Decentralized Music

Transcript

uh Hey everybody thank you for coming to this talk my name is hatham I'm going to be talking about my experience building a music project in web3 I'm the co-founder and CEO of stems it's basically a music creation and collaboration platform powered by web3 my backgrounds in engineering I worked in Venture Capital startups in 2018 I did some open source code for Cosmos actually and then I'm pretty passionate about music so I like to rap and produce and sing for fun um so as many people here probably already know the music industry is a little bit flawed unfortunately musicians are not most musicians aren't uh living off their

music and I think there's three main reasons why the music industry is not efficient basically it's like poorly designed the mechanism doesn't reward the creators properly and it doesn't have good Discovery mechanisms the three main factors are so one most of the music you listen to is back catalog that is owned by three major labels uh Warner Universal and Sony they control 80 percent of the stuff you listen to on Spotify um and then there's insane competition for musicians if any people is anybody here a musician nice great so insane competition UH 60 000 tracks a day are uploaded on Spotify and only 0.2 percent of people on

Spotify make over minimum wage in the US and then a thing that we don't talk about enough is how the internet kind of somewhat destroyed uh the music industry in the sense that everything you had to pay for to like you had to get a disc or a cassette or vinyl before and then you could just get it for free if you appear to peer uh here you can see the the kind of evolution of music with various Technologies music Revenue um so in the period since the early 2000s and now the US GDP more than doubled whereas music Revenue basically is just about the same and you can see like after the 70s you have vinyls then you have the disc in the early 2000s the 1990s and early

2000s and then you see the effect of the internet uh completely destroying the music Revenue sales but there is hope uh you know like the ad supported and paid streaming uh monetization methods are starting to be pretty interesting uh even though Spotify gets a bad rap it did kind of innovate in the sense that before people used to listen to music and albums they used to buy vinyl CDs and like kind of listen to an album by an artist whereas now it's kind of playlist oriented which is and and you can you can have any song you want instantaneously which is one of the benefits of Digital streaming uh so what does that all have to do with with the web 3 basically by putting music uh like audio files that's

basically what music is audio files in nfts you can you can have interesting kind of attributes such as transparent royalty attribution so you know who owns the nft who created it when there's revenue generated by the nft you can attribute it properly um and then you have like composability so you can you can basically give the nft owners the nft creators specific Perks at a concert or on a different platform they can use the nft with another audio file or another video file and then you can kind of compose into a new nft and then the last thing which is I think is very cool is as an artist if you put an nft out and people buy it you have the wallet addresses of the people that

supported you so you have a direct kind of uh link to to these people most of the time like if you post your music on YouTube uh Spotify et cetera you get com people who comment you know who they are but you don't know who who kind of listen to your song you don't know who your top fans are on Spotify are um so yeah I think this is an interesting thing about nfts as well and so we focus on on stems which are basically uh individual instrument tracks for the people who aren't musicians in in the in the crowd it's gonna let Stromae show you the better can it be louder okay I have another have something else

planned so this is a stem player have you guys ever seen this anybody so this is something Kanye West like came up with and it kind of shows what's what stems are so each of these little bars here is one of the instrument tracks like drums bass vocals uh and Melody so if I play here I can kind of turn off a part of it you hear like different parts of the kind of the song coming together so that's kind of what a stem is each different individual stem track okay all right and so the reason we decided

to make stem nfts instead of song nfts is because I personally believe that for music to go to like for kind of a consumer product to grow in in the blockchain with music you need the music to be there already like I don't think people are going to listen to music that is on Spotify that they can get for ten dollars a month on other platforms because they're supporting the artist unfortunately that's not how human nature works so if you know by focusing on stem nfts we have the building blocks for music and the music is being created on chain so you have to go on chain to listen to it and then you can do stem level rights attribution and the original artist has kind of control over their whatever is made with the stem so imagine a 40 year

old Baseline is used again like you know 40 years later you can reward the people that that bought it they created it Etc um so we made this protocol basically that um that consists of dropping a song into it like the different pieces of it it stems as nfts and then we like the stems Labs the company incentivizes people to make music with these stem nfts and then the resulting music is basically a combination of stems from the drop and the new stems that the remixers make uh and then there's the original artist can actually approve the remixes they like on chain so it's kind of like a featuring mechanism on chain like let's say there's 50 remixes the original

person can pick which one they like and that's kind of uh public and transparent um so up until now this presentation has been we've been doing that with this presentation for for a few months um and that's like the kind of the theory of the protocol is very interesting Etc but in practice you know we've been building for about a year now and talking with a lot of artists uh you know the reality of it is like the protocols and the the things underneath are all interesting and like when they grow they make a lot of sense but initially you need people you need artists to use them so we've been focusing on on a platform that wraps around this protocol called stems.art kind of the same way uni swap Labs released the mobile app

