BitShares Music non-technical paper. Updated.

[xeroc]

Mppph [frustrated]  then they should go with "artist cards." Coin is not an intuitive term for DACs

If you wouldn't think about crypto coins and instead imaging a collectible coin such as

everything is fine

it's just not a "coin" in the "traditional" crypto coin sense

[carpet ride]

Can you please refer to artist coin as artist shares?  It would be many times more sensible

they can't .. for legal reasons if I recall correctly ... shares have a legal implication while "coins" are much like baseball collection cards (citing cob here )

if we it wasn't for regulations I would totally agree!

Mppph [frustrated]  then they should go with "artist cards." Coin is not an intuitive term for DACs


Sent from my iPhone using Tapatalk

[xeroc]

Can you please refer to artist coin as artist shares?  It would be many times more sensible

they can't .. for legal reasons if I recall correctly ... shares have a legal implication while "coins" are much like baseball collection cards (citing cob here )

if we it wasn't for regulations I would totally agree!

[carpet ride]

Can you please refer to artist coin as artist shares?  It would be many times more sensible


Sent from my iPhone using Tapatalk

[cob]

What determines the price of a song?

The artist.

What determines the price of an Iphone cover on ebay? The seller!
ebay has no say in how much a product sells for on their platform.

[cob]

As it is now  PeerTracks does not make any money for sales of the artist coin or songs. So the only way to make money it is to buy NOTES and hope to make enough profit to cover bandwidth cost and development. This model can't work, i.e  if a company in China want's to make  PeerTrackChina I will have 0 incentive to go all this trouble to build it. It is much easier to just buy the NOTES and make a profit and not bother with all trouble building the website bandwidth etc. Or even better they will clone Bitshare Music and they will lunch on a different chain.
So if we want Bitshares  Music to become the music DAC that everybody will use, then others company needs to have the incentive to build on top of it. I think the best way will be that each company should be able to set a percentage of the sales that is going as profit.

Agreed. Each company will set their own fee. Some companies might set their fee to 0% if they can cover costs some other way and attract more artists/users to their platform because of that low fee.
PeerTracks would like to be that 0% fee website right out the gates if possible.

..whether the Notes PeerTracks will hold will be enough to repay the bandwidth costs..  But you are saying that PeerTrack does't hold  any NOTES or funds ??

No PeerTracks will definitely have some Notes. But it's impossible to calculate just how much revenue those will generate. Maybe those Notes will cover costs, maybe not. If not, then we will have no choice but to charge a extra % for the service.

( If it's not enough then a fee will be charged for that) The fee that PeerTrack will charge will be coded in the front(PeerTrack website) or it will be integrated in the back end( Bitshare Music Dac) ?

It would be front end of course.
The backend fee is to ANYONE that has Notes. So any DAC "share"holders benefit from this fee. PeerTracks will be a Noteholder as well. Compared to most noteholders PeerTracks will have expenses, since as you said it's cheaper to just buy Notes and sit on them then to build a site.
In that sense it makes total sense for PeerTracks to charge a fee on top of this. But remember websites have other means of monetization. If having low (no) fees help PeerTracks draw traffic then we are good.
Facebook is free for example.

Basically. The plan is for PeerTracks to see if holding notes + traditional monetization are enough to cover costs and make a profit.
A front end fee can be added if need be.
Simple enough (:

One more think. Why you don't take a small fee that goes directly to Bisthares Music Foundation in that way there will a continuous flow of founds that will be use by the Foundation for the development and other project of the DAC, so there will be  less need to inflate the Notes supply. I.E. 80% goes to the artist, 17% goes to buy back, 2%  you burn that goes to Notes holders and 1% you don't burn you put in the Foundation account .

The foundation will loose it's power as the project goes from start-up to established DAC.
Foundation = centralization

Once the DAC is mature, it will be hard to justify dilution and the only way dilution could happen is if Noteholders vote for a delegate that can convince them there is a project/idea that would greatlly benefit the DAC's ecosystem.

So no, there will be no hardcoded fee going to the foundation. It will all be done through delegates.

[oco101]

So peertracks never handles any funds. We just see that BOB the user that has an account with PeerTracks paid Britney and we let him take the file. PeerTracks should have made up the cost of the bandwidth by the transaction fees (whether the Notes PeerTracks will hold will be enough to repay the bandwidth costs, we don't know yet. If it's not enough then a fee will be charged for that)

Cob, I think this raise a very interesting  question. There is one think that is not clear at all:  How PeerTracks makes money ?  In my opinion  the businesses model that  will be use  is essential to the future of Bitshare Music DAC.

