This should give everyone a better idea of what is being developed.
Bitshares Music
and
PeerTracks
Non-technical Paper
By Cédric Cobban
cedric@peertracks.com
August 16th, 2014
Abstract
Napster introduced people to peer to peer (P2P) file sharing. It sparked what changed the entertainment industry forever. Crypto-currencies such as Bitcoin have opened the door to an economic revolution in the information age as significant as the industrial revolution before it. BitShares Music is the first experiment in taking the ideas introduced by Bitcoin and Napster to the next level by issuing trust-free digital assets that have the potential to fluctuate in value with the sales of music, fund the artist and reward the buyer. In this paper we share the details of how BitShares Music can change the music world, affecting the majority of the online population rather than strictly the financial sector.
1.0 Background
BitShares Music does not seek to reinvent the wheel. It simply aims to take what is made possible with the advent of a blockchain (a decentralized public ledger) and apply this new technology to some already proven concepts.
1.1 Napster and P2P
Napster introduced many of us to the concept of P2P. It revolutionized the music industry, even its downfall led to the gradual decentralization of file sharing services like FastTrack, Donkey2000, and Bittorrent. File sharing is great for most, but it has left many content creators feeling short handed.
1.2 Pandora, 8tracks, Grooveshark, Last.fm and similar music APIs
Music APIs have proven that there is huge demand for music discovery playlists. Although most people's music libraries are enormous compared to just a few decades ago, choosing what to listen to can be quite a task and the shuffle option can sometimes be the worst DJ imaginable. More importantly, big personal playlists do not quench our thirst for something new to listen to.
1.3. iTunes and paying for music
The iTunes store has shown that people are willing to pay for music if it can be made convenient enough. People want a fast, easy and virus/trojan/malware free way to get ahold of an audio file. If these criteria are met and the price is low enough, many will find it worth while to hand over a small sum for the desired songs. Although those that lack the funds will, for self-interested reasons, have no choice but to take the time and go through the hassle of pirating a song.
1.4 Crowdfunding with Kickstarter
Crowdfunding websites have demonstrated the willingness of the people to support an idea or a cause without getting much (if anything) in return, as long as they know the funds are going to the desired cause.
1.5 Bitcoin, the DAC concept and publicity
Bitcoin is what some consider the first Decentralized Autonomous Company (DAC). Where the Bitcoin protocol is the company, each bitcoin is a share of that company and each bitcoin owner is a shareholder. Bitcoin has no marketing branch and yet Bitcoin got worldwide recognition in 2013. How is that? Well, every single "shareholder" was effectively a PR representative for Bitcoin. Every bitcoin owner had an economic incentive for it to catch on and be globally accepted. And it worked. Bitcoin is a great example of a DAC's grassroot publicity strategy.
1.6. Initial Public Offerings
Initial Public Offerings (IPOs) aren't new. They are a great way for a company to raise capital while getting exposure at the same time. Unfortunately, IPOs are a complicated and costly process only well established businesses can afford. There is a need for a simpler process which would be easily available to regular people which isn’t currently addressed.
2.1.0 Introduction to BitShares Music
BitShares Music, a slight variant of BitSharesX, is an experiment to test the economic theory behind a new kind of music market. It creates a decentralized exchange that uses a decentralized transaction ledger secured by DPOS (Delegated Proof Of Stake) to create fungible digital tokens that are tied to an artist’s profile. Like all DACs, BitShares Music has units that can be transferred between users in the same way bitcoins can. For the purpose of this paper, units in BitShares Music will be referred to as Notes and we will be using artistcoin, a token of a specific artist, as the example asset.
A musician using BitShares Music can create, say, 10000 artistcoins into existence. He can sell or give away the newly created artistcoins to his fans to fund his or her career. Every single artistcoin is recorded and kept track of in the ledger that is the BitShares Music blockchain.
2.2.0 PeerTracks
The first front end to use the BitShares Music technology will be the PeerTracks website. Allowing for a user friendly way for artists to harness the true power of their fans through incentivized, peer 2 peer, talent discovery. Hence, BitShares Music and PeerTracks are two separate, independent entities. PeerTracks uses the BitShares Music blockchain and adds value to the network just as Bitpay uses the Bitcoin blockchain and adds value to that. One does not own the other. If PeerTracks were to disappear, or get shut down, this would not affect the BitShares Music blockchain anymore than Bitcoin would be affected if Bitpay was shut down. It would go on as long as transactions are processed. Other front ends could pop up, whether it be websites, apps, desktop clients, etc. PeerTracks does not have a monopoly on who gets to be the front end for the blockchain. There could be dozens or hundreds of websites all bringing in value and volume to BitShares Music.
