An introduction to MODA DAO
Redefining the future of Web3 music ownership, publishing and licensing via NFT standards, decentralized governance and automated finance. We call it, Music3.
Since 2015, the music industry has been playing close attention to the world of blockchain. We’ve been talking about it at conferences for years. We’ve seen projects rise and fall; some disappearing forever, others making progress in an exciting direction. But in 2021, the Web3 space has advanced in a more rapid way. The time has come for the music industry to come together, embracing what looks less like another industry iteration, but an entire paradigm shift.
Welcome to MODA DAO.
Over the next few weeks we will share the ingredients that are going into this project; ideas, creative, code, thoughts and thinking that comes from 30+ years in the music industry, 20+ years of start-up work, 6+ years in the blockchain space and 4+ years at the intersection of blockchain and music.
Here on Medium we’ll share information about the roadmap, the team, governance, technology, tokenomics and our innovation lab. We will also keep you, the MODA community, up-to-date with details of our token generation events and product launches.
Follow us here and on Twitter to get the news, hit telegram for quick engagements and look out for an invite to our discord for deep interaction with the community of like-minded artists and technologists.
Problems with music
The music industry has always been broken, corrupt and highly exploitative. In fact, the industry term for monetising music is literally ‘exploitation’. Beyond the known bottlenecks and middlemen lay some lesser-known problems like multi-billion dollar royalty blackboxes and a global collections system that takes years to distribute revenue.
In the modern streaming environment, the behemoth platforms have a stronghold on the pathway between the studio and listeners’ ears. Now that these platforms have all the music and hundreds-of-millions of paying subscribers, their goal is to reduce the amount of royalties paid to rights holders. Notice that Spotify often tries to push you to a podcast? Or are you wondering why they bought The Joe Rogan Experience? It’s because every minute you listen to their ‘owned content’ is a minute they don’t have to pay artists.
No matter what you are told, traditional corporate entities have one main goal: to make money between their suppliers and the customer, to deliver that value back to their shareholders and line the pockets of company executives.
MODA DAO is being built on a non-profit foundation where that middleman cut is reduced, automated, improved and streamlined and the value that’s created goes to the token holders and back into the ecosystem.
What progress have we made so far on that end? We have engaged a top legal firm to set-up the MODA Foundation drawing from their experience helping Synthetix become a fully decentralised ecosystem. The MODA Foundation will be incorporated within 6 weeks.
Problems with blockchain
Junk-in, Junk-out. The industry often heralds blockchain as something of a magic wand; a quick fix for any out-dated or corrupted system, instantly cleansing it. This simply isn’t true. This year we have seen countless copyright infringements, fake works and improper monetisation of creative output. Blockchain, like any system is only as good as the data that goes in. MODA’s primary goal is to ensure the Web3 world does not become the wild west of music, dragging us back 20 years to the days of p2p torrenting.
The old system won’t work. A new entertainment world is emerging; Interactive music experiences and VR metaverse performances with decentralised ownership and governance. Anonymous, global NFT marketplaces, multi-currency liquidity pools, yield farming and loan collateralization using digital assets. Most of these worlds are completely untapped by the legacy music industry and frankly, they don’t know where to start.
Bridges between networks. While designed to be democratic and open, the blockchain ecosystem is evolving as a tribal and somewhat segregated space. In order for the entire space to work towards evolving an industry like the music industry, there needs to be some standardisation and interoperability between technologies and networks. MODA is focussed on the ethereum ecosystem (inclusive of sidechains and L2 scaling solutions) due to the network effects, but with problems like transaction fees and gas costs top of mind, we will be exploring various EVM-compatible communities and L2 scaling solutions like ZK-Rollups and Optimistic Rollups. It is paramount that any new model for the music industry is secure, scalable, and trustless.
Bridges between the legacy industries and Web3. Music3 (as we call it) exists already; it’s predominantly a stand-alone part of the music industry with little integration with the rest of the world; NFT sales, blockchain streaming, fractional ownership and social tokens that don’t heavily interface with the standard lifecycle of a song, the global royalty collection system or the meta-data standards of DDEX, ISRC and ISWC.
