockchain technology to decentralize the music industry, removing intermediaries and increasing earnings for the artists who create the music. Despite initial skepticism from traditional investors, Audius managed to secure seed funding from early believers who saw the potential in the project.
The Evolving Music Industry: Streaming Services and Labels
The music industry has transformed with the digital age, enabling niche music to reach fans and artists to earn from direct payments. Streaming services like Spotify and Apple Music offer algorithmic recommendations, infinite shelf space, and zero cost reproduction and distribution, but traditional parties like labels still control the industry's economics. Record labels offer effective marketing and brand-building, underwriting the 5-10% chance an artist can become a superstar, making label deals a venture-type bet. Despite sour grapes around label deals, honoring deals made is incumbent upon artists and offers a meaningful shot at a great living and career. In the evolving music industry, there is a place for streaming services and user-generated audio, serving different segments of the market.
Finding the Right Business Model for Your Music Career
Labels business models are built on creating stars like Drake and Katy Perry, so if you aspire to be like them, take that path. However, if you want to be a great folk singer, there may be a better path. The production cost of typical pop or rock songs is hundreds of thousands of dollars per song, while dance music and hip hop require lower costs. Advances are necessary for expensive content, but for cheaper content, platforms like Audius offer an alternative. Decentralization helps in distributing ownership and control of the system, giving more trust and opportunity for creators. The cost of producing content going to zero is enabling the proliferation of great music and great content.
Decentralization drives growth and user control in Audius.
Decentralization removes any individuals or company from making decisions that undermine the integrity of the platform and its value proposition. This trust dynamic incentivizes users and artists to contribute value and control back to the platform which has helped grow Audius to the most used crypto app in the world. Audius has over 6 million monthly users and 100,000 artists. Users can gain governance over the future product development of Audius through their wallets that are managed and controlled by the user. The majority of users have no idea there is any decentralization or crypto involved, but they still receive the benefits of the platform's decentralization, such as complete access to their relationships with fans and targeted audience engagement.
The Importance of Decentralization and Governance in Audius Network
Decentralization and governance being decentralized over the product prevent companies from becoming too powerful and abusing their power to benefit themselves rather than their users. The Audius network relies on an incentive model where the token provides economic security around how the network runs, grants access to certain types of distribution features and maps directly to governance power within the ecosystem. The network operates on a voting system for any changes to the code that powers any of Audius, and routine bug fixes and updates require the community's approval through voting. This decentralized model represents a shift towards a more democratized approach to technology, where the community takes control over core decisions and safeguards against potential abuse of power by companies.
Importance of Governance and Incentives in Blockchain Ecosystems
Governance is important for the success of blockchain ecosystems, as it is meant to improve and push the protocol forward, while also punishing those who misbehave. However, conflicts can arise when the existing power base of governance is not incentivized to fix problems like botting and abuse. Economic incentives and ability to earn tokens need to be protected with good enforcement to prevent abuse. Audius incentivizes creators with rewards for hitting certain metrics like plays and playlist creations, and its growth has been steady, with some moments of explosive growth. Decentralization is achieved through an API ecosystem, with client-side implementations being only a reference and not the primary interface for Audius users.
Decentralization: Empowering Community Innovation
Decentralized technology allows the community to take control and innovate beyond the limitations of the company's own product. The value of the network is in the underlying database, and not in the interface. Third-party interfaces that gain traction may have to consider their business model and their impact on diversity in accessing the network. However, the limitation of DNS remains a big challenge for launching an entirely Web 3.0 stack. Brave and MetaMask have the potential to create widely installed applications to overcome this challenge. Overall, decentralization provides an opportunity for a more flexible and diverse ecosystem to flourish, where the community can take the lead in developing innovative ideas and applications.
Audius: A Decentralized Music Ecosystem
The Audius ecosystem achieves decentralization by having multiple interfaces and ways to interact with the network. This is useful for music because it increases awareness and play counts, driving value around the artist's brand rather than royalty revenue around content. Artists are shifting towards business models which recognize that content is used as marketing for shows and merchandise, which are actually the main source of income. Audius works on multiple blockchains, using Ethereum and Solana for their benefits. The off-chain node architecture in Audius means that community-run nodes host all the content and metadata, and users upload to one of those nodes, receiving a pointer to the content which their client writes on chain.
Audius Harnesses Off-Chain Nodes for Decentralized Data Modelling
Audius uses off-chain nodes to bridge information between various chains to provide a unified API interface for looking up data across all these networks in a trustless and decentralized way. The off-chain nodes allow all this information to get bridged and reconciled in a sensible way. Without that, this would be really hard. Today, there are over 400,000 transactions per day being done on Solana, for example. If that were on Ethereum, it would be very cost-prohibitive. The decentralized data modelling around consumer-scale applications like Audius is super different from a traditional product. Audius has been trying to figure out a way to allow folks to get better recommendations driven by user data without compromising their privacy.
Audius Empowers Artists with Decentralized Streaming
Audius, a decentralized music streaming platform, gained popularity in the dance community, with early adopters including Skrillex, Deadmau5, and Dillon Francis. The platform provides value propositions such as ownership of fan relationships and certainty around rules, which resonated with the community. Audius later expanded into hip hop, as the cost of content production and the grassroots support system aligned with the community's values. Audius recently raised $5 million from industry heavyweights, including Katy Perry, Steve Aoki, and The Chainsmokers. The fundraising provides an opportunity for them to have more skin in the game. The success of Audius represents a new type of business model for the music industry, where artists have more control over their content and ownership of relationships.
Audius Fundraising Mechanism and Token Management
Audius uses tokens instead of shares for fundraising and an SPV managed by an investor named Ken Seiff is administering it as a favor to the ecosystem, helping those who face logistical hurdles. Audius receives grants from the Audius Foundation, and the foundation manages the treasury of tokens. The community treasury is on-chain and governed by token holder governance while the foundation is not. The foundation needs to manage tokens like an endowment and not like an evergreen source of potential funds. Tokens don't behave like equity and financings are not dilutive in token land. The primary product of Audius is audius.co, and Twitter is where they announce the most interesting news and things.