I wrote a medium spicy piece about generative AI x music last week. Tl;dr is that I think the democratization of music creation is a net good for humanity. Startups like Suno and Udio are leveraging state of the art models to generate music, enabling users to create songs with simple text prompts. More people than ever before will soon be able to create really great music, and that is undeniably awesome.

BUT, I do think it's important to acknowledge that we're standing on the shoulders of giants. Often, these AI models are trained on vast datasets of copyrighted music, raising important questions about data attribution, and therefore, compensation.

The Problem

When an AI model generates a new piece of music, it is essentially remixing and recombining elements from the millions of songs in its training data. But there is currently no clear way to trace which specific songs influenced the generated music. This is problematic because it means there is no mechanism for the original artists and rights holders to be credited or compensated when the AI-empowered music creators go on to commercialize their work.

Some argue this is a fair use of the training data, since the AI is not "directly" copying songs. After all, doesn't every human musician use all of their accumulated influences (whether consciously or subconsciously) to create "new" music?

Others take the opposing view, stating that nonconsensual use for training violates copyright law, as the AI-enabled musicians are deriving commercial benefit from copyrighted works without permission or payment.

Irrespective of which side of the argument you're on, I think both sides would agree that the ability to attribute AI-generated music to it's upstream creators is worthwhile - whether it's for auditing models and sending takedown requests (doomers) or for unlocking new licensing models for consensual training (maxis).

Okay, if both sides want it, why doesn't it exist?

Historically, it has been computationally hard to solve the attribution problem at scale (not to mention all the baggage the traditional music industry brings with it's longstanding metadata / rights management issues).

People way smarter than I am have written at length about the latter, so let's talk about the former—we might finally have a solution to solve data attribution at scale.

In December 2023, Junwei Deng and Jiaqi Ma from the University of Illinois wrote a paper titled Computational Copyright: Towards A Royalty Model for AI Music Generation Platforms.

They applied an existing ML approach called data attribution to music. The idea is to systematically measure how much each song in the training data contributed to a particular output. They used techniques like influence functions to quantify how the generated output changes when a particular training song is removed.

For example, if removing song X from the training data substantially decreases the probability of the model generating song Y, then song X can be said to be highly influential on song Y. By applying this type of analysis across the full training dataset, it's possible to create an "attribution score" for each training song in relation to each generated song.

These attribution scores could then be used as the basis for a more granular and transparent payout model. The owners of the songs with the highest attribution scores would receive the largest payouts. These payouts could be made on a per-stream or per-use basis, depending on the consumer application layer.

What would this unlock?

I think putting this into production could be really interesting. Solving the attribution problem for music could unlock better creative and financial outcomes for everyone involved. Some examples just to cement how important this could be:

• Artists could choose to provide their work for training, and get paid a "royalty" every time someone uses an AI tool that is trained based on their work—opening up new revenue streams for them and new business models for startups providing high-quality training data to AI companies.

• AI-generated music creators will strongly accelerate an existing trend - the decentralization of rights. Solving attribution will let startups benefit through a decentralized, demand-driven licensing approach, removing traditional blockers and enabling faster, more cost-effective innovation. Founders can go from 0-1 without having to worry about being sued by the labels.

• There would be greater transparency around what data is used to train AI models. Artists and labels could audit the datasets and attribution scores.

• Smaller artists could potentially benefit, as the attribution scores would be based on actual influence, not just popularity. If an indie artist's song is particularly influential on an AI model, they would be compensated accordingly.

• AI-based sampling and remixing could become more fluid and open, as the attribution scores would provide a clear basis for credit and compensation.

The rise of generative music is inevitable. As technical barriers to create music are obliterated, we're going to have an unprecedented amount of people with the ability to create music. This could be music's Canva moment. Solving the data attribution problem could help kickoff a virtuous cycle: More Creation -> Accurate Attribution -> Fair Compensation -> Even more Creation. Psyched to see what's next.

Yash

Often friends and readers will suggest topics I should write about, but as someone with shiny-object syndrome, usually I try not to let those suggestions sidetrack me.

This time however, I succumbed. The rise of generative AI is set to irreversibly change the music industry, and it's hard not to have an opinion on where we're all headed.

Note: Some of the thoughts expressed here might upset music industry purists, but I encourage all of you to do one thing before you read this essay. Go to Suno.ai, and create your first song. Trust me.

Alright, assuming you just did, here are my thoughts, starting with some of the more obvious takeaways:

Generative AI will democratize music creation and blur the line separating music creators (i.e. artists) and music consumers (i.e. fans).

Like most things, this will lead to desirable outcomes and undesirable outcomes.

What are some desirable outcomes?

• The technical barriers to music creation will no longer exist -- creativity (and originality, whatever that means in a post-AI world) will be the true differentiating factors. This need not mean "musical" creativity - it could mean creative ways to capture attention via memes, tiktoks, wearing a giant chicken outfit outside a taylor swift gig, whatever. There was a time in history where only scribes possessed the technical ability to write. Today, most educated humans can, and I think most of us agree that it's been a net good for humanity. More people than ever before will be able to create music, growing the overall pie for everyone involved.

• As the volume of music released will exponentially increase, the value of (live) performances, social capital, genuine fan connections, etc will rise. Physical experiences and tangible things will be premium. We might see a full-fledged inversion into smaller fan communities. The value of community / connection is inversely proportional to the volume of content.

• Today, anything I create using Suno's paid version is owned by me. As we see a proliferation of AI-native music creators, we'll also see the acceleration of an ongoing trend - more artists will own the rights to their music. This is huge. Beyond the obvious benefits, decentralization of music IP means other startups aren't beholden to the major labels (as much). This shift albeit small at first, could end up becoming really meaningful with time.

Let's talk about some undesirable outcomes:

• With such a high volume of releases, distribution will be key. For smaller high value fan communities to form, artists need to be discovered first - and we may have gatekeepers and/or highly skewed power laws preventing that from happening. Very important to note here that I'm not advocating for equality of outcomes, just equality of opportunity. Everyone should be able to fairly compete in the attention economy.

• People working in the music industry overestimate how much people care. They write eloquent essays about how sacred artist-fan connections are, and how artistic expression is the only virtuous thing worth striving for. The reality is most people don't care. Most people see music as a form of entertainment, and will be oblivious / indifferent towards how generic music sounds. These are folks who are okay being deep inside the Spotify auto-suggestion realm -- and don't mind listening to similar sounding shit over and over again.

• Art and tech are going to be inextricably linked -- AI has shown us that creativity is not some weird ineffable alchemy that happens inside the creator's head. It's just math we haven't completely solved (yet). Believe me, it really hurts to say this, but I think it's best not to be in collective denial as an industry. Metaphorically speaking, the model and methodology underlying a product like Suno is like a kid in high school who has just learned basic statistics. Imagine when this same kid goes to Stanford to study advanced mathematics - it's a matter of when, not if. In fact, most mediocre human musicians will be wiped out before this kid has their first kiss on prom night. We often expect AI to be perfect, but remember - it doesn't have to be perfect. It just has to be better than most humans.

All this to say that it’s a challenging yet exciting time to be working in music right now—the industry's deep understanding of culture positions us well to leverage generative AI—only if we adopt it first.

Until next time,

Yash

I've been facing this same problem as I transition from non-technical to psuedo-technical. One way to solve this (for me) has been to have 1:1 conversations with smart founders and academics working at the frontier—asking them to explain cutting-edge concepts like I’m five.

Publishing my notes here because I think the insights from these conversations will help other founders like myself. The goal with this is to give readers a sense of:

• Where we’re at with AI today.

• What are some things coming up in the near future.

• What are the opportunities / use cases these changes will unlock.

Let's get into it.

This essay was written using Type.ai. I’m a huge fan of what Stew and team are building. If you’re a founder or investor who struggles to write and publish consistently, Type is a complete game changer.

Recently, I spoke with Enrico Shippole, a researcher and entrepreneur building Teraflop AI. Enrico's journey began in quantitative finance, where he became interested in using LLMs to process and extract insights from vast troves of financial documents like SEC filings. This led him to start training LLMs from scratch on terabytes of copyright free, permissively licensed data.

Enrico has published influential research on extending the context window of language models and improving the efficiency of diffusion-based generative models. He's also collaborated with leading AI companies like Stability AI to develop state-of-the-art open-source models.. In our conversation, Enrico shares his perspective on the current state of LLMs and where he sees the most exciting opportunities ahead.

Here are some takeaways from our discussion:

Model Architectures Haven't Changed Much, But Hardware and Data Have

While it may seem like the LLM realm is evolving rapidly, the core architectures of today's state-of-the-art language models have actually existed for 3-5 years. What's really driving progress are improvements in hardware, like the A100 and H100 GPUs, and techniques for parallelizing training across many devices. At the same time, the availability of massive high-quality datasets has been a game-changer.

Data Quality is a Major Bottleneck

Despite the abundance of web-scale data, data quality remains a significant challenge, especially for domain-specific applications. Many commonly used datasets rely on outdated parsing methods, making it difficult to extract clean, structured information. Enrico and his co-founder are tackling this problem head-on by building a platform to streamline data processing at scale.

Domain-Specific Models are Key for Robust Applications

While large general-purpose models like GPT-4 are impressive, the biggest opportunities lie in developing domain-specific models trained on curated, high-quality datasets. This is especially true for applications like information retrieval, document understanding, and knowledge-grounded generation, where having relevant in-domain knowledge can dramatically boost performance.

Open-Source Models are Catching Up, But Still Lag Behind

Open-source NLP models still have some ways to go to match the robustness and coherence of closed-source models like GPT-4 and Anthropic's Claude. However, he expects this gap to narrow in the coming months with the release of ever-larger open models like LLaMA 3.

Autoregressive Models Aren't Going Away Anytime Soon

While there's been a lot of excitement around non-autoregressive approaches like diffusion models for text generation, Enrico remains skeptical that they'll displace the tried-and-true autoregressive paradigm anytime soon. He notes that autoregressive language models have withstood the test of time and continue to be the backbone of most state-of-the-art NLP systems.

Stylistic Alignment is an Unsolved Challenge

It’s very hard to get language models to faithfully mimic a specific author's writing style or voice. He explains that this is difficult because most training data only contains a small fraction of any given author's oeuvre, making it hard for the model to reliably learn and reproduce their stylistic fingerprint. Few-shot prompting with representative excerpts can help, but generating truly unique creative outputs remains elusive.

Research Often Fails to Translate to Practice

Many of the techniques and architectures that generate buzz in the research community fail to deliver when applied to real-world problems. While it's easy to get caught up in the hype around each new groundbreaking paper, he advises taking research claims with a grain of salt and pressure-testing them yourself.

You can follow Enrico on X @EnricoShippole.

Until next time,

Yash

What specific form that tool ends up taking, is TBD. But it’s an exciting problem, and I’ve spent the last few months trying to figure it out.

I started by building an agency to scale my freelance career, and tried building a software to scale my agency.

This second part is where I’ve been struggling, for a variety of reasons. But I’m married to the problem, and I’m building a portfolio of small bets to see what sticks.

Ambiguous times, but also exciting ones.

The ultimate goal? a content tool that is based on a fine tuned model for thought leadership and personal brand building on the internet. Basically, democratized thoughtboyhood.

Anyway, on to today’s topic.

Over these last few months of iteration and experimentation, one thing has become increasingly clear to me:

If you want to be an entrepreneur, don’t be an “entrepreneur”

Let me explain.

The moment you proclaim you’re a founder or entrepreneur, there are a million different businesses waiting to feast on your naively optimistic soul.

1. offshore app development agencies who promise to build your MVP in 3 days.

2. shady capital providers who offer friendly deal terms and low interest loans

3. people and agencies that promise you leads

4. fractional CMOs, CTOs, and other pseudo suits

In other words, hustlers and hucks. The worst people to be surrounded by. They assure you quick fixes while making a quick buck. Even so called high reputation orgs like YC aren’t immune to this. Anyone who has tried to look for a cofounder on their matchmaking tool knows this.

Okay, we get it. What’s the alternative?

Imo, to build something truly brilliant, one needs to go upstream. It’s a cliche at this point, but definitely holds true - instead of asking myself what a successful outcome looks like, I need to establish processes and seek environments that that instil meaning into my life. I need to seek meaning, not success.

In other words, less “10 tips on how to make your cold emails more enticing” and more psychology. Less Twitter, more Substack (or arXiv if you’re feeling adventurous)

For me personally, this means going deep on high leverage domains. Here are a few things on my list:

1. Coding (I haven’t written a single line of code, so wish me luck)

2. Philosophy

3. Cognitive Psychology, Physics, Biology, etc

4. Understanding how frontier tech works from first principles

5. Writing more

6. Talking to smart people (researchers and academics who have dedicated decades of their life figuring out hyper specific problems)

A few ideas I’ve been toying with, that’ll institutionalize these goals:

1. A podcast where I interview leading academics and researchers in AI and ask them to explain concepts like I’m 5.

2. Reading cognitive psychology as a tool to understand the future of generative agents (and AI more fundamentally)

3. Coding so all of this coalesces via action and real world problem solving.

4. TK

1-2-3

One picture, two thoughts, and three links. Stolen from James Clear and Shaan Puri :)

One

Two

• The width versus depth challenge - everyone is inherently wired towards one extreme of this spectrum. Deep people know a lot about one domain but don’t know anything about other domains. Wide people know something about many things but do not deeply understand any one thing. I’m inherently wide so need to proactively go deep. Good people know how to do both. Great people know when to do either.

• Shoe dog - I’d love to find or create a shoe that combines the comfort of the Allbirds Wool Piper, the durability / ruggedness of the La Sportiva TX4, and the style of the Jak Royal NZ. The use case? Something I can wear on a 12 hour flight, 12 hour hike, and a fun dinner right after.

Three

1. Noah Kagan’s new book is great! Especially his insights on validating business ideas.

2. I wrote a thread on how text diffusion models will impact creative writing here.

3. I really liked this piece by Astral Codex Ten - especially Scott’s take on people who have “advice”

   

If you’re a service provider, you get feedback pretty instantly. You send in your deliverable, and the client either likes it or doesn’t. Either way, they give you feedback and you work on v2. Simple. Straightforward.

