SoundCrowd: Tokenizing & Collectivizing Soundcloud

I’ve been thinking about this a lot since the recent, somewhat unsurprising, news of Soundcloud’s troubles.

My intention is to put these thoughts out there, but also to run a temperature check on how people respond to the idea of tokenization in musical communities in general. I’ll continue to add to the list of reasons I believe the initiative might be worthwhile as feedback rolls in from this initial gesture. I also bought soundcrowd.org if y’all want to amass a serious petition.

What are tokens, and what does tokenizing mean?

There are a great many articles far more erudite in their description of cryptocurrency tokens and their utility and application in culture and business. I will post a few of them below.

Tokenizing Soundcloud could happen in a number of ways. Soundcloud themselves could decide to tokenize, perhaps rewarding investors, artists and fans in accordance with their participation and investment with the platform thus far, and unlocking features that will allow for those tokens to grow in value and be spent throughout the platform.

Tokenizing Soundcloud could also mean that we, as artists, fans and organizations invested in independent music, collectively invest to buy out Soundcloud, and distribute ownership to everyone involved through token allocation, commensurate with each entity’s investment. In both possible models, tokens would work both as shares to be traded or used to participate in governance decisions, and also as cryptocurrency to be spent on the platform.

The prospect of a user buyout might sound outlandish to some, however we are at a point in the blockchain field where investors from the general public are regularly raising hundreds of millions of dollars for new services through ICOs. With a well enough organized plan, and enough brains behind the idea, it may be feasible.

In either scenario proposed, Soundcloud would functionally be collectivized amongst its users, and require a new governance model to ensure that token holders feel a tangible sense of investment and alignment with the future of the platform and its application to their art and business.

These tokens could be traded between holders, and their own value could fluctuate with the amount of value brought into the Soundcloud platform. This decentralization of power, and eventual decentralization of the service itself, would create a robust and unified ecosystem that may stimulate and negotiate even more activity and value around the platform over time.

Crypto Tokens: A Breakthrough in Open Network Design by Chris Dixon

ICOs for Dummies(like me) by Ouriel Ohayon

The Ego Badge: An Experiment in Tokenizing Social Capital by Ujo Music

A beginners Guide to Ethereum Tokens by Linda Xie

Tokens presentation by Simon de la Rouviere

By NASA [Public domain], via Wikimedia Commons

A Tokenized Scenario

For this I will borrow heavily from Trent McConaghy’s speculative model for tokenizing Facebook.

Soundcloud announces the launch of the Sound token ($SND). Investors and employees will see their equity reflected in tokens on the platform — so let’s say 1 billion $SND tokens are created to be distributed proportionally amongst existing stakeholders.

Now Soundcloud creates another 1 Billion $SND tokens, and distributes them amongst users. So now Soundcloud itself is 50% owned by it’s audience. Following Trent’s model, these tokens can be allocated for past contributions to the Soundcloud ecosystem, and also for future contributions, with tokens earned for contributing value to the platform, albeit in the form of music, new technical features or work in recruiting people to participate.

With this number of token hodlers, it is likely that the $SND token would make it’s way onto crypto exchanges, which in turn will invite more people to invest in the platform and thus grow the value of the tokens.

With this scenario in place, everyone who holds tokens has an incentive to think of ways to generate more activity on the platform.

For example, I have an idea for a better discovery mechanism on the Soundcloud platform. I will approach ten respected music journalists with significant Twitter followings, and create a magazine to discover new music only accessible to $SND token holders. For the sake of argument, accessing this magazine will cost 1 $SND per month, which is divided equally (via smart contract) between the writers and the artists whose music is featured. Experimental models like this could see existing music publications migrate their focus over to the platform, with their own novel ideas for monetization.

Another example: as an artist I can make certain pieces of music only accessible to $SND holders, or choose to participate in a stream-to-own model as proposed by Peter Harris at Resonate. As new optional functionalities begin to be added to the now open platform, I might be incentivized to begin selling subscriptions, merchandise, or tickets as I now have the ability to easily upsell or bundle offers in one distinct location.

