Peter Harris: Democratizing the Music Industry with the Streaming Music Cooperative Resonate (167)

Transcript

[Music] this episode of epicenter is brought to you by Jax Jax is a userfriendly wallet that works across all your devices and handles both Bitcoin and ether go to jx. and embrace the future of cryptocurrency [Music] wallets hello and welome welcome to epicenter the show which talks about the Technologies projects and startups during decentralization and the global cryptocurrency Revolution my name is Brian faan Crane and I'm Mah Roy today our focus is going to be on the music industry and

how blockchain technology could perhaps change some of the models in the music industry we are talking to Peter who is the founder of resonate which is a project that seeks to create a music streaming flat platform that is owned cooperatively by listeners and the artist themselves so before we start perhaps let's have a bit of background from from Peter Peter can you tell us a bit about your background and how you came to be interested in the music industry and blockchains so yeah my background is as a web developer since the 90s and I did a lot of projects for musicians um and I was also a h bedroom DJ and music producer so I I was often uploading

content to all the digital distribution platforms um you know sort of just like right after Napster hit so I kind of got this uh interesting perspective of working with a lot of clients who were in the uh who were very well off and very famous in the music industry um as well as upand cominging startup um musicians like you know garage bands and stuff and then my own experience of of trying to uh you know build a career online um with my music and so it was all of these kinds of different experiences that that had been percolating around for quite some time and then when the ethereum crowd sale happened in um summer 2014 it all kind of started to come back in gel and I

started to think about ah maybe this is the uh the solution that we've been looking for that's interesting so because when I was reading about resonate and going through it I was wondering whether this was something you kind of started independently of blockchain or and then later you discover blockchain and kind of said okay this makes sense to add this in here but it was the original inspiration for resonate and what made you say okay we can do this there's something here because of ethereum and because what you saw happening in the blockchain space yeah there was there's a direct thread um that that connects those things too and then what happened actually when I started um getting going on resonate is I hit this wall that I

think a lot of people did where we realized oh well actually you know the transaction speeds and throughput and all that of Bitcoin is is terrible you can't actually do anything and U you know beyond like currency um and so I kind of imagined that it maybe would come back later um but uh in uh 2016 I was doing lots of uh workshops and um speaking in events and stuff and so I had a lot of exposure to the uh Big Chain folks and that's when my perception started shifting like oh maybe this is actually possible to do now because the the big issue there you know to do anything music related on a blockchain is that you know if it's

anything other than like selling a track there's just such a massive amount of data um that that you know the the Bitcoin Paradigm just wasn't going to work um so their their technology um really seemed like the best way to go uh in terms of being able to really deal with the massive data sets that we would um create as well as you know transaction speeds and all that stuff cool well we're going to get into technology in a bit later and of course also we'll Link in the in the show notes to our episode we did with the big chainb guys as well or with Trend now the the big problem you're trying to solve here right is that you're trying to find the better way that musicians

make money and monetize uh their work so I'd be really curious if you could kind of run us through the history of of how historically musicians have monetized their work and how that has changed with different technologies that came along you know whether that was CDs peer-to-peer file sharing iTunes or you know most recently um the streaming platforms like Spotify and apple music yeah I mean this this could this one topic could easily fill an hour um because there's been such massive disruption uh across the board a lot of ways I think that the music industry is kind of a canary and the coal mine for digitalization and changes in technology

and how it's really just decimated um uh the the business and a lot of livelihoods in the process um while also liberating too it's been a strange kind of um dichotomy so you know it used to be that the the vast majority of recording happened through major record lab because it was so expensive uh you know and that so that was the kind of the big first wave that happened is that digital recording allowed people to break free of that so you didn't need to spend $50,000 to record an album you could have $5,000 worth of equipment in your house and make an album um now it's even less than that and so that was kind of the first

wave and then of course Napster um and and peer-to-peer um changed everything overnight and so that was sort of the where the the starting point for me was was that it was I was living in LA and had a lot of clients in the in the industry there and they were all kind of asking us like what's GNA happen next and it was really clear that the recording industry just didn't get it they didn't they thought they would be able to um put the genie back in the bottle so to speak that they could just you know throw a bunch of lawsuits out and it would all just go away um they just had no clue what what had happened and so that was this kind of obsessive question for me

was where is this going to go and so you mentioned the industry has gotten decimated does that mean it's become harder for musicians to make a living and make money today than it was in the past um well like I said there's that there's a strange sort of dichotomy around it because you know in in one sense it has created opportunities for people that are outside the system to self-produce and self-release self-distribute their work um but what's happened in that at that in that during that whole process is that the uh the consumer Trends and behaviors have changed so dramatically that it's become almost impossible to make a living just