With software, this is absolutely not the case. You can spend months building something, only to share it with users who have either moved on or don’t care or both. There’s no way you can share unfinished software, the way you could share an essay outline and/or blurb with a client before writing the whole thing.

In other words, the concept to creation bridge is long, expensive, and unpredictable.

I’ve been thinking about this a lot as we build out Spectral. We’re bootstrapping currently, so the costs add up—real dinero, but also opportunity.

Our solution is to have a constellation approach. Let me explain.

Btw - the idea is to stress test these thoughts so we can all walk away with a better framework. I know there are a lot of experienced product builders on this list. I’d love to hear your feedback!

Step 1 - have an overarching thesis about how you see the world.

For us, it’s the following:

“Content is king. Thought leadership is crucial for professional success in any industry today”

We live in a world where Andrew Huberman gives philosophical advice, Jordan Peterson gives dietary advice, Sahil Bloom is our family therapist, and Chamath is our geopolitcal expert. This is not a moral judgement btw, I consume some of the same content. It is what it is.

Step 2 - you define specific problems and/or challenges that exist if you see the world is in fact how things are / will be.

For us, it’s the following

“when you're busy building the future, it's hard to find the time to share what you're doing.”

The sporadic nature of this newsletter is a clear illustration of how hard it can be to work in the real world, and then come back and create content about it. Also, I’m not even in the major leagues yet. Imagine what this problem looks like for busy founders, VCs, and executives.

Step 3 - ship fast, ship lean, validate, validate some more

Next, you ship minimum viable versions of products and services that address these problems, and validate them separately. 1 product launch per month is a challenging but realistic goal to set—depending on what you’re building, team size, resources, etc.

Step 4 - Rinse and repeat.

If your thesis is coherent enough, eventually (and inevitably) all these product experiments start to make sense as one cohesive offering.

So that’s essentially our plan.

What products and services does the Spectral constellation have currently?

Good question. Right now, we’re working on the following:

• Our podcast producer [product]

• Our podcasting editing agency [service]

• A thought leadership API / task specific model [TBA / WIP] [product]

Spectral updates

• Our podcast product has ~90 users currently, and our first enterprise client - a podcast editing agency in Canada.

• Our podcast agency has 4 clients, with a monthly revenue fluctuating between ~$3k to $5k.

• I found a CTO that I really align with - Alvaro :)

• We’re working on the following:

  • Fixing mission critical problems - authentication, payments, etc.

  • Revamping the UI. There are some incredible plug-and-play options out there!

  • Talking to users.

  • Fundraising. Find our deck here. (If you have fundraising experience, I’d love to get some feedback!)

  ---

Cartel88 updates

• We’re double clicking on mood music, trying to build a productized label.

• We’ve Zapier’d the hell out of our processes, use Midjourney for album artwork, GPT4 for text copy, and are playing with some AI-powered creation / mixing / mastering products.

• The incredible Pavel aka Pasha joined us as a cofounder a month or so ago. He’s a data wiz and is going to lead our marketing efforts. Some of you might remember him from this essay we wrote together in 2022.

• We released our first EP last month, and our second one yesterday!

Personal stuff

Imagine learning a new sport, but every time you make a mistake, you get punched in the face. Well, that’s surfing for you.

As a Kook myself, really enjoying the KookCast:

What I’m brewing

El Carmen blend from Q7th coffee for my milk-based drinks (don’t hate on blends!) Really trying to nail latte art - it’s incredible how fat % in milk affects texture and taste. Unsurprisingly, James Hoffman has a great breakdown here. My progress below:

Until next time,

Yash

For me, its software.

With agencies, I know what I’m doing (most times). It’s because I’ve put in the time. Lessons have been learned the hard way, and all these experiences have coalesced into loosely held intuition.

With software, I’m a complete beginner. The time and experience needed to build intuition is..well, absent. I will learn lessons the hard way. I will get burned. It’s just part of the process. Sometimes I wonder why I subject myself to this self-inflicted pain and embarrassment.

The goal of course, is to achieve what I said in my last note:

What’s up with Spectral?

v1 is finally ready! You can sign up here. A few notes: 

• The version you're using is a prototype. Excuse the spartan UI, bugs, and hallucinations - we're working on making the product look beautiful, and generate high quality output.

• At this stage, your feedback is extremely valuable. You can do so by responding directly to this email, scheduling a call with me here, or DMing me on Twitter. We're pre-PMF, so your small input or offhand comment could have an outsized impact on what the product eventually looks like. 

• I see a few podcast networks on our waitlist. For those of you who need something more hands on, we also run a full-service podcast production agency that may be of interest! 

What's next? 

Q4 will be formative for us. Currently, I'm focussed on two fronts: 

1. Cofounder Dating - I've been using YC's co-founder matchmaking tool and scouring my personal network to find someone to build this with. We've worked with an excellent product studio (shoutout to Tanush and Wereon) to build out v1, but we lack the momentum that a CTO could bring.

2. Raising $$ - I've come to realize that using my agency revenue to fund Spectral is not sustainable. Moreover, to have great talent by our side, we have to pay them what they’re worth. We're actively speaking to investors to raise a small seed round and hope to close it by the end of this year or earlier.  

OKRs for Q4

Here are my OKRs for this quarter. I should write a separate note about Cartel—fun stuff happening on that front too.

If you’re still reading this, you must really believe in me. Nobody has the patience to read granular details about a founder’s journey. It feels like I’m death wrestling ogres here, but of course, the reality is sliiiightly different.

Appreciate you following along over countless bumps and digressions - it really means a lot. Onwards! 

Yash

The short note. What am I doing?

1. I’ve been running Spectral - an agency that helps founders and VCs craft compelling stories. This could mean writing a newsletter, producing a podcast, or writing thoughtboi threads on Twitter / X.

2. After countless existential crises and a three week sabbatical, I realized two things: One, it’s insanely hard and stressful to scale an agency. Two, the future of content marketing is going to be radically different due to the rise of generative AI.

3. To future-proof Spectral, we will be experimenting with products. Currently, we are working on our first product experiment - an AI powered podcast producer. We’re launching v1 later this week. Join the waitlist here :)

4. Of course, product building requires $$$ so I’ll use Spectral's agency (and my freelance consulting) revenue to fuel our product aspirations.

   Join Spectral Waitlist

“But Yash, I signed up for a music x tech newsletter Wtf is this?”

I understand your confusion. Here’s the plan:

• I’ve been reading and learning more than I ever have, so I could write about AI / consumer-tech / product building in general - more from a learning in public perspective, rather than a prescriptive one? The format and cadence is still TBD. Lmk by responding directly to this email.

• I think many of the aspects that drive consumer tech can also be applied to the music industry. I hope existing readers will be able to derive value from these insights.

• I still have some thoughts about the music industry, but they will be more ad hoc, inspired by the conversations I have with friends who still work there.

• The AFD podcast is going strong, with Maarten and Steph as brilliant co-hosts. Check out the latest episodes here.

• Of course, if you don’t want to come along for this new ride, opt out here. Just know that Substack sends me a notification with your email, so I know who you are - haha :) Jk no hard feelings.

The longer note. Why am I doing this?

I feel like every time I write an essay, I preface it with an apology for not publishing regularly. I see a lot of you stuck around (or probably forgot that you ever subscribed to this newsletter!) but I’ll take what I can get :)

A bunch has happened since the last time I wrote here. I’ve been busy building Spectral - a content studio that helps founders and VCs tell compelling stories about the future.

Initially, I kept writing this newsletter because it was a great top-of-funnel for new Spectral clients. But soon I felt this nagging uncomfortable feeling preventing me from doing my best work - After some thought, I realized what it was. I was focussed on building a business that was far removed from the music industry. As much as I’d have liked being an armchair critic, you can’t really write a music x tech newsletter if you don’t operate in the music x tech space. I felt too inauthentic. Yes, we worked with talented founders and prolific investors in music, but really—most of my headspace was occupied by the nuts and bolts of agency building—setting up processes, managing contractors, acquiring and onboarding clients, etc.

The decision was staring me in the face. I had to stop writing.

Tbh, it felt like a lost opportunity. Some really influential and established operators had subscribed, and we all know that the armchair critic space is a highly lucrative one. Painful as that was though, looking back, it was definitely the right decision to make.

————

The journey with Spectral has been profound. As a first time founder, this is my first “serious” venture. So no fancy pitch decks and/or corporate cotton candy. Just cold and unforgiving numbers. How much iscomingin?Howmuch is going out? It’s funny how in the crazy venture backed world of tech, we forget the simple math that makes businesses work.

Spectral enabled a lifestyle that I had always dreamt about as a young kid growing up in India. I moved to Spain, travelled the world with my partner, freely crossed continents to spend time with my family, and ticked off all the fundamental requirements for a meaningful life. All while the world burned around me, with the pandemic first and a wider economic downturn after that. Extremely fucking grateful.

————

First world problems (sorry!)

At the start of 2023, I decided to take Spectral to the next level. This is when things went sideways. You see, agencies don’t require capital to set up, so you can go from 0 to 1 pretty quickly. It’s just a freelancer-esque setup on steroids. But agencies are ridiculously hard to scale. Your time and your revenue are inextricably linked. You can setup systems, hire offshore, and leverage new tech, but the fundamental law of agencies remains constant: The more clients you take on, the more time you spend pandering to their needs in order to earn that increased revenue.

Initially, this was extremely stressful. I hated trading my time for money. Running an agency felt like running a hotel. Most guests are great, but then one annoying guest comes along, and you have to smile and cater to their whims anyway. It felt like a badly orchestrated scene from The White Lotus.

Context-switching across projects depleted my soul. I woke up without purpose, and had no energy to invest in other parts of my life. My lack of energy didn’t serve clients too well either; and the irony was I was netting the same amount of $$ I made as a freelancer, since our costs went significantly up. In other words, instead of running Spectral, Spectral ran me.

Something had to change.

A few months ago, I decided to clear my schedule and think long and hard about why Spectral was causing me so much stress and anxiety. I finally figured it out - Spectral was at odds with one of my highest values as an individual — Freedom.

Indulge me for 2 minutes as I unpack this thought:

According to me, freedom (in the material realm) has two deterministic variables: time and money. Money, because you can say no to things you don’t want to do, and time because all the $$ in the world is meaningless if other people have control over how you spend your time. So basically:

We spend our time to make money to reclaim our time.

The obvious goal then, is to work on projects that make more money while spending the least amount of time doing so. Easy right?

The way Spectral was structured (the agency model) was terribly ill-suited for this. In my mind, exponential monetary growth without exponential time spent can only be attained via software-enabled products. Of course, unlike agencies, these products need upfront time and capital investment, so a steady cash flow stemming from an agency business is important. Especially if you’re bootstrapping like I am.

In other words, the Spectral Agency -> Spectral Product transition will be a slow, non-binary, and co-dependant one. 

If you’re still reading this, I really appreciate you indulging my rant on these first world problems. We all think we are the protagonists of our own lives, and our problems are the defining problems of mankind. Spoiler: they’re not.

So thank you for sticking around anyway. Really grateful for all of you :)

Yash

Join Spectral Waitlist

Currently, Dan leads product and ops at Hifilabs, where they’ve launched interesting projects like MusicOS - an operating system for artists and fans to be their own platforms. He’s also building Neume Network, a decentralised, composable, socially scalable, and open source backend for music. He also writes which documents his higher level thoughts as he builds all this - I’m a regular reader and I encourage everyone reading/listening to also go check it out!

This was definitely the best conversation we've had on the pod!

Subscribe now

I have something to share - starting this year, Appetite for Distraction will be accepting pitches for guest essays!

Two reasons for doing so:

• The music tech landscape is in perpetual flux, and there are far too many things for one person to cover.

• I really love jamming with like-minded thinkers and operators in this space, and this is a great excuse for me to do so more regularly!

Pitch Guidelines

How to Pitch:

• Direct pitches to: yash@appetitefordistraction.xyz with the subject line “AfD Pitch: [Your Pitch Title]”

• In the body of your email, please include:

  • A brief summary of your story (1-2 paragraphs)

  • A few lines about your background and why you're the best person to write this story

• We’re a small reader-supported operation of course, but we’ll strive towards paying competitive rates! As of today, rates start at $300 to $400 per original piece. Interviews are paid out at $250. 

• Essays could be around 800 to 1000 words. Think of it as a creative constraint though, not an arbitrary limit.

• Writers will have complete creative autonomy. We’ll have a couple rounds of edits to ensure ideas are clearly represented.

What to Pitch:

We’re a publication that dissects music and tech. We want to highlight underrated stories around how technology is helping (or not helping!) creators bridge the gap between art and commerce.

Our interest for tech includes all the usual suspects:

• music & crypto

• generative AI

• the metaverse

• how the legacy music industry is adapting to aforementioned suspects

• <insert buzzword for 2023>

The idea is to dissect the commerce and the culture driving these domains. What are artists, fans, and founders doing to navigate these emerging technologies?

Having said that, I’m open. If you’ve been working on something that you think is worth highlighting, hit me up — I’m always excited to learn more!

Thanks so much!! Really psyched to read your ideas 🙂

Yash

Fractionalised ownership might seem like a new, web3-powered possibility—but it’s actually been around pre-web3. It was called equity crowdfunding or ECF and it never really took off.

Why? 

Well, the traditional ECF model was not a sustainable financial strategy for most artists. Raising capital and sharing equity with a large number of individual shareholders meant taking on the stresses of corporate governance, investor relations, and fragmented interests—a complicated task for artist teams to manage. However, things are presumably different now. We have powerful tools to solve many of those challenges. 

In this essay, let's look at why fractional ownership matters, whom it's for, and what it’ll take to see mass adoption beyond early adopters and whales. 

Why does this matter? 

Liquidity = Goood 

Today, IP ownership is concentrated in the hands of a few select stakeholders. Fractional ownership could lower the barriers to entry, democratise the investing landscape, and provide artists with capital from early supporters. 

Music copyright as a liquid asset will increase the amount of money invested in the asset class as a whole—total money invested in a particular asset class is directly proportional to its liquidity.

More liquidity would also lead to more accurate valuations of copyrights, as there would be more transactions to base the valuations on.