This scenario is quite different to the current model, in which the experience of each artist is almost identical as determined by the designers at Soundcloud. Now there would be a marketplace of competing ideas and ideologies for how music is experienced, unified by a token that can be spent and divided in immeasurable configurations. This may enable a great deal of the activity around crowdfunding, micro-patronage, streaming and other aspects of creative industry migrate over to an open Soundcloud platform, not to mention give existing labels, record stores and radio stations greater latitude in utilizing the platform for their own idiosyncratic ends.

A continuously updating list of reasons to Tokenize Soundcloud (Last update July 27)

Image NASA

1.The future of music needs a unified lobby of artists, audience and the organizations that connect them

If artists and fans feel ownership and responsibility for the future of one platform, it will create a unified lobby for negotiation with the legacy music industry. The old music industry wields a significant amount of power through their control of valuable old recording catalogue, and as things stand, their collaboration (or threats of legal action) can make or break a platform. They feel a sense of comfort with this predicament, under the assumption that the user base will continue to follow their catalogue to the platform that reflects their interests best. The current uncertainty around the future of music only serves to benefit this incumbent faction.

What if that user base was steadfastly fixed to their own platform? If we could build a unified lobby of artists and fans, we would hold a much stronger hand in negotiation, and consequently may see more favorable deals negotiated in the use of sampled material and other roadblocks prior platforms have experienced. Legacy industry need association with emergent artists to maintain relevancy — in the case of tokenization and a unified lobby, they would be incentivized to either negotiate reasonably with this emergent community, or let their old catalogue languish elsewhere as we build the future of music together. It is one thing to play hardball with a few founders, it’s quite another to assume the same tactic with hundreds of millions of passionate and informed artists and fans (i.e their audience).

By NASA/Kim Shiflett [Public domain], via Wikimedia Commons

2. It will open up the platform for innovation and new interactions

At the moment, new feature decisions for platforms like Soundcloud are determined by a very small group of people behind closed doors, and are just as readily informed by concerns about profitability than utility for the medium and experience of artists. The longer they remain unprofitable, the more this balance swings towards the profitability question.

With distributed ownership, we can collectively choose to open up the Soundcloud platform, allow factions within the community to hack away their own features, and experiment with new modes of experience and value transaction, abstracting from the core protocol and making a healthier and more diverse ecosystem.

Every artist or label has ideas about how they could better engage with their public, but they do not currently have a say in the design of platforms. Worse still, currently artists and labels are one executive design decision away from having their strategies ruined.

I would wager that there are thousands of people out there who hold clues as to how to make music better, and more sustainable and equitable for artists, labels and other stakeholders alike. Opening up the biggest platform for sound in the world, and providing testing ground for those ideas, may very well transform the space.

By heb@Wikimedia Commons (mail) (Own work) [CC BY-SA 2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons

3. It may pioneer a new era of community ownership, an epochal shift

Web 2.0 created monolithic monopolies of centralized platforms. These unicorns have leapfrogged competition to dominate their fields, and wield a troubling amount of power over how we interact with each other and our ability to do business. Many of these companies, such as Soundcloud, Twitter, Spotify, and Uber have yet to turn a real profit — and there is a real concern that the benefits that they have provided the community in order to capture such impressive market share will soon be whittled away as they get more and more desperate to meet investor demands.

If we tokenize Soundcloud, and transfer its governance to a network of token holders, it will represent the first of many seismic shifts towards collective ownership, and an historic victory for the decentralized cryptocurrency space over the prevalent, advertising driven, era of the web.

The field of music has long served as harbinger for greater cultural shifts, and a paragon for ideals of unity and collectivity. Ushering in this new era would be an epic accomplishment, and other fields may follow suit.

4. It’s a pragmatic way to convert a loss into a win

Everyone stands to lose financially if Soundcloud goes under or is diluted into a platform with compromised motives. Soundcloud’s unique value is in it’s independence and credibility with creators.

Artists and fans who have fallen in love with the platform will have to start again elsewhere, and attempt to reconstruct their presence and strategy, which could take years to figure out. Conversely, if artists and fans invest to support the tokenization of the platform, this network of 200 million people with no business model will immediately transform into a market of 200 million people who hold something of value (tokens), and who are incentivized to bring more value and energy to the network.