for instance to to wrap the uni Squad protocol um yeah I think like that's the most interesting kind of topic nowadays as the person the formula is talking about like how do you make user-friendly things like Beyond web3 how do you kind of hide all the protocol stuff and make it very simple um so you know there are two two ways that you can grow the the network of a protocol uh in my opinion one is strong incentives so basically like proof of work for Bitcoin and ethereum it was like people were using Bitcoin ethereum because there was a financial reward for it in the case of these projects like you have audience and a bunch of other projects that did airdrops which is an

interesting mechanism that can use they can use that another way to make your kind of a base of users grow is just good UI ux like openc they first built a nice product that was very simple to use but like tens of millions of people into web3 and then they build a protocol so that's kind of the approach we have and you can see how early we are like there's 200 million ethereum addresses and then 600 million music streaming users is 2.3 billion people on Instagram every month uh so we're still very early and we need to focus on this kind of user adoption stuff unfortunately there's some challenges I don't know what's going on this slide um anyway so the there's obviously UI ux hurdles around wild signatures and

transactions uh I don't like who logged in using a wallet here whoever used the wallet here who never had a problem connecting with a wallet all right nobody so like basically basically like you know I use wallets every day I have multiple wallets it's a terrible ux it needs to be attracted away to not use users lose users the other thing you're not seeing in this slide is basically music nfts went into a kind of a bubble a year ago and then music nft sales plummeted basically there was no real use case for music nfcs my opinion is there was a lot of venture capital there was an Eco chamber that pushed the sales up but

there wasn't really an explanation Beyond just supporting the artist which is cool but like it's not really a consumer product use case I would say and then the other part of this slide that you're not seeing is uh like we're pitching to regular artists like people that have an audience that go on tours that have millions of streamers and when we come in and tell them crypto or nft they like they get scared away right away so we we actually try to keep it like very subtle we'll like use words like decentralized digital native Etc and you can see like this is across the industry like coinbase changed their logo They removed coin from coinbase it's pretty huge the biggest company in the space um

so some solutions that we've thought about basically like the philosophy is to think of blockchain like it's like your database technology so when you're building a startup you're not going to tell like the users like I'm building it with SQL and like you're asking them for their to like SSH into SQL or whatever like your focusing on the product there's some value to blockchain like to using blockchain for the user like they need to know that it's transparent they can use tools to see the stuff that is happening to their money so that yes that should be surfaced but beyond that I think it should be kind of toned down um so couples like very cool uh kind of guiding principles is to remove the

initial friction um so you can there's plenty of tools out there that allow you to allow users to sign up and log in using regular providers like Google Apple Instagram and then uh there's there's various models to generate wallet addresses for them so they don't even need to worry about like wallets they can just log in with Google uh the like these tools use different mechanisms like NPC is a mechanism that allows you to generate a wallet for somebody and not like but you you don't own the private key the private key is basically spread nobody owns it um so that's that's been huge a lot of products using that has been very big for us and then the other thing is simplifying transactions so there's many

ways to do this lens protocol that we're building on is uh has a dispatcher mechanism so basically you activate this thing and then you're basically telling them anything that uh like anything that I post is is validated it's signed I don't need to sign every time until you deactivate it so it's kind of like there's a little security risk but it's I think like most users won't really care about that uh there's also account attraction uh it's very new allows people to kind of interact with with their with portions of their wallet via Smart contract without directly kind of having to log in or anything there's also topping up your the user account with with the fiat currency so there's tools like on-ramper Crosman Etc

that allow you to let users pay for nfts with dollars with their credit card uh which make the whole thing very simple and I'll leave some time for for questions so I'm going to stop here this my info uh yeah yes good oh this might come as a little bit of a curveball but I don't know if you were in the previous talk but I assume a lot of the music you're talking about is like recorded stuff right recording recorded stuff like MP3s webs like recorded content well yeah I mean most most content is now in the form like

when you listen to on Spotify Etc it's like they say this I understand my question for you is what about live oh yeah that's like uh I mean uh like that yeah that's a whole different you know what about live with just regular web too right like never really made I mean there's Ticketmaster I think there's stuff with tickets that's what I say like we're not doing really doing that but like with tickets there's probably some interesting stuff I'd say I wanted to oops I wanted to ask what is Stan's meeting point with the user like are you about creating a streaming app for the stems produced composite of NF of stem nfts or is it

more like an online editor where me as a musician no even just as a thinker like a marketer I need original music and I can choose different stems from different creators create my pay and that gets divided so what is the final product that maybe you're aiming to if you want to disclose of course yeah it's a good question um you know I think it's kind of like a chicken and egg thing where you need music you need musicians to get users you need users for musicians to care about posting so we're focusing on producers and uh just you know building up uh like producer like it's a producer-centric product and platform we're on Discord also if you guys want to join the

Discord and see how it works basically like uh like we're learning from the community of producers to build a product that creates more music and then brings on more more musician music users basically great that's that's it for for me thank you thank you [Applause] [Music]