How decentralization dies: the killer concessions

MUSIC [1999–2008]

  1. THE PROBLEM (1999–2002)
    Major record labels did not make popular music available online
    • When they did, it spanned across multiple different sites and formats
    Napster, an application with a library of all music in mp3 format
    • Gnutella protocol (behind LimeWire), and derivations
    • BitTorrent
    Record labels agreeing to 99¢ music on the iTunes Music Store
    • Freemium licensing model behind Spotify

Attempt #1: pressplay

pressplay, an attempt by the music industry to gain back market share from Napster
The pressplay pricing model
  • Not every song was available for streaming, and among those that were, not all could be downloaded
  • You couldn’t burn more than two tracks from the same artist

Attempt #2: MusicNet

MusicNet, another attempt by the music industry to address the Napster protest

The Concessions Trickle In

A quote from Paul Vidnich, VP of Warner Music Group. iTunes would be the first legal, all-in-one competitor to Napster
The record labels made major concessions in dealing with Apple, on both digital rights management, and 99¢ pricing. From

The Spotify Concession

Unlimited streaming services pushed music piracy protests to the fringes of society
Daniel Ek, co-founder of Spotify, shifts the goalposts further by calling iTunes a worse UX than piracy. From,
“Daniel Ek profile: ‘Spotify will be worth tens of billions’”, the Telegraph (2010)

Effects of the Spoify concession

The Telegraph article, 2016

MOVIES [2000–2011]

  1. THE PROBLEM (2000–2011)
    Popular movies had an 11-year lifespan before becoming available for digital, subscription-based streaming
    • BitTorrent for downloading movies
    Starz licensing deal with Netflix for premiere content in 2008
    • Floodgates opening to more premium channels agreeing to licensing with Netflix, future competitors
In 2011, Netflix accounted for 22.2% of all U.S. broadband traffic, while BitTorrent accounted for 21.6%. During peak times, Netflix accounted for 30% of all traffic.

What does this mean for cryptocurrencies?

  1. Borderless transacting without intermediaries
  2. Ease of access to banking and capital (creating a private/public keypair rather than being beholden to a bank)
  3. Legal, digitized gambling
  • Censorship resistance
  • Anonymity in transactions

What are the “killer concessions” for cryptocurrencies?

  1. A trusted “globalcoin” like Libra, where nations cooperate to regulate a currency spanning borders.
  2. Nations digitizing their sovereign currencies on an interoperable (or single) blockchain, so people can easily transact with each currency.

Isn’t decentralization the point of cryptocurrencies?

Wrapping Up




Building something new! Bitcoin, security, mining. Former early @Gemini.

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Brandon Arvanaghi

Brandon Arvanaghi

Building something new! Bitcoin, security, mining. Former early @Gemini.

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