from recorded music itself and if you look at the the numbers um and why this is one of the points we we try to make about the why the monthly subscription model is terrible is that if you if you look at it it's about as an independent artist this is not even on a label um your fans would have to stream a song on Spotify at least 150 times in order to equal the cost of a download so there was this brief period of time when um iTunes took off and we had digital downloads as the alternative like that here was the good alternative to um needing to go out and buy CDs but

then as consumer Behavior started to really dramatically change um there was this moment in which um there the uh the technology around streaming had also um gotten robust enough to be able to deliver a a product that could actually function really well but it seems that it my impression of it is that the industry kind of jumped onto it jumped onto that bang wagon because they were really desperate to find an alternative to piracy and Torrance and stuff and so they just kind of went for it and because they were going to get an own ownership stake in Spotify immediately and they had that that hope of an IPO

down the road um I think it seems like nobody really kind of looked at the business model and this the this notion that you have to listen to the same song 150 times um to to to equal the price of of a download is just it's a bad business model it doesn't it's almost impossible to make a living from recorded music or is what you're saying here the problem is that Spotify is just too cheap I think the it's it's yes and no because a a big part of the issue is that it's the all you can eat model um this notion that you can somehow fairly Rumer people when you've got some folks

that in a half hour a day and some people that have it on six hours a day and so there's these wildly different listening habits and but there's just you know it doesn't I don't think there's any way to reconcile the math to pay people fairly so that's that's part of the issue and then it's that like I said that the this notion that somehow just having access and occasionally listening um it's not really it's not really a Dependable income stream um because you have to you know you have to really get hardcore you have to convert people into hardcoree fans in order for it to to even get close to um the kind of money that you know artists

used to make off of physical Goods so uh you mentioned that you would need the users to stream a particular piece of music 150 times to make the same amount of money that you would make if if if there was a download so how do I interpret that statement that means suppose I sell a song Over download I might make a dollar and if I stream then I I need um then if one user streams then I make $1 divided by 150 on that on that song is it yeah approximately yeah I mean it the numbers are slightly different but it's

yeah it's basically that so Peter can can you tell us a story of how you started resonate so resonate kind of began out of a bigger issue of looking at uh the new decentralized technologies like ethereum and arts distribution because that was the the real Vision that I had of where the internet was going to go back in the 90s and I think that's what a lot of us that were around since then we really saw the possibility that the internet was going to create this new distribution um method but then what would happened is that we got all these silos right you know we got Amazon Facebook Google and apple kind of controlling most of the the traffic and

so when I had found out about the ethereum um campaign uh and looked into that I realized like oh wow maybe here's a technology that could help disrupt all of that and so I was very curious about uh looking at some ways of of combining like arts and creative and cultural distribution through a decentralized system like this and the initial ideas were like really much too large much too complicated and so I decided to focus on one one thing and kind of narrow down into something really specific and that was music because it was something I cared about and um had been a part of for most of my life so um yeah it's been an incredible

journey since then because I got to learn a tremendous amount about the way things the way the industry works and uh the way the technology works and I'm still very hopeful that uh this is going to lead us to kind of uh a whole new paradigm so in your website I read that you are pioneering this new streaming model that you call stream to own can you tell us what what that is and how it differs from the streaming models used in other places in the industry yeah so where that came about was um part of it was just like I I had a a burst of inspiration because I was listening to the same two albums on Spotify and realized that I was essentially renting

these albums and I knew what the per stream rates were so I knew that like they weren't really getting that much money and I was getting no closer to owning it and then if I still wanted to go out and buy the CD I'd have to then pay for the CD on top of already paying for the streaming and that's when it the inspiration struck um and so I immediately pulled out a calculator because I figured out out that like if you gradually come to own something the more that you listen to it you could probably break that down into an interesting pattern and I thought well gez maybe you could take a dollar and you know being a fan of The Beatles I went for number nine number nine number nine and just for the fun of it and

found that there was an interesting pattern that you could start at 0.2 and double it and it got just over a dollar and so that's that was kind of the uh the birth of the model and the more that I explored it I realized that there was there's something there's a few few things that are built into it one is that like I was talking about in terms of U the problems around uh the existing streaming model with a $10 subscription and the way that this money gets divied out based on different listening patterns is that you've get there's no consistent rate you know even Spotify quotes um on their own website that they pay 0.006 to