Creative Renaissance 

Labels currently don’t really offer early-stage support. They act as late-stage, “growth” investors once an artist has a proven track-record. No major label is taking creative risks. Think about it—when was the last time we saw a major push the cultural envelope? 

Fractionalised ownership can change this. By democratising the investment landscape, fans and other aligned individuals could provide the capital that cutting-edge artist projects need. 

Just to be clear, this is not patronage. This is financially incentivised individuals investing in true creative innovation. Whether it will actually end up happening is up for debate of course. But we can all admit that it’s definitely better than 4 companies dictating the future of culture. 

Who is this for? 

This model could be viable for artists who: 

1. Wish to avoid major label control but need major label budgets to manifest their creative vision. 

2. Have a high risk appetite and are okay with directly linking their social capital with their financial capital. (being cancelled would not just mean social ruin, it would mean financial ruin. Fandom is fickle!)

3. Want to use this as a way to bootstrap their “mainstream” career → a way to indicate PMF and use that as bargaining power to secure an institutional deal. 

Part 2 of this essay will include what the artist teams leveraging this model could look like. What happens when managers become community managers, and community managers become investor relationship managers?

Adoption - what will it take?

Intermediaries will be crucial for this new model to see mainstream adoption. They will act as the capital inflow and royalty outflow interface connecting artists and fans/investors. They will help us prevent complex rights management BUT ensure we retain the social aspect of music, which is very important. Ideally, these intermediaries would be sufficiently decentralised to ensure the collective interests of all micro-invested fans and artists are represented democratically.

Intermediaries will orchestrate status games at the front, and rights management at the back. 

On the front end, the intermediary could act as an arena for: 

1. Seamlessly integrating the investment, ownership, and consumption experience on the same platform—helping us enjoy music but also play status games, which, as we all know, are very important. 

2. Provide governance i.e. “investor relationship management” tools for artists—how much control should the micro invested fans/capital providers have? What decisions should they have a say in? (more on this in part 2) 

3. Make sure the investment experience is frictionless and high-trust. This could mean using traditional payment rails like Visa, not just web3. It could also mean ensuring investors do their KYC and other regulatory compliance measures.  

On the backend, intermediaries could: 

1. Mitigate the complexities of rights management by collectively representing multiple capital providers as one entity to whom the metadata is linked.

2. Act as a conduit for payouts to each investor.

The ECF model was limited due to rights management complexities. Multiple micro investors meant fragmented interests and worse, fragmented metadata. A sufficiently decentralised, interoperable protocol could solve this. 

Concluding Thoughts 

The current ownership model in music is broken. Music NFTs are powerful, but they are based on a scarcity model. As long as we treat music as a fixed supply store of value, i.e. gold, we’re limiting ourselves to its true potential. Fractionalised ownership on the other hand, enables a productive assets model for music. It treats music like the S&P 500. A compounding source of value. 

Fractionalised ownership in music is an interesting problem to solve because it sits at the convergence of fandom and finance. How projects balance these two factors will be key to their success. 

Here’s the TL;DR:

Hello folks. I’ve been building Spectral, a writing studio for founders and investors in tech. It’s my first real stint as a founder and I’m figuring things out as we grow.

Anyway, this has made it hard to write consistently, something I love doing. So for the next few essays, I’m experimenting with a shorter format—500ish words, no bs. (Okay fine! maybe a little bs)

Right, on to today’s essay.

One of the topics I’ve been thinking about lately is ChatGPT and its potential implications for the music industry. In case you’ve been living under a rock or just happen to be a true Cal Newport fan, here’s a quick explainer:

ChatGPT is an open source, free-to-use text-generating AI engine. It allows you to generate fully human-readable text, conversational or otherwise, at scale. Basically, an AI that can generate human-like conversations in natural language.

The potential for this technology is limitless, and frankly, terrifying. We’ve seen everything from engaging landing page copy to cold emails in the style of Shakespeare. But how does it impact the music industry?

Let’s look at some potential use cases first.

Writing Lyrics

ChatGPT could be used to quickly create lyrics for new songs. Musicians can simply start a conversation with ChatGPT and request it to generate lyrics for them.

Engaging with fans, at scale

There are already a plethora of ChatBot services that aim to help artists and celebrities interact with their fans. There is no mild way of saying this, but they suck. ChatGPT will dramatically up the bar. It could help artists engage with fans, by replying to their comments, questions, or messages with AI-generated content. This could enable unique customer interactions at scale without artists having to invest their time and energy. 

Ending template culture

ChatGPT can also be used to generate contracts, press releases, and other standard documents on behalf of musicians, publishers, labels and other industry professionals—generating standard documents need not entail hiring expensive middlemen.

While all of these use cases are exciting, I think a caveat of sorts is in order. We need to understand the dynamics driving human status. More specifically, the role of expensive signaling.

Understanding expensive signaling

There is a reason why executives fly out to meet clients in their private jets when they could just send across a zoom link. Spending money to fly out and meet someone showcases how valuable you perceive them to be—and gives them a rough sense of how many zeros there are at the end of your bank balance. We’ve seen less extreme manifestations of this in our daily lives: the omnipresence of phones, texts, and emails have made IRL meetings more valuable. 

Every time we invent a cheaper and more efficient medium of communication; personalisation, effort, and imperfection become scarce, and therefore, increasingly valuable.

(This trend is not just restricted to communication, and applies to commodities as well. Remember, “hand-made” aka “artesanal” only became a good thing after the exodus of factory-made products!)

Okay so how is this relevant to ChatGPT?

Talk is cheap on the internet. In fact it has been for quite some time now. Spam prevails because the marginal cost of replication and distribution of content on the internet is next to nothing. Generative AI takes this to the next level. It enables a world where generating facts and some logical gibberish around them is completely free. But of course, humans are ingenious primates and our status dynamics will shift accordingly. Authenticity and imperfection will become increasingly valuable.

Concluding Thoughts

So, back to our probing question, what does this mean for the music industry? 

Resurgence of groups

As Sam Lessin put it, "we're all going to retreat into tight private webs of localized trust” essentially inverting from large platforms with billions of users to smaller, trustworthy networks. The smartest people I know already get their news and insight from exclusive, curated groups of like-minded people. So I guess the takeaway here is less Twitter, more Discord? 

Side note: This trend will eventually converge with the concept of on-chain reputation in web3. 

Imperfection becomes a personal branding tool 

For instance, if anybody can write pop song lyrics, what makes a song stand out? If every artist can use a chatbot to effectively interface with fans, what makes an authentic artist? If everyone is BeingReal, what makes something real?? 

My guess is personal brands become key here. Artists and celebrities will go above and beyond to showcase how they are normal humans, with normal lives. And ironically, imperfection will become a performing art. Like intentional candid pictures. Fun. 

Ultimately, I see ChatGPT going down two, non-binary paths: On the one hand, GPT3 could unleash the true creativity of humans by enabling us to access vast amounts of information that is otherwise too expensive to gather. On the other hand, the internet could become Mumbai at rush hour - loud, chaotic, and not conducive to peaceful human existence.

If you like this essay, please share it with other humans who might enjoy it too. I have no social media (except Twitter) so the social approval really keeps me going! As they say, there is no discipline, only dopamine ;)

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SHOW NOTES

Yash and Maarten talk about Music NFTs. Are they just cryptographic records that basically have nothing to do with music? They talk about this and more as they discuss the pros and cons of operating in Web3 as a musician, manager, or label. 

WHAT IS APPETITE FOR DISTRACTION?

Yash Bagal and Maarten Walraven dissect all things music and tech. They ask each other the hard questions around the trends that everyone talks about.

Creative AI has made great strides in the last few years. But it's definitely having its moment today. In the visual realm, tools like Dall-E and Stable Diffusion have enthralled some and terrified others. Within the writing world, you have incredible GPT-3 powered tools like Lex (huge ups to my friends at Every, Dan and Nathan! ).

Oh btw, Lex wrote one whole part of this essay—care to guess which one? ;)

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Sequoia’s recently published map for Generative AI tools gives us a broader picture of the landscape: 

Early-adopting music creator RAC tweeted recently: 

His last words stuck with me. Music is next. 

I’ve written about the state of music creation tools before. (excuse the dated Clubhouse example)

Photography had its Instagram moment; videography had its YouTube and TikTok moments; even audio had its Clubhouse moment—although it wasn’t music-related. 

Why then, does the creation of short-form, user generated music remain so elusive? 

When will we have disgruntled cynics like myself saying:  “is everyone a musician now?”

Better music creation tools will definitely lead to a meritocratic creator economy—just like what the first wave of pioneering YouTubers who broke free of the capital-intensive, gatekeeper infested video production / film industry prompted. To be clear, the music creator economy won’t “disrupt” or “replace” anything. It will coexist with the mainstream music industry, just like YouTube coexists with Hollywood. Through AI-powered tools, music creators will have more optionality, and the barriers to entry will be lower than ever before. It will help the next generation of music creators create a true music creator economy!  

Why is having a Music Creator Economy so important? 

Recent news stated that more than 100,000 tracks are being uploaded on streaming services every day. More people than ever before are creating music. While that’s great, we’re quite far away from the magnitude of the “video creator economy.” For comparison, 3.7M videos are uploaded on YouTube every day. I couldn’t find a similar number for TikTok, but one thing I’m certain of is that it's much, much, higher than 100,000. 

AI-assisted music creation tools could change everything though. They could bring us closer to the numbers we see in the video realm. Why is this number important though? 

Having more humans creating music is important for the music industry. It's a strong promoter of aspiration. Aspiring YouTubers watched MrBeast’s videos to eventually become successful YouTubers themselves—going on to inspire the next generation of creators. Their social and financial success also enabled multiple unicorns and a thriving ecosystem of startups (including multiple unicorns) and broader innovation in the space, all towards building products and services that help these creators/entrepreneurs. A lower bar to creative expression and higher creative output is a great thing for every industry. 

It also eventually blurs the line between mainstream success and indie/creator economy success. In a world where Will Smith can build a presence on TikTok, so can Taylor Swift on BandLab. Or a host of other music creator platforms. 

Where are we at with AI-powered Music Creation? 

My take on AI-powered music creation is that we're not there yet, but we’re definitely not too far off. Music creation may not require musical training very soon—just like creating a TikTok doesn’t require video production skills. Of course I’m talking about the craft of creation, and not the art of creation. Just because you can make a TikTok doesn’t mean you have the creativity to make a good one. The goal is equality of creative opportunity and freedom of creative expression—a world where everyone has access to tools that help them freely manifest their creativity. This is exciting! 

Spotify, the music industry’s self-proclaimed savior, has also been bullish about the audio creator economy. It has invested heavily in developing AI-powered music creation tools that lower the barriers to music creation. This is a very smart move. Spotify understands how it can benefit from aspiration and its upstream effects. 

Francois Pachet, director of AI research and development at Spotify, drew up a very interesting analogy while talking about Spotify’s music creation play. In an interview with Forbes, he compared it to the the instant cake mix story: 

As the story goes, a food conglomerate in the 1950s boosted sales when they figured out that when you get the customer involved in the cooking, even a little, sales rise. They removed dried egg from an instant cake mix, so the customers – usually housewives back then – would have to add a fresh egg. “It was that bit of effort,” Pachet says, “so she could say she made the cake, that made all the difference.”

Spotify’s foray into the Metaverse via the Spotify Island on Roblox (which focuses on music creation as well—with virtual beat makers, etc. powered by its acquisition Soundtrap) indicates that the company is making calculated strides in this direction.

Similarly, Splash, a company that builds AI-powered music creation tools, launched their music creation game on Roblox and had ~8 million users create music via its toolkit. They raised a $20 million Series A funding round and are rapidly expanding their suite of tools for aspiring music creators. 

In Conclusion 

What does the future of music creation look like? 

Here are a few thoughts:

• A big part of it will be empowered by AI, which will enable new forms of creativity that were previously unthinkable.

• We will see a continued acceleration in the use of AI in music production, composition, and performance.

• AI will increasingly be used to create and perform entire pieces of music, either autonomously or in collaboration with humans.

• The lines between human and machine music-making will become increasingly blurred.

What does this mean for music creators? 

It means that we need to be prepared for a future in which AI plays a major role in music creation. We need to start experimenting with AI now, to learn how to use it in our own creative practice. And we need to be open to the idea of AI becoming a major force in the future of music.

Announcement! 

Maarten Walraven and I are starting a podcast! it’s called *surprise surprise* Appetite for Distraction and its about *surprise surprise* emerging trends in music x tech. 

Why are we doing this? 

It's an exciting time to be working in music. Tech is fundamentally changing the relationship between art and commerce. However, as with any new technology, you inevitably have dogmatic maxis on one side and cynical naysayers on the other. 

Both sides present valid arguments. But they rarely ever talk to each other. 

THIS is where the pod comes in. 

We want to talk how technology is radically changing the music industry - but in a nuanced way - without being swayed by maxis or naysayers. We want to steel man rational arguments on both sides so we all reach intellectual high ground.

Maarten is the best human to do this with. He is one of the most insightful thinkers I know. You probably know him through his work writing Music X with Bas Grasmayer. 

We really enjoyed jamming at Future Music Forum Barcelona and we wanted to keep the conversation going.

EP #1 is titled “Music NFTs Don’t Exist” we tackle a simple (?) question: 

"why would someone want to own a piece of music today, when most of it is available on demand?” 

Hope you find this meaningful! 

What I’m Listening To:  

Psyched to see her live in VLC next week!

What I’m Reading: 

Straphanger: Saving Our Cities and Ourselves from the Automobile - a vindictive choice given that I recently failed the notoriously hard Spanish driving test! FYI I’ve been driving all my life. I just need to get my Indian license converted to a Spanish one. Unfortunately however, driving in Spain and passing the Spanish driving test are two VERY separate realms. 

Until next time, 

Yash

“do people in the music industry really want to head into a future where we all play at being Wall Street traders, balancing risk against reward to increase notional value?” 

This criticism is a valid and concerning one. Something I’ve written about this previously as well: 

Does a fan invest to support the artist? Does the fan invest in hopes of future financial returns? Fans and financial investors may have very different interests and NFTs weave those two groups together. Who someone decides to support financially may not necessarily be linked with whom they are a fan of. 

