RCRDSHP Whitepaper Part 1
In late July 2021, I put the finishing touches on a 17-page Whitepaper describing my vision for how RCRDSHP plans to revolutionize music.
The Whitepaper immediately became a victim of its own success. In our opinion, it described what we planned to do so perfectly, that if we were to release it publicly, it would provide a set of high-level blueprints for competitors to copy us and steal our thunder. So until today, the Whitepaper remains totally confidential, a prime document and piece of RCRDSHP history that is only shared with a select few under strict NDA terms.
As we’re now in mid-November and a number of things have changed, my feelings about the Whitepaper are changing too.
For starters, RCRDSHP has successfully launched the premier platform for NFT-backed, music-related digital collectibles. Hardly anyone outside of early adopters has heard of us yet, but that is slowly changing as we gain traction, find our targeted product market fit, and begin to market more heavily to turn music fans into new players.
The other significant change is that we have a bustling community of enthusiastic players that clamor for more, more, more information about what we have planned and what exactly they are investing in when they sink large sums of money into buying our collectibles. That enthusiasm has led to close to 2 million dollars in total sales, which is trivial by successful NFT project standards, but sizable for a 3-month old music tech startup.
Based on the above, I feel like the time has come to begin revealing more of the long-term roadmap for the project. In this series of blog posts, I will be posting excerpts from the Whitepaper that communicate our vision for the RCRDSHP project. Today’s chapter is the Introduction.
Introduction
According to the RIAA, there have been five eras of recorded music, including the current one, each with distinct dominant modes of recorded music delivery: vinyl, tape (8-track, then cassette), CDs, downloads, and streaming. The crossover to the latest era happened in 2017 when revenue from subscription royalties on first-generation digital streaming platforms such as Spotify and Apple Music surpassed that of digital music downloads for the first time.
As shown in Figure 1, the revenue during the CD era dwarfs all others by a large margin. During that “golden era” for the music industry, there was enough money to go around for everyone. Working musicians across the spectrum were able to generate healthy incomes and provide for their families quickly. Not anymore.
The problem is that the current system works well for a relative handful of stars that generate billions of streaming plays every day and the major record labels that publish their music. But the current system doesn’t work for anyone else, including working musicians with billions of fans in aggregate. The current system undervalues and even devalues the culturally rich and highly diverse “long-tail” that music creation and engagement are the most significant contributors.
We need a new era in music marketing, distribution, and consumption.
Not All Music Is The Same
A high-school kid in Florida named Alex uses a mobile app and sample packs to make a 30-second song featuring trap beats layered over a double-speed and highly distorted illegal sample of the chorus from an Eminem track.
As a final touch, he layers in a loop of his baby sister screaming and calls his masterpiece “Shutup Bae B.” The whole effort takes him about an hour, after which he uses it as the background music for a funny video on TikTok, starring his baby sister throwing a tantrum. Alex’s video goes viral, and “Shutup Bae B” rapidly spreads across the internet. Many commentators cite it as an example of how user-generated content is taking the music world by storm. Is it music? Yeah, it’s a kind of music.
The latest hit collaboration by Lil Aye B’emm, Justin Beeper, Camelia Candida, and Ariana Grandiosa called “Soopa Con Poota” credits nine songwriters and twelve producers.
One of the producers provided nothing but the track’s high hat patterns. Three others didn’t actually work on the project, but were listed due to their association with the recording studio. Within a day of release, it racks up a billion views on Youtube and is hailed as “track of the summer.” Is it music? Yes, of course. Most critics and discerning listeners think it’s crap, but it’s still music.
Meanwhile, Nash Graham, acclaimed singer-songwriter with a decades-long career and millions of fans, releases his latest album after two years holed up in his studio in upstate New York.
Nash records two dozen tracks during the two years of production, but only half of them make it into the album. Fans and critics universally agree that the album is his finest work to date. Is it music? Absolutely.
All three examples given are music, in the broadest sense, but all are significantly different too. Many of you reading may have thought that only the final example involving Nash Graham is real music. But regardless, the important point that we’re trying to make is that the economic outcomes for these “musicians” are wildly different.
Alex’s viral hit “Shutup Bae B” generated no royalty income for anyone (except maybe for Eminem, but even that is unclear.)
Alex is not a trained musician, and his 30-second hit is not traditionally an actual song, but that didn’t stop Alex from wanting to capitalize on his viral success by getting signed to a major record label. After two painful rejections, he decides to focus his creative genius on making NFTs instead, and hooks up with a friend that’s learning Javascript to launch a PFP project on Solana. It fails.
The hit of the summer, “Soopa Con Poota,” generated millions of dollars in royalties for everyone involved, including the programmers responsible for creating Lil Aye B’emm, the “world’s first AI rapper.”
For his part, Justin Beeper made enough money to replace the Lamborghini that he had to sell during the pandemic. Two weeks later, he crashes it into a Miami Beach Starbucks in a bizarre incident involving a pet monkey. Luckily, nobody except Justin was injured.
Nine months after the release of his album, Nash Graham eagerly opens a royalty statement email from his record label.