0.84 you know that there's this wild fluctuation in what their actual um rates are and so with stream to own one of the benefits you get of this is that it's it's a fixed rate you're paying based on where you are in that cycle and so there's no like fuzzy accounting math in terms of how that gets calculated so you get to lock those transactions into a blockchain so we can have an immutable Ledger that says that's what happened that's what was played and that's what gets paid um but then there's a kind of deep psych psychology around it as well and that was the thing that I felt like ever since Napster came along that I was kind of seeking myself

was what's what's the alternative in this this era um because we went from scarcity to abundance almost overnight and I I feel very lucky to be old enough to remember scarcity you know I remember like not being able to find music or that you'd have to have a certain you have to have certain friends that knew about bands and a lot of stuff traveled by word of mouth if you were going to listen to anything that wasn't on top 40 radio and so that we suddenly went from scarcity to abundance where you could get anything and I think the the key thing that was missing there was what's the real human process of

becoming a fan of something and I think that's what we with stream to own that's something that we achieve with this model because um when you're starting out and you're just in like the music Discovery phase you can listen to the same song four or five times it's you're paying less than a dime but there there's a moment when you become a fan of a work and you become a fan of that artist and that's when I think that for most people there's a recognition that like wow I really like what they're doing I want more of this I should probably give them some money and I don't think there's been a mechanism on any of the existing services that has done that there hasn't been anything

that allows you to easily and seamlessly go from just checking somebody out and seeing if you like it to wow I'm really a hardcore fan of this band and I want to support them financially because I want more music from them and I think that's something that we achieve with stream to own yeah I think that's a very interesting point so my my wife is a writer and I've had a I had a variety of discussions with her about the sort of you know pricing of books because that also seems to be something where uh it's just very inefficient right because usually if one prices something you try to uh somehow get people you know who value something more to pay a higher price right so Airlines try to get

people who you know have more money they uh you know want some more confidence stuff you know they get them to pay business class and then they pay a lot more right and and or you know in a in a football stadiums you know Sports you you have better seats and you know there's all kinds of differentiation but then if you have something like a book uh it could be somebody who's just by the airport and going to the kiosk to buy something quickly on the plane pays like then but somebody who's been waiting for the next book you know from that author for like two years since reading the last one and can't wait to have this thing pay the exact same amount right so that's something that's clearly inefficient because there's a lot of

value that's kind of left on the table and I can see something you know something similar here that maybe you're actually able to capture uh capture more value from people who you know really value uh that work yeah that's the idea we'll see how it works when we actually get it running still though there's an interesting question here I mean if you if as an artist I make more money um with the stream to own model I mean presumably that means that the listeners they end up paying more um I mean unless you think that resonate as a

platform will be much cheaper to operate uh than some like Spotify or existing platforms so do you think that the stream to own model because of that psychology described it will make people happy to pay more for music or is there something else that's going on here yeah I mean this's this is the one of the big questions that we get asked a lot about the model in terms of how it's going to actually um you know kind of work itself out when it's when it's live and it's out in the market and we've got some infog Graphics that show that um if you're an average listener and you're mostly listening to new music you can spend two to four dollars a month

listening to a thousand songs a month which is the the average um that's based on spotify's average and um it the real real question is going to be is how many people are going to go uh convert to like fans of specific artists during that phase and end up spending more because they go they like buy a couple of tracks and maybe that goes up to five or six or seven do so there's going to be a lot of gray area um certainly the heavy users I think could have um an issue and it could end up spending more but where that um might be uh okay is when you when you look at like the upper

end of the scale uh and those are the the people that spend um higher than average amounts on on music that are still going out buying um CDs or they'll buy they'll they'll stream something and then buy the downloads um they may represent the the folks that are uh at the higher end of the consumption pattern and that when we see like maybe more mainstream that they want to do something like um set a cap at five or six dollars a month and not go over it so there's going to be a lot of questions that we'll be kind of answering once we get it out and introduce it to to our our community and and start playing with it um but I do

think that it has a possibility to I mean certainly puts more puts the issues back out and says well you know here's a different model and this is about supporting artists so you can you can do that or you can go buy at the sweat shop and so we'll see how that plays out yeah yeah now let's Mo move on to the technical part how does what does resonate as a platform look like what kind of Technologies um you use and what's what's the overall architecture yeah so at the moment um streaming is pretty straightforward uh it's not you know there's there's nothing um really new or sexy about that

core functionality um where things do get very interesting though is is in the blockchain and for us that's going to be about a couple of different things one is the metadata is to be able to put um content into a blockchain so that that information could be used by other parties or could be um ported off into different apps or used by different startups or maybe it could goes to Shazam or Wikipedia or whatever um and so by having the metadata in the blockchain you've got a lot of benefits there for artists it's also like about securing copyright and stuff like that um and then the transaction actions like I mentioned before to be able to create