2.2.1 Music Retail website
PeerTracks will allow an artist to create a profile and upload his music song by song, album by album and set the price for each piece of audio. The flow of music goes directly from artist to fan and the flow of income goes directly from fan to artist. PeerTracks does not hold any funds.
2.2.2 Artistcoins
An artist can decide to create his own coin and start selling them to his fans to fund his career. The artist sets the price of his coin and sells it just as he would sell a baseball card. A limited edition digital token with his name and/or his face on it. These newly created, limited edition artistcoins are now distributed throughout the artist’s fanbase and himself. The income generated by his fans buying up the artistcoins will go straight to his wallet, directly funding his career just like kickstarter would. Only, as we will see below, this type of kickstarter is superior in many ways.
Every time a song is sold on PeerTracks.com, a certain % of that income goes into the market and buys up the lowest ask of that artistcoin, effectively cashing out the seller. That artistcoin is “burned” (taken out of circulation). This mechanism achieves the following:
pays the artist for his content
increases liquidity in that artistcoin (paying off the artistcoin seller)
increases demand in that artistcoin
reduces supply of that limited edition artistcoin
The last three points are what can cause a price increase in that artistcoin.
The more music an artist sells on PeerTracks, the more liquid his artistcoin is. Since every song sale is actually a buy order on the books.
If a user purchased a certain artist’s coin and the artist starts selling songs and albums on PeerTracks, that coin is now worth more than when it was purchased. It is in that user’s self-interest to share and promote this artist’s music in order to reap maximum benefit from the holding of that artistcoin. In other words, the fans are incentivized to generate more music sales for the artists they hold artistcoins of.
3.0 Incentives and advantages
The current economic model for buying music gives the listener two choices: one free, and one paying. People getting their music for free are the majority. People that pay for music do so for a variety of reasons but none of them involve self-interest. Our new model favours everyone's self-interests. Unlike the current one where artists hesitate before putting their music online for fear of file sharing / pirating, PeerTracks now makes it profitable for the artist to upload and share everything he has.
What Bitshares Music offers is to take the majority of people that normally just torrent music and turn them into music buyers. How so? By switching the incentives around. Buying music through the blockchain is now an action that promotes self-interest. If a user likes a song so much that he is willing to download it with the varying levels of hassle it entails (trojans / malware / viruses and the time required to find the files online), he most likely sees the value of that song. By buying an artistcoin of that artist, he is invested in the artist’s success. Every time the song is or purchased, the new artistcoin holder now sees the value of his portfolio rise and can cash out at any time.
A buyer can purchase an artistcoin, compensating the band in the process, for the sole reason that he will make money off it in the future. BitShares Music is harnessing the power of greed and putting it at the service of good.
As for people already paying for their music, they will keep doing so, but will now know that the funds are going directly to that artist and, to a smaller degree, those that helped that artist out (by sending them money for artistcoins).
3.1.0 The user
Apart from the obvious benefits of having a website generate quality playlists, the user's role is to make sure new talent gets recognized and rises to the top.
Buying an artistcoin is not a private donation done behind closed doors. The user contributes financially to the artist’s career and this is reflected publicly in the price of the specific artistcoin. Other users / listeners notice rising coin value, get curious and look into it by either listening or buying artistcoins themselves.
This is not pure charity either. You can see your artistcoins rise in value if the artist starts selling albums or gets their song played on one of the more popular playlists.
3.1.1 Freed market in music genres
Money can now go straight from the fan to the artist and the music from the artist directly to the fan, eliminating the need for a middleman. Talent is also discovered and shared peer-2-peer. This removes some of the influence big record labels have on picking who rises to the top. Those corporations often change a band to what they think will please the public. Trying to please the most amount of people at once, creating a bland, one size fits all type of music. Well this is the internet and BitShares Music now allows for the fans to decide what they like and want to hear before any corporate meddling. The artist can be as specific and niche orientated as the internet allows him to be. How many more genres would we have without the bottlenecking effect of the current system? How many artists gave up from lack of financial support because they thought what they did would never catch on and instead found another line of work? Had they had just a bit of financial support they would have refined their musical skills just little longer before giving it up.
Some bands also never get signed because they are offered horrible deals by the big record label companies. BitShares Music bypasses this inefficient way of getting talent to rise to the top.
3.1.2 Borderless careers
A user could spend hours looking for something new/good/genuine to listen to. This could now be a productive activity. The user could now make revenue from finding new talent and buying into their career before the masses do. Anyone with an internet connection, no matter what his country's economic situation, could generate income by finding talent early and in the process, helping it rise to the top.
3.2.0 The artist
The artist can be himself, no need to sell out to what a record label thinks would please the masses. He can now generate revenue immediately without signing with any company. All he would be doing is putting his music out there, and letting the internet see if they like it.