The solutions to these problems, both technical and strategic, will be addressed in the MODA Light Paper and form the basis of the Founding Board’s first open standard projects.
Three pillars of operation
MODA is being established as a not-for-profit foundation (with a tokenised value structure) for the sole purpose of pushing Web3 music forwards and establishing a more sustainable future for audio creators. Therefore, the token model itself contains a balance of free and open-source tooling for the music world, and value-creating functions which will drive its long-term growth:
Pillar #1: Music3 Infrastructure and creator tools
MODA will offer tools for the music industry to be fairly and transparently compensated for the value they bring to the world by leveraging Web3 technologies. While these are not aggressive drivers of the Value Model, users will be required to sign the MODA constitution and hold at MODA tokens as a member, as well as staking MODA behind each track that they wish to ‘exploit’ in the Music3 way.
Each of the following would need to be voted on by the DAO:
- Membership structure for ensuring authenticity and network effect
- Open on-chain music registration
- International Standard Collaboration Code (ISCC) contract creation
Pillar #2: dPub — A publishing ecosystem for Music3
MODA is building a new backbone for the future of the music industry, by replicating some of the old structures in a new, decentralised, autonomous and highly streamlined way. Some of these functions are also powerful value-drivers for the token economy and the future of the DAO:
- A (dPub) publishing DAO structure that plays the role of maximising the monetisation opportunities for the musical composition and songwriting side of each song in MODA Publishing.
- A global, digital, autonomous and decentralised licensing and collections agency designed for Web3, NFTs and virtual performances here, in the metaverse and beyond planet earth.
- Autonomous, DAO-voted grants and decentralised finance options will replace old-school album advances.
Pillar #3: MODA Innovation Lab
The MODA Labs Innovation zone will produce highly innovative and experimental products, designed to test the future of Web3 & music in a live, real-world environment. When successful, these experiments will scale out of the lab and add value to the MODA ecosystem. Teams who join the DAO will be able to apply for technology grants. Some concepts have already been conceptualised by the launch team and are moving into production.
- Pre-release music-hype market
- Music Genesis NFTs
- A user-generated content revenue share engine
- NFT based autonomous micro-licensing
Looking forward, in some cases, development bounties may offer the community an opportunity to help bring concepts to life. We believe in decentralisation and democratisation of all aspects of creative work, and adding to the platform is no exception.
The MODA Value Model
The MODA Value Model is designed to give token holders exposure to the MODA DAO ecosystem at 3 levels:
Layer 1: The MODA Layer
Holders of the MODA Tokens can join the MODA Foundation DAO. MODA tokens will be taken out of circulation when songs are moderated out, when release NFTs expire, or when new DAO members join. MODA publishing will earn revenue from any song it manages, and revenue will be split three ways with a % going back to the MODA Fund, another % buying tokens back on the market for recirculation into the reward pool, and a small % burned to drive continual growth and liquidity.
In September 2020, Trent McConaghy (the founder of Ocean Protocol) introduced the “Web3 Sustainability Loop” which OCEAN is currently testing in Beta. MODA’s macro model is derived from this, using music as the source of value rather than data.
Layer 2: The Artist Layer
A level deeper, MODA members may be able to back certain artists as a way to increase their exposure and ranking within the DAO. In some cases, artists may choose to return rewards to their backers in the form of Artist tokens, NFTs or MODA Rewards. What artists choose to do with their NFTs and how they reward fans and backers will be entirely up to them.
Layer 3: Song Layer
At the song layer, MODA members could stake into new songs before they are released as a way of increasing their visibility within the MODA catalogue. Staking into a song might mean receiving NFTs and receiving trade fees as new Music Genesis NFTs are bought from a Bonding curve. This model again takes inspiration from Ocean Protocol, with reference to the Ocean Data Market.
Operational Pillars + MODA Value Model
Below, you can see how the Operational Pillars combine with the MODA Value Model to deliver a new iteration of the Web3 Sustainability Loop; a market-proven token model that has now been applied to the music world.