that immutable Ledger saying this is what was streamed on our platform and this is what gets paid for for it so um that's where things are interesting and I think also there's going to be something around um storage and distribution U there's definitely some hope that things like ipfs or storage or stor J I'm really not sure how they're officially pronounced Storage storage yeah um that they they could be an interesting um alternative that could like you mentioned you know really drive the cost down um storage certainly is advertising that that um they're gonna you know they're saying half the price of Amazon S3 and that could be a big

cost savings and I think it's really cool too that it's like it's kind of going back to torrent in a way and that you're you're seating files as listeners as fans um but you're doing it in an ethical way that's not about um you know stealing content um so we'll see I think it's going to take some time this year for that stuff to mature um but where it really gets interesting down the road is when we can fully evolve this into a dow and I that's what I seriously hope will um that it will evolve into that and that's why the The Cooperative business structure is is so important that I think we do have the the possibility that once once somebody actually figures out how to make a dow work

that we could apply that kind of technology to the community where where where it could really become self-sufficient and self-sustaining and and maybe not even really need an Administration um in a traditional sense yes I I can definitely see that right if one thinks of resonate as an organization that's owned by the artists and and where they can kind of vote on what happened and how and there's visibility on how uh payments get routed um and and usage gets tracked um but but I guess at the moment they would still be I mean payments would be I would sign up with a credit card uh it would go to

the cooperative and then you would how would that those payments go to the artist and is there a blockchain component in that definitely in terms of recording the transactions um if any artist wants to sign up um or link an account to like their Bitcoin account um we could do uh more instant more frequent payments that way um for sure but the majority people for a while are going to be on Fiat so um we'll have to do the normal things like you know do payouts at a at a certain amount like you say reach a $20 balance or something to be able to to to withdraw um just to deal with transaction costs but I mean I think even there I mean there's so many

startups coming on that I'm sure you know of like that are doing um stuff with with International currencies and trying to Route money more efficiently so that you know if we can get away from this three to 4% um search charges that happen um then we' be in in good shape to to be able to make that a bit more automatic but that's going to take a little time to develop you mentioned before that you guys went with big chainb can you run us through how you're using big chain DB and and what was the kind of what were the criteria that you used to make that choice so that decision kind of came about very organically um partly from just interacting with them uh being in berin

and and you know being at the same conferences and having lots of conversations with u their developers and you know Trent and Greg and stuff and um but I think there was also a lot of it came from seeing what else was going on in the space and you know they're certainly like the the most well-known project at the moment is benju hog. blockchain and it it just seemed like it was overly ambitious to try to do they're sort of doing everything all at once um from the very beginning and I thought that was a big problem or a big uh mistake because the the huge thing around content with blockchain of course is identity you know uh I often explain to

artists who don't really know too much about the way the stuff works I say that that you know um if you lose your keys to your Bitcoin wallet it's you're losing access to your money you know it's sort of like that if you lose your keys you don't just lose the ability to get back into your house um it's like your house disappears and what's even worse than that is that there's like a there's like a an automatic Beacon inside that house that's sending out transactions around the world so you you just you're never going to get back in you're never going to shut it down you know if you were to try to kind of look at the way Bitcoin functions when it comes to Identity and

try to Overlay that against dealing with content and and Licensing and payments and stuff you know it could be very very dangerous if uh musicians don't keep track of their their access so uh projects like dot blackchain um and others that were trying to solve that identity problem in the in the short term I thought that was kind of gonna create some problems because it's going to take take some time to get there so that immediately kind of set the the the tone to be like okay so if we strip that out what are we left with when we're left with is that we're going to have a massive amount of data because that's what streaming is going to do it's going to generate an incredible amount of data um and at the most

fundamental you need metadata you want to put metadata into a blockchain because that's the huge problem in the industry is that that there are multiple databases and they're often inconsistent and so by having a single point of truth that this is what you know identifies what a track is um you can solve a whole lot of problems with that um and you just kind of strip it down to that and so I you know was looking at that and thinking well what's out there that could do it it was really clear to me that the the really the two Alternatives were media chain or big chain and I think just being in Berlin you know it put me in regular contact with big chain folks so that's kind of where that that ended

up um then there was another step that occurred in that whole process and that in the evolution of uh that thinking was that they started to work with uh they were part of the koala IP working group and that um the koala IP thing is is tremendous in terms of really being the framework for dealing with music licensing and creative works and derivative works and all that so the fact that they're baking that into the the cor their Tech is is fundamental let's take a short break to talk about Jax Jax is a multi-coin wallet created by the people at the central now in the past if he had a whole bunch of cryptocurrencies it was a pain to handle them you either had to