With my supporter hat on, I’d probably buy NFTs offered by artists I’m a fan of. Amazing folks such as Feng Suave and Sports Team. With my investor hat on, I’d probably think it's a better bet to invest in Adele, or Lorde, or Taylor Swift! 

And this is precisely what most music consumers might do. The large majority of music consumers will decide to invest in “blue-chip” artists rather than making more riskier investments in the obscure, experimental, and alternative acts they love. (but clearly don’t trust with their money!) 

The question is: is the convergence of fandom and finance an inevitable outcome in web3? I used to think so. But I was wrong. 

Let’s understand why fandom and finance tend to converge in web3 first. In most web3 projects, tokens (fungible or otherwise) derive their value by: 

1. Signalling Reputation: possession of tokens acts as a powerful reputational signal. It signals your status to other community members. Certain tokens are air dropped to early community members and validate their reputation as respected old timers. We know how powerful this can be in the context of music: fans squabble about who discovered artists first and who their biggest fan is, etc. This status signal only gets amplified when communities and cultural contexts are interoperable. Having a $STREAM token not only acts as a status signal within the Water & Music community, it also acts as a status signal within FWB, SeedClub, and so on.

1. Providing Liquidity: possession of tokens also helps individuals financially – early contributors who were compensated with the community token can sell them in the open-market for fiat currency to pay their bills in the “real” world, buy unnecessarily expensive espresso machines, etc. This is where the financial speculation aspect of web3 comes in—something many people (including Joe Sparrow and myself) have expressed concern about.
   

The value of any token is largely determined by these two factors. If the tokens your community issues can’t be used to signal reputation or be exchanged for ‘actual’ money, nobody will engage with it or your community. 

Herein lies a paradox: brilliantly formulated by Scott Kominers and Jad Esber: 

Text within this block will maintain its original spacing when published

..if a token can be transferred easily, then those without reputation can simply purchase it, which reduces the token’s ability to serve as a reputation signal. 

Text within this block will maintain its original spacing when published

Making reputation tokens transferable not only reduces their ability to serve as a signal of reputation, it can also diminish their ability to serve as valuable compensation. Thus, establishing reputational capital requires fully (or at least mostly) non-transferable tokens. The question, then, is how to translate reputation into liquidity. 

If a token is liquid, i.e. if anybody can buy or sell it freely, it devalues its first function as a reputation-signal. Reputation doesn’t mean anything if it can be bought or sold. On the other hand, if the token is a very very strong reputation signal which can only be earned and not traded, the token is less liquid and overall capital deployed in music x web3 reduces. (total capital deployed in any asset class is strongly correlated to it’s liquidity) 

This is the defining challenge of reputation-based networks: Lean too much towards liquidity, and music fandom becomes mere financial speculation. Lean too much towards reputation, and music fandom loses its financial utility.

How do we solve this paradox? Or more specifically for us in the music industry, how do we financially incentivise and reward genuine music fandom instead of going down the art equals finance equals entertainment route? 

Scott and Jad proposed a framework inspired by the gaming industry. They devised a two-token approach similar to the “points” and “coins” systems that many games have: 

We propose a two-token reputation system, whereby one token, which we call “points,” serves as a non-transferable reputation signal. A second token, “coin,” is a transferable asset dispensed to holders of points on a regular cycle. Effectively, points spin off dividends in coins that can be used as tradable currency. Moreover, because coins accrue to holders of points, coins also have a link to the underlying reputation.

At a high level, this design promotes a feedback loop whereby users derive points from high-quality contributions on the platform such as contributing content, moderating, or winning gameplay. And then, when the users with points receive coins, they can be traded as a currency. Users’ demand for coins drives the need to acquire points, which in turn incentivizes high-quality contributions.

Points 

Points are earned via high quality contributions in the community. This could entail being active on an artist’s Discord server, attending  concerts, buying merch, etc. Points will help fans build up and signal their reputation within their favourite artist’s community. Points will serve as powerful signals within these communities because points can only be earned through action and cannot be bought or transferred. Artists will also be able to use these to identify their most authentic fans. Not just their most affluent ones. 

Artists have the ability to decide how fans earn points. Meritocracy can be embedded. Or not. Instead of the 26yo who spent $300 for a ticket, maybe the 16yo who spent an entire afternoon helping with the community town hall on Discord deserves more points. Artists can play points god here. Needless to say this is an important step. How artists decide to structure the points system will determine the fundamental status-dynamics of the community. 

Coins

Points earned by fans will entitle them to coins—distributed pro rata based on the number of points they have. Coins will have the ability to be traded in the open market for fiat currency. An artist’s Discord Community Manager will earn points based on their work for the community. These points will entitle them to coins. These coins could then be traded for USD, EUR, etc. if needed. 

Coins are crucial because they provide liquidity to community contributors. Fandom is real but so is rent—compensating contributing fans fairly and transparently will incentivise new members to join, and keep community engagement high. Distribution has to be aligned with the artist’s vision for their fan community. Factors such as the cadence with which coins are disbursed to points holders, whether its pro rata based on the number of points or tiered based on roles, etc. will change community dynamics. 

This enables a positive feedback loop. Demand for the coins in the open-market would increase demand for points, thereby incentivising fans to get involved more proactively, making high-quality contributions within the artists community. Genuine music fandom is financially incentivized and the risk of fandom becoming mere financial speculation reduces significantly. 

Reputation within communities becomes non-fungible. Financial capital becomes fungible. 

Conclusion 

Web3 has forced us to rethink the artist-fan relationship in a fundamental way. Setting up a tokenized community may seem daunting to artists who think it may over-financialize their careers—their creativity beholden to the whims of their fan communities. 

The two-token framework lets artists financially incentivize and reward genuine fandom, without letting their communities slide into mere financial speculation and inauthenticity. Happy to have been proved wrong in this case.

What I’m Listening To

Best album I’ve heard so far this year. I’ll just leave it at that.

Really great insight into what western companies don’t understand about “emerging markets” and how this apparent gold-rush may not actually be one.

Thank you so much for reading! If you want to get in touch, you can respond directly to this email or reach out on Twitter. Always excited to meet like-minded humans! 

Until next time,

Yash

Anyway - art is long and life is short (Conrad!) so instead of sitting on this essay which I have done for a very long time, I finally cleaned it up and made it all tidy and nice to read—let’s get straight into it!

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Historically, value has always accrued towards the center of the music industry. There have been a group of select stakeholders who have acted as gatekeeping intermediaries separating artists and fans. Major record labels controlled the means of production and distribution pre-Napster. Streaming services and social platforms control the channels of discovery post-Napster. 

Admittedly, these intermediaries solved artists’ problems initially and added value to their creative careers. Record labels helped finance the production and distribution of music when the industry was essentially a manufacturing business. Subsequently, streaming services (with Spotify at the helm) “saved” the industry by legitimizing the digital consumption of music — which was a piracy driven wild west in the wake of Napster.  

In both these eras, intermediaries initially arose to solve a genuine need that music creators had. This helped them grow in size and influence, and consequently become powerful determinants of social and financial success for creators who wanted to succeed within their ecosystem. As they experienced growth however, platforms’ priorities shifted. For instance - early creator economy startups added genuine value to creators’ careers. They democratized the creation and distribution of content. But as the creator economy converged with the attention economy, creator empowerment made way for advertiser appeasement. Creative content was relegated to being a conduit for eyeballs and resultant advertising revenue. 

As the middle class of creators grows, product and business decisions made by a select group of executives can tangibly affect the livelihoods of many. The defining problem of the creator economy (and music industry) today is that these decisions are autocratically imposed on creators who have no say in how these decisions are made and have no freedom to leave if these decisions don’t make sense for their creative enterprises. 

In 1970, Albert Hirschman formulated the Exit, Voice, and Loyalty framework for stakeholders in any kind of ecosystem to address and potentially resolve their concerns. Applying Hirschman’s framework, creators should either have the ability to voice their grievances, raise proposals, and tangibly affect decision-making within these platforms, or be free to exit these platforms—taking their content and audience with them wherever they wish to go. 

The current rails on which the music industry and the broader creator economy is built on don’t allow this. Let’s take Spotify for example: Musicians on Spotify have no way to voice their concerns or tangibly affect change within Spotify. A few executives are making decisions that tangibly affect millions of music creators. 

Moreover, if these music creators wish to leave Spotify, they can’t really do that either. Their audience is locked in within the Spotify ecosystem. Besides vague information about where their audience is based and which songs they listen to, music creators have NO IDEA who these people actually are. There’s no way to shift platforms without losing a huge part of their listenership.

This is problematic. Many platforms owe their success and multibillion dollar valuations to the middle class of creators who house their content and communities within their walled gardens. It is only reasonable then, that the next generation of creator platforms are democratically governed (voice!) and interoperably structured (exit!) 

Side Note: Of course, the incentives driving the attention economy may still not align with the ones needed to build creator-friendly products and services. Would things have been different at Spotify if product and business decisions were made by artists? Perhaps. Perhaps not. But one can’t help but wonder what Spotify would’ve looked like if it were built to serve music creators instead of serving advertisers who want to target music fans. 

Okay, I know where you think this essay is going. Let me assure you, it’s not. 

Yes, intermediaries are universally vilified in the music industry. It is cool to dunk on Spotify within artist communities and every music industry conference has a minimum of three enthusiastic founders promising to disintermediate the music industry. But the reality is that intermediaries are not the problem. The way they are governed and the incentives driving the ecosystem they operate in are the problem. Companies are autocratically governed by executives who are incentivized to make decisions that benefit Wall Street - not music creators. Spotify may enthusiastically state “x number of artists made $50,000 a year through our platform!!” (which seems to be an effective marketing strategy?) Wall Street however, evaluates performance based on user time spent in-app - not creators making a living. 

tl;dr - platforms initially arose as valuable intermediaries empowering creators at first. But these platforms are autocratically governed and have made decisions that align with the attention economy and not the creator economy. Executives autocratically decided to appease advertisers and Wall Street instead of creators, leading us to a scenario where all creative content is merely seen as a virtual ad space, devaluing individual creators in the process. Artists have been forced to become entertainers - leading to a cultural downward spiral. 

ANYWAY.

To realign incentives in a way that is mutually beneficial for creators and platforms and to incentivise executives to make decisions that actually empower creators, we need to fundamentally change how projects in the music industry are governed. Instead of striving for a music industry free of intermediaries, we need to enable an ecosystem where intermediaries are democratically governed. Instead of going from a peaceful dictatorship to a free but belligerent nation run by rogue army generals, let’s gradually transition towards a more transparent and democratic music industry. 

To do this we need new democratically governed rails for the music industry to be built on. And we finally have the technology to do it.

Protocols, not platforms 

A powerful antidote to platform autocracy could be: decentralized open-source protocols enabled by web3. Through open-source + decentrally governed protocols, the music industry could be restructured as a healthy and competitive ecosystem of interoperable artist tools built on top of platform-agnostic rails. 

Open-source

Let’s tackle open-source first. 

Open source protocols have existed since the early internet days. We still use them every single day with our email—which uses the SMTP protocol. Open-source protocols are inherently interoperable. It’s what makes our gmail account accessible whether or not we use the Gmail App, Apple Mail, Outlook, or Superhuman. Google can’t force us to use its own services to access our Gmail account. This seemingly minor thing actually has powerful downstream effects on the creator economy. We are currently seeing how this plays out in the newsletter space first-hand:  Because newsletter writers communicate via email, they have complete ownership over their audience rather than the publishing platform they use. If I’m not satisfied with Substack (the platform I’m using to publish this essay), I can just export my email list and go elsewhere pretty easily—moving on to alternative platforms like Ghost, or Revue—bringing all of you along with me. In other words, if I’m not happy, I can leave. 

But the same is not true for Spotify—if a music creator on Spotify wants to move to another platform or if Spotify decides to deplatform them, it entails losing their entire audience on Spotify. Yes, they can draft a fiery post dissing Spotify on their socials and maybe a few devout fans will follow them to their new platform of choice. But there is a loss involved. A loss painful enough to keep them toiling away within Spotify’s serfdom, complying with its rules, however arbitrary they may be.  

Open-source protocols could enable a music industry built on radically different rails. Instead of having their audience owned and controlled by autocratic platforms, music creators using open-source protocols could own their audience and communicate with them through their preferred content format, on their own terms, through the platform of their choice.  

Moreover, an open-source world is an artist-friendly world. Artist-facing tools and platforms are incentivized to compete based on value propositions that better serve creators because they can’t impose features that lock them in. Rather than forcing creators to stay, they have to actually focus on building compelling products and services that make them want to stay. Open-source protocols promote a healthy, diverse, and competitive ecosystem. Creators benefit as a result. 

Now, you’re probably thinking: if open source protocols are SO great and have existed since our web1 days, why did centralized web2 platforms win? Why would anyone choose autocratic platforms over democratic protocols?

Because of governance. 

Decentralized Governance

It turns out that building anything in a truly democratized way is really really hard. Allocating capital and coordinating labor in a democratic way was chaotic and inefficient as internet projects scaled. Without the technology for efficient governance, democracies were susceptible to indecision and inaction. Like a giant never-ending university group project.  

This collective analysis paralysis is a problem web2 autocracies didn’t have. If Daniel Ek joins Clubhouse and likes what he sees, he can ask his team to build or acquire a similar product and execute all this in a very short amount of time. The same isn’t true for decentralized projects. Historically, decentralized projects just haven’t been able to innovate with the same speed and decisiveness as centralized platforms. Web2 platforms ‘won’ because nobody could figure out how to solve the governance problem in an economically feasible way. 

With web3 however, we finally have the technology to make decentralized governance work at scale. 

While the consumer-facing application of web3 like music NFTs might make the news, the really exciting potential of web3 is its ability to radically change how organizations are governed in the music industry. Tokenized governance enables projects to be built in a truly democratized way. Smart contracts enable the efficient allocation of capital and labor, at scale. 

Web3 enables an internet-native way of organizing labor and capital at scale. An ecosystem of Decentralized Autonomous Organizations, owned and operated by a community of participants, governed based on transparently encoded rules. 