As it is now  PeerTracks does not make any money for sales of the artist coin or songs. So the only way to make money it is to buy NOTES and hope to make enough profit to cover bandwidth cost and development. This model can't work, i.e  if a company in China want's to make  PeerTrackChina I will have 0 incentive to go all this trouble to build it. It is much easier to just buy the NOTES and make a profit and not bother with all trouble building the website bandwidth etc. Or even better they will clone Bitshare Music and they will lunch on a different chain.
So if we want Bitshares  Music to become the music DAC that everybody will use, then others company needs to have the incentive to build on top of it. I think the best way will be that each company should be able to set a percentage of the sales that is going as profit.

..whether the Notes PeerTracks will hold will be enough to repay the bandwidth costs..  But you are saying that PeerTrack does't hold  any NOTES or funds ??

( If it's not enough then a fee will be charged for that) The fee that PeerTrack will charge will be coded in the front(PeerTrack website) or it will be integrated in the back end( Bitshare Music Dac) ?


One more think. Why you don't take a small fee that goes directly to Bisthares Music Foundation in that way there will a continuous flow of founds that will be use by the Foundation for the development and other project of the DAC, so there will be  less need to inflate the Notes supply. I.E. 80% goes to the artist, 17% goes to buy back, 2%  you burn that goes to Notes holders and 1% you don't burn you put in the Foundation account .

[luckybit]

So the DAC will allow flexibility is amount of artistcoins issued, and the % of income going to artist and artistcoin holders.

Is that necessary? Why not just have all of the income go to the artistcoin holders and have the artist decide the percentage they get by holding on to the appropriate percentage of the artistcoin? So an artist can issue an artistcoin with some supply, keep 50% for themselves, sell the other 50% on the open market. Now when the income from the music sales buys the artistcoin, the artist should get 50% of the effective dividends from the buyback. To realize these gains as BitUSD, they simply sell the appropriate amount of artistcoins on the exchange (they sell only enough to maintain 50% ownership of the new reduced supply of artistcoins). Maybe they can even get away with paying long-term capital gains taxes on some of their earnings instead of income taxes if they can hold off selling some of the artistcoins for over a year (I don't really know for sure, I am not a tax attorney).

I second that. The knowledge that the artists will actually receive their income through the same artistic coins that the investors are buying will lead to much more interest by investors/sponsors and much higher price, than if they buy some artistcoin that will be producing some unclear returns and the artists' interest how big such returns are is pretty uncertain (and even potentially opposite if % of music sales goes to artistcoins' holders and the rest to him/her).

Well the artist will have some of his own coin as well.

So far, when a song sells for say 1BitUSD.
0.8 bitUSD could go to the artist's wallet paying him in a liquid form. Without him having to liquidate anything.
say 0.05BitUSD was the fee
And 0.15 BitUSD goes to the buy back mechanism.

I know you understand this already.
Now the thing to realize is that the artist might have kept say, 50% of the artistcoins. So he still has a stake in it's value.

As an analogy, we can look at the artist profile as a company.

You have income = 1 BitUSD
You then have 2 expenses
1. the 0.05 BitUSD in fees (service/network/bandwidth)
2. The artists salary 0.80 BitUSD

The "company" is left with 0.15 BitUSD of PROFIT

This profit is what is distributed to the "shareholders" (Artistcoin holders).

Now in a company, say Apple, Steve jobs has a CEO salary. A liquid form of weekly spendable income. But he also held shares in the company, incentivizing him to make the shares worth more and more.

This is the approach we are taking SO FAR.

I do like the simplicity of having 100% going to the coin, and nothing as an artist salary. I can see some band's cashing out and selling off all their coins accidently. There is no Undo button for that. The band basically just gave up 100% of stake in their own profile "company".

To introduce the non-trader world to this tech, we are taking baby steps. User experience first. That can change over time when people WANT to go into the "advanced settings"

What determines the price of a song?

[tonyk]

Is that necessary? Why not just have all of the income go to the artistcoin holders and have the artist decide the percentage they get by holding on to the appropriate percentage of the artistcoin? So an artist can issue an artistcoin with some supply, keep 50% for themselves, sell the other 50% on the open market. Now when the income from the music sales buys the artistcoin, the artist should get 50% of the effective dividends from the buyback. To realize these gains as BitUSD, they simply sell the appropriate amount of artistcoins on the exchange (they sell only enough to maintain 50% ownership of the new reduced supply of artistcoins). Maybe they can even get away with paying long-term capital gains taxes on some of their earnings instead of income taxes if they can hold off selling some of the artistcoins for over a year (I don't really know for sure, I am not a tax attorney).