leave them on an exchange which was insecure or you had to have all these different wallets which was a hassle fortunately now with Jack those medieval days of darkness misery and suffering are over Jack supports multiple cryptocurrencies and new ones are being added but it's not just storing cryptocurrencies you can do with Jacks but you can also exchange them directly from with inside the wallet thanks to their shapes shift integration and since there's only one seed Jax makes it super easy to back up and sync to the other devices Jax works with Windows Mac OS Linux Android iOS and has browser extensions for Firefox and chrome so go to ja.io that's

jx. to download the wallet and get started today we'd like to thank Jax for the supportive epicenter can you tell us what quala IP is yeah so quala IP is is essentially about linked content and um ownership and and rights and rights transfers and things like that when it comes to creative works and it's a schema that was developed out of the link content coalation um and it uh is is a perfect fit for the Arts because you know especially music because you've got um complex ownership structures you know in terms of like um who has rights in in different capacities and so that you

could create a system that recognizes those rights allows for transfers allows for licensing um and that that that framework is the uh that's the structure of what the qual IP is is all about is is a huge win for us to to have that um with big chain um because it's it gets to be incredibly incredibly complicated when you think about like producers and songwriters performers and engineers and and what have you um uh Publishers collection societies it just you know it's a there's a lot of people involved sometimes on a single song you know there can be 50 different entities in involved and that's what a lot of what

the coal IP solves is being able to create a a framework and a structure for um dealing with those ownership rights so in the in the past I think two years there there has been this this movement in the blockchain uh technology Community about um a attribute like solving attribution of content on the internet like who produced or who created what content and then B figure figuring out a way by which um yeah content creators could could be fairly compensated for their work and in the specifically in the music field like there there's a project called ujo music

that's trying to do something similar and uh we're wondering like what is exactly the difference between your approach and like what ujo music is trying to do yeah so ujo is very well known because they did the first prototype of music on a blockchain um the first really kind of project that got a lot of exposure I think um maybe peer tracks or bit tracks or something like that maybe those started first but um because zjo was able to use a song from image and Heap they got a lot of exposure and then they kind of did a made a pause and to take a look at you know how this was actually going to play out because the the ujo

experiment was kind of limited in the sense it was really just a consumer facing app um for you know making a a payment on a song with ether um but it wasn't about like infrastructure and I think where they're at now is looking at profiles and the identity part that I mentioned a minute ago and so I'm actually going to be talking to those guys later this week and hoping to see if we can um align our efforts to um you know to not be kind of both inventing the same wheel um and if they really focus on identity which makes a lot of sense because they've got you know consensus has U part um and that's a one of the main driving things

that consensus um then I think that their creation of an an artist um identity uh pod or or module or something if you will um could be tremendous and it could be beneficial to both resonate as well as lots of other uh players in the industry because that's like um that's the hardest thing the identity on the blockchain is just a mess and if they can solve that then I think um it could really be really be tremendous Peter um you know it it seems like resonate right is really about giving um content producers musicians a way to you know put out their tracks sell them directly monetize them and and

you know Make a Better Living out of that but one of the realities of the music business is that you have the traditional labels that have enormous power and uh and you know we're here in Berlin and in Berlin there is a startup that probably many know actually we use it with EP Center called SoundCloud and they have raised uh almost $200 million and and you know essentially to try to create a new uh you know way for artists to sell music and and yet um at this point they don't seem to be doing well right they don't have a business model the labels essentially would be able to sue them and shut them down so so how do you think about that do you

think that uh success for resonate will involve um onboarding labels or working with them to some extent or do you do you have more the stance that one just needs to build something completely separate completely apart and you know kind of start aesh well I think one of the key things that you said there was the lack of the business model and I think that was the thing that happened with SoundCloud and they you know they took they had a real similar trajectory to lots of other startups in the 2000s um which was that it was all about um creating an incredible product building up a user base and then figuring out the business model later um

and they were they weren't the only ones that that kind of had that trajectory and um they solved an amazing they solved a problem that in a really amazing way um in the mid-2000s you know because everybody needed and all the producers really needed a way to make a portable player and to be able to stick it anywhere on the web and so it was um a huge success because they solved a fundamental problem but you know there wasn't a unfortunately there wasn't a business model attached to it and you know a lot of the money came in said we'll figure it out later but then then Along Comes Spotify and