For the sake of brevity (which seems to be an increasingly bleak goal at this point), I encourage you to check out Water & Music’s report on the state of Music DAOs for a more comprehensive look at the decentralized governance landscape in music – it contains a database of 30+ music DAOs and a detailed breakdown of how they operate – including governance. 

Let’s take Audius as a simplified illustration. It is a decentralized music streaming service that bestows governance rights (among other perks) to $AUDIO holders, giving them a say in how the platform develops. Every user has the ability to influence product-level decisions, making Audius more community-led and operated compared to its centrally operated counterparts such as Spotify, which has an executive team steering these same decisions. 

Audius is just one of many decentralized projects that have been emerging recently, as web3 moves beyond early adopters. The appeal is clear—decentralized platform governance ensures that decisions made by social networks are taken transparently and collectively. 

Beyond obvious merits however, we do need to be aware of some current limitations. Even Vitalik Buterin highlighted that DAO governance is often plagued with some of the same challenges that we currently grapple with in our legacy (democratic?) governments—problems such as low voter turnouts, bribes, a lack of representativeness, centralization, and rigid constitutions. 

Moreover, there is a local group of people who argue that democracy/decentralization might actually not be the most conducive for innovation. Oftentimes people don’t really know what they want and it takes an autocratic visionary (Steve Jobs at Apple the most cited example) to really drive disruptive innovation i.e. make something that people didn’t know they wanted. (I encourage you to read Jesse Walden’s brilliant essay on Progressive Decentralization if you wish to scratch this itch.)

My view on this is that we finally have the technology to experiment with internet-native governance models and it's going to take a while before we figure out best practices. Different degrees of decentralization <-> centralization might work for different projects, just like some businesses are better off being structured as an LLC rather than a C-corp. These are minor operational hiccups that could and probably will be overcome in the future. 

Conclusion 

Intermediaries that play a decisive role in determining the social and financial fate of music creators. But a lack of interoperability or democracy keep music creators locked-in within these walled-gardens, in a neo-feudal state of work. Today however, as more individuals make their living through streaming services and social platforms, there seems to be a palpable shift in the air. Music creators are disillusioned. Many are questioning the outsized influence of DSPs and social media platforms over their careers. It is not unreasonable to expect that as the impact of these platforms over creators’ careers increases, their autocratic control over creators’ outcomes should decrease. New rails i.e. open-source and decentrally governed networks could usher in this next era of the music industry and broader creator economy. 

1. The next issue of Timestamp is slightly delayed! Sorry about that, it’s been quite a month. For those who missed my last piece, Timestamp is a collective series I kicked off a few weeks ago, documenting the creative and commercial lives of music creators in web3. The first issue features the incredible Karma.wav which I encourage y’all to check out.

2. I’ll be speaking at Measure of Music on the 26th of February with Joey Akan, Bas Grasmayer, Caroline Whiteley, and Diana Gremore about independent music journalism—essentially trying to figure out how people can own their content & audience while writing about music, technology & culture.

3. I’ll also be moderating a music x web3 panel with Maarten Walraven, Anne McKinnon, and Alexandra Greenberg at Future Music Forum on the 24th of February!

Hope to see some of y’all there! 🙂

Okay, on to today’s essay. Does anyone remember this app called TikTok?

Apologies to all my crypto maxi readers! With all the buzz around web3 and the possibilities it opens up for music creators, this essay might feel like travelling back in time. Trust me though, it’s absolutely worth it.

I teamed up with Pavel Telica and Parth Sinha — founders of the Intelligent Music Agency, to unpack how TikTok-native creators are rewiring the music industry.

TL;DR

• In the music industry, the distribution of music has been prohibitively expensive and largely unmeritocratic. 

• Music creators have needed substantial capital to ensure they’re on the favourable end of an unforgiving power law—to get their music heard in an industry where 0.7% of artists are driving 90% of streams. 

• Major record labels have been the sole financiers and therefore, the de facto determinants of success. 

• TikTok has radically changed this by making the global distribution of music free and meritocratic. 

• Music creators like Abigail Barlow, ASTN, and Ren Carter have successfully distributed their content among TikTok’s 1B users for free. 

• Their success has also been “determined” by these 1B users in a meritocratic way—since TikTok’s algorithm recommends content that users genuinely find interesting, rather than content from already established creators with larger followings. 

• On TikTok, the most interesting content wins, irrespective of whether you're an aspiring creator with just a few followers or you’re an established creator with millions.

• This “universal basic distribution” is circumventing old gatekeepers by enabling music creators to directly connect with potential fans—letting fans determine a music creators’ success, rather than record labels (aka Meritocracy!)

Hope you enjoy :)

The rise of TikTok is fundamentally changing how music is created and distributed. TikTok totally obliterates the financial barriers to the distribution of music—thereby changing how it is created. How does TikTok do this? By enabling meritocratic, low capital, universal basic distribution. 

TikTok’s FYP, or For You Page, is the best place for music creators to test their Minimum Viable Song—a stripped down demo that conveys the essence of their sonic musings. A sonic prototype normally sent to bandmates or producers, seeking feedback. TikTok however, distributes it among its 1B MAUs, who give instant feedback with their attention and engagement.   

Abigail Barlow and the group Avenue Beat have used TikTok to validate their upcoming song before committing to a full release on streaming platforms. Their recent hit song F2020 went viral on TikTok first, before the group decided to record a full version; which (unsurprisingly) hit the iTunes Top 50 chart for pop songs when it was released. 

Abigail and her band were able to validate their song because unlike other social platforms, TikTok offers meritocratic distribution. Its recommendations are based on what a user is interested in rather than who they follow. This means TikTok gives emerging and established artists the same level of initial exposure, letting the most interesting content win—irrespective of whether creators have 20,000 or 2,000,000 followers. 

This radically new way of distributing music has led to an equally radical shift in the way it's created. 

Recently, music creator ASTN covered Billie Eilish’s “Happier Than Ever” on TikTok, reimagining the song as an R&B cover. The video went viral on TikTok’s FYP, receiving 2.5 million likes within 24 hours. ASTN went on to gain 800,000 new followers within the next seven days.  

ASTN uploaded a longer version of the cover song to retain the attention of his newly acquired fans, and to gauge whether it was worth releasing a polished studio version on streaming services. ASTN was trying to get his minimum viable song validated by his fans. “What if this song was on Spotify and Apple Music?” he said, prompting them with a pre save link. He released the full version a few days later. 

Okay, so what happened when ASTN released the full version of his previously validated minimum viable song? 

It's safe to say the song had a powerful ripple effect on Spotify — accumulating 1.6 million streams in 48 hours and 3.4 million streams just 6 days after release. If we look at the engagement rate of each of ASTN’s videos from the day he posted the first snippet right up until the date the full version was released, it's clear that every user who followed him and interacted with his content was eagerly waiting for the full song to come out.

This is not surprising—virality on TikTok often translates into a spike in consumption on services like Spotify. However, with ASTM, something was noticeably different. The initial virality on TikTok and the subsequent explosion on Spotify was not just some ephemeral viral trend—fans coming to ASTN’s Spotify profile seemed to be genuinely interested in him as an artist—they were what the industry calls, “organic” fans. Unlike previous cases of TikTok driven virality, his number of followers and monthly listeners on Spotify have seen substantial growth as well. 

This is a radical shift from the traditional music industry. In the legacy music industry, the creation and distribution of music were capital intensive. That's because music creation entailed hiring studios, producers, session musicians, studio engineers, and clearing multiple samples. Music distribution was essentially a manufacturing business—getting a song heard globally entailed retail advances to distributors, fighting for shelf space in brick and mortar stores, and paying DJs to get radio placements. 

Major record labels happened to be the sole providers of capital and therefore, the de facto gatekeepers to success.

In the new digital millennium post-Napster, things started changing. The advent of new technology made the creation of music much cheaper. High quality music could now be produced in bedroom studios. 

But as the creation of music became more accessible, the supply of new music increased dramatically! This radical increase in supply overwhelmed limited demand i.e. our time and attention. 

Advances in music creator tech also converged with the rise of Spotify and other streaming services that enabled the ubiquitous access to music, a celestial jukebox available for free or for $9.99.

The rise in supply paired with limited demand led to the devaluation of music, and the prevalence of a skewed power law among music creators. Today, 0.7% of artists on Spotify are driving 90% of monthly streams. More than 50,000 songs get uploaded to Spotify everyday, and more than half of those are never streamed by anyone. Ever. 

Through all this, the label model persisted. Yes, music creators didn’t need big label advances to create music anymore. But they absolutely needed label budgets to distribute music—to cut through the noise and get their music heard in the attention economy. Instead of competing for limited retail space in stores, artists now needed label money to compete for our finite attention spans. Instead of paying retailers for premium shelf space, labels pay Spotify to get their latest releases on the homepage and popular playlists. 

Alright, let's pull back for a second to the ASTN example. Seasoned music industry folks could rightfully make the counterargument that ASTN already had a small but bubbling fan base to begin with. Moreover, it was a cover version of an established hit song, which undeniably helped. Didn’t ASTN just piggyback on the success of Billie Eilish? And isn’t Billie Eilish signed by a major label? Therefore, the label model persists, they would say. 

For the minimum viable song theory to stand true, we need to determine whether TikTok can enable someone to go from absolute zero to one? Enter Ren Carter. 

A few months ago, Ren used TikTok’s duet feature to remix an existing TikTok of a frog making a funny sound. Ren sampled that sound in a highly creative way and his duet blew up on the FYP, garnering more than 400,000 likes and 5,000 comments in the first 24 hours. 

Ren realised the song’s potential to go viral, so he decided to tease fans with a longer version of the song. This helped him build up hype around the trend i.e. validate his minimum viable song. 

The response from his fans seemed to indicate that they really wanted the full version of the song, so he subsequently promoted a pre save campaign for it.

Ren released the full version of his song on the 14th of July, nearly a month after teasing, testing, and validating it. Given the duet-friendly nature of the song, it received a lot of fans and creators making duets using it. 

The song, called “Frog” was Ren’s first ever foray into music, his debut release. Currently, it has 132,000 streams on Spotify and Ren has 754 followers and 9,000 monthly listeners.  

TikTok’s distribution can be very powerful—a few months ago, TikTok published a report stating that 70% of TikTok users discover new artists on the platform, while 72% of users associate a particular song with TikTok. TikTok already has more than 2.5x the number of DAUs compared to Spotify—most recent stats state that Spotify has 365 million MAUs while TikTok had 1 billion MAUs. 

The FYP allows musicians to test the waters by putting out smaller iterations of songs they have in the pipeline. But it's important to state that even the most viral minimum viable song may not lead to much, unless creators have a carefully crafted artist identity to build relationships with their new fans. It’s like a startup that raises too much money, too quickly, without a well-defined product. 

Ren’s second release for instance, Talk Dirty, only has 1,291 streams. Ren’s virality on TikTok almost compelled him to become a music creator, without giving him the time to formulate his identity as one.

I’ve written previously that TikTok is a strong top-of-funnel, but a leaky one. The platform promises viral distribution but does not necessarily lead to authentic relationships  between music creators and their fans. How creators leverage TikTok’s distribution is ultimately up to them. In the unforgiving, dog-eat-dog attention economy, TikTok helps aspiring music creators get their foot in the door. Once they're inside the room however, a well thought out artist identity could help them stay.

I hope this series helps music creators who are still on the fence—folks who are still deciding whether going down the crypto rabbit-hole is a good use of their time and money—by demystifying some concepts and laying out simple, actionable steps to get started.

For this first edition, we are joined by Karma, a music creator who has been at the cutting edge of music and web3 for a very long time.

If received well, this series will also be published on Mirror, with the proceeds being split 50:50 between Karma and myself. Please consider supporting us, and owning a piece of music x web3 history!

Read on Mirror

Alright, let’s dive straight in: 

Karma, could you introduce yourself to AfD readers?

Hi, I’m Karma. I am a musician, music producer and WRLD builder. I've been a musician most of my life and a crypto native since 2016. I have worked with multiple early-stage projects and communities. I have my music project Karma.wav and my music duo KarmaVioletta with my girlfriend Violetta, for which we recently released our genesis music video NFT on Zora for our song “Without You.” 

I am currently in the middle of many web3 experiments in the music space, from doing web3 songwriting camps with Songcamp to building wavWRLD, a social club at the intersection of music and web3. I also co-created 2 NFT projects, a digital card game called “In Search of Satoshi Nakamoto” and a 1 of 1 art project called “A Brief History of Art”, with my sister Tori and my Mom Jacqueline. We call ourselves Generation XYZ, with a mission to educate all three generations about crypto, NFTs and web3 via thought-provoking art and games. 

I am currently exploring how the ownership economy will impact the music market. My mission is to live in a world where a kid can tell their parents, "I want to be a musician, artist or creator," and there's a viable path for that financially, emotionally and socially. 🎵 🌊 🎹

What got you interested in web3? Describe your career in music before web3 — did you ever try going down the traditional music industry route?

Initially, I found crypto on a podcast with Andres Andrianopoulos. That was my first introduction to thinking about money as value exchange on a shared ledger. I got more directly involved in crypto throughout the last bull run and worked at an early-stage company whose mission was to democratize access to alternative assets. I saw early glimpses of NFTs with things like Crypto Kitties and even remember thinking, “What if digital scarcity could be reintroduced to music?” when learning about the double-spending problem.

I stumbled upon Li Jin's piece on the Passion Economy while getting interested in what was going on in the creator economy via Jack Conte from Patreon and other founders and creators. I was scratching my own itch by looking for ways to capture value from being a creator that didn't require playing gigs every weekend and selling merch. I tried all the traditional web2 tactics for my music, but the platforms didn't have aligned incentives for creators and it always felt like an uphill battle.  

I started seeing exciting experiments in NFTs begin to emerge at the end of 2020. It became apparent that web3 would be the technology allowing the ownership economy to emerge. It was the missing piece in the tech stack. 

I grew up playing in bands and recording music. I started making music on my computer, fell down the Ableton rabbit hole and the rest is history. I decided early on as a musician that I wanted to do it on my own terms and my primary fulfilment came from playing instruments and creating music. I saw many of my musician friends who had gotten a lot of attention, but weren’t fulfilled, were struggling to get by and lost the love for making music. I have made music all my life, but I take a generalist approach to it. Seeing life through the lens of music is my motto.

