Musicoin Project White Paper V2.0
(Note: The white paper published here is an abridged edition of the full-length one at https://www.scribd.com/document/362834077/Musicoin-White-Paper-v2-0-0 )
“Without Music, Life Would Be a Mistake”, Friedrich Nietzsche
Musicoin is a decentralized platform that leverages the power of blockchain technology in empowering musicians to take full ownership of their content and finances. Our platform is built on a transparent Peer-to-Peer network powered by programmable smart contracts to enable fair remuneration for all musical content and services. Our long-term vision is to develop an open ecosystem where outside providers can build music related goods and services on top of the Musicoin platform.
The onset of the digital age in the 1980s allowed the likes of Napster to become a disruptive force in the recording industry. Peer-to-peer file sharing allowed people to pirate content online without legal implications. This caused a huge uproar amongst musicians because they were not compensated for their work, which ultimately forced the industry to adapt and embrace streaming technology in the early 2000s.
Figure 1. Musicians are completely disregarded from a Peer-to-Peer torrent model.
However, even with an unprecedented reduction in piracy and growth of the streaming market, the music industry is still facing the same problem. Musicians, especially the upcoming and the lesser-known ones, derive a paltry portion of the total revenue generated from their work because most of that revenue is consumed by intermediaries, the same entities who claim to represent their best interests. This problem is predominantly due to centralization, lack of transparency and an unsustainable business model.
Today, about 88.5% of the global music industry is largely dominated by three multinational record labels; Universal Music Group, Sony Music Entertainment, and Warner Music Group. With huge market monopoly, these record label companies are in a position to dictate market rules that are most favorable to them. Centralization of revenue and power among music producers and publishers has also led to egregious abuse of nascent centralized streaming platforms.
Moreover, the current revenue share model in the streaming music industry is unfair to all musicians and particularly detrimental to independent and aspiring musicians. In revenue share contracts between record labels and streaming companies, most of the revenue goes towards paying the intermediaries, and musicians are almost always left out of these discussions. This results in a royalty distribution scheme that heavily favors intermediaries, at the expense of the musicians, ultimately undervaluing the musician’s work and revenue (Figure 2).
Figure 2. Current legacy system pays musicians a small fraction of total revenue.
Lack of Transparency
With centralization of power in the hands of industry middlemen, the copyright and licensing contracts for most musicians have become complex, opaque and draconian. Artists, often with no legal background and without the means or the desire to hire lawyers, are not in a position to negotiate the terms of their contract. This creates a great degree of confusion, discontent and lost revenue. Although it is imminently possible to provide clear and concise contracts that are fair and easy to understand, industry intermediaries are reluctant to do so because the status quo benefits them immensely.
Unsustainable Business Model
The streaming companies like Pandora and Deezer have free-streaming tiers to promote platform adoption. Free streaming encourages growth in user-base and advertisements generate revenue. However, despite massive growth, their business model is unsustainable. One of the reasons behind this is the rising content acquisition costs. They are highly variable, and are mainly associated with the type of content and licensing agreements with record labels. The expenses from content acquisition costs incurred by streaming companies grew more than their revenues. And since intermediaries primarily decide the percentage of revenue share from streaming companies, any disagreement could result in both parties being embroiled in a protracted legal dispute. In some cases, a losing lawsuit could pressure streaming companies to increase monetized revenue sources to stay afloat, like paid-streaming tiers, which in turn diminishes user base.
Musicoin is the first platform in the cryptocurrency space that is unleashing the power of blockchain technology to heal the woes that afflicts the music industry. Our primary goal is to remove all middlemen and close the gap between the musician and the listener. In the process, Musicoin will abolish the pernicious problems plaguing today’s music industry as outlined in this paper, by decentralizing distribution and consumption of music, making musical contracts fair and automated, and paving the way for a self-sustaining business model. Musicoin, by fairly rewarding all participants on the platform, aspires to be the leading global ecosystem for goods and services built around music.
Peer-to-Peer (P2P) Decentralization
Musicoin leverages the power of blockchain technology to enable Peer-to-Peer (P2P) payments and data-storage in a fair, transparent and automatic fashion. Automated P2P payments enforced by smart contracts on the Musicoin blockchain enable fair and transparent distribution of value across all parties, from miners and project developers to musicians and listeners, without any need for third-party intermediaries.
Moreover, instead of using centralized servers, Musicoin is storing and distributing its content through a decentralized P2P file distribution system known as Inter-Planetary File System (IPFS). Smart contracts and content files on the blockchain are encrypted before and decrypted after its transmission to prevent unauthorized access and malicious activity. Metadata on our platform and user wallets can be stored and cached indefinitely. For faster transmission and reduced content delivery costs, we have also enabled syncing from multiple peers simultaneously.
Pay Per Play (PPP) Smart Contract
Our Pay Per Play (PPP) smart contract is designed exclusively with the interests of musicians in mind. All musicians on our platform retain full ownership of their content, and are rewarded fairly and automatically through autonomous smart contracts. It brings a new level of transparency and clarity to the music industry that is plagued by complex and obtuse licensing contracts. With our PPP smart contract to enforce and execute licensing terms, musicians can receive instant payments based on each playback. No intermediaries are required to facilitate payments other than the ledger of the Musicoin blockchain.
Figure 3. Musicoin’s Pay Per Play (PPP) Model of royalties distribution.
One of the advantage to a PPP smart contract is that it can execute immediate revenue split to several beneficiaries. For example (Figure 3), a PPP contract of a license for a four-person band can enforce a split payout of 45% to the main musician, 20% to the songwriters and producers, 10% to the guitarist and 25% to the drummer. The use of this contract allows us to avoid unnecessary costs in content acquisition by removing all middle-men involved and thereby distribute 100% of the earnings to the musicians.