and and so then it seemed like um they had to sort of try to force that model onto their their community and and it's just not the right match in a lot of different ways so um I think that's we we've got uh um a lot of reasons to be optimistic that we are starting off from the very beginning with the distinct business model and we're also you know in some ways may not be entirely popular in the in the sense that like one of the big problems SoundCloud has had is that um is is over takedowns um because the way the community started off in the beginning

was that it was really popular for DJs to put up mixes um but the longer that that went went on the more uh problems they ran up against the Maj labels and then they started to have to build in all of these Technologies to do automatic takedowns which has been extremely contentious in the community um you know for resonate we're starting off with only allowing artists to upload completely original works not even cover songs in the beginning and that's to try to not repeat that same kind of process again it will be interesting to see like if if that um works for everybody I think certainly um some subcultures that

believe that you should just be able to do anything you want online with content um regardless of where it came from and so we'll see how that plays out if if uh if everyone's willing to kind of adopt this new model that's about ultimately it's about fairness um and making sure that that everyone that's involved you know gets their credit and gets their payment if if if they want it so hope that answered all of your questions sure sure today's magic word is cooperative that's c o o p r a t i b e head over to let's talk bitcoin.com to sign in into the magic word and claim your part of the listener

reward so one one more thing that I think differentiates resonance uh resonate is uh the Cooperative structure that you are pioneering right so can you give us just a brief walk through about what is this Cooperative structure and why you chose it so yeah I mean I think that the two sort of major influences that came into play when I came to that decision was looking at um the decentralized Tex of of blockchains itself um because as I often say decentralized technology without decentralized economy is ultimately meaningless um it's pointless to have one without the other and so when I was

just kind of brainstorming around that I thought wow actually the the closest business structure we've got to that is is the co-op model so that seemed to to make a lot of sense and then it was also just um that I've been around um with web startups and and sites for such a long time um it was on the periphery of a lot of stuff and had a startup previously here in berin and and so I've spent a lot of time looking at what's gone on what's happened and and I think the big problem with tech of course is that um you need money to develop and depending on where that money comes from the money that helps you develop is

often going to dictate how you operate um just to put it as simply as possible and so I wanted to to see you know if we're really going to do this and um make sure that it doesn't get corrupted like other services have in the past that the co-op structure was the way to go because it's about um Democratic ownership Democratic controls so it's gonna be really interesting to see how this kind of plays out um now that we're in dare I say it the Trump era I think this is going to become like the most if anybody's watching this is become like the most used

expression the screen the most used emoticon yeah so anyway what I meant by that was that we'll see if if if uh you know as as we kind of are are kind of confronted daily with this this um probably the most corrupt regime that's ever existed in the history of the human race um that if you know that really kind of drives some yearning for the alternative and and I believe that the co-op structure is the way to go yeah I mean I I the idea of a coop and and blockchain of course is not a new one I know there's been a few um a few projects a bunch of interest in that

one of them which we've had on ages ago years ago was a project called swarm uh with Jo Deeds so so they they were sort of a crowdfunding platform for um crypto projects and and one of the things they founded they funded was um a co-working space in Brooklyn that was sort of cryptocurrency driven and that was also organized as a Cooperative structure and I know this there's been a bunch of people sort of looking at that so I'm it's it's great to hear that you you know you're taking that forward because I agree I think it's a it's a it can be a very nice fit with a decentralized model and especially when it's about fairness uh and it has goals that are kind of different from just maximizing

revenues for the owners then this could be a really nice fit yeah so ju just briefly I mean with big chainb right uh there's still the question you know who runs the blockchain who operates the blockchain would would that be also members of the co-op or how is the control structure on the technical level organized I think it's going to take years years before we'd be in a position for members of the community to host um the the blockchain itself because I think the data sizes is going to be too large and you just look at Bitcoin um what what are they over what are they at

now 100 plus gigabyte um you know for the for the music world that's just you know music consumers it's just ridiculous and I think that there's a possibility that um the resonate blockchain when it comes to metadata and recording transactions and and content and everything else is going to be many many um times many exponentially larger we'll just say so um but I am confident that big chain has a good model through ipdb to you know start off with this uh Federated distribution model to to to reconcile that problem that you know we're talking about really massive data sets so not

everybody's going to be able to host that but let's look at um what kind of structure can be put into place that's going to make sure that it that it can't be corrupted in the same way that Bitcoin can't be corrupted and I think they've put a lot of thought into that and I'm very confident in the team there that um they're going to be able to guide that in the right direction um so I think it really is you know just time will tell I mean we we are talking about something that's very very bleeding edge yeah okay so you guys will be using ipdb which is sort of a public version of Big Chain DB um yeah that's also operated by a foundation U which is kind of like a