What is the most practical advice for music creators to take their first step into crypto? 

Figure out your "Why?" Why do you want to get involved in the NFT space? (Shout out to Simon Sinek!) 

Mint something and buy something inexpensive. Having skin in the game and making on-chain transactions will consolidate all the "theory" you have learned and give you direct experience. 

If someone had to learn crypto from first principles, where should they start?

Learn what a wallet is and how to secure it. What is a blockchain? Why are self-sovereignty and agency core principles of web3. The Bitcoin whitepaper is a good resource, Chris Dixon and Naval Ravikant on the Tim Ferris podcast and the Naval Ravikant and Vitalik Buterin episode to name a few. There’s also a course on Brilliant about cryptographic primitives.

“NFTs are a simple set of blockchain standards that enable genuine ownership in an interoperable, re-mixable and secure way. For the first time, users can now genuinely own digital objects.” - Chris Dixon

Discovery still seems to be an issue in web3. Music creators seem to be relying on web2 social platforms (primarily Twitter) to promote their NFTs, or other web3 offerings. How do you see web3 solving discovery? 

The first step to solving a problem is clearly defining the problem set. There's currently no incentive to promote new music, showcase the long tail of artists and optimize for anything but popularity. We need to align incentives for the artist and fan's best interests instead of the platforms. It's early on in the adoption curve. Still, as consumer behavior shifts and early contributors demand ownership and upside in the value capture of the networks and platforms they participate in, we will start to see new tools emerge for web3 discovery.

Platforms like Sound.xyz host listening parties where artists can be supported and find their 1,000 True Fans. I could see them including the community in the curation process and rewarding listeners for finding emerging artists. We need to reward and incentivize curation and discovery in new and novel ways. 

Another significant bottleneck for discovery in music NFTs is metadata standards. Luckily a collective of builders and musicians across the web3 space have self-organized to develop better standards. 

DAOs and social crypto will be growing trends to allow for better sense-making. Even on Twitter, it's hard to find the signal in the noise if you're new to web3. Experiments and communities like Songcamp (a writing camp and incubator for musicians), Good Karma Records (a music label DAO owned by an artist) and wavWRLD (a social club at the intersection of music and web 3), amongst many others, are emerging discovery tools. These still live on Discord, hybrid web3 you could say, with the new Metamask integration announcement. Ultimately, there's much building to be done, and web3 discovery needs a lot of work and experimentation. 

Can you tell us a little bit about your experience at Songcamp? How would you explain Songcamp to a conventional (web2) artist? What are your thoughts on the future of collective music creation? 

I found Songcamp while looking for communities doing interesting experiments in the music space. You can think of Songcamp as a mix between songwriting camps and web3 hackathons. It's as if Y combinator went to Nashville to do a songwriting writing camp. Each cohort or camp tests different ideas around music-making, collective creation and distribution. We explore all art mediums (visual, written, etc.) but music is the main focus. Everything we believe about funding, creating and releasing our creative work is transforming. Songcamp is a laboratory conducting highly experimental songwriting camps + music NFT releases. A place where musicians can experiment, play and explore where these new web3 primitives can take us. (You can check out the history of Songcamp here.)

Can you talk a little bit about wavWRLD and your idea behind it? 

I believe your success in life and web3 is correlated to how well you can collectively and individually make sense of the world. Web2 has led to the near collapse of sense-making. The information commons is hijacked by algorithms optimizing for doom scrolling and a large portion of social interactions are predicated on third-party advertisers bidding on your attention. Coordinating with people to create aligned incentives with the goal of finding the signal in the noise is one of the most exciting things about web3 technology and I needed a place where I could do this socially outside of Twitter. wavWRLD is a social club at the intersection of music and Web3. In its current state, it is a social club. Why a social club? Because

“ʏᴏᴜʀ sᴜᴄᴄᴇss ɪɴ ᴡᴇʙ𝟹 ɪs ᴅɪʀᴇᴄᴛʟʏ ᴄᴏʀʀᴇʟᴀᴛᴇᴅ ᴛᴏ ʜᴏᴡ ɪɴɢʀᴀɪɴᴇᴅ ʏᴏᴜ ᴀʀᴇ ɪɴ ᴛʜᴇ ᴄᴏᴍᴍᴜɴɪᴛʏ. ᴛʜᴇ sᴛʀᴏɴɢᴇʀ ʏᴏᴜʀ ɴᴇᴛᴡᴏʀᴋ, ᴛʜᴇ ᴄʟᴏsᴇʀ ʏᴏᴜ ᴀʀᴇ ᴛᴏ ᴛʜᴇ sᴏᴜʀᴄᴇ. ᴀsᴋ ɴᴏᴛ ᴡʜᴀᴛ ᴛᴏ ʙᴜʏ, ʙᴜᴛ ᴡʜᴏ ᴛᴏ ᴍᴇᴇᴛ." - ᴄᴏᴏᴘᴀʜᴛʀᴏᴏᴘᴀ

How would you advise music creators to stay creatively and commercially productive? 

A web3 native music creator wears multiple hats: not only are you making music, you’re also managing a community, figuring out tokenomics and governance, creating visual content to go along with the music, and so much more.

I think we are all answering these questions via experimentation, but it's a conversation I have been starting to have a lot more with musicians and we are planning to host a discussion in the wavWRLD discord in the new year. I began to think about creativity in seasons similar to nature, thanks to my friend and fellow Songcamp member Mark Redito. So maybe there's a case to be made for musicians using seasonal creation to allow for periods of more focus on specific hats. I have always been wearing multiple hats for music—writing, recording, producing, mixing and mastering my songs. I plan release campaigns, film music videos, build websites and book my own gigs. For musicians like me, wearing multiple hats comes naturally and I prefer building community than running and setting up Facebook and Instagram ads. Finding someone to complement your strengths is essential for musicians who don't want to wear various hats. It can be as easy as hiring a community builder or a knowledgeable friend, helping with governance and tokenomics. Daniel Allan is an excellent example of this. Coopahtroopa helped him with his tokenomics and Henry Chatfield helps manage his Discord community. I created wavWRLD to allow for a space where people could find each other to help actualize their creations and we have already seen some community builders get connected with musicians.

What is the current achilles heel of the music x web3 world? 

The internet going offline or a 51% attack on the network. Besides that, lack of consumer adoption or the hypothesis being proven wrong over time.

What does your web3 tech stack look like?

Give readers a look inside the tools, platforms, and networks you use for creating, distributing and monetizing your fans

I use a combination of Discord, Zora, Foundation, Sound.xyz, Catalog, PartyBid, MintSongs, Mirror.xyz, Ethereum, Solana, Audius and Opensea. I am also looking into glass.xyz and some emerging platforms, but I have less direct experience with those. 

One artist to look out for in the music x web3 space? 

I will give you some low-key artists for that alpha. Lookout for an artist called Greydient from Songcamp and an artist called Julian Mudd who started Mudd DAO.

What are your thoughts on fan clubs structured as DAOs? 

DAOs as fan clubs are interesting, and I have been watching them play out well, as well as participating in them. I think it’s important to think about the secondary and tertiary effects of turning yourself into a DAO. What does it look like when you have a bunch of your fans directly holding tokens? What are their expectations? What does having all that financial interest do to the music? Are artists over-promising on things they can’t deliver in the future? What happens during a bear market? These are questions we should be asking ourselves, but we will not have the answers until we gather enough information to make sense of the data. 

If you had the chance to send one article/essay to convince a music creator to adopt web3, which one would you send them? 

Li Jin’s “The Passion Economy and the Future of Work” 

What’s coming up next? Anything you’d like to plug? 🙂

My duo KarmaVioletta’s first music video NFT for our single “Without You” is currently up for auction on Zora and also has a PartyBid. I have a music video coming out on Zora for my first single “WRLD.” I will also be releasing new music and videos as part of my “web3 experiments” while documenting my process.

Thank you so much for reading! If you want to get in touch, you can respond directly to this email or reach out on Twitter. Always excited to meet like-minded humans! 

Until next time,

— Yash

Thanks so much for subscribing, and please tell a few friends if you’d like! 

— Yash

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This is a three part series unpacking three fundamental promises made by web3—ownership, community, and legitimacy. You are reading Part 2. 

Web3 promises to revolutionize the music industry by enabling ownership, community and legitimacy. A few weeks ago, I wrote an essay largely focussing on ownership. This essay focuses on community. More specifically, web3-native communities aka DAOs, and what they entail for the music creator economy. 

DAOs, or Decentralized Autonomous Organizations, unlock  radically new ways to organize capital and human resources. Packy McCormick sums it up succinctly: 

“DAOs are a new way to finance projects, govern communities, and share value. Instead of a top-down hierarchical structure, they use Web3 technology and rapidly evolving governance and incentive systems to distribute decision-making authority and financial rewards. Typically, they do that by issuing tokens based on participation, contribution, and investment. Token holders then have the ability to submit proposals, vote, and share in the upside.” 

DAOs usher in a brand new era of the creator economy. In the Bankless podcast, Variant’s Li Jin framed four distinct chapters of the creator economy: 

• Chapter 1: The rise of social networks and user generated content which were primarily used for social interaction and communication. 

• Chapter 2: Certain users started gravitating towards other prominent users, who became socially  influential. These socially influential individuals (creators!) started converting their social capital to financial capital by advertising for brands — helping brands sell their products and services, giving rise to what we termed “influencer marketing” 

• Chapter 3: Creators realized that they don’t need to promote other brands and enterprises when they can become brands and entrepreneurs themselves. Why promote Starbucks when you can launch a coffee brand yourself? 

• Chapter 4: We are here today. Web3 is blurring the line separating creator (business) and fan (consumer). Structures such as DAOs align economic incentives in a way where the relationship between creators and fans  is no longer unidirectional — altruistic fans and enthusiastic consumers are now investors and stakeholders in their favorite creators' businesses. 

This new way of organizing capital and labour could latch onto existing practices in the music industry, leading to exciting derivatives:  

• A group of likeminded  artists forming a creative collective. 

• A group of curious researchers forming a research collective.  

• A group of fans coming together to finance a new project by their favorite artist. 

• A group of music-tech enthusiasts coming together to form their own streaming service.

Attentive readers would be quick to point out that fan clubs, artist collectives, record labels, and DSPs are all existing ways of organizing labour and capital in the music industry. But what would each of these organizations look like, if they are structured as DAOs? 

Let’s consider the following example: 

Let's say you’re really into this emerging techno artist from Berlin—criminally underrated in your opinion. Let’s say this artist has a DAO that she has set up, with a community token $TECH. 

You can get involved if you hold $TECH, and there are essentially three ways to do that: 

1. Participation — you are a proactive member of her Discord, participate in community events, share her songs, build hype on Twitter, etc. Participants earn fiat currency (USD) or $TECH based on their involvement.

2. Contribution — you contribute your skills to the project itself. This could be anything that furthers the project: if you’re a graphic designer you could help with designing a visual NFT, if you’re a promoter, you could help route a tour, if you’re a community manager, you could help with managing the Discord, etc. Again, contributors could be compensated in fiat currency (USD) and/or $TECH

3. Investment — you can pay the market price (let's say $5 in this case) to buy $TECH. 

Over the next few years, due to the work of financially incentivized participants and contributors, this artist gets a coveted spot in a respected showcase festival in Europe. Multiple playlist placements follow, stream counts grow, another successful EP released, and an American Tour announced. As the artist grows, their fanbase does as well, and demand for $TECH does too. 

$TECH token-holders are given cool perks depending on how much they hold. Some of them (majority token holders) can decide where that artist’s tour is routed, others get access to exclusive events, meet and greets, exclusive merch, etc. 

Okay, these perks are great, but can’t all of this just be done on good old Patreon? Well, yes. But I haven’t mentioned the best part yet. 

The value of the tokens themselves has appreciated, due to the increased demand from new fans. It is not a stretch to imagine it growing by 10x or even 100x. Your early participation, contribution and support can pay off exponentially.

If your favorite artist has a Patreon subscription priced at $10 per month. You have supported this artist for one year, which means you have spent $120 to support them over this time. This $120 is an expense for you, an altruistic act to support an artist you love. Great!

If this same artist sets up his business as a DAO, the $120 you spend could be a potential share in their creative business, which would (or won’t) appreciate over time. Yes, the $120 you invested could become $12 with time. But it could also become $12000. Not too bad for your early act of support.

Moreover, as fans, we could actually financially benefit from the “I knew them before they were big!” spiel that we (not so) subtly flex about. Through DAOs, supporting your favourite artist could be transformed from an expense to an investment. Early supporters = early investors.

Some of the most successful and culturally relevant DAOs today, like Friends With Benefits, started out with a token price of $5. Today, new members need to hold 75 $FWB to be a part of the community, with each $FWB priced at $88. 

This is one of many things DAOs can enable. Let us now look at more specific use cases. What does community-first, top-down music creation, distribution, and consumption look like? 

Community-powered Creation 

 Historically, labels have been a source of early capital for artists. They justified their lopsided and highly unfair contractual terms by claiming that they provided early capital to help fund the creation of music and get it heard globally.

Today however, creators have multiple ways to raise capital without labels—direct monetization on Patreon, regular crowdfunding, equity crowdfunding, etc. have all existed for a while, and even though every conference has a spiel about artists not needing labels anymore, the label model has still persisted. Why? 

This is because there exists a misleading narrative wherein labels are framed as solely capital providers. Actually, what labels do incredibly well is fuse capital with labour. Even though these new direct monetization methods solved the need for capital, artists lacked the resources to deploy this capital in an efficient way. It’s not just about the money. It’s also about how you use it. The major label model is successful because they use capital and leverage it through labour — extremely talented (and highly underpaid) individuals who use their domain specific expertise, coordination, and cooperation to ensure that a creator’s music gets heard across the world—whether that means fighting for shelf space pre-Napster, or a banner ad on the homepage post-Napster.

Let us now imagine a label structured as a DAO.

DAOs not only act as a source of capital, they also have embedded financial incentives that lead to coordination among members — fusing capital and incentivized labour to help music creators grow. DAOs tick both boxes.