Removal of intermediaries has allowed Musicoin to transfer most of the value generated from music to the musicians. Below is a comparison table of per stream payouts (in USD) among existing streaming platforms, including Musicoin (Figure 4). Musicoin does not distinguish between signed and unsigned artists and pays its musicians at a rate that is at least ~286% higher than its closest competitor, Spotify.
Figure 4. Per Stream Rates from existing streaming platforms in 2017.
Musicoin v2.0 Platform (Heal the World)
The PPP smart contract in Musicoin v1.0 (Hello) has helped in the tremendous growth of the platform in a short span of eight months and in building a thriving and passionate community of musicians and listeners. However, as the platform continues to advance its development and forge strategic partnerships within the music industry, the corresponding increase in the value of $MUSIC (native currency of the Musicoin platform) with respect to fiat created two problems, high music streaming costs for users and inconsistent payouts to musicians due to market volatility.
In order to allow the value of $MUSIC to grow with the growth of the platform and to provide our musicians with a stable income that is not influenced by the whims of the market, we will remove the constraint in our original PPP smart contact of 1 $MUSIC per playback in Musicoin v1.0 and enable fractional $MUSIC per playback in Musicoin v2.0 (Heal the World). This will enable sustainable economic growth in the value of $MUSIC with development of the project, and at the same time provide a fixed but fair revenue to artists for every play.
Universal Basic Income (UBI) Model
In Musicoin v2.0, we are introducing a revolutionary new concept in cryptocurrency, “Universal Basic Income (UBI)”. In this economic model, a UBI pool is created to secure musicians’ income from PPP on the platform, at a fixed rate that is fair, uninfluenced by market forces and higher than that of any other competing streaming platforms. This will boost the influx of content from musicians as well as make streaming music free for listeners, thereby ensuring deeper penetration of Musicoin into the streaming market. Unlike other streaming platforms, users on the Musicoin platform will be able to stream songs for free and without ads. Free and unlimited music streaming without ads is the critical feature that will distinguish Musicoin from centralized streaming platforms, allowing us to expand radically and capture a bigger share of the streaming market.
A small portion of the UBI pool will go towards further development of the platform (Figure 5), more details are outlined in the longer version of this white paper.
Figure 5. $MUSIC allocation pre and post-UBI implementation.
GUIDING PRINCIPLE: SHARISM
The concept of Sharism is a revolutionary philosophy that incorporates wisdom from the studies of Epistemology and Axiology. It emphasizes the importance of sharing knowledge and value within a community to create a positive social impact. This leads to shared ownership where value is distributed throughout the network through the contributions of everyone involved. In other words, everyone is valued and is necessary to Musicoin, the miners, the listeners, the developers, the outside providers and of course the musicians.
By 2018, Musicoin will incorporate the principles of Sharism to strengthen its existing network with a new consensus model known as Proof-of-Sharing. More information will be available in future versions of this white paper.
Musicoin ecosystem aligns with the underlying principle of Sharism. This ecosystem, also known as Musicoin Economy or Musiconomy, is built as an economic network that fosters the distribution of fair value to different participants based on their contribution in the network.
The value of Musiconomy begins with the content-creators, the musicians. The more the number of musicians and the more actively they release quality content on the network, the more listeners will be attracted to use the platform. More consumers will amount to more content consumption which will fuel the utility and value of $MUSIC. This will, in-turn, encourage more active participation in the network by musicians. This positive feedback loop will continue to power the value of $MUSIC while also benefiting other participants (miners, developers, third-party services) and incentivizing their continued participation in the network. Such a self-sustaining musical economy is precisely the kind of ecosystem that is promoted by our guiding principle of Sharism.
The Musicoin platform is a pioneer, paving the way for a paradigm shift in musical economy and technologies that power creation, distribution and consumption of music. It is an open ecosystem that welcomes external participation from start-ups in the music industry who are interested in building innovative technologies and services to generate new sources of value for both musicians and listeners. For example, hardware makers can create smart devices that can stream music from the Musicoin platform when you are home and mine $MUSIC when you are away. Moreover, the tremendous amount of metadata that is generated on the Musicoin blockchain will enable the creation of artificial intelligence systems that can assist listeners with smart music discovery based on variables like their search histories, personal mood, time of day et cetera.
The Musicoin team is committed to execute each milestone on its public roadmap and deliver consistent and on-time results. Moving forward, we will continue to maintain transparent communications with our community and provide them with additional channels to get up-to-date information about the latest developments in the project, including BitcoinTalk, GitHub and Reddit.
- $MUSIC Repertoire: https://musicoin.org
- BitcoinTalk: https://bitcointalk.org/index.php?topic=1776113.0
- GitHub: https://github.com/musicoin
- Reddit: https://www.reddit.com/r/musicoin
Moreover, the recently released public roadmap explains our objectives regarding future iterations of the Musicoin blockchain. We aim to continually make our blockchain more Stable, Sustainable, Secure, and Scalable (4S). Previous version of our white paper and roadmap are provided below. Our milestones for the next two years is available for viewing in the longer version of this white paper.
- White Paper v0.9.0: https://medium.com/@musicoin/musicoin-white-paper-free-creations-while-rewarding-creators-v-0-9-b14b334a8843
- $MUSIC Blockchain Roadmap: https://medium.com/@musicoin/roadmap-of-musicoin-blockchain-4a65620fefce