The lack of touring during the pandemic has wrecked Nash’s finances; some money to pay off debts would be welcome right now. According to the statement (after accounting for expenses), he earned a total of 61 dollars. The minimum amount needed for a check to be issued is a hundred dollars, meaning he won’t receive any money from his record label yet. Dejected, he opens an older email from his record label, offering to buy the rights to his entire back catalog for $120,000. Good money, except it would have to be split at least five ways with his old bandmates, and the last time the subject came up there were serious arguments.
The scenarios described above are ficticious, but they accurately reflect the new reality of UGC (user-generated content) and the legacy music industry, forever dominated by corporate behemoths that continue exploiting vast numbers of legitimate musicians as much as possible to line the pockets of company executives and shareholders.
Is there a way to dramatically increase the value of the creative work performed by legitimate musicians like Nash Graham while unleashing additional fan engagement and spreading the wealth more equitably around the musical world? Absolutely!
New Solutions for a New Era
RCRDSHP (pronounced “record shop”) is building robust new solutions designed to address and improve existing music distribution systems’ many weaknesses and perverse incentives and realign them in favor of working musicians and passionate fans by cleverly applying game mechanics and new blockchain technologies. As our first step, we are establishing a global platform for trading electronic music and music-related digital collectibles.
The foundation of the RCRDSHP platform is its use of blockchain technologies such as non-fungible tokens (NFT) to make music and music-related digital collectibles a) scarce and limited in quantity, b) excludable, and c) rivalrous, as if they were tangible items in the offline world. Just like their physical counterparts, excludable and rivalrous digital assets that are made available in strictly limited edition quantities tend to be valued highly by consumers as valuable and sought-after collector’s items.
While RCRDSHP cannot reverse global trends that have devalued naked music files (e.g., MP3) to nearly zero, what we can do is provide independent labels and artists with tools to package their music in culturally relevant new formats that form part of a compelling, gamified fan engagement platform on a global scale.
Digital music and collectibles on RCRDSHP are priced and sold in US dollars (not cryptocurrency), making our goods and services accessible to millions of music fans. Many of those fans will be introduced to cryptocurrency concepts such as staking, wallets, and tokens for the first time via our platform.
Three Intersecting Transformations
The development of the RCRDSHP platform is fueled by three powerful global economic forces — the Experience, Platform, and Token Economies.
The convergence of these three forces, fueled by massive technological innovation, is the foundation for profound and lasting changes in how artists and fans engage with each other. RCRDSHP’s innovative game experiences, which go far beyond just listening to music, are poised to change how economic value is accrued and exchanged amongst musicians, record labels, venue owners, promoters, and even music equipment manufacturers.
The Experience Economy The average consumer is no longer excited by physical goods and services. Global trends point to the growing importance of compelling and novel experiences, both physical and virtual. The global pandemic drove record numbers of people of all ages to video games and live-streaming (e.g., Twitch). Everyone suffers from at least some attention deficit disorder, as our phones and devices devour more and more of our attention. So, just as the Service Economy superseded the Industrial Economy last century, today, the world is entering an Experience Economy, one where anticipation is the most crucial factor behind the success of anything.
Live music events like concerts, festivals, raves, or nightclubs, are not dull experiences! And as a result, touring and live performances have gradually become the primary way working musicians can engage fans directly and make enough money to survive.
Even before the global pandemic decimated the live music business, the general problem with touring as a prime source of income is that many working musicians don’t want to do it, especially not continually! Some are painfully introverted or have families to take care of, or health limitations, or a multitude of other challenges that make having to travel regularly an exquisite form of torture.
Quality music can form the foundation of compelling fan experiences beyond live performances, as long as it’s packaged up correctly. RCRDSHP offers ways for music professionals to create fan experiences that drive sales and ongoing engagement for all the players in the musical ecosystem, from promoters to record labels to equipment vendors, all coming together to foster the organic creation of patronage communities with plentiful opportunities for positive cross-side network effects.
The Platform Economy Platforms have become transformative players in the global economy, including the music industry. A key feature of platforms is that as more users engage with the platform, the platform becomes more attractive to other potential users. The more artists join and contribute content to the platform, the more fans will participate. The more fans that participate, the more artists will join.
With its creator ecosystem, pack drop marketing mechanisms, and user-driven marketplace, our core platform will be a fantastic place for everyone involved with creating music and music experiences to sell to and engage with fans in innovative ways.
What excites us the most is the prospect of fostering an ecosystem of value-added partners and third-party, decentralized applications built on the platform. Innovative entrepreneurs will leverage our work on next-generation music industry protocols, standards, and incentives far exceeding those currently explored with NFTs.
The Token Economy The disruptive potential of blockchain has profound implications for every kind of transaction, including music distribution and how fans enjoy music-related experiences. When we refer to “The Token Economy” as one of the three foundations for RCRDSHP, we are referring to our use of fungible and non-fungible tokens (NFTs) at the heart of the platform.
The rest of the whitepaper describes our use of both fungible and non-fungible tokens, and will be excerpted in future articles in this series.