The community collectively decides which projects to financially support. For example, the Dreams Never Die Records DAO is a record label that is aiming to “become an incubator for brand-new artists and aspiring music business talent alike, built around an incentivized and aligned community that participates in discovering, developing, distributing, and promoting the roster.” 

Participants and Contributors in the label will have a direct upside in the label’s success. Imagine every employee at UMG getting a financial upside in the label’s success. Overworked and underpaid employees as financial investors in Universal. The accumulation of wealth won’t be restricted to Vivendi executives and shareholders. 

For independent artists, their 1000 true fan community could be structured as DAOs that use a shared treasury to collectively hire managers, agents and other music business professionals to help develop the artist they’ve invested in. To reiterate, DAOs can be a source of capital AND labour. 

For example, Artists like Daniel Allan and Ibn Inglor have successfully crowdfunded their upcoming releases via Mirror. Daniel raised 49.3 ETH ($224,000) for his project, Overstimulated, and has subsequently released music on Catalog — funneling the proceeds back to his artist DAO treasury. 

Artists like Daniel have also set up token-gated Discord communities. Imagine a world with token-gated creative input — token holders in a specific artist, or early supporters, could be entitled to give creative input for their favorite artist’s next song. Like shareholders having a say in a company’s decisions. 

This type of crowdsourced creativity is already being enabled by the likes of SONGCAMP, a collective of music creators, which has hosted two cohort-based camps, where members of the community came together and created music. 

In fact, one of their camps, called Elektra, spun off of the initial project to form their own DAO, the ElektraDAO. The Elektra camp had an initial funding goal of 20 ETH, around $82,000. They ended up raising 41.05 ETH, or $169,000. The collective of 42 music creators, visual artists, developers and strategists are planning to use the funds to build Elektra: “an interactive choose-your-own-adventure web3 game with music at its core.” The project was backed by 145 backers, with the highest contribution coming in at 5.4 ETH made by Brett Shear, also known as BlockchainBrett. 

“As this project evolves, the lines between creator and audience will blur. Game builders will play the game they are building; and game players will build the game they are playing. The $ELEKTRA token will come to establish the contribution graph of this project, and once the camp is finished — the ElektraDAO will be born.”

Crowdsourced creativity can be baked into music creation tools themselves. Arpeggi Labs for example, is an on-chain music creation platform which acts as a browser-based DAW. Music created on Arpeggi can be minted on the Ethereum blockchain. 

Side Note: Crowdsourcing creativity may seem dystopian to a few artists, since it’s the ultimate manifestation of the capitalist ideal: the customer is always right. Mike Shinoda did this on legacy tech, when he live streamed himself creating his next album on Twitch, and accepted fan inputs on how it should be produced. 

Community-powered Distribution

If the creation of music becomes community-driven, the distribution of music will also be supercharged. Creation and ownership lead to evangelism. They are the most potent marketing forces in the music industry. Imagine the enthusiasm of a fan promoting a song that THEY helped create! 

Fan communities have always been a very powerful force in the music industry. Communities of enthusiastic early fans have supercharged careers. But historically, these early supporters have largely been unsung heroes. Beyond some degree of pithy recognition by the artist, they haven’t really benefited from sticking their cultural and social limb out there; for believing in the artist when nobody did. 

While we obsess about micro influencers and nano influencers to help promote an artist’s song — we forget that engaged, distributed fan communities are the most powerful influencers. Especially those fans who are financially invested in the song’s success. A DAO with 1000 true fans promoting a song that they are financially invested in is much more powerful than the most carefully orchestrated micro-influencer campaign. What web3 really does then, is not just acknowledge but also reward these early fan communities. 

Community-powered Consumption

The music industry may start resembling the videogame industry, as web3 augments ownership and community on top of music consumption. Currently though, we’re way behind the curve. Recently, Matthew Ball posted a fascinating chart comparing the historical revenue of the music industry versus the gaming industry. The difference is staggering. 

According to a16z’s Chris Dixon, the reason for this significant difference is that the video game industry has figured out an optimum balance between free offerings (that help with viral distribution) and paid offerings (that monetize that viral distribution). Most successful games such as Fortnite are free to play, but in-game goods and upgrades are paid. 

In the music industry’s web3 future, music creators will distribute on web2 and monetize on web3. Spotify, Apple Music, YouTube, and other DSPs enable universal, ubiquitous access to music, for free or $9.99. We’re too busy trying to extract money from these legacy models — debating about pennies — whether payouts should be 0.08 or 0.09 cents per stream. But trying to monetize legacy web2 models is futile. By augmenting an ownership and community layer on top of web2, web3 offers significantly better monetization to support music creators. 

Music creators should think of their Spotify Artist Page as their Google Business listing. It’s just a search tool that helps potential fans explore artists’ value propositions.  

Web3 native music services such as Audius, are helping layer community and fandom on top of consumption, recently implementing an engagement system built on Solana to gauge and potentially reward fan involvement. Audius currently has 6.5 million MAUs. 

Concluding Thoughts

Web3 and the communities it spawns will lead to the convergence of creation, distribution, and consumption. But I’d like to add a note of caution here, so as to not let ourselves be seduced by what Marshall Mcluhan used to call “rear-view mirror” thinking. 

When faced with a radically new and uncertain technology or future, we tend to seek comfort in looking at the new and unfamiliar as an extension of the old and familiar. The new medium is seen merely as an extension of the old one. Neil Postman famously wrote that “we tend to think a car is a faster horse and a light bulb is a powerful candle.” 

The creation, distribution, and consumption of music may look radically different in the future. This was my attempt to make sense of it all, with a pinch of skeuomorphism.

Thank you so much for reading! If you want to get in touch, you can respond directly to this email or reach out on Twitter. Always excited to meet like-minded humans! 

Until next time,

— Yash

Quick update before we start: I’ll be geeking out about music, tech, web3 for music creators, and more with David Čajčík + some other smart folks at Nouvelle Prague this Saturday! If you’re in Prague this weekend, come say hi! 👋🏻

As always, thanks so much for subscribing, and please tell a few friends if you’d like! 

— Yash

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This is a three part series unpacking three fundamental promises made by web3—ownership, community, and legitimacy. You are reading Part 1. 

Web3 promises to revolutionize the music industry by enabling ownership, community and legitimacy. This essay focuses on the first promise: ownership. More specifically, ownership of digital assets. For us in the music biz, that means — ownership of digital music.

Web3 as a paradigm and the innovation it spurs (NFTs for instance) are often touted as the shiny new tools that will spark the revival of ownership in the music industry. A product of the post-napster generation, I was always curious about what the music industry’s ownership era looked like, and why industry folks look back on it with such fond nostalgia. I found my answers in Steve Knopper’s Book: Appetite for Self-Destruction (yeah yeah I know!) which provides an in-depth account of the music industry’s heyday excesses. 

Here’s the TL;DR: In the music industry’s ownership era — fans bought vinyls, CDs, cassettes and mp3s, labels largely controlled the capital-intensive means of production, which made them flush with cash. Especially during the years 1986 to 1999, when CD sales were at an all time high. Post-napster, in the new digital millennium rife with piracy, music was heavily devalued, and industry revenues plummeted. Music came to be perceived as FREE on the internet, and labels wasted their time and remaining money trying to individually sue stoner kids living in their parents’ basement.  

After much pain and hardship, the likes of Spotify “saved” the music industry by ushering in what’s commonly known as the access era—almost every piece of music on earth can now be ubiquitously accessed, on demand. 

But this universal and ubiquitous access to music created another problem: it made the talent market universally accessible, and we all know how that goes: 

But now with web3, the music industry seems to have cycled back to a new version of an old age: talk to a crypto-pilled early adopter, and they’re sure to tell you that we’ve moved from ownership (CDs, cassettes, downloads) to access (streaming on Spotify, Apple Music, Deezer, etc) and back to ownership (NFTs, fractional ownership, etc.) NFTs admittedly offer a radical shift from the dog-eat-dog, numbers game the music industry is today — where success means virality, stream counts, and engagement rates. However, there is an inherent problem with the blanket assumption that ownership is seeing a resurgence. To put it in relative terms, the extent to which ownership is seeing  a come-back, is similar to the ‘revival’ of Vinyl. It’s fringe. It’s niche. And its proponents are hell bent to convince you otherwise. 

The central question is this — why would someone want to own a specific piece of music today if most of it is available on demand? 

In an illuminating essay called Why Own Anything, Sam Lessin outlined three reasons why individuals own anything: 

1. Financial Capital 

2. Social Capital 

3. Utility and/or Pleasure 

Let’s unpack each one of these within the context of music. 

Financial Capital

Individuals might be willing to pay money to own an asset today with the hope that it accrues value or be a source of future cash flows. Ditto Music’s Opulous for example, enables music creators to offer copyright-backed NFTs to their fans in exchange for: 

• Future royalty earnings (cash flow)

• Hope that value increases (future sale)

• Exclusive rewards: backstage passes, gig tickets, merchandise. (financial savings) 

Does a fan invest to support the artist? Does the fan invest in hopes of future financial returns? Fans and financial investors may have very different interests and NFTs weave those two groups together. Who someone decides to support financially may not necessarily be linked with whom they are a fan of. 

With my supporter hat on, I’d probably buy NFTs offered by artists I’m a fan of. Amazing folks such as Feng Suave and Sports Team. With my investor hat on, I’d probably think it's a better bet to invest in Adele, or Lorde, or Taylor Swift! 

And this is precisely what most music consumers might do. The large majority of music consumers will decide to invest in “blue-chip” artists rather than making more riskier investments in the obscure, experimental, and alternative acts they love. (but clearly don’t trust with their money!) 

This brings up an uncomfortable possibility: Yes, NFTs are framed as fans supporting the emerging middle class of music creators. But practically, will it just lead to upper class fans (i.e. those who have the means to pay) supporting upper class artists?  (i.e. those who are already on the favorable end of a highly skewed power law) 

Will the power law persist, stronger than ever? Just like the 1% of artists driving 90% of the streams today, will 1% of artists attract 90% of investments tomorrow? It’s possible. 

Liron Shapira summed it up pretty well: 

“Whether or not NFTs are in the picture, the hardest challenge for artists is how to compete in a market where the supply of songs far exceeds the supply of hours per listener per day.”

The good news however, is that all of this may not really matter. Streaming payouts are currently pro rata, which has made it a numbers game, and a zero sum one. There is one pie and everyone’s clawing for a piece. Web3 however, is inherently user-centric due to its decentralized structure. Each artist runs their own patisserie delivering their own pie, on their own terms, to their 1000 true fans. Heck it need not even be a pie, it could be a brownie for all I care! The point is, music creators are free, and not locked into any specific DSP. They can use this autocracy to directly connect with fans—nurturing and monetizing those relationships as they please. 

Moreover, fans can co-create value alongside the music creators they love! This is not some idealistic philosophy that web2 ‘artist-first’ companies love to spew. It makes logical sense: In the current music industry, value accrues towards the center of the network. The only way to increase the value of an IP asset i.e. music copyright, is to have it exploited by a central stakeholder with market control and domain specific expertise a.k.a Record Labels. Today, the Majors control huge swathes of the digital music supply chain, and have the capital and the human resources to make their music heard. 

Things are radically different on the other side, in a web3 world where fans own a piece of their favorite artist’s music. Micro invested fans, or fractional owners of music don’t have market control or expertise to increase the value of the asset they have a stake in. These fans may be able to provide financial capital to the artists they love, but can’t really provide business expertise. In a decentralized music industry however, this doesn’t matter either! Music creators will be able to seamlessly co-create with other music creators, and invested (token holding) fans will be able to directly connect with other fans. Value will accrue at the edges of the network, away from central intermediaries such as DSPs and social media platforms which act as powerful gatekeepers today.  

Bas Grasmayer wrote a fascinating essay about fan clubs structured as DAOs. He termed it the The Decentralized Autonomous “1,000 True Fan” Organisation. Imagine that as a part of an artist’s release strategy, they assign some percentage of their song’s copyright to their fan club (structured as a DAO), with future royalties flowing into the DAO’s treasury. Micro-invested fans could use that shared treasury to collectively hire managers, agents and other music business professionals to help develop the artist they’ve invested in. It’s also not a giant leap to envision a web3 native version of Hipgnosis structured as a DAO, facilitating portfolio management for micro investors. 

We also need to look at the past: platforms enabling fractional ownership in the copyright of a song have existed for a long time now. Equity crowdfunding platforms like Corite, Global Rockstar and Songbook have offered fans the ability to be fractional owners of music, but haven’t really picked up steam. This is because they equate fractional ownership in copyrights with retail investing in the stock market. To me however, ownership in music seems to be fueled more by fandom than by pure financial interest. Therefore, we need web3 networks that prioritize fan base development and community building features over features that promote financial returns.  

Rights Management—The Boring Elephant in the Room 

Even though NFTs offer a new way for fans to invest in music, how that money flows back to fans is still based on legacy technology. Multiple owners of a song’s copyright will only add to the already abysmal metadata problem that has plagued the industry since time immemorial. Payouts will inevitably be complicated for web3 networks to handle. Even for one conventional pop song, every single recording artist, songwriter, producer and invested fan will have to be onboarded to web3 before they get paid. In an interview for The Cadence, Philly based producer Yuri Beats spoke about his experience selling his publishing rights as an NFT through Royalty Exchange for $51,000.

“The fact that this was an NFT does not mean that the calculation of royalties is occurring on the blockchain. It's occurring manually behind the scenes. This is a step towards more on-chain components and accountability around royalty distribution.” 

Moreover, the music industry runs on opacity and is rife with NDAs. Technology that ushers in transparency is still limited by archaic contractual standards that may take a while to shake off. You can only be transparent about things you are legally permitted to disclose! (More on this in Part 3.) 

I see these as minor road bumps which will fall into place as more elements of the music supply chain are brought on-chain. Currently however, it’s like fitting brand new taps without changing the existing cloggy plumbing. 