We thought of that too. One thing we want to avoid is for artists to have to do anything manually. Artists and bands are solicited by a hundred different music websites that'll do X or Y for them. Having to learn the intricate details of each can be a big deal. We wanted a way for an artist to just put up his music, set his price, sell his coin. Go away! and collect BitUSD.

What you suggest is excellent in my opinion, but we might at first launch it with the pre determined split. Without the artist having to sell off some coins to cash out.

Are you trying to just destroy my wonderful day, cob, with this lame excuse?
If they do not have agents to do that part of the job for them I can set up a service to do it for them.... They will just have 'sold' all/part of their artist coins at the end of the day... no brain power extended on their part...

It is just as easy as " How much do you want for this song/album upfront? It is currently probably valued at 50K. Do you want $25,000 now and 50% of all sales or probably $12,500 now and probably (hopefully) 75% of 50 Mil sales?"

[cob]

So the DAC will allow flexibility is amount of artistcoins issued, and the % of income going to artist and artistcoin holders.

Is that necessary? Why not just have all of the income go to the artistcoin holders and have the artist decide the percentage they get by holding on to the appropriate percentage of the artistcoin? So an artist can issue an artistcoin with some supply, keep 50% for themselves, sell the other 50% on the open market. Now when the income from the music sales buys the artistcoin, the artist should get 50% of the effective dividends from the buyback. To realize these gains as BitUSD, they simply sell the appropriate amount of artistcoins on the exchange (they sell only enough to maintain 50% ownership of the new reduced supply of artistcoins). Maybe they can even get away with paying long-term capital gains taxes on some of their earnings instead of income taxes if they can hold off selling some of the artistcoins for over a year (I don't really know for sure, I am not a tax attorney).

I second that. The knowledge that the artists will actually receive their income through the same artistic coins that the investors are buying will lead to much more interest by investors/sponsors and much higher price, than if they buy some artistcoin that will be producing some unclear returns and the artists' interest how big such returns are is pretty uncertain (and even potentially opposite if % of music sales goes to artistcoins' holders and the rest to him/her).

Well the artist will have some of his own coin as well.

So far, when a song sells for say 1BitUSD.
0.8 bitUSD could go to the artist's wallet paying him in a liquid form. Without him having to liquidate anything.
say 0.05BitUSD was the fee
And 0.15 BitUSD goes to the buy back mechanism.

I know you understand this already.
Now the thing to realize is that the artist might have kept say, 50% of the artistcoins. So he still has a stake in it's value.

As an analogy, we can look at the artist profile as a company.

You have income = 1 BitUSD
You then have 2 expenses
1. the 0.05 BitUSD in fees (service/network/bandwidth)
2. The artists salary 0.80 BitUSD

The "company" is left with 0.15 BitUSD of PROFIT

This profit is what is distributed to the "shareholders" (Artistcoin holders).

Now in a company, say Apple, Steve jobs has a CEO salary. A liquid form of weekly spendable income. But he also held shares in the company, incentivizing him to make the shares worth more and more.

This is the approach we are taking SO FAR.

I do like the simplicity of having 100% going to the coin, and nothing as an artist salary. I can see some band's cashing out and selling off all their coins accidently. There is no Undo button for that. The band basically just gave up 100% of stake in their own profile "company".

To introduce the non-trader world to this tech, we are taking baby steps. User experience first. That can change over time when people WANT to go into the "advanced settings"

[cob]

Is that necessary? Why not just have all of the income go to the artistcoin holders and have the artist decide the percentage they get by holding on to the appropriate percentage of the artistcoin? So an artist can issue an artistcoin with some supply, keep 50% for themselves, sell the other 50% on the open market. Now when the income from the music sales buys the artistcoin, the artist should get 50% of the effective dividends from the buyback. To realize these gains as BitUSD, they simply sell the appropriate amount of artistcoins on the exchange (they sell only enough to maintain 50% ownership of the new reduced supply of artistcoins). Maybe they can even get away with paying long-term capital gains taxes on some of their earnings instead of income taxes if they can hold off selling some of the artistcoins for over a year (I don't really know for sure, I am not a tax attorney).