Cooper a little bit like a Cooperative yeah I mean at least it says that the that the ownership structure is is fixed and it can't be um diluted it can't be controlled or taken over and that's super important now you guys are running uh I think you call it a crowd owning compan although most probably would think of it as like a crowdfunding campaign or like you guys are raising money right so can you run us through what that looks like you know what you guys are raising money for and how you are going about it yeah so it's a crowd owning campaign because if you participate you become an owner um the minimum is five dollars or

five euros and that's the membership as a listener to the co-op um as a musician if you're supplying music to the con uh to the platform that that's what earns your share so musicians don't actually have to do that it's really just for listeners but then we have the possibility of um having investor shares or very very soon um maybe is when this podcast is live um that language is going to change to supporter shares because it's a it kind of fits a bit more with um what the co-op model is about um we can get into details about what that means but um yeah I mean the the notion that it's a crowd owning campaign is really kind of in a way it's

for marketing purposes you to kind of get people excited about it but um the reality is that there's no real end date to that at all because for the life of the project anybody can become a member and anyone can buy shares buy additional shares U because that's going to be an ongoing part of the way that the the the uh Cooperative will have to function so it's um it's a crowd campaign for kind of for marketing purposes but really this is a fundamentally different model which is about um the ability for the crowd to support a project that has um you know a long rout ahead and that um just has a completely different concept

behind it so it's not like pre-ordering a product that gets shipped six months to a year after you you know you put down your 30 bucks this is a bit a bit different and the exciting thing about this is that um it's coming to fruition rather fast um we started the campaign three months ago and we're very close to actually releasing something for our members it's a little bit under wraps as to what that is but um yeah we're we're pretty close to to putting something out so this this quad Cooperative model com combined with the crowd ownership and you said um in your website you say one person one vote

one share so does does does that mean like even you get like one vote for having come up with that idea and build the Cooperative in the first place yep that means I could be voted out of my job and I will walk away with nothing don't yeah this isn't this isn't like your normal startup where the founder has 100,000 chairs and and uh is Rich on paper um this is a totally different Paradigm tell me like how how you going to recruit developers to build uh build this Cooperative model so you might be

fine with that kind of arrangement where suppose I go to the website today and I put in $5 I have the same ownership stake in the Cooperative that you have and you have spent like let's say at least a year of your life doing this thing now now you're going around recruiting somebody else and you're asking them to put two or three years of their life building this thing um how are you going to incentivize them if those guys are going to get the same number of shares as I am and I just spent five minutes on the website the ownership share is mostly about voting and the ability to participate and we have have a a voting structure and a profit structure that's

very similar to uh most other worker consumer co-ops and how that breaks down is that we have a uh two kind of classes you you have the worker class and the consumer class consumers are the listeners the worker is two groups and that's the musicians who are supplying the content and the and the other one is the people who are building it so um if we hit a point where we get enough investment coming in to where people can go on salary um from the from the investor shares or supporter shares then the the people who have been volunteering and building the platform will then you know just have a job um but if we have more

of like a slow growth model where it's really based on volunteer effort then as uh workers in the platform they get to share in profit distributions and so we have a profit distribution block that goes um strictly to people that build it so it's not necessarily that your one share means that you can ever possibly make money um because through the through profit distributions um that option uh does does exist I'm still curious though how the economics here work exactly so let's let's assume that resonate is going to be huge success you guys you know let let's just say that through um 200,000 people become members so you guys raise

1 million or something like that through through those member uh member um the fee the membership fee and now it's going to and and you know somehow that's enough to build the platform right and now it's starting to make a lot of money uh I mean how does that then work do does that mean the member share could increase in value and now instead of it costing five euros it costs1 because you know the the the payout from the profits is is so high that the value of those shares is increased a lot or or how would that mechanics work here it's possible that

it'll change it a little bit but the the value of the member share isn't necessarily tied to the overall success and and profitability of the company and if you if you go to our site there's a section um of diagrams that shows some charts that explains um how the profit distributions work so uh in in your example of if we've got 200,000 members and and that reaches a million Revenue what that does is or not a million Revenue but um a million uh to to support the development that could Co cover most of our developer costs um and then allow us to to kind of have stabil stability as an organization to you know acquire more members and more Talent etc

etc um but the it's really in the profit distribution that the the value is then created and so if you go and take a look at the site and take a look at some of the charts you can see where how that all breaks down but um basically for let's say that we end up with a million in profit at the end of a particular year um it's 45 35 20 is the split so 45% of those profits um would be form 50,000 would be distributed among the musicians um 350 among the uh the uh the fans and then the rest going to the volunteer community that's building the system sorry my gold is like thrashing