3.2.1 Global grassroots marketing
The band gets to have people doing the marketing for them, because of these new economic incentives. It no longer has to rely on friends and family to spread the word, and it can now have a varied fan base spread out across the world that thinks their music has potential. Those diverse fans have an economic incentive to share the band's music out to the world. When they do, the band gets more and more funds to pursue their career.
This is a win/win/win situation where the artist, wins, the fans win and the world wins by hearing new music that might have never broke out of the band's hometown or closed circle of Facebook friends.
3.2.2 Crowd-funding
PeerTracks replaces existing models of crowd-funding via sales of artistcoins. Only in this situation the contributors are not doing it as a donation but because they can profit from that purchase. The people who currently contribute to crowd-funding projects (like kickstarter and indigogo) will continue to do so, what this new system adds on top of that capital, are the funds of all the new contributors doing so for reasons of personal gain.
PeerTracks offers to outperform the existing crowd-funding competition and do it while cutting out the middlemen:
The fees taken by the services themselves (5% for Kickstarter)
Payment processing fees (3% to 5% + $0.20 per pledge for Kickstarter)
3.2.3 Token Controlled Access
Bands can even offer special treats to their artistcoin holders. For example a band could announce that anyone with over 100 of their coins can just show up at any of their concerts, as long as they have their balance on their smartphone for the bouncer to see before letting them in. Another example could be to grant the 10 largest coin holders access backstage to meet / hang out with the band or something as simple as "Artistcoin holders get a free t-shirt and a picture with the band". This process can be automated too. A user logging into his PeerTracks account might see different files available for download and at different prices on music, concert tickets and merchandise depending on how many of that artist’s coin he holds. Some artists might allow large coin holders to download anything they have for free, maybe even allow private messaging. Whatever the band decides really. It's a way to:
Show appreciation for the support
Make the value of the band's coin appreciate.
An artistcoin that goes up in value is great, but one that also comes with all kinds of perks can be worth way more to diehard fans. All at negligible cost to the band itself.
4.0 Room for growth
We are not talking about just propping up another music API website to simply compete with the current ones. We are proposing a system to revolutionize the way media is shared by the artist and the fans, which now has stake in the content as well. This has the potential to reshape industries and create thousands of DOGEcoin like ecosystems in the process. All residing on the BitShares Music blockchain.
4.1 Undercutting the competition
The PeerTracks website uses the BitShares Music blockchain as back-end. Using this new technology allows us to undercut the current music API models that must deal with credit card fees and any other overhead. Using PeerTracks, the income generated goes directly to the artist/label.
With the reduction of fees and middlemen, there is more wiggle room for prices to come down. Compared to other music retail options, the artist/label can either:
Sell at the same price as before but now actually receive all the income
Lower his price and still make the same amount per song. Although keep in mind lower prices can mean more sales. So in this scenario the artist ends up with more total income.
A combination of both. So he could still be cheaper on PeerTracks than most other sites and yet still make more per song.
That being said, PeerTracks will not be limited to new musicians that have not yet signed a record deal. It can also incorporate all existing music as well. The model still allows artists that are already signed under a record label to upload their music. A record company could create a profile with the name of one of their bands, upload all their songs and distribute the coins to the fans the way they see fit. The income generated by these coin sales would be split between the record label and the artist whichever way their original legal contract stipulates.
4.2 BitShares Media
Once the model proves successful, nothing would stop us from applying the concept to video, thus competing with YouTube, Vimeo, etc.
4.3 Grassroots marketing for crypto in general
Every band, every singer in every town (and every newsfeed!) from Vancouver to Buenos Aires to Moscow will be telling their fans to support them by jumping on PeerTracks or the BitShares Music blockchain directly. Thus introducing the masses to the world of crypto assets. This is grassroots advertising that can benefit BitShares, Bitcoin and all the others.
5.0 Revolutions
What popularized Peer-2-Peer networks was the arrival of Napster. Before Napster, only a select few knew what P2P stood for. Napster took the technology and applied it to a sector of the economy nearly everyone was involved in, music. Without even knowing what it was or how it worked, millions of people started using P2P technology. This is what educated the public and got them comfortable with the P2P concept. We believe BitShares Music and the PeerTracks is what can change the zeitgeist regarding crypto-currency, equity, accessible crowdfunding, etc.
PeerTracks is what will take Bitcoin, BitShares and the like, out of the specialized niche area of investors, economists, gold bugs, libertarians and cipher-punks and into the mainstream and everyday use. We aim to do for the crypto world what Napster did for the P2P world, bringing it to billions.
Topic: BitShares Music non-technical paper. Updated. (Read 23506 times)