We thought of that too. One thing we want to avoid is for artists to have to do anything manually. Artists and bands are solicited by a hundred different music websites that'll do X or Y for them. Having to learn the intricate details of each can be a big deal. We wanted a way for an artist to just put up his music, set his price, sell his coin. Go away! and collect BitUSD.

What you suggest is excellent in my opinion, but we might at first launch it with the pre determined split. Without the artist having to sell off some coins to cash out.

By the way, you make a clear distinction between PeerTracks and the BitShares Music DAC, which is great. But I don't understand the mechanics of how the BitUSD to pay for the music and buy the artistcoin works. The whitepaper is not clear on this. The only reason people are paying money for the music download is because PeerTracks is providing the download in exchange for the money. Does the DAC itself provide a mechanism to set song prices and keep track of payments and license rights of those songs on the blockchain, which then PeerTracks monitors and gives the payer the download? Or does the music buyer pay the BitUSD to PeerTracks in exchange for the music download which PeerTracks then uses to buy up the appropriate artistcoin and pay the artist? If PeerTracks really is just a frontend to the DAC, shouldn't that mean that an artist should in theory be able to use the DAC (with other open source clients) to sell music to their fans directly without PeerTracks involved at all (even though this obviously will not be as convenient as using the PeerTracks interface)?

Good question Arhag. PeerTracks holds no funds.. ever. The blockchain takes care of everything. CUE THE MUSIC!  "Can't be stopped, can't be touched, can't be..."
sorry.
back now
When BOB sends 0.99 BitUSD to Britney Spears' Oops I did it again wallet, PeerTracks see that on the blockchain and allows BOB's PeerTracks account to download Oops_I_did_it_again.mp3 from the peertracks server.

So peertracks never handles any funds. We just see that BOB the user that has an account with PeerTracks paid Britney and we let him take the file. PeerTracks should have made up the cost of the bandwidth by the transaction fees (whether the Notes PeerTracks will hold will be enough to repay the bandwidth costs, we don't know yet. If it's not enough then a fee will be charged for that)

Are you increasing the fixed fee of BitUSD transfers for music purchases or is there a percentage fee as well? If you are able to distinguish between a regular BitUSD transfer between addresses and a music purchase with BitUSD (which I assume you have to be able to do in order to use a percentage of the BitUSD for music purchases to buy the appropriate artistcoins), then you have a lot of flexibility in how you charge fees. Keep fixed fee transfers of Notes, BitAssets, and user-issued assets (artistcoins) low just like BitShares X, but then add a small percentage fee (maybe 2%?) in addition to the tiny fixed transaction fee on music purchase transactions.

Once BitSharesX is done and is relatively "final". Then we will see just how much flexibility we have with this. For now, I can't answer since we are still unsure ourselves. Once BitSharesX is done and settled, we will have a better idea of what we can work with to charge a fee for song sales.

[tonyk]

So the DAC will allow flexibility is amount of artistcoins issued, and the % of income going to artist and artistcoin holders.

Is that necessary? Why not just have all of the income go to the artistcoin holders and have the artist decide the percentage they get by holding on to the appropriate percentage of the artistcoin? So an artist can issue an artistcoin with some supply, keep 50% for themselves, sell the other 50% on the open market. Now when the income from the music sales buys the artistcoin, the artist should get 50% of the effective dividends from the buyback. To realize these gains as BitUSD, they simply sell the appropriate amount of artistcoins on the exchange (they sell only enough to maintain 50% ownership of the new reduced supply of artistcoins). Maybe they can even get away with paying long-term capital gains taxes on some of their earnings instead of income taxes if they can hold off selling some of the artistcoins for over a year (I don't really know for sure, I am not a tax attorney).

I second that. The knowledge that the artists will actually receive their income through the same artistic coins that the investors are buying will lead to much more interest by investors/sponsors and much higher price, than if they buy some artistcoin that will be producing some unclear returns and the artists' interest how big such returns are is pretty uncertain (and even potentially opposite if % of music sales goes to artistcoins' holders and the rest to him/her).

[emski]

This is exemplary explanation of original and much-needed DAC. Good Job!

I'll just throw in some questions and ideas:
How will this be spoken in the words of law. Who will protect the artist(s) if someone uses their work without permission. Should everyone hire a lawyer? Can the lawyers be hired by blockchain under certain conditions (additional insurance for example)?