The same applies for Soundcloud’s investors, who will serve to lose a great deal if the platform goes under, or is sold cheaply to a competitor in order to cover costs. Investors will instead now hold tradable tokens in the first great conversion of the blockchain era, and will themselves be incentivized to experiment and contribute with the direction of this new community.

Image David Spencer

5. Music needs a hard reset and renewed optimism

I’m going to write another piece soon on why I believe that the decentralized blockchain/crypto asset space holds the potential to facilitate a renaissance for independent music and the arts. For now I’ll just keep it brief.

The top 1% of musicians now make ~77% of revenue in music. Many factions of the independent musical infrastructure have become closer and closer aligned with corporate interests and advertising supported journalistic models in order to keep their head just slightly above water, and are in danger of losing their distinction and identity as a result. Unless we construct an intervention, this curve towards the commercially viable and mediocre templates of the bland, centralized, content warehouses ultimately threatens to displace the role of music as the preeminent critical space of psychedelic possibility, experimentation and collective desire.

Paraphrasing the great, late, Mark Fisher , there was a time in which the music industry served the purpose of inspiring people to believe that anything was possible.

“Ideology is a form of dreaming in which we live… the Psychedelic consciousness of the 60s and 70s expanded far beyond the usage of drugs. This was led by people like the Beatles. Nothing had been more famous than the Beatles up until that point. Nothing. So you have a popular modernist culture with something like the Beatles, who trained people to expect things to get more and more experimental the more popular they got. What they mainstreamed was a psychedelic consciousness with its key notion of the plasticity of reality.”

Popular didn’t used to mean boring or safe. Music that is valued because it means something to it’s audience, rather than because it makes money for its publishers, might regain the power to change how people see the world and what they imagine is possible.

An alignment of interests and desires precipitated by collective ownership could be just the opportunity to set a new course for the medium. Artists and audiences could begin to think big again. If we could accomplish this, what else might we be able to do, together?

Image http://www.kadena.af.mil/News/Article-Display/Article/418162/aircrew-brushes-up-on-water-survival-training/

6. The cryptocurrency space would benefit from this opportunity

Outside of innovations in transferring digital assets and raising currency for new projects, the success stories of cryptocurrencies being used by anyone but a small faction of devotees are few and far between. As a result, there is a very real danger that blockchain developers are building the perfect systems for nobody in particular. Elaborate, but empty, districts, that work in theory, however never see mass adoption.

A platform like Soundcloud represents a perfect, relatively low risk, sandbox for experiments in cryptocurrency and tokenization. It would represent a way for beginners in the space to receive some tokens, and play around with them in order to familiarize themselves with this new logic of value exchange and growth.

Many new projects in the blockchain space have raised hundreds of millions of dollars through ICOs with nothing more than a mission statement and healthy dose of optimism about how readily the general public will adopt to the crypto space. If we were to tokenize Soundcloud, we could plan such projects with far more insight by studying how people adapt to tokenized exchange from day one, and also invite far more informed critique and feedback into the space from millions of users who have some rudimentary experience of participating in a token economy.

By Tattoodwaitress [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

7. Fortifying the Archive / Decentralize to survive

I will not trivialize quite how difficult it would be to stably decentralize a platform of the scale of Soundcloud, however it can and ought to be done.

A centralized archive of music like Soundcloud represents a single point of failure. If it goes down, so does sonic documentation of a large part of the last decade. Broken links, silent articles. Permanent and secure decentralization strategies such as those proposed by IPFS may help fortify us from the risk of losing the past decade of recorded music, and also from the risk of losing any of the good work that is yet to be made.

This is an opportunity to finally solve this problem, and create a sustainable, immutable archive of our culture. This endeavor goes beyond the music itself, as it would be possible to also protect the metadata and activity associated with music, the connections and comments made around it, as a vital archive to be preserved.

Thanks to Peter Harris, Holly Herndon, John Hill, Jay Springett, Gabe Tumlos and Alex Williams for reading over this and giving their thoughts :)

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