The Web3 landscape is one of the fastest developing technology spaces in the world. It is essential that projects remain nimble and open-minded when it comes to blockchains and scaling solutions. The undeniable truth about the space in 2021 is that Ethereum has developed a stronghold on network-effect, developer community, investor network and industry adoption. Networks like Matic/Polygon now extending that base layer into new territory with a very high degree of interoperability, For this reason, MODA will launch with an ERC20 as the base digital asset and transaction fee / gas reduction will be one of the primary goals of the project right out of the starting blocks.
The MODA tech team prefers optimistic roll-ups as a scaling solution in the short-term, but others will be considered seriously as the project evolves. Smart contracts involved in the network will use a proxy pattern to allow the project to adopt new functionality and approaches as technology matures.
Likewise, alternative chain solutions and low-impact options such as WAX may form part of the solution over time.
At the core, MODA is designed to bridge not only the legacy music industry with Web3 but to also bridge existing networks through standards and interoperability. MODA is about allowing people freedom, not locking them into walled gardens.
This article is not intended to be technically deep, our team are working on the V1 Lightpaper now in conjunction with Coinage who were instrumental in the development of not only the Synthetix tokenomics, but also the smart layer of the SNX multi-currency trading platform. MODA is also working closely with Ocean Protocol, and looking to leverage the base layer data-market contracts for V1 of the Music Genesis NFT product with potential to extend this integration into our core publishing framework.
The MODA Roadmap is being carefully modelled as the initial board is brought together. While dates are not yet set, all of the following will be proposed for the first 5 years of DAO activity.
- Completion of private sale
- Token Generation Event
- Launch pad, fair auction or IDO
- Staking and rewards dashboard
- Voting portal
- Publishing company launch
- Innovation lab launch
- Music provenance program
- Music NFT standards board
- Metaverse music licensing standards program
- Web3 ISCC standard creation and launch
- Metadata and music classification standardisation program
- Cross-chain music metadata program
- Legacy industry bridge
- Catalogue acquisitions
- Dedicated Music3 storage and data network
- Fractional ownership legal framework
It should be noted that MODA is taking a progressive approach to decentralization and in the beginning, the Founding Board will have controlling decision-making abilities. This will be covered in a forthcoming article.
The Innovation Lab
#1 Music Genesis NFTs
Every song that is released into the world creates value. Often, that value is not recognised for months, years or even decades. MODA Genesis NFTs capture the magic of new music before it is released, front-loading value when music is new and hype train is moving! MODA Members will be able to stake into new tracks as a way of generating new NFTs, burn NFTs to recover their MODA stake, or export them to other markets.
#2 Tokenised Microlicensing
What if licensing a song was as easy as purchasing an NFT? Whether for an exclusive personal stream, broadcast rights on your digital radio station, inside your metaverse experience or for officially recognised NFTs, UGC or derivative content. What if all of this was done in a new market, available before the music is released to the rest of the world? Our thesis is that Web3 has the power to make music monesition open to anyone and therefore, the potential to regress us back to the days of torrenting. So, legitimate licensing needs to be easy and incentivised.
#3 On-chain provenance
As mentioned in the introduction to this article, blockchain data and media is only ever as authentic as the person putting it on-chain. Additionally, many music industry complications arise when deviation of a song’s provenance occurs after the first studio sessions Regardless of whether the track was recorded in a Hollywood studio or a Berlin basement, the issues persist. MODA Labs will explore a range of audio provenance tools that combine the latest in audio-recognition and fingerprinting technology with the best blockchain use-cases.
#4 Revenue Share Rails
As part of our launch partnership deal with Blockchain Music Pty Ltd (Emanate/RAREZ), MODA has been given access to IP that relates to a new User Generated Content monetization platform which utilises smart-contracts to align incentives between viral content creators and artists/labels. This product will help demonstrate the power of MODA’s Web3 music monetisation framework.
MODA Basic token metrics are as follows:
- Members must stake MODA and sign the constitution
- Partners must meet the MODA holding requirement
- Board members must stake and hold at least 1% of supply (TBC)
- Every song on-chain must be backed by at least 1 MODA (TBC)
- MODA Labs project should utilise the MODA token to align incentives with the foundation
- Ongoing buy-back to support the Web3 Sustainability Loop and ongoing growth
Thank you for getting involved early in the MODA journey. Our lives have become dedicated to the evolution of blockchain and creative media and we are excited about the next stage.