[Somewhat Unrelated]What I was thinking about as a possible use of current technology:
What if each license/song purchased are recorded in the blockchain with info of buyer (location, intended usage etc).
What if we have a free app that recognizes the song being played (similar to shazam, soundhound ) in the user's vicinity and check if it is registered on the blockchain and if the current location (Bar, Shop, ) has the right to use it.

[arhag]

So the DAC will allow flexibility is amount of artistcoins issued, and the % of income going to artist and artistcoin holders.

Is that necessary? Why not just have all of the income go to the artistcoin holders and have the artist decide the percentage they get by holding on to the appropriate percentage of the artistcoin? So an artist can issue an artistcoin with some supply, keep 50% for themselves, sell the other 50% on the open market. Now when the income from the music sales buys the artistcoin, the artist should get 50% of the effective dividends from the buyback. To realize these gains as BitUSD, they simply sell the appropriate amount of artistcoins on the exchange (they sell only enough to maintain 50% ownership of the new reduced supply of artistcoins). Maybe they can even get away with paying long-term capital gains taxes on some of their earnings instead of income taxes if they can hold off selling some of the artistcoins for over a year (I don't really know for sure, I am not a tax attorney).

By the way, you make a clear distinction between PeerTracks and the BitShares Music DAC, which is great. But I don't understand the mechanics of how the BitUSD to pay for the music and buy the artistcoin works. The whitepaper is not clear on this. The only reason people are paying money for the music download is because PeerTracks is providing the download in exchange for the money. Does the DAC itself provide a mechanism to set song prices and keep track of payments and license rights of those songs on the blockchain, which then PeerTracks monitors and gives the payer the download? Or does the music buyer pay the BitUSD to PeerTracks in exchange for the music download which PeerTracks then uses to buy up the appropriate artistcoin and pay the artist? If PeerTracks really is just a frontend to the DAC, shouldn't that mean that an artist should in theory be able to use the DAC (with other open source clients) to sell music to their fans directly without PeerTracks involved at all (even though this obviously will not be as convenient as using the PeerTracks interface)?

Imagine if someone issued 700 billion artistcoins and the buy back was 0.1% and some guy makes 4 artistcoins with a 50% buy back.
One will be in decimal world, the other in Zimbabwe land, one coin willl be worth 5 million BitUSD and the other 0.0007 pennies.

Just avoid this issue by denominating everything as a percentage of the share supply in the user interface.

Yes it is exactly like BitSharesX, only we are isolating a certain type of transaction and making that transaction fee higher.

We want everything to stay low cost of course, but the DAC must generate revenue on song sales.
This means that BitUSD transfers will be slightly more expensive.

So people trading around artistcoins (say 2 kids swaping coins in the school yard) should not be charged a big fee. This fee is cheap. But someone sending BitUSD from his wallet to an artist's wallet (upon song purchase) will see a higher transaction fee.
The goal is for the DAC to make money when music is sold basically.

Are you increasing the fixed fee of BitUSD transfers for music purchases or is there a percentage fee as well? If you are able to distinguish between a regular BitUSD transfer between addresses and a music purchase with BitUSD (which I assume you have to be able to do in order to use a percentage of the BitUSD for music purchases to buy the appropriate artistcoins), then you have a lot of flexibility in how you charge fees. Keep fixed fee transfers of Notes, BitAssets, and user-issued assets (artistcoins) low just like BitShares X, but then add a small percentage fee (maybe 2%?) in addition to the tiny fixed transaction fee on music purchase transactions.

[cob]

Your PTS will give you shares in this DAC, or do you mean something else?

Yes but how do the shares make money? In other words how does the DAC make a profit to pass on to the shareholders.

just read the first post in this thread.

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.

That describes how the artistcoin will make money not the DAC.
So will PTS holders be given 10% of all artistcoins? Or will the DAC charge a fee for creating an artistcoin?

Like BitSharesX the revenue streams for the Dac :

1) Transaction fees
2) bid/ask overlap
3) Asset creation
4) Shorting related fees
5) Feel like I'm missing some...

Yes it is exactly like BitSharesX, only we are isolating a certain type of transaction and making that transaction fee higher.

We want everything to stay low cost of course, but the DAC must generate revenue on song sales.
This means that BitUSD transfers will be slightly more expensive.

So people trading around artistcoins (say 2 kids swaping coins in the school yard) should not be charged a big fee. This fee is cheap. But someone sending BitUSD from his wallet to an artist's wallet (upon song purchase) will see a higher transaction fee.
The goal is for the DAC to make money when music is sold basically.