my throat a little bit um and so we we split those up uh based on um consumption patterns and um so like if you're a huge artist and you're you've got like a million and downloads you're going to get a higher percentage of profits you know if you if you as a consumer you spend $200 a year you're going to get a higher percentage in dividends than someone who spends $10 a year and that's totally typical and normal among worker consumer co-ops um I was a member of One called REI in Seattle years ago I spent 800 bucks in the store and when I got my

distributions they gave me the option to either either cash out or go back to the store and spend spend that those earnings on something else and I think with resonate we'll see a lot of musicians or a lot of listeners rather that will will do that they'll they'll take their profits and in more streams and that's one of the great things about the the models that it kind of help recirculate some of those profits back into the the musicians um so I think it really remains to be seen kind of like what um what the consumption patterns are at that level of um users um and what the costs are I mean we've got a lot of projections

and and charts and graphs around you know how much is this going to take to operate and and all that but we won't really know until we're we're actually running so there's a lot of there's a lot of questions there but that's where it's really cool that it's a co-op is that if anyone wants to um take a look at the inner workings they can you know we're not going to be secretive like other Services out there that hide their contracts we're going to be open and transparent about everything that goes on here yeah um and so PE people want to get involved of course we link to uh to the crowd owning campaign to the others to other resources but is is there any any particular help or support or

involvement or type of people that you're looking for and that you're kind of wanting to join the effort well we're always in need of developers um at the moment we've we've been very very lucky to have um some folks that have been able to put in some um some time without salary um for quite quite a while um but we're you know always use Mor code support um there's a lot to lot to be done um of course spreading the word too is is really important just you know passing it on letting people know um for musicians getting them to sign up and create a profile and maybe upload a couple of tracks to uh to show a case um on on their on their profiles um Can can um

really help a lot so there are a lot of different ways to get involved there's a lot of info on the site about how you can do so and I think it really it's it's gonna kind of come down I think you know to kind of circle back to that whole political thing at the moment is that I think that um we may be at the cusp of a sea change in the way that folks look at things like this and and I think that's ultimately the the the the uh the answers to whether resonates going to succeed or not is If people really want a different world if they want a different model um because uh things are getting crazy out there as we see in the news every single

day now and um and I think that's what we're presenting is a different way forward so you know just by way of comparison Spotify spends $2 million a month on Advertising so um I don't know if a co-op model can compete against that um against the VC model but if you look at the fact that Spotify is essentially not in business to make money on on music they're in business to build a network and have an IPO um you just have to just have to ask yourself like who's benefiting from this you know are the people benefiting or a

handful of investors and some CEOs at some major labels so whether resonate succeeds in the long term I think is really going to depend on some of these kind of bigger broader societal issues U because it's all connected in a lot of ways about you know do we want to own the platforms that we use or do we want to just you know use the data mines the crap out of us and then um makes a handful of people insanely maddeningly Rich yeah I know I mean I think there's no question right that the whole monetizing of content or so many of those the internet infrastructure in a way has has become very centralized and

and different approaches are needed and I think uh music and content is is a great example of that that so I'm I'm really excited about what you're building and the kind of vision you're pursuing and I just wanted to point out because people maybe weren't you know just listening to this they they wouldn't be able to to be aware of that but the website is really fantastic and I think there's so much great blog posts and and background information and infographics there that's really uh exploring and explaining all of the different aspects of resonate so I was I was really impressed and I can really see that you know somebody has been thinking about this problem for years and somebody has been putting a lot of

work or you know people have been putting a lot of work into all different aspects I think that really shows and and uh so I think that would be very interesting for people to check that out yeah there's there's tens of thousands of hours involved in in where it's at at the moment um and a lot of people that have contributed to to making that happen and it's been really really inspiring to have started with uh an idea uh you know in its most raw form and to see it developed to this degree to see so many people respond to it we've got I don't know what the exact count is but over 850 musicians and over 120 labels um Indie labels um that have

signed up so U it's really exciting to to see the um the interest and um just hopefully we can keep it going yeah well thanks so much for coming on Peter uh yeah we'll we'll have of course links to lot that we talked about here uh in the show notes if people want to check that out you know they'll know where to go and yeah thanks so much thank you for having me so EP is part of the let Talk bitco network you can find this show and other shows on let's talk bitcoin.com and uh of course if you like the show and if you want to support us the best thing you could do is leave a review on one of those centralized platforms like like iTunes so that that helps new people find this

show so thanks so much and we look forward to being back next week [Music]