Social Capital

Another main reason we own things is because doing so helps us play status games. In a previous essay, I wrote about the signalling embedded in the ownership of digital assets: 

“..NFTs are rarely about the content. They are about the community. Anybody who is willing (and able) to pay $475 to see a $69 million JPEG is probably worth meeting. The same can be said about some of the other hyped NFTs: Buying a pixelated CryptoPunk for upwards of 23 ETH (~$80,000) gives you access to a community of individuals who have the willingness and ability to pay the same. It’s expensive signalling, just like important execs taking private jets to meet clients (instead of just sending a Zoom link). We are social animals, and social signals are very important.”

But Sam points out a key difference between the ownership of physical assets versus digital assets. Owning a rare vinyl or piece of art is valuable because they are illiquid assets (for the most part). They are hard to acquire and cannot be easily traded. Digital assets in the cryptoverse are highly liquid. Anybody can go to OpenSea, Foundation or any other NFT marketplace and buy, sell, or trade these products. This reduces their perceived value, i.e. the social capital associated with owning them. What are the social conventions around the ownership of audio files as NFTs? Where can fans display them? And will anybody care? Only time will tell. 

One thing seems to be clear though—if everything is “ownable”, it will fundamentally change what we consider “ownership”

Moreover, the social hype and celebrity involvement around NFTs is directly tied to their financial value, exposing fan-investors to significant risks:

“As Water & Music reported previously, the music NFT market reached its peak just over six months ago — generating nearly $27 million in primary sales in a month, thanks largely to blockbuster campaigns from the likes of 3LAU, RAC, Steve Aoki and Diplo. Since then, primary sales have plummeted by over 95% to just around $1.5 million a month on average, with almost no celebrity drops in sight.” 

We often talk about NFTs letting fans empower the middle class of artists. But what about the upper class of celebrity artists affecting the middle class of fans? When fans also happen to be investors, there is an irrational increase in risk appetite, in what is largely an unregulated space. 

When social and financial forces are inextricably linked, it leads to many unique challenges. But let's take a moment to explore the (amazing!) opportunities: 

Fractional ownership could enable artists to deploy the most effective micro influencer campaign we’ve ever seen. Ownership in a song could lead to organic evangelism. As an emerging artist, offering your fans a portion of your song as something they can own and rightfully call theirs, opens up the most potent promotional method we’ve known since our gossipy hunter-gatherer days — word of mouth. Fans who literally own the song will be even more incentivized to promote it. 

Fractional ownership could even enable smarter promotional campaigns: Instead of paying an influencer marketing agency $10,000 to deploy 10 micro-influencers, you could offer each of those influencers a 1% share in the song you want them to promote. Their financial compensation could be tied to their actual performance instead of their existing social following! Creating engaging content and the results that content drives could all lead to higher equity in the song itself. Currently, many emerging creators who play an influential role in the virality of a song don’t have a financial upside in the song’s success. Fractional ownership could give these creators skin in the game. Emerging and enthusiastic creators would receive a better financial compensation (based on the streams that they drive for example) rather than a disinterested celebrity’s half-hearted post. And all of this could be potentially baked into a smart contract on the Ethereum blockchain. Exciting stuff indeed. 

Today however, these behaviours are still locked into centralized web2 platforms. Opulous, for example, states that “fans will not only receive royalty payments, but also unlock exclusive rewards (...) by sharing it on social media”. But its not clear whether these activity-based rewards are embedded into a smart contract. For instance, if I create a TikTok based on an artist’s latest single, and it leads to 25000 streams, will I therefore be entitled to 1 backstage pass? Currently, my success is still beholden to how TikTok’s FYP recommends my content, what Spotify considers an official stream, and Opulous’s own policies. ($OPUL holders are not vested with governance rights presently.) 

It's also important to note that which NFT gets owned and the social hype around them is still controlled by centralized web2 platforms such as Instagram, TikTok, etc. Web3 platforms struggle with discovery due to their decentralized, p2p structure. 

Side Note: Just because centralized web2 platforms control discovery doesn’t mean they understand how the cryptoverse works. TikTok recently tried to leverage its ability to aid discovery among its 1 billion MAUs to launch it’s own NFT collection, partnering with the likes of Lil Nas X and Bella Poarch. But recent investigation from the Rolling Stone suggests that Lil Nas X has pulled out of the campaign, and Bella Poarch is reconsidering her involvement as well. The currently unfolding fiasco just underscores how little web2 platforms understand the factors that drive ownership and community in the cryptoverse. 

Utility and/or Pleasure

We now come to the third and final reason why people own things. On the utility side of things, it is quite clear — owning an NFT of an audio file is not useful. You do not need to own an mp3 to listen to it, just like you don’t need to own a jpeg to see it. In terms of pleasure, it is a subjective realm and beauty lies in the eyes (ears?) of the beholder. Music is a great source of pleasure for us all, and the degree of pleasure we derive from it is hard to get into without attempting to define what art is—a lifelong pursuit for some. All this just to say: let’s skip this one for now! :) 

Concluding Thoughts

Until now, the unpleasant reality about the business of music was that what’s good for the consumer and what’s good for the creator were often located on opposite ends of the spectrum. Financially supporting music creators to help build a healthy middle class was in stark contrast to financially investing in music creators, hoping for the value of their copyright to increase. 

Web3 promises to change that. Creators and fans can “win” together. But a question worth asking is what does winning actually mean? Web3 blurs the line separating fans and investors—fundamentally changing the music industry as we know it. But when art and commerce become inextricably linked, it risks becoming entertainment. Let’s tread lightly.

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What I’m Listening To 

If You’ve Made It This Far.. 

You can make it all the way. 

What I’m Brewing — Attikan Estate from Blue Tokai Coffee Roasters 

Thank you so much for reading! If you want to get in touch, you can respond directly to this email or reach out on Twitter. Always excited to meet like-minded humans! 

Until next time,

— Yash

Thanks so much for subscribing, and please tell a few friends if you’d like! 

— Yash

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Quick note before we start: I’ll be offline for 2 weeks starting on the 20th of September to the 1st of October. The next issue of AfD will be published on the 5th of October!  

Epic Games versus Apple

Apple and Epic Games (the developer of Fortnite) have been embroiled in a long and highly publicised antitrust battle against Apple’s restrictive App Store policies. These policies not only affect app developers, but also creators who depend on those same apps.

Ever wondered why you can’t pay for a premium subscription directly through the Spotify app on your iPhone? Well, read on. 

A few months ago, I co-wrote an essay with Li Jin and Nathan Baschez about how Apple is Holding Back the Creator Economy: 

Apple is a product company. They famously obsess over details, and want every element of the user experience to be perfect. They require total control, because it allows them to use their taste to make choices that are frustrating at first for users (like removing the headphone jack) but then turn out later to be prescient and perhaps even courageous. There’s no question, they make the best products, and they extract a steep price for them.

But iOS is a platform. And the habits you acquire by being a good product company do not always help to run a platform effectively. Too much control, taste, and value extraction can break a platform. These three principles served iOS well in the early days when the platform was nascent and needed to be hand-nurtured. But now that the iPhone is ubiquitous, the App Store has become part of the basic infrastructure of the internet. And many of its policies around in-app purchases and tightly controlled App Store curation are not well-suited—and in fact harm—the broader ecosystem.

We’re not the first to critique Apple’s policies. But most debates about Apple center on the harm they cause to developers, and instead we think the far larger impact is on creators: the millions of people that could be earning more money and connecting with their fans.

Specifically, we take issue with:

• Requiring all payments for digital content to use Apple’s in-app purchase system (IAP)

• Their 30% take rate on IAP

• Their $999 price cap on IAP

• Too much intermediation of the relationship between buyers and sellers

• Restrictive, inconsistent norms on what kinds of apps are allowed in the store 

The creator economy has grown massively in the past few years, but what we see today is actually just a small slice of what the creator economy could be if Apple were not stymying its growth. Apple’s gatekeeper status is holding back the growth of the creator economy. Without Apple’s policy restrictions, there’s an entire universe of creators—including those who aren’t participating in the creator economy—that could flourish on iOS in ways we’ve never seen.”

Last week’s judgement might have changed that, but only slightly. Two main takeaways from the 185 page judgement were: 

1. Apple will now have to let companies include links and/or buttons that direct users to their own payment mechanisms independent of Apple’s infrastructure for in-app purchases. (where they take a 30% of all revenue) 

2. Apart from the above, the court ruled that Apple was not monopolistic, or acting in contravention of Antitrust laws. This means Epic Games has to pay Apple 30% of the $12.6 million that it collected from Fortnite’s iOS users. 

Adi Robertson from The Verge has a great tl;dr on Twitter:

Related Reading: 

• Insights: And The Walls Came Down On Apple's $100 Billion Garden—A Little Bit 

Old World, Meet New World—TikTok and MTV Introduce Trending: VMAs

• TikTok and MTV partnered to introduce Trending: VMAs, acknowledging the growing influence of TikTok on the music industry. They introduced 5 new categories: 

  • Best Artist x Creator Collab 

  • Best Viral Dance 

  • Best Audio Mashup  

  • Best Comeback Song

Best paired with:The Music Industry and Creator Economy Are Colliding: Analysing Addison Rae’s New Release

China’s New Laws Restrict the Monetization of  Fandom

• The Chinese government recently enacted a 10 point policy to limit “irrational star-chasing” effectively prohibiting the excessive commodification of fandom. 

• These laws are set to drastically affect the Chinese entertainment sector, which depends on the monetization of parasocial relationships. Tencent Music for example, derives two thirds of its revenue from in-app tipping, and other fandom related revenue streams. 

Best paired with: Mark Mulligan’s analysis on the oncoming fandom crisis in China. 

Weird (but unsurprising) Musonomics 

• Sleep Fruit Music, a company that releases 30 second ambient music (Rain sounds, for eg) to aid sleeping, is registering more streams than Lady Gaga. 

• Well played Sleep Fruit Music—but I can’t help thinking about what their success says about us: 

• The fact that we need digitally produced nature sounds to coax our monkey minds into sleeping is a sobering thought. (Although, it's hard to be self righteous as I write this listening to a Spotify playlist with Brown Noise) 

Why Buying a $475 Ticket to See a $69 Million JPEG is Worth It  

• In November, we can all witness the first authorized public projection of The First 5000 Days, a digital artwork created by Beeple, which was sold for $69 million earlier this year. 

• Tickets to view the JPEG will be sold as $475 NFTs. And it might just be worth the money. Why would someone pay $475 to view something that can be viewed online at this very moment? 

• Because NFTs are rarely about the content. They are about the community. Anybody who is willing (and able) to pay $475 to see a $69 million JPEG is probably worth meeting.

• The same can be said about some of the other hyped NFTs: Buying a pixelated CryptoPunk for upwards of 23 ETH (~$80,000) gives you access to a community of individuals who have the willingness and ability to pay the same. 

• It’s expensive signalling, just like important execs taking private jets to meet clients (instead of just sending a Zoom link). We are social animals, and signals are very important.  Intrigued? check out Rory Sutherland’s interview with Shane Parrish.

Twenty One Pilots are Hosting a Concert on Roblox 

• Warner Music is fully leveraging their investment (and consequent partnership) with Roblox, with an in-game concert for Twenty One Pilots. 

• I wrote about how Roblox is a potent promotional channel because it enables context-based consumption:

  “Roblox’s link to pop culture has set it up to be a powerful promotional channel for the music industry. ‘Dance Monkey’ is this year’s second most streamed song on Spotify.   Younger fans prefer entertainment as a non-linear, collaborative experience rather than a linear,  prescriptive imposition.  Let’s unpack this — A legacy promotional channel like Instagram uses a linear feed and campaign success is based on impressions and click-through rates. In a non-linear promotional channel like Roblox, the music consumption experience is a contextual one. And Roblox can potentially power infinite contexts. Instead of giving fans a glimpse of their work, artists can invite fans into their world.” 

Vox Media Acquired Hotpod

• Hotpod, a paid newsletter dissecting the growing podcast industry, has now been acquired by The Verge, a tech-focussed media property owned by Vox Media.

• Hotpod was founded in 2014 by Nick Quah, with a monthly $7 subscription for podcasting industry news and analysis. 

• The acquisition signals a growing interest from Vox Media to experiment with paid publishing models, says media analyst Mark Stenberg.

Kanye Crowdsourced Creativity for Donda via Discord

• Kanye’s producer Mike Dean used a popular Discord Server with Kanye’s fans, WestServerEver to test out different variations of upcoming music. Alex Hern from the Guardian figures out why; and what makes Discord such a potent tool for community building. 

LinkedIn Launches a $25 million Creator Fund

• LinkedIn, the not-so professional network with a very weird alternate universe (aka Hustle Pornhub) has now launched a $25 million creator fund. 

• The fund includes a $15,000 grant with a 10 week accelerator program that will help creators with coaching, networking, and features on LinkedIn marketing. 

David Dobrik Gets His Own Travel Show on Discovery+

• David Dobrik, a celebrity creator with 18.3 million YouTube subscribers, will be launching a 10-part travel series on Discovery+, set to air later this year. 

Canva Raises $200 million at a $40 billion valuation

• Canva, an Australian company that has made aesthetically impaired individuals such as myself seem like talented but inexperienced designers, recently raised a $200 million funding round, valuing the company at $40 billion. 

• The valuation really underscores the importance of democratizing creation. (not to be confused with creativity, which still needs to be honed!) 

Reading List 

1. Clive Davis at 89: Whitney Houston, NYC Show, and Why He Won't Retire | Amy X. Wang, Rolling Stone

2. Why Go to Live Shows? Music Tomorrow’s Report on 17 Factors of Attendance in the Live Industry |  Dmitry Pastukhov, Music Tomorrow 

3. Olivia Rodrigo, Paramore, and the murky tides of copyright infringement | Kirbie Johnson, Dazed

4. The Reality of NFT Royalties | The Cadence  

5. OpenSea CEO Says Era of ‘Pure Collectible NFTs’ Is Over | Kaya Yurieff, The Information

What I’m Listening To 

If You’ve Made It This Far.. 

You can make it all the way. 

What I’m Brewing — Sidama-Bensa de Etiopia from Tallat Coffee

Thank you so much for reading! If you want to get in touch, you can respond directly to this email or reach out on Twitter. Always excited to meet like-minded humans! 

Until next week